Intermediate Macroeconomic Theory and Policy I: Course Syllabus and Study Guide

Course Overview

Introduction to Intermediate Macroeconomic Theory and Policy

This course, Intermediate Macroeconomic Theory and Policy I (EC2152B-001), is designed to provide students with a comprehensive understanding of macroeconomic theory, focusing on the application of microeconomic principles to macro-level phenomena. The course covers key topics such as business cycles, savings and investment, inflation, unemployment, economic growth, and financial crises, with an emphasis on both theoretical models and policy implications.

Course Structure and Content

Course Topics and Textbook Alignment

The course closely follows the textbook Macroeconomics by Stephen D. Williamson (7th Canadian Edition). The material is organized into four main parts, each corresponding to major themes in macroeconomics:

• Part I: Introduction and Measurement Issues

  • Introduction (Chapter 1)

  • Measurement Issues (Chapters 2 and 3)

• Part II: Basic Macroeconomic Models

  • Consumer and Firm Behaviour: The Work-Leisure Decision and Profit Maximization (Chapter 4)

  • A Closed-Economy One-Period Macroeconomic Model (Chapter 5)

• Part III: Savings, Investment, and Government Deficits

  • A Two-Period Model: The Consumption-Savings Decision and Credit Markets (Chapter 9)

  • Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security (Chapter 10)

  • A Real Intertemporal Model with Investment (Chapter 11)

• Part IV: Economic Growth

  • Economic Growth: Malthus and Solow (Chapter 7)

Note: Not all chapters may be fully covered; students should refer to the course website for updates.

Learning Outcomes

Core Competencies Developed

• Macroeconomic Facts: Define and explain the basic facts that describe aggregate economic activity over time.

• National Income Accounting: Calculate GDP using three methods and understand the structure of national accounts.

• Labour Market and Price Level Measurement: Define and compute key indicators such as unemployment rate and inflation.

• Business Cycles: Identify phases of the business cycle and describe the behavior of macroeconomic variables in each phase.

• Micro-Founded Macroeconomic Models:

  • Analyze household decisions regarding leisure, consumption, and savings.

  • Examine firm decisions on hiring and investment.

  • Understand how aggregate outcomes result from the interaction of firms and households.

• Model Analysis: Critically compare models, explain causes and effects of changes, and apply models to new scenarios.

• Business Cycle Shocks: Identify and explain forces or shocks that drive business cycles.

• Income and Substitution Effects: Explain these effects on consumer choices.

• Financial Market Imperfections: Analyze how credit frictions and financial crises affect the economy.

• Fiscal Policy: Explain the impact of government policy on macroeconomic outcomes.

• Economic Growth: Differentiate between sources of economic growth (e.g., Malthusian and Solow models).

Assessment Structure

Grading and Evaluation

Assessment	Tentative Date	Weight
Midterm I	Tuesday, February 3rd, 7:15 – 8:45 pm	30%
Midterm II	Tuesday, March 10th, 7:15 – 8:45 pm	30%
Final Exam	To be scheduled by Registrar	40%

• Missed Assessments: No make-up midterms; missed midterm weight may be transferred to the final exam with proper notification and approval.

• Final Exam: Comprehensive, 2 hours, covers all course material.

Key Macroeconomic Topics (as per Syllabus)

1. Introduction and Measurement

• Gross Domestic Product (GDP): The total market value of all final goods and services produced within a country in a given period.

  • Three Methods of Calculation:

    1. Production Approach: Sum of value added at each stage of production.

    2. Income Approach: Sum of all incomes earned (wages, rents, interest, profits).

    3. Expenditure Approach: Sum of all expenditures on final goods and services.

  • Formula (Expenditure Approach): $GDP = C + I + G + (X - M)$ where $C$ = consumption, $I$ = investment, $G$ = government spending, $X$ = exports, $M$ = imports.

• Labour Market Indicators: Unemployment rate, participation rate, employment-to-population ratio.

• Price Level Measurement: Consumer Price Index (CPI), GDP deflator.

2. Business Cycles

• Phases: Expansion, peak, contraction (recession), trough.

• Key Variables: Output, employment, inflation, interest rates.

• Business Cycle Measurement: Analysis of fluctuations in GDP and other macroeconomic indicators over time.

3. Consumer and Firm Behavior

• Work-Leisure Decision: Households allocate time between labor (work) and leisure to maximize utility.

• Profit Maximization: Firms choose input levels (labor, capital) to maximize profits, given technology and market conditions.

• Income and Substitution Effects: Changes in wages or prices affect labor supply and consumption choices.

4. Macroeconomic Models

• One-Period Model: Analyzes the allocation of resources in a closed economy within a single period.

• Two-Period Model: Examines intertemporal choices, such as consumption and savings decisions over two periods, and the functioning of credit markets.

• Real Intertemporal Model with Investment: Incorporates investment decisions and their impact on future output and consumption.

5. Credit Market Imperfections

• Credit Frictions: Barriers to borrowing and lending that can lead to financial crises and affect aggregate demand.

• Financial Crises: Disruptions in financial markets that can have severe macroeconomic consequences.

• Social Security: Government programs that provide income support, affecting savings and investment behavior.

6. Economic Growth

• Malthusian Model: Early theory emphasizing population growth and resource constraints.

• Solow Growth Model: Focuses on capital accumulation, technological progress, and long-run economic growth.

  • Key Equation (Solow Model): $Y = F(K, L)$ where $Y$ = output, $K$ = capital, $L$ = labor.

  • Steady-State Condition: $s f(k) = (n + d)k$ where $s$ = savings rate, $f(k)$ = output per worker, $n$ = population growth rate, $d$ = depreciation rate, $k$ = capital per worker.

Course Policies and Academic Integrity

Professionalism and Conduct

• Follow the Student Code of Conduct and respect copyright on all course materials.

• Recording lectures is not permitted without explicit written permission.

• Plagiarism and cheating are serious academic offenses and will be penalized.

Assessment and Accommodation Policies

• Missed assessments require proper notification and, where necessary, documentation.

• Academic accommodation for disabilities is available through Accessible Education.

• Rewriting exams or retroactive reweighting is not permitted.

• Religious accommodation is available with advance notice.

Tips for Success

• Read assigned textbook chapters and review lecture slides weekly.

• Attend all lectures and take detailed notes.

• Complete practice problems and engage with peers in study groups.

• Utilize office hours for clarification and support.

Important Dates

• Add Deadline: January 13th, 2026

• Drop Deadline: March 30th, 2026

Support Services

• Mental health and wellness resources are available through the university.

• Support for survivors of gender-based and sexual violence is provided.

Additional info: The above guide synthesizes the course syllabus and policies, and expands on the main macroeconomic topics to provide a self-contained study resource for exam preparation.