INTRODUCTION

Macroeconomics is the study of the economy taken as a whole.  It is an empirical discipline that deals with the behavior of aggregate economic variables, also known as economic indicators.  It studies the patterns in macroeconomic data, particularly focusing on how the important variables evolve over time.  Sound theoretical models are an essential tool for understanding these empirical observations, because each individual phenomenon can generally be accounted for by more than one explanation.   Many of these explanations are mutually exclusive, and as a consequence many of them must be false.  This need not prevent them from being widely believed, however.   A good theory should succeed not merely in explaining a single phenomenon.  It should also be consistent with a wide range of observed phenomena.

In this course, we examine the behavior of the most important macroeconomic variables and the leading explanations for that behavior.  Knowledge about the macroeconomy is important for business decisions because the state of the economy directly affects the performance of many types of business firms.  Furthermore, it affects different types of firms to different degrees, and it is important to understand these differences.

As a result of completing this course, you should

• become familiar with the various macroeconomic variables that affect the performance of business firms
• learn how these variables behave, and why
• learn how changes in macroeconomic conditions affect various types of firms
• learn how government policies affect the behavior of macroeconomic variables.

You should also take away from the course a healthy degree of skepticism about much of what you hear and read concerning macroeconomic events.  The daily torrent of economic news contains much valuable information, but it also contains a large amount of nonsense.  By taking this course, you should become better able to distinguish between the two.