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Chapter 4

Macroeconomics I – The domestic

economy

Outcome

By the end of this session you should be able to:

 explain determination of macroeconomic phenomena, including equilibrium
national income, growth in national income, price inflation, unemployment, and
trade deficits and surpluses

 explain the stages of the trade cycle and the consequences of each stage for
the policy choices of government

 explain the main principles of public finance (i.e. deficit financing, forms of
taxation) and macroeconomic policy

 describe the impacts on business of potential policy responses of government
to each stage of the trade cycle

 describe the impact of interest rate changes on market demand and the costs of
finance

 explain the role of hedging and derivative contracts in managing the impact of
changes in interest rates

and answer questions relating to these areas.

The underpinning detail for this Chapter in your Integrated Workbook can
be found in Chapter 4 of your Study Text

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