Summary
Macroeconomics is the study of the economy as a whole, as opposed to an individual entity. This was an intro lecture without any canonical material
Next: Basic Macroeconomic Concepts (GDP, labor market, inflation).
Macroeconomics involves interactions; it is not just the sum of microeconomic entities. Because of this, we need shortcuts to model, as the dynamics become too complex. The goal of this course is not to be too quantitative but to understand the underlying economic models that govern our world.
Interest rates are the driving factor to stimulate/slow the economy. When a recession hits, the central bank (federal reserve) sets off lower interest rates to combat the recession.
Example
Donald Trump wants interest rates to be lowered to stimulate the economy.
Why not set interest at 0? Inflation. If you decrease interest rates too much, the economy explodes, leading to large inflation. The first part of the course will focus on the effects of interest rates, and then inflation will be placed into the picture in the second part and beyond.
Fiscal Policy can boost domestic economy during times of need. Labor markets also have an impact: high unemployment rate can be an issue to consider. Productivity is also a factor, especially the idea of human output per hour. Productivity growth is the main driver of economic innovation.
= "capital deepening" + "labor composition" + "Total factor productivity"$$
In the end of the course, we will look at the open economy.
To succeed in this course, you should follow lectures closely. The quizzes won't be complicated but will test knowledge in lectures and PSETs. Make sure you can do the problem sets alone.