UNIVERSITY OF THE WEST INDIES, MONA CAMPUSDEPARTMENT OF ECONOMICS

INTERMEDIATE MACROECONOMICS 1ECON 2002

COURSE SYLLABUS BY MIKOL A. MORTLEY

1. Introduction Review of Basic Macroeconomic Concepts

What is Macroeconomics Tradeoff between Unemployment and

Inflation in the short run Actual vs. Potential Values

Natural level of GDP Natural rate of Unemployment

Short Run vs. Long Run analysis Economic Models

2. Measurement of Income, Prices, and Unemployment

a. Measurement of Income Circular flow of Income GDP

Methods of Calculation( Input, Output, Expenditure)

Limitations of GDP GDP vs. GNP

Real and Nominal GDP deflator

National Income Accounts GDP GNP NNP National Income Personal Income Personal Disposable Income Personal Saving Public Savings

b. Measurement of Prices Changes Inflation

Laspeyres Index Paasche Index

c. Measurement of Unemployment Unemployment

Labor Force Employment ratio Unemployment rate Labor Force participation Types

Okun’s Law

3. Income Determination in the Short-run a. Subunit I - Review of Keynesian Income

Determination Keynes General Theory of employment,

Interest and Money Introduction to the Investment Savings-

Money Lending Modelb. Subunit II – IS-LM Model Keynesian Cross Model to derive IS IS Curve

Investment Function Consumption Function Net Export Function Mathematical and Graphical

Derivations of the IS curve Goods Market Fluctuations

LM Curve Liquidity Preference Theory Money Demand and Money

Supply Real Money Balances Mathematical and Graphical

Derivation of LM curve IS-LM

Monetary Policy and IS-LM Fiscal Policy and IS-LM Monetary Policy Response to

Fiscal Policy Mathematical Derivations of

Interest Rates and Equilibrium Output

4. The AD Curve and Price Adjustment (Short-run and Long-run Analysis)

a. Derivation of the AD Curve Derived Through interactions of the IS-LM model Monetary Policy and AD curve Fiscal Policy and AD Curve

b. Price Adjustment Mechanism (Aggregate Supply (AS)) 3 types of Aggregate Supply Curves Short Run Aggregative Supply (SRAS)

Reactions to Shocks in IS curve Shocks to the LM curve Changes is Aggregate Demand (AD)

Long Run Aggregate Supply Combining AD and LRAS Transitioning from SRAS to LRAS Phillips Curve Price Adjustment

c. The AD Curve and Price Adjustment Monetary Policy, AD and Price adjustment

Short Run Long Run Money Neutrality

Fiscal Policy, AD and Price Adjustment Short Run Long Run

AD shocks Policy Responses to AD shocks

d. Extensions to Macroeconomic Policy Stabilizing Output with Fiscal policy

Aggregate Demand Shocks Supply Shocks(Price

Stabilizing Output to Monetary Policy