ECO-202 explores the manner in which the overall levels of output, income, employment, and prices are determined in a capitalist economy. The course covers key concepts such as national income, inflation, unemployment, and economic growth, examining the Aggregate Demand and Aggregate Supply model, fiscal and monetary policy, and the role of central banks. ECO-201 is a prerequisite.
Economy-wide aggregates versus individual markets
The course shifts focus from ECO-201's individual market analysis to economy-wide aggregates — total output, overall price levels, aggregate employment — requiring genuinely different analytical tools than microeconomics uses.
Policy tools shaping economic outcomes
ECO-202 covers fiscal and monetary policy and the role of central banks as real, active tools governments and central banks use to influence economic outcomes, not just theoretical constructs.
Key topics in ECO202
- National income and output
- Inflation and unemployment
- Economic growth
- Aggregate Demand and Aggregate Supply model
- Fiscal policy
- Monetary policy and central banks
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Worked example: fiscal versus monetary policy tools
- Fiscal policy: Government adjusts spending and taxation to influence the economy
- Monetary policy: Central banks adjust interest rates and money supply to influence the economy
- Lesson: ECO-202 teaches that these are genuinely distinct policy levers, often used together, each with different mechanisms and different institutional actors responsible for wielding them
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Frequently asked questions
While macroeconomics examines the economy at an aggregate level, its foundational concepts still build on microeconomic principles — understanding how individual markets, firms, and consumers behave provides the building blocks for understanding how millions of these individual decisions aggregate into economy-wide patterns like national output and employment. ECO-202 requires ECO-201 because macroeconomic aggregates ultimately emerge from the microeconomic behavior ECO-201 establishes, even though the analytical focus and tools shift substantially at the aggregate level.
Fiscal policy (government spending and taxation) and monetary policy (central bank actions on interest rates and money supply) are genuinely different tools, controlled by different institutions (elected government versus central bank), that can be used together or independently to address economic challenges like unemployment or inflation, and understanding only one gives an incomplete picture of how modern economies are actually managed. ECO-202 covers both because real economic policy-making regularly involves both tools, sometimes in coordination and sometimes in tension.