In 24 revealing lectures, Macroeconomics Made Clear will introduce you to the subject that people have been theorizing about and modeling for almost 100 years. With easy-to-understand illustrations, charts, and graphs, Dr. Akila Weerapana of Wellesley College shows you the real-world applications of the key ideas of macroeconomics, how macroeconomics sheds light on the present, and how it offers a hopeful tool for the future.
Macroeconomics Made Clear
Akila Weerapana is an Associate Professor of Economics at Wellesley College who earned a PhD in Economics from Stanford University. He has won Wellesley College’s Pinanski Teaching Prize and appeared in The Princeton Review’s Best 300 Professors. He is a coauthor of the textbook Principles of Economics and has published work in the Journal of Economic Perspectives, The Journal of Economic Education, and Economic Development and Cultural Change, among other publications.
01: Viewing the World through a New Lens
Explore the differences in subject matter between microeconomics and macroeconomics. You’ll learn what macroeconomics can reveal about human welfare by examining the changes in various countries over a 50-year period.
02: GDP: The Economy in a Single Number?
To try to quantify the financial devastation caused by the Great Depression—and express that devastation in one number—economists created what we know today as gross domestic product (GDP). Explore the power and limitations of GDP and the significant differences between GDP and real GDP per capita.
03: Prices: How to Quantify the Dangers of Inflation
Explore the meaning of inflation, one of the most used terms in economic news. What does it technically represent, how is it calculated, and why does it matter? You’ll also learn about the consumer price index, and why that remains the most widely used measure of prices.
04: Unemployment: Who Wants to Work?
The unemployment rate is the macroeconomic variable that is likely to have the greatest direct impact on any individual’s life. Understand the technical definition of “unemployed” and why economists typically consider the employment-to-population ratio to be the best measure for describing the health of the labor market.
05: How Is Money Created—and Why?
Money has been an essential part of economic transactions since the dawn of civilization—whether in the form of gold coins, cigarettes, or salt. Find out how the Federal Reserve determines the appropriate US money supply and how it categorizes money based on liquidity and ease of transaction.
06: Is There Such a Thing as Too Much Money?
Learn how the quantity equation reveals the relationship between money growth and inflation, and why the velocity of money is critical to the Fed’s decisions. You’ll discover why the supply of money must be carefully managed to keep the economy going without triggering either inflation or deflation.
07: Two Interest Rates to Rule Them All?
There are many interest rates that impact businesses and consumers daily. Explore the relationship between interest rates and risk and learn about the development and significance of two key interest rates—the Federal Funds rate and the yield on US Treasury bonds.
08: Why Economic Growth Is So Powerful—and Hard
Why is per-capita economic growth so important for improving the well-being of most people in a country? And how did Deng Xiaoping work his magic on the Chinese economy? In answering these questions, you’ll use a graphical depiction of the Solow model to learn about why sustained economic growth is challenging.
09: Technology: The Engine of Sustained Growth
We tend to think of technology as the computer on your desk or your wrist. But to macroeconomists, technology is the idea behind those items. Discover why technology is different than other inputs to the economy and explore Solow’s work showing that technology is the engine of economic growth.
10: What Are Fundamental Barriers to Growth?
If the work of Solow and others taught us the path to economic growth more than 50 years ago, why are so many countries still struggling to achieve those goals? Explore in depth four key factors that can keep a country from the economic growth it desires—openness, conflict, geography, and institutions.
11: How Recessions Occur and Why They Matter
Why do recessions occur and what can policymakers do to reduce their frequency and severity? By examining the works of Keynes and Friedman, you will develop an understanding of why recessions occur and why economists often disagree about the appropriate policy response.
12: An Intuitive Model of Economic Recessions
Models are a necessary tool for macroeconomists who can’t experiment on whole countries to test economic policy options. Learn about the Aggregate Demand/Inflation Adjustment model—which addresses similar issues considered by the Fed in their more complex modeling—and gain insight into current policy debates.
13: Lessons from Past Recessions
Do policy responses to recessions always make the situation worse, as they did after the Great Depression? Or could policies positively influence a recovery? Using the model presented in the previous lecture to study the Great Depression, the 2001 recession, the 2008-2009 Great Recession, and the COVID-19 pandemic, you might be surprised at the answers.
14: What Is Good Monetary or Fiscal Policy?
Although policy disagreements are always good for news ratings, economists do agree on certain sound principles. Dr. Weerapana will help you explore expansionary, neutral, and contractionary policy—while understanding that good policy is always context-dependent and will remain an art as much as a science.
15: Extraordinary Actions by Central Banks
In extreme instances, policymakers are stymied by the zero lower bound (ZLB), the fact that interest rates cannot go below zero. From forward guidance to quantitative easing, learn what options are available when the economy hits the ZLB and how and when the Fed has employed them.
16: How Much Debt Is Too Much for a Country?
Dive into the reasons why running budget deficits and borrowing during bad times—while running budget surpluses and paying off debt in good times—is better policy than not taking on debt at all. But how much debt is too much? That’s the toughest question. You’ll learn about the economies of the United States, Japan, and Greece while trying to answer that one.
17: How Exchange Rates Move the Global Economy
To better understand today’s globalized economy, you’ll explore how exchange rates are determined, why they are so volatile, and how they are influenced by other variables such as inflation and interest rates. Learn why The Economist magazine publishes its annual Big Mac Index.
18: Why Countries Try to Control Exchange Rates
Some countries choose to fix their exchange rates, believing that a stable rate will help facilitate trade and investments between countries. But does it really work to their advantage or will market forces eventually exert their will? Explore this complex and fascinating issue.
19: The Euro: Many Nations under One Currency?
While it hasn’t always been a smooth journey, the Eurozone remains the single most important development in international finance in the 21st century. Explore the reasoning and specific hopes behind the union, its new state-of-the art central bank, and the major hurdles it has still to overcome with respect to development of centralized fiscal policy.
20: International Trade and Finance Must Balance
Discover the pros and cons of the United States running a large Current Account deficit while China runs a large Current Account surplus. Does a Current Account deficit equate to economic weakness? Not at all. Learn about Balance of Payment accounts and one of the most important concepts in international economics: the Balance of Payments always sums to zero.
21: How Stocks and the Economy Shape Each Other
Explore the complex two-way relationship between financial markets and the macroeconomy. Learn about the tools policymakers use to try to keep the markets functioning properly, and why the most important “commodity” is information—the millions of pieces of publicly available information that are consumed every day and quickly incorporated into the price of a stock.
22: Labor Market Policies for the Long Term
We are all familiar with the short-term consequences of the unemployment rate being either too high or too low. But what about the long-term component of those rates? Learn about the “natural rate of unemployment” that exists in the absence of short-run fluctuations and how macroeconomic policies could potentially reduce that rate.
23: Rising Inequality Is a Threat to All of Us
In 2019, a report released by the Census Bureau showed that US income inequality was at its highest point in 50 years—and that was before the COVID-19 recession further widened the gap. Learn how economists measure inequality, why it is a societal and economic concern, and what macroeconomic policies could address the problem.
24: Three Macroeconomic Challenges of Our Time
Explore the three issues macroeconomists consider to be the greatest challenges of our time: inequitable economic growth, migration, and climate change. Learn how a carbon tax of an appropriate level could not only address climate change, but also become an incentive for general economic growth.