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ECON 303

Introduction to Intermediate Macroeconomics

Economics The study of how society chooses to use scarce resources
- Time, money, other resources
- Microeconomics decisions of a small number of firms or households
- Macroeconomics entire economy
o Growth and fluctuations (business cycles)
- Micro and Macro have grown closer
o Unifying theme Equilibrium Approach
Agents optimize given preferences and technology
Agents actions are compatible with each other
o Must be explicit about assumptions
o Use models as abstractions
The Scope of Macroeconomics
- Many subfields of macroeconomics
Disagreements in Macroeconomics
- Many different people in a single field naturally spawns different ideas
- Most research macroeconomists agree on a wide set of issues
o Wide agreement on growth theory
o Less agreement on business cycle theory
- What drives disagreements?
o Incomplete understanding about quantitative issues that we want to learn about
o Potentially vested interests (financial/emotional bias) behind some opinions
- Focus on separating opinion and science
- Measurement
o GDP, inflation, etc.
- Growth Models
o Slow Growth Model
o Endogenous Growth Model
- One Period and Two Period Model
o Understand choices made by consumers
- Credit Market Imperfections
o Models with Asymmetric Information
o Different Social Security Programs
- Monetary Intertemporal Model
o Cash-in advanced constraint
- Business Cycle Models vs new Keynesian
o Fully flexible prices vs sticky prices
- Xx
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