Learning Outcomes

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The content, assignments, and assessments for macroeconomics are aligned to the following learning outcomes.

 

Module (Chapter) Learning Outcomes
Economic Thinking: Prepare for success in studying economics
  • Explain what economics is and explain why it is important
  • Explain how economists use economic models
  • Use mathematics in common economic applications
  • Use graphs in common economic applications
Choice in a World of Scarcity: Use economic thinking to explain choice in a world of scarcity
  • Explain the cost of choices and trade-offs
  • Illustrate society’s trade-offs by using a production possibilities frontier (or curve)
  • Explain the assumption of rationality by individuals and firms
  • Define marginal analysis
  • Differentiate between positive and normative statements
Supply and Demand: Analyze how buyers and sellers interact in a free and competitive market to determine prices and quantities of goods
  • Describe and differentiate between major economic systems
  • Explain the determinants of demand
  • Explain the determinants of supply
  • Explain and graphically illustrate market equilibrium, surplus and shortage
Elasticity: Measure how changes in price and income affect the behavior of buyers and sellers
  • Explain the concept of elasticity
  • Explain the price elasticity of demand and price elasticity of supply, and compute both using the midpoint method
  • Explain and calculate other elasticities using common economic variables
  • Explain the relationship between a firm’s price elasticity of demand and total revenue
Government Action: Evaluate the consequences of government policies in markets
  • Analyze the consequences of the government setting a binding price ceiling
  • Analyze the consequences of the government setting a binding price floor
  • Explain how the price elasticities of demand and supply affect the incidence of a sales tax
  • Define progressive, proportional, and regressive taxes
Surplus: Use the concept of producer, consumer surplus, and total surplus to explain the outcomes of markets for individuals, firms, and society
  • Define and calculate consumer, producer and total surplus; graphically illustrate consumer, producer and total surplus
  • Use the concepts of consumer, producer and total surplus to explain why markets typically lead to efficient outcomes
Macroeconomic Measures of Performance: GDP and Unemployment: Evaluate macro economic performance using indicators that include output measures and unemployment
  • Define the term “economic indicator;” identify the major economic indicators used to assess the state of the macroeconomy
  • Explain the expenditure and national income approaches to calculating GDP
  • Describe the relationships among GDP, net domestic product, national income, personal income, and disposable income
  • Explain how the unemployment rate is calculated
  • Critique the unemployment rate as a measure of the unemployment problem
  • Identify and differentiate between the different types of unemployment
Macroeconomic Measures of Performance: Inflation and Price Indexes: Evaluate macro economic performance using indicators that include inflation
  • Define the rate of inflation; explain how the rate of inflation is calculated
  • Explain the consequences of price instability (i.e., inflation)
  • Explain the concept of a price index and explain how price indices are derived; define the consumer price index and the producer price index; calculate a price index number given a basket of goods & services and the nominal price of each in a base year and at some later time
  • Use a price index to translate between real and nominal data
  • Define the GDP price index (also known as the GDP deflator or the Implicit Price Deflator)
  • Differentiate between nominal GDP and real GDP
Macro Workings: Model the macro economy over the short and long terms
  • Describe the business cycle and its primary phases
  • Define economic growth
  • Identify the sources of economic growth
  • Explain productivity and relate productivity growth to improvements in the standard of living
  • Use the AD-AS model to explain the equilibrium levels of real GDP and price level; define aggregate demand (AD) and explain the factors that cause it to change; define aggregate supply (AS) and explain the factors that cause it to change
  • Use the AD-AS model to explain periods of growth, recession, and expansion, demand-pull inflation and cost-push inflation
Keynesian and Neoclassical Economics: Identify, compare, and apply key features of Neoclassical and Keynesian economic models
  • Understand the tenets of Keynesian Economics and apply the tenets through the aggregate demand and supply model; identify the Keynesian portion of the AS curve and explain the logic for it
  • Use the Income-Expenditure model to explain periods of recession and expansion; find the GDP Gap (negative or positive)
  • Use the Expenditure Output model to explain periods of recession and expansion
  • Understand the tenets of Neoclassical Economics; identify the Neoclassical portion of the AS curve and explain the logic for it; differentiate between the long run and short run aggregate supply curves
  • Compare and contrast the circumstances under which it makes sense to apply the Keynesian and Neoclassical perspectives
Fiscal Policy: Understand what government budgets consist of, and how fiscal policy affects the economy
  • Identify the major spending categories and major revenue sources in the U.S. Federal budget
  • Identify the major spending categories and major revenue sources in U.S. state and local budgets
  • Define fiscal policy, identifying the roles of tax rates and government spending
  • Differentiate between discretionary and automatic fiscal policy; define Automatic Stabilization Tools; define discretionary fiscal policy; differentiate between structural and cyclical budget balance
  • Compare and contrast expansionary and contractionary fiscal policies
  • Compare and contrast the way tax changes and government spending changes work
Monetary Policy: Explain the role of money, banking and monetary policy in the economy
  • Define money; explain the functions of money; define liquidity
  • Define credit (or debt)
  • Explain what a bank does
  • Understand how money is created by lending; calculate the lending capacity of a bank given its deposits and a required reserve ratio
  • Explain the structure, functions and responsibilities of the Federal Reserve System; define the money multiplier, explain how to calculate it, and demonstrate its relevance
  • Differentiate between M1 and M2 (measures of the supply of money)
  • Define monetary policy and differentiate it from fiscal policy; identify the tools of monetary policy
  • Define interest rates; differentiate between the Federal funds rate, the Prime rate and the Discount rate
  • Explain how the equilibrium interest rate is determined in the market for money; describe what economists mean by the demand for money
  • Explain the mechanism by which market operations affect the money supply and interest rates
  • Explain how monetary policy affects GDP and the price level
Policy Application: Use an understanding of the strengths and weakness of fiscal and monetary policy to determine an appropriate stabilization policy for a given macroeconomic situation
  • Understand the Keynesian view on changes in government spending and taxation; define the multiplier effect; define the crowding out effect and explain why it occurs and how it reduces the fiscal multiplier; define the Keynesian concept of the Liquidity Trap and explain why it occurs and how it reduces the effectiveness of monetary policy
  • Understand the effects of tax and spending policy from a neoclassical perspective; define and give examples of supply-side economics; explain the types of lag times that often occur when solving economic problems; describe the neoclassical long-run aggregate supply curve; understand and describe the emergence of New Classical Economics, along with its main tenets; define Ricardian Equivalence
  • Identify appropriate macro policy options in response to the state of the economy; understand the effectiveness and limitations of fiscal and/or monetary policy for a given state of the economy; choose an appropriate fiscal and monetary policy for a given state of the economy
Globalization, Trade, and Finance: Analyze the benefits and costs of international trade
  • Define and calculate comparative and absolute advantage
  • Explain how a nation’s workers and consumers are affected by impact of international trade
  • Understand the way government regulations (e.g. tariffs, quotas and non-tariff barriers) affect business, consumers and workers in the economy
  • Differentiate between alternative international trade regimes and how they impact global trade
  • Define currency exchange rates and explain how they influence trade balances
  • Explain how the balance of trade (surplus or deficit) affects the domestic economy, and how the domestic economy affects the balance of trade
  • Connect globalization, international trade, and international finance