This is the first of a two-course sequence that builds an analytical macroeconomic framework and then uses it to explain changing macroeconomic conditions in the world economy and the challenges these present for modern policy makers and business leaders. Students become familiar with basic terminology regarding the phases of the business cycle, central banks’ behavior in managing monetary policy (including recent tools, such as quantitative easing, and others), economic growth, inflation, interest rates, exchange rates, global competitiveness, unemployment, fiscal policy, debt sustainability and the external sector (international reserves and the like). At the end of the sequence, it is expected that students will be able to critically assess how possible developments in the world economy – such as the change in the monetary policy stance by central banks – will affect economic conditions, social conditions, and the business environment. The first course defines basic concepts, including short- and long-run aggregate supply, aggregate demand, inflation, exchange rates, central banks, monetary policy, and Keynesian and Monetarist schools of thought.