Fulbright Economics Teaching Program
Lecture 1
Academic year 2005-2006
Thai Van Can
Macroeconomics: Principles and Reasoning
Session 1
Outline points to examine in this session.
Why study economics and particularly macroeconomics.
It affects us, our society in a very direct way: our standard of living
We want to understand more about a major subject regularly discussed in our society
and in the world.
In doing so, we may contribute, in a more effective way and with more chance of
success, to our society in our position as decision makers at the central, provincial,
local levels
A. What is the main object of macroeconomics.
Analyze the behavior of the economy in its aggregates, such as output, employment,
inflation, exchange rate.
Determine the causes of economic fluctuations in the short term and the medium
term, and of economic growth in the long term
Recommend, design, and implement appropriate policies to reduce economic
fluctuations (stabilization policy) and to promote economic growth.
B. What are the relations between micro and macro
1. From micro to macro: a unified continuum of economics study.
Microfoundations of macroeconomics attempts to explain
macroaggregates behavior on the behaviors of individual consumers
and firms.
Aggregate individual consumption to aggregate consumption
function : C= C( YD)
Aggregate individual firm investment to aggregate investment
function : I= I( r)