Overview of the course and assessment methods, followed by a recap of GDP, inflation, and interest rates. Introduction to national income identity and distinction between nominal and real variables.

Analysis of how output is produced and distributed, the roles of consumption, investment, and government spending. The quantity theory of money, causes and effects of inflation, Fisher effect, and the social costs of inflation.

Understanding national saving, investment, and net exports in open economies. Balance of payments structure and interpretation, exchange rates, natural rate of unemployment, and labor market rigidities. Brief introduction to comparative advantage and trade policies.

Examination of the Solow growth model with capital accumulation, population growth, and technological progress. Analysis of convergence and policy implications.

Exploring how fiscal policy influences aggregate demand. Topics include crowding out and multiplier effects, balanced budget vs. deficits.

Money demand and supply, central banking, inflation targeting, and short-run effects of monetary interventions

Analysis of short-run economic fluctuations, the interaction between goods and money markets, and how the IS–LM model explains aggregate demand shifts.

Mid-term test

Understanding the aggregate supply

Fundamentals of the foreign exchange market, nominal vs. real exchange rates and interest rate parity.

Analysis of currency regimes, the impossible trinity, central bank interventions, sterilization, and the impact of monetary and fiscal policies on exchange rates.

Examination of currency and banking crises, global contagion, and the theory of optimum currency areas. Costs and benefits of monetary unions, with a focus on the Eurozone.

Currency and banking crises