| (*)Learning Outcomes
Learning Outcome 4 (LO4): Solve for the equilibrium level of GDP with and without fiscal policy interventions.
Learning Outcome 5 (LO5): Represent graphically the goods-market and financial-market equilibrium in the IS-LM model and use the latter to investigate the effects of fiscal and monetary policy measures in the short run.
Learning Outcome 6 (LO6): Extend the IS-LM model by the Phillips-Curve (PC) relationship and use the IS-LM-PC model to analyze the effects of fiscal and monetary policy measures as well as exogenous shocks (e.g. to energy prices) in the short and the medium run.
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(*)Course Content
- Introduction
- Demand and supply in the goods market
- Demand and supply in financial markets
- Interaction of goods and financial markets: The IS-LM Model
- Money supply and interest rate (a.k.a. inflation) targeting
- Demand and supply in the labor market
- The Phillips Curve, the natural rate of unemployment, and inflation
- From short-run to medium-run equilibrium: The IS-LM-PC Model
- The goods market in the open economy*
- Output, the interest rate, and the exchange rate*
9. and 10. depending on how much time is left at the end of the semester
Learning Outcomes
Learning Outcome 1 (LO1): Recall the fundamental components of macroeconomic output of an economy – a.k.a. gross domestic product (GDP).
Learning Outcome 2 (LO2): Understand that, in short-run equilibrium, aggregate supply = aggregate demand, and how this can be used to determine the equilibrium level of GDP.
Learning Outcome 3 (LO3): Remember the empirical regularity of a relationship between inflation and the unemployment rate and how the Phillips Curve hinges on assumptions about the inflation expectations of economic agents.
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