clear the efficiency of the fiscal and
Demand management; varieties of the fiscal and monetary policies and the combinations
TOPIC 7 AGGREGATE SUPPLY, PRICE LEVEL AND THE SPEED OF
Dependency between the general level of prices and the size of the aggregate demand; the
curve of a macroeconomic demand.
Dependency of the aggregate supply on the state of the factor markets, and, first and
foremost, of the labor market. the vertical shape of the aggregate supply curve in the
event of the prevalence of the perfect competition laws in the labor market. Nosensical
attempts to influence the amount of output and income in these conditions by means of
stimulating the aggregate demand.
factors that account for the "stickness" of wages and salaries in the short term. The
influence of this circumstance on the shape of the short-term aggregate supply curve.
Economy's adaptation to the shocks caused by the demand and by the supply.
TOPIC 8 UNEMPLOYMENT
The characteristics of the main types of unemployment - frictional, structural, classic,
unemployment generated by the low demand. Voluntary and involuntary unemployment.
The natural level of unemployment. The characteristics of the supply-side policy and its
role in bringing down the natural level of unemployment.
The essence of the "hysteresis" phenomenon and its forms. Hysteresis as a factor that can
generate and preserve high unemployment for a long period.
TOPIC 9 INFLATION
Money supply and inflation. The quantity theory of money and its limitation. Interrelationship between inflation and the nominal rate of interest. The nature of hyperinflation. The deficit of the state budget and inflation.
Inter-relationship of inflation, on the one hand, and unemployment, on the other. The
Phillips curve and is contemporary interpretation. The absence of a "trade-off" between
inflation and unemployment in the situation of a shock from the side of supply.
The social costs connected with a high inflation ("the shoe leather costs" and "the menu
costs", problems connected with the institutional non-adjustment of the economy to
inflation, the costs of the unanticipated inflation and the costs due to the uncertainty of
Methods of combating inflation (the restrictive monetary and fiscal policy, the incomes
policy, institutional reforms). Adjustment to inflation.
TOPIC 10 THE FOREIGN EXCHANGE MARKET AND THE BALANCE OF
Factors that determine the demand for foreign currency and its supply. The fixed and the
floating exchange rate - two extreme varieties of the exchange rate regime. The
mechanism for maintaining balance in the foreign exchange market under the fixed and
the floating exchange rates. Devaluation and revaluation of currency.
The nominal and the real rate of exchange and the problem competitiveness of export and
The balance of payments; its current figures and items of capital. The concepts of the
balanced and unbalanced balance of payments; the financing of a deficit of the balance of
payments. Factors that affect the state of the current and capital items of the balance of
TOPIC 11 MACROECONOMICS OF THE OPEN ECONOMY
Relationship between the state of the economy and the balance of payments. Internal and
external balance in the economy.
Economy's adjustment to the internal and external shocks under a fixed rate of exchange
regime. The reasons for inefficiency in stimulating the demand by means of a monetary
policy under a fixed rate of exchange.
Increased short-term efficiency of the fiscal policy under a fixed rate of exchange. Shortterm, medium-term and long-term effects of the national currency's devaluation.
Adjustment of the economy to the internal and the external shocks under a floating rate of
exchange regime. The reasons for inefficiency in stimulating the demand by means of a
monetary policy under a floating rate of exchange. Increased short-term efficiency of the
monetary policy under a fixed rate of exchange.
TOPIC 12 THE LONG-TERM GROWTH AND THE SHORT-RUN
The problem of measuring economic growth: advantages and disadvantages
of various indicators.
The production function and the long-term economic growth. Malthus's theory. The neoclassical model of a steady-state economy. The role of technological changes. The
conception of zero growth.
The concept of business activity cycles. The fundamentals of cyclicality (the model of an
accelerator-multiplier, the concept of a political business cycle, the theory of a balanc