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Week Two Student Guide

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Week Two Student Guide

Week Two continues to focus on fundamental concepts and indicators of the macroeconomy. The main topics uncovered for this week include aggregate demand, aggregate supply, the Keynesian Model, and the Classical Model.

You have an opportunity to explore these concepts in the Learning Team Weekly Reflection, the Fundamentals of Macroeconomics Paper, and the discussion topic.

Aggregate Demand and Supply Models

OBJECTIVE: Analyze the impact of various factors on aggregate demand and supply.

Resource: Ch. 10 of Macroeconomics.

Content

• Ch. 10: “The Aggregate Demand/Aggregate Supply Model”

o The Historical Development of Modern Macro o The AS/AD Model o The Aggregate Demand Curve o The Short-Run Aggregate Supply Curve o The Long-Run Aggregate Supply Curve o Equilibrium in the Aggregate Economy o Why Macro Policy Is More Complicate Than the AS/AD Model Makes It Look

OBJECTIVE: Evaluate the effectiveness of changes in fiscal policies using Keynesian and Classical models

Resource: Ch. 12 of Macroeconomics.

Content

• Ch. 12: “Thinking Like a Modern Macroeconomist”

o Why It Is Important to Know about Modern Macro Theory o Engineering Models and Scientific Models o From the Keynesian Revolution to Modern Macro Models o A Beginner’s Guide to the DSGE Model o Policy Implications of the DSGE Model o How Relevant Are the Problems? o Modern Macroeconomic Policy and the Collapse of the Tacoma Narrows Bridge o The Complexity Approach to Macro: The Future of Modern Macro o The Underlying Dynamic Assumptions of the Standard DSGE, and Complex Systems Models o Macroeconomics, Learning, and Behavioral Economics o Agent-Based Computational Economic Models of the

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