Welcome to the second lecture of our couse in Macroeconomics.

Today we will cover three topics that help us to settle

the basis for a better understanding of the evolution of
GDP both in the long and in the short run.
The first topic is focused on the relationship between savings and investment
decisions.
In this topic, we will see how the financial system
connect lenders and borrowers or, in other words,
those who save (in this lecture, mainly the public and the private sector)
and those who invest (mainly firms and households).
We will also see how this interaction can be understood
assuming a market for loanable funds which determines the equilibrium
level of savings, investment and interest rate.
The second topic is an introductory analysis of labour markets and unemployment.
Within the complexity that characterizes unemployment,
we will distinguish a long run component and a short run component
and we will see how the latter -also called cyclical unemployment
- is closely related with the fluctuations in GDP.
The third topic introduces the
<span id="w0" class="word-text">Consumer Price Index (CPI)  </span>that, together
with the GDP deflator,
is one of the main tools to measure inflation.
We will understand the main steps to compute a simplified version
<span id="w0" class="word-text">of the CPI and</span> how to use the CPI (or
eventually another price index)
to compare nominal and real variables across time.
It is now time we start with the first of the topics: savings
and investments.