ECON 1951
Principles of Macroeconomics

3.0 Credits


Students examine how the economy behaves at the aggregate level and how national income is measured and determined. Topics include an overview of macroeconomics; measuring gross domestic product, inflation and unemployment; demand including the multiplier process; supply, business cycles, long-term growth; money, banking and monetary policy; inflation; interest rates; stagflation; deficits and fiscal policy; exchange rates and balance of payments; exchange rate policy; purchasing power and interest rate parity.

Delivery Method



Completion of one of Principles of Math 12, Foundations of Math 12, or Pre-calculus Math 12 highly recommended.

B or better in Foundations of Math 11 or Pre-calculus Math 11 (BC graduates of 2013 onward); or C+ minimum in Principles of Math 11 or Applications of Math 12 or equivalent (BC graduates prior to 2013); or MATH 0523 or equivalent is recommended.


  • Understand the forces determining macroeconomic variables such as inflation, unemployment, interest rates, and the exchange rate;
  • Formulate and assess macroeconomic policy suggestions;
  • Define macroeconomic terminology, such as the multiplier, monetarism, the natural level of unemployment, and fiscal policy;
  • Interpret and evaluate media reports on the macroeconomy.

Course Outline

Module 1: Background and Overview

  1. Street Smarts
  2. Microeconomic Basics
  3. Macroeconomic Overview

Module 2: Macroeconomic Basics

Unit 1: Measurement

  1. Measuring Gross Domestic Product
  2. Measuring Inflation
  3. Measuring Unemployment

Unit 2: The Aggregate Demand Side

  1. The Multiplier Process

Unit 3: The Aggregate Supply Side

  1. Explaining Business Cycles
  2. Long-Run Growth

Module 3: The Monetary Sector

Unit 1: Money and Banking

  1. Crowding Out
  2. Defining Money
  3. Fractional Reserve Banking

Unit 2: Inflation

  1. The Quantity Theory
  2. The Monetarist Rule

Unit 3: The Interest Rate

  1. Interest Rates and the Price of Bonds
  2. Monetary Policy and Interest Rates
  3. Real versus Nominal Interest Rates

Module 4: Stagflation and Deficits

Unit 1: Stagflation

  1. The Phillips Curve
  2. The Real Cause of Inflation

Unit 2: Deficits

  1. Fiscal versus Monetary Policy
  2. The Structural Deficit
  3. Burdening Future Generations

Module 5: The International Sector

Unit 1: The Exchange Rate and the Balance of Payments

  1. The Exchange Rate
  2. The Balance of Payments
  3. The Twin Deficits
  4. The Law of Comparative Advantage

Unit 2: Policy in an Open Economy

  1. Influence of Openness on Policy Efficacy
  2. Monetary Policy under a Fixed Exchange Rate
  3. Fixed versus Flexible Exchange Rate

Unit 3: Purchasing Power Parity and Interest Rate Parity

  1. Purchasing Power Parity (PPP)
  2. The PPP Exchange Rate
  3. Interest Rate Parity

Maximum Completion

30 weeks.

Required Text and Materials

Kennedy, P. Macroeconomic essentials: Understanding economics in the news. 3rd ed. Cambridge, MA: MIT Press, 2010.
Type: Textbook. ISBN: 978-0-262-51480-4

Additional Requirements

Computer with Internet is required for this course.

Open Learning Faculty Member Information

An Open Learning Faculty Member is available to assist students. Primary communication is through the Learning Environment's "Mail" tool or by phone. Students will receive the necessary contact information at the start of the course.


In order to successfully complete this course, students must obtain at least 50% on the final mandatory examination and 50% on the course overall.

Assignment 1 10%
Assignment 2 10%
Assignment 3 10%
Assignment 4 10%
Final exam * 60%
Total 100%

* Mandatory