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  • The circular flow of income model

  • Measures of economic activity: GDP, GNP, or GNI

  • Short-term fluctuations and long-term trend

2.2 Aggregate Demand and Aggregate Supply

  • The AD curve

  • The components of AD

  • The determinants of AD or causes of shifts in the AD curve

  • The meaning of aggregate supply

  • Alternative views of aggregate supply

  • Shifting the aggregate supply curve over the long term

  • Short-run equilibrium

  • Equilibrium in the monetarist/new classical model

  • Equilibrium in the Keynesian model

  • The nature of the Keynesian multiplier 

2.3 Macroeconomic Objectives

  • The meaning of unemployment

  • Consequences of  unemployment

  • Types and causes of unemployment

  • The meaning of inflation, disinflation, and deflation

  • Consequences of inflation

  • Consequences of deflation

  • Types and causes of inflation

  • Possible relationships between inflation and unemployment 

  • The meaning of economic growth

  • Causes of economic growth

  • Consequences of economic growth

  • The meaning of equity in the distribution of income

  • Indicators of income equality/inequality

  • Poverty

  • The role of taxation in promoting equity

  • Other measures to promote equity 

  • The relationship between efficiency and equity

2.4 Fiscal Policy

  • Sources of government revenue

  • Types of government expenditures

  • The budget outcome

  • Fiscal policy and short-term demand management

  • The impact of automatic stabilizers

  • Fiscal policy and its impact on potential output

  • Evaluation of fiscal policy

2.5 Monetary Policy

  • Interest rate determination and the role of a central bank 

  • Monetary policy and short-term demand management

  • Monetary policy and inflation targeting

  • Evolution of monetary policy

2.6 Supply Side Policies

  • Supply-side policies and the economy

  • Investment in human capital

  • Investment in new technology

  • Investment in infrastructure

  • Industrial policies

  • Policies to encourage competition

  • Labour market reforms

  • Incentive-related policies

  • The strengths and weaknesses of supply-side policies

2. Macroeconomics

Anchor 1

2.1 The Overall Level of Economic Activity

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