ECON102: Principles of Macroeconomics

Upon successful completion of this unit, you will be able to:

• compare and contrast as well as discuss fiscal policy and monetary policy;
  
• define the money multiplier, and explain the money creation process;
  
• distinguish between the types of money (i.e., between commodity money and fiat money), identifying examples of each;
  
• define money supply, and its related definitions (M1 and M2); draw and interpret a money demand curve, and explain how changes in other variables may lead to shifts in the money demand curve;
• explain and illustrate the relationship between a change in demand for or supply of bonds and macroeconomic activity;
• explain the functions of a bank, and describe a bank's balance sheet;
  
• explain the primary functions of the Federal Reserve, and describe the three tools it can use as part of monetary policy;
  
• explain how the bond market works, and discuss the relationship between bond prices and interest rates;
  
• describe the relationships among changes in money demand or money supply, in the interest rate, in the prices of stocks and bonds, in aggregate demand, in real GDP, and in the price level;
  
• identify and discuss domestic policies that contribute to economic growth;
  
• explain the linkages among income, consumption, and net investment, relating them to economic growth;
  
• describe how crowding out occurs and its connections to fiscal and monetary policies;
  
• discuss the arguments for side supply approaches to economic growth separating macroeconomic and microeconomic variables;
  
• summarize the bases of the philosophical differences between the Classics and Keynesians;
  
• describe the key components of the monetarist perspective; and
  
• explain why the Phillips curve is vertical in the long run.