I. Basic Economic Concepts (8–12%)
- Scarcity, choice, and opportunity costs
- Production possibilities curve
- Comparative advantage, specialization, and exchange
- Demand, supply, and market equilibrium
- Macroeconomic issues: business cycle, unemployment, inflation, growth
II. Measurement of Economic Performance (12–16%)
- National income accounts
- Circular flow
- Gross domestic product
- Components of gross domestic product
- Real versus nominal gross domestic product
- Inflation measurement and adjustment
- Price indices
- Nominal and real values
- Costs of inflation
- Unemployment
- Definition and measurement
- Types of unemployment
- Natural rate of unemployment
III. National Income and Price Determination (10–15%)
- Aggregate demand
- Determinants of aggregate demand
- Multiplier and crowding-out effects
- Aggregate Supply
- Short-run and long-run analyses
- Sticky versus flexible wages and prices
- Determinants of aggregate supply
- Macroeconomic Equilibrium
- Real output and price level
- Short and long run
- Actual versus full-employment output
- Business cycle and economic fluctuations
IV. Financial Sector (15–20%)
- Money, banking, and financial markets
- Definition of financial assets: money, stocks, bonds
- Time value of money (present and future value)
- Measures of money supply
- Banks and creation of money
- Money demand
- Money market and the equilibrium nominal interest rate
- Loanable funds market
- Supply of and demand for loanable funds
- Equilibrium real interest rate
- Crowding out
- Central bank and control of the money supply
- Tools of central bank policy
- Quantity theory of money
- Real versus nominal interest rates
V. Stabilization Policies (20–30%)
- Fiscal and monetary policies
- Demand-side effects
- Supply-side effects
- Policy mix
- Government deficits and debt
- The Phillips curve
- Short-run and long-run Phillips curves
- Demand-pull versus cost-push inflation
- Role of expectations
VI. Economic Growth (5–10%)
- Definition of economic growth
- Determinants of economic growth
- Investment in human capital
- Investment in physical capital
- Research and development, and technological progress
- Growth policy
VII. Open Economy: International Trade and Finance (10–15%)
- Balance of payments accounts
- Balance of trade
- Current account
- Financial account (formerly known as capital account)
- Foreign exchange market
- Demand for and supply of foreign exchange
- Exchange rate determination
- Currency appreciation and depreciation
- Imports, exports, and financial capital flows
- Relationships between international and domestic financial and goods markets