How to use this guide
This guide follows the published description of ECON 203, Principles of Macroeconomics (measuring economic activity, growth, unemployment and inflation, business cycles, money and financial systems, exchange rates and the international economy, and macroeconomic policy), plus the standard topics of an introductory macroeconomics course. Instructors' emphasis and notation vary: check your own course outline and use this guide to fill the gaps.
Topic order. Work the tabs left to right, the way a term usually runs. 01 to 04 measure the economy: output, jobs, prices and long-run growth. 05 and 06 explain short-run swings with two models: aggregate demand and supply, then the expenditure model with its multiplier. 07 to 09 are the policy tools: the government budget, then money, banks and the Bank of Canada. 10 opens the economy to the world: exchange rates and the balance of payments.
Inside each topic: read the idea, do each worked example on paper before opening the solution (they run simplest first), then break the lab by changing numbers. Finish with the Drill until you get several in a row right. All money is in Canadian dollars unless a question says otherwise.
| Level | What it asks | Example |
|---|---|---|
| Beginner | One definition, or one formula in one step | Add up C + I + G + NX; find an unemployment rate |
| Intermediate | A standard calculation with a few steps | Real GDP and the deflator; equilibrium output; the money multiplier |
| Exam level | A full exam-style question with several parts | Close a recessionary gap with spending, then check the budget |
| Hard | Twists: combining ideas, working backwards, traps | Debt dynamics; the balanced-budget multiplier with leakages |
The drill starts at Beginner and steps up a level after three correct answers in a row; you can also pick a level yourself. The written questions, multiple choice and flashcards are ordered easy → hard, so working through them in order builds each idea from the ground up.
The core formulas
- GDP = C + I + G + (X − M) · real GDP = quantities × base-year prices
- GDP deflator = nominal GDP ÷ real GDP × 100
- CPI = cost of the fixed basket now ÷ its cost in the base year × 100
- Unemployment rate = unemployed ÷ labour force · participation rate = labour force ÷ population 15+
- Inflation = (CPInow − CPIbefore) ÷ CPIbefore · real rate ≈ nominal rate − inflation
- Rule of 70: years to double ≈ 70 ÷ growth rate in percent
- Expenditure model: Y = (autonomous spending) × multiplier, multiplier = 1 ÷ (1 − c(1 − t) + m)
- Money multiplier = 1 ÷ reserve ratio (with leakages: 1 ÷ (r + leak − r × leak))
- Saving − investment = net exports · price of a one-year bond = face ÷ (1 + i)
Rules people forget: memorize
- GDP counts final goods produced this year: no used goods, no transfers, no intermediate goods
- Unemployment is measured against the labour force, not the population
- Nominal values need a price index before they can be compared across years
- A price-level rise is a movement along AD; only spending changes shift it
- Fiscal multipliers shrink with taxes and imports: leakages
- Banks lend out deposits, but the loans come back as new deposits: that is how money is created
- A rate cut works through investment, consumption and the exchange rate
- "CAD appreciates" means one dollar buys more foreign currency
- A current account surplus is matched by lending to the rest of the world
Exam format, weight and allowed aids differ between sections and terms. Check your own course outline.
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