 Welcome to Intermediate Macroeconomics. It's the advanced course in macroeconomics in the undergraduate program. In this course, we are interested in understanding how economies work at the macroeconomic level, looking at how different markets work, how the production of national output happens, and how macroeconomic policies are conducted, notably to respond to shocks to the economy as we have seen recently during the financial and economic crisis. This instruction will be supported by a set of videos like this one, supplemented by PowerPoint presentations, notes from the book, and the textbook. We will also assign a number of videos that illustrate a number of some of the topics, which we would require the students to watch and comment on. In terms of requirements for the class for grading purposes, there will be weekly assignments drawn from the textbook or from the other material. We will give a midterm exam and a final exam. There will be discussions online. Like other courses in macroeconomics, this course is organized along the way we normally think about how economies work, how the world evolves. We have phenomena that determine the behavior of the economy in the short run. Factors determine the economic outcomes in the medium term and then in the long run. We will start with an overview of the U.S. economy and the global economy, how they are now and the expected prospects in the medium term. We will then focus on the short run. In the short run, we look at partial equilibrium of key markets, the goods markets, the financial markets. Here, in the short run, we really focus on the demand side, how demand determines equilibrium of the whole economy. Before we move to the medium run, we will now bring in the supply side starting from labor market analysis, which allows us to determine employment, which then determines aggregate output. That aggregate output will be matched with demand to determine equilibrium in the economy. After that, we look at the long run. In the long run, what we are interested in is to see how economies grow over time. This will allow you to understand why some economies grow faster than others, why some economies are struggling and still struggling to grow, like many countries in the developing world, in Africa, Latin America, and even some in Asia. In this section, we will do a detailed analysis of the growth dynamics. We will also look at some stylized facts of growth over time. Here, an interesting exercise in macroeconomics is to look at what determines growth in the long run, how much does capital, how much does labor contribute to growth. This is what we refer to as growth decomposition in the growth analysis. After that, we will open up the analysis a little bit to look at the world economy, incorporate trade of goods and services, but also the financial markets in the open economy which involves analysis of exchange rates and how exchange rates are determined, how they affect trade of goods and services. We will then look at how policy, macroeconomic policy, fiscal policy, monetary policy, works in the open economy settings, having spent the first part of the class looking at the close economic context. We want to finish this class with a more focused analysis of policy, especially given that today we have actually seen what policy can do to help economies that are facing crisis. This will illustrate with the case of the U.S., but the analysis can be expanded to the case of other countries. We'll talk a little bit about the case of Europe with the debt crisis, but we'll also refer to policy interventions in developing countries during the crisis and see how they manage to hedge the effect, or smoothen the effects of the crisis. In the latter part, we will discuss the concerns of policymakers who are interested in stimulating the economic activity so that the economy could grow faster, but are also worried about potential negative impacts on inflation. If you embark on a heavy stimulus initiative, that, of course, will boost demand, but in doing so, if the supply side doesn't respond quickly, you may have to face high inflation. But we'll see what is the evidence really about this presumed trade-off between inflation and unemployment. Does it really exist, or is it a theoretical construct and whether it has real evidence? We'll talk about a critical concern in policy, which is how do you finance the deficit? Given that governments in many cases do not have enough revenue to finance the expenditures, and some of the expenditures are basic expenditures that are difficult to cut, how then do they finance the deficit? The second option is to just print money, and we call that inflationary financing of the deficit, or senior age. How sustainable is that? How much revenue can you generate from printing money before you face high and spiraling out of control inflation? Policymaking is like a game. You have the policymaker undertaking policy interventions to generate particular outcomes like reduced inflation, increased growth. But this is conditioned on the fact that the private actors will continue to respond to policymaking so that if the government promises to cut interest rates or to reduce inflation, the expectation is that then consumers will consume more, investors will invest more. Is that how it works? What happens if the public does not believe in the pronouncements by the policymakers, which often happens when the policymaker does not have full credibility vis-à-vis the public in terms of following through on policy pronouncements or even being able to implement policies as announced? In that case, we have a serious concern of problem of credibility, and in which case actually policy pronouncements or policy announcements may have no effect, but not generate the desired effect because the public is not confident that the policymaker will actually follow through on policy announcement. So this is the broad view of the course in terms of the sections that we'll cover and also the organization of the course in terms of the readings and the requirements and what we hope the students to be able to accomplish and gain from this class. Thank you. We'll come back again to intermediate macroeconomics. We now dive into the discussion of the substance of the course. In this segment, we'll have an overview of the key concepts, but also setting the stage for the discussion. Given the context of the world,