This is a Principles of Macroeconomics Course developed through the Ohio Department of Higher Education OER Innovation Grant. This work was completed and the course was posted in January 2019. The course is part of the Ohio Transfer Assurance Guides (TAGs) as OSS 005. For more information about credit transfer between Ohio colleges and universities, please visit: www.ohiohighered.org/transfer.Team LeadAmyaz Moledina College of WoosterContent ContributorsRosemarie Emanuele Ursuline CollegeKenneth Fah Ohio Dominican UniversityDarcy Hartman Ohio State University – NewarkLibrarianNathan Wolfe Kenyon CollegeReview TeamSeth Kim Central Ohio Technical CollegeJoe Nowakowski Muskingum University
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The aggregate demand and supply model provides a comprehensive and intuitive explanation of changes in the price level, actual real GDP, and potential real GDP. Students will employ the AD-AS model to examine short-run cyclical changes in the economic and long-run changes in potential real GDP. The AD-AS graphs give the students an analytical tool by which to illustrate how changes in several economic variables and policy will impact important economic indicators and overall economic performance in the short run and long run.
This topic may be covered after reading The Aggregate Demand/Aggregate Supply Model (Chapter 11 in OpenStax) and The Keynesian Perspective (Chapter 12 in OpenStax). Preferably, Aggregate Expenditures should be taught as the theory of Aggregate Demand. In the latter case, sections of the Keynesian perspective should be coupled with this section on Aggregate Expenditure. Thereafter, students can study the Money Market and Monetary Policy. Finally, the instructer can put together all these frameworks to derive Aggregate Demand. The fundamental ideas of Keynesian economics were developed before the AD/AS model was popularized. From the 1930s until the 1970s, Keynesian economics was usually explained with a different model, known as the expenditure-output approach. This approach is strongly rooted in the fundamental assumptions of Keynesian economics: it focuses on the total amount of spending in the economy, with no explicit mention of aggregate supply.
It is typical to see economic activity pick-up around the holidays or harvests. For example, every year, the Chinese and some other East Asian cultures celebrate Spring Festival or what is known as “Chinese New Year”. People travel to their home village, buy gifts and celebrate with elaborate family meals. Consumption rises before and falls after the festivities are over. Economic fluctuations due to seasonal demand factors are one thing, but modern economies experience ups-and downs for a host of reasons including shocks such as droughts or economic crises. One of the main reasons for economic downturns is the breakdown in some aspect of the economic mechanism. In this section, students will be introduced to the basic definition of a business cycle, learn how to define the different phases of the cycle, and explain the different mechanisms that give rise to recessions.
This topic is not often covered explicitly in a principles of macroeconomics course. Nonetheless, the topic of economic systems might lead to coverage of efficiency and government intervention.
The learning objectives below refer to the typical goals one would have for an introduction to macroeconomics. Most economists consider the discipline as “a way of thinking”. The key question we answer is “how we make choices under scarcity”. However, we encourage you to consider other alternative ways to conceptualize and teach economics or even introduce pluralistic ideas into your course. For example, the CORE Economics project describes economics as, “The study of how people interact with each other and with their natural surroundings in providing their livelihoods, and how this changes over time.” The “economy is part of society, which in turn is part of the biosphere.” (Chapter 1.11). More importantly, many of the factors and commodities that give us economic growth are socially (re)produced and uncompensated. Consider alternative conceptualizations of the macroeconomy such as the one proposed in UNDP (2012): Gender and Economic Policy Management Intitiave, page 30 outlined in the figure above. The supplemental content is an excellent place to find videos to enliven your classes. Listed alternative resources can be used to familiarize yourself with material that goes beyond the standard treatment.
Looks at several different approaches to Economics and compares them in terms of important economic variables. While none of these philosophies are always correct, we will see that each has a role to play in explaining some aspect of economics for some time period.
Looks at fiscal policy as a means to address problems in the macroeconomy. Focuses on government spending as well as taxes and transfers in the Keynesian model, as well as determinants of the level of Aggregate Demand.
Looks at the flow of income in the economy and the calculation of GDP as well as other measures of national income. Discusses shortcomings of and improvements on the various measures.
This is very difficult set of topics to cover in one chapter. It is actually three topics! Instructors should choose one of these topics to cover and adjust the learning objectives accordingly. Inequality can be studied from the perspective of the US or between countries. The study of inequality would cover Learning objectives 1 and 3. Poverty is fundamentally about deprivation and should be understood as such. Deprivation can also intersect with inequality. Economic Development is a contested term and its definition depends on the period and region that is being studied. Poverty and Economic Development together cover learning objective 2, 4 and 5.