This podcast explores key themes in Open Economy Macroeconomics, diving into international trade, foreign exchange markets, and the balance of payments. We cover essentials like demand for imports, equilibrium income in open economies, and forward margins in foreign exchange. We also break down complex topics like balance of payments, current and capital accounts, exchange rates, and the impact of trade on aggregate demand. Join us for an in-depth guide to the forces that shape global economic interactions and currency movements.

The episode begins by introducing ex ante and ex post values, which refer to planned versus actual values of economic variables like consumption and investment. It then focuses on aggregate demand, the total demand for final goods and services in the economy, which is made up of consumption, investment, and government spending. The episode demonstrates how changes in autonomous expenditure, such as investment, impact equilibrium income and output through the multiplier effect. Finally, this episode discusses the paradox of thrift, which shows that increased saving can lead to a decrease in overall income and saving.

In this podcast, we break down the fundamentals of money supply and demand, exploring why money is demanded, its roles as a medium of exchange, unit of account, and store of value, as well as the three main motives for holding it. We dive into how the supply of money is defined and regulated, the mechanisms through which commercial banks create money, and the central bank’s critical role in controlling money supply, setting interest rates, and acting as the lender of last resort. Tune in to understand these concepts and their impact on inflation, interest rates, and economic stability.