The Market of Goods and Services
The notes go through the market for goods and services, which relies on the distinction between the components of the GDP: consumption, investment, government spending, and net exports. I discuss in the notes the difference between demand and actual output and advance monetary effects of fiscal policy. The concept of the government expenditure multiplier and the crowding out effect are also efficiently explained. Finally, we learn about the foreign exchange market to explain the movements in the exchange rate.