1. Principles of Macroeconomics, Fall 2010
ASHESI UNIVERSITY
Principles of Macroeconomics, Fall 2010
Lecturer: S Armah
Lecture 1: Lesson Plan
1. Introductions: You, the TA and Me.
2. Attendance (sign the sheet).
3. Syllabus Distribution and Discussion (Note due dates for assignments).
4. First Day of Class Survey (Group Work).
5. Brief Guide to How Labs will be run this Semester.
5. Lecture (Divided into two parts A and B).
INTRODUCTORY LECTURE
*LECTURE A: Introduction to macroeconomics (The science of macroeconomics).
**LECTURE B: Evolution of Macroeconomics
*Note we will consult the text book in class so always bring your textbook to class.
** More detail is provided in the article by Gregory Mankiw: “The macroeconomist as a scientist)

2. ECONOMICS: Explains how people make their living
Microeconomics and Macroeconomics:
Microeconomics focuses on the individual parts of the economy.
--How households and firms make decisions and how they interact in specific markets
Macroeconomics looks at the economy as a whole.
--Economy-wide phenomena, including inflation, unemployment, and economic growth

3. Chapter 1: The Science of Macroeconomics
(i)What macroeconomists study (What do they do)
Macroeconomists study
--Inflation, unemployment, the process of growth and development
Macroeconomists analyze
--data on the historical performance of economies and try to predict booms , and busts (recessions and depressions). They also form theories to explain trends in the data
Macroeconomists formulate
--economic policy to ensure smooth operation of the economy, minimize the effects of inflation, reduce unemployment, foster growth
Examples of the kinds of policies they formulate? TAX POLICY
Macroeconomists explain
-- how the economy as a whole works to politicians and the public. For example they have to advise politicians on how to manage the national budget
Recessions:
Depressions:

4. Chapter 1: The Science of Macroeconomics
(ii) How Economists Think
Models are used by economists to understand the world
--they explain trends in economic variables: GDP, inflation
Models illustrate
--the mathematical relationship among variables in the model
Models typically have two main variable types
--Endogenous variables (which the model is trying to explain) and Exogenous variables (that the model accepts as given)
About Economic Models
--Note that economic models make simplifying assumptions. A model is only as good as its assumptions. There is no one correct model. Instead there are many models each of which applies in a specific situation. Economists must determine if the model’s underlying assumptions fit a particular problem
PLEASE RE-READ PAGES 7 TO 10 OF YOUR TEXTBOOK
Recessions:
Depressions: