- Course name: Macroeconomics: Monetary Policy and International Trade
Macroeconomics: Monetary Policy and International Trade begins by considering the two main tools – fiscal policy and monetary policy – by which government attempts to steer the macroeconomy toward the three main goals and economic growth. Monetary policy consists of methods through which the Federal Reserve (in the U.S.) attempts to engage banks, businesses, and individuals in effecting changes to interest rates, the supply of money, the demand for money, and so forth. We will consider money as a medium of exchange, a store of value, and a unit of account, three functions which enable individuals to avoid bartering.
We will then turn to international trade. Trade among countries serves many functions aside from the exchange of goods and services at a global level, facilitating movements of foreign currencies held in a country’s bank and ensuring more and a greater variety of goods available to trading partners. International trade can become and often is an emotionally or politically charged issue that cuts across microeconomics and macroeconomics, but here we will consider the topic from an economic perspective and direct our attention to factors such as trade balances, exchange rates, and other aspects of a country’s macroeconomic performance.
- Approximate learning hours: 41 hours
- Course: One of three micro courses for Principles of Macroeconomics
- Level: 1st year Bachelor Degree
About Principles of Macroeconomics
Economics is traditionally divided into two parts: microeconomics and macroeconomics. The main purpose of these three micro courses is to introduce you to the principles of macroeconomics.
Macroeconomics is the study of how a country’s economy works while trying to discern among good, better, and best choices for improving and/or maintaining a nation’s standard of living and level of economic and societal well-being. Historical and contemporary perspectives on the roles and policies of government are part of the mix of interpretations and alternatives that surround questions of who or what gains and loses the most or least within a relatively small set of key interdependent players. In the broadest view, that set consists of households, consumers, savers, firm owners, investors, agency and elected officials, and global trading partners in which some wear many hats and face price considerations at two levels.
Consider one distinction between macroeconomics and microeconomics through the way prices are taken into account in both divisions. On one hand, microeconomics focuses on how supply and demand within a given market determine prices. On the other hand, macroeconomics focuses on changes in the price level across all markets. Another distinction resides within goals. A study of microeconomics orients itself toward firm profit maximization and output optimization as well as consumer utility maximization and consumption optimization. In contrast, a study of macroeconomics situates itself around a number of goals including economic growth, price stability, and full employment.
Macroeconomic performance relies on measures of economic activity, focusing on variables and data at the national level within a specific period of time. Macroeconomics entails analyses of aggregate measures such as national income, national output, unemployment and inflation rates, and business cycle fluctuations. These courses will prompt you to think critically about the national and global issues we currently face, to consider competing views that may agree or disagree with your own, and to draw challenging conclusions from a vast array of perspectives, tools, and alternatives.
Credits and licensing
This course has been adapted from OER originally created/assembled by the Saylor Academy.
This course is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.