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The aim of this course is to introduce students the use of analytical tools of macroeconomy. Students would understand the response of policy makers to macroeconomic issues and expectations. Students are encouraged to use their knowledge of macroeconomic theory to gain a better understanding of current macroeconomic events and issues.
Expectations: The Basic Tool. Financial Markets and Expectations. Expectations, Consumption, and Investment. Expectations, Output, and Policy. Openness in Goods and Financial Markets. The Goods Market in an Open Economy. Output, the Interest Rate, and the Exchange Rate. Exchange Rate Regimes. Depressions and Slumps. High Inflation. Should Policy Makers Be Restrained? Monetary Policy: A Summing Up. Fiscal Policy: A Summing Up.
Upon succesful completion of this course, a student will be able to
1. Apply macroeconomics to current policy issues.
2. Predict responses of policy makers to different macroeconomic issues.
3. Explain unemployment and inflation and their impact on the economy.
4. Analyze adaptive and rational expectations.
5. Describe policy effectiveness under rational expectations.
6. Analyze the impacts of central bank independence on inflation and output.