The Economy 2.0: Macroeconomics

Take a closer look at the units of the The Economy 2.0: Macroeconomics – what they’re about, what models they present, how they’re changing compared with The Economy 1.0.

 

Unit 1 — The supply side of the macroeconomy: Unemployment and real wages

Summary

Motivated by data on the large differences in unemployment rates and growth rates of real wages across high income countries, this unit introduces a model of the supply-side, called the Wage Setting – Price Setting (WS-PS model). The unit provides an introduction to macroeconomics, focusing on unemployment and real wages as two key outcomes. In the new measuring the economy feature, students learn how to calculate unemployment rates and the CPI so as to compare nominal and real wage growth.

 

Models

The unit introduces the WS-PS model and then explains the microeconomic foundations of the wage-setting curve, as well as the price-setting curve. It also discusses equilibrium, adjustments to equilibrium, and why involuntary unemployment is a characteristic of supply-side equilibrium.

 

Major changes

Unit 1 of The Economy 2.0: Macroeconomics is substantially different from Unit 9 in The Economy 1.0, because it is built on the new labour market models in Unit 6 and the updated Unit 7 of Microeconomics. Nonetheless, it still uses many of the same fundamental concepts such as employment rents, and develops the same final model, the WS-PS supply-side model.


See how Unit 2 is changing →