ECO102 Study Guide: Macroeconomics at UofT, Module by Module
Practice ECO102 on Rottly with exam-style questions and explanations.
See ECO102What ECO102 is
ECO102 Principles of Macroeconomics is the second half of first-year economics at the University of Toronto, and it requires ECO101 (or ECO101H5 or MGEA02H3). The calendar describes it as economic analysis from an economy-wide perspective: international trade and finance, the role of money and the banking system, monetary and fiscal policy, with graphical and quantitative analysis used extensively.
Rotman Commerce does not publish outlines for ECO courses, so there is no grading scheme to quote here. Your section's Quercus page has the weights and dates; put them on your Rottly home screen so they sit next to the practice.
The thirteen modules
Rottly's ECO102 course follows the lecture sequence as thirteen modules, each with a quiz and a flashcard deck, plus timed practice exams.
1. GDP. Expenditure and income approaches, nominal versus real, the GDP deflator, what GDP leaves out. Know why the two approaches must give the same number.
2. Growth. The sources of long-run growth: capital, labour, and productivity. The rule of 70 shows up constantly.
3. Inflation. CPI construction, the difference between CPI and the deflator, real versus nominal interest rates (the Fisher equation), and who wins and loses from unexpected inflation.
4. Investment. What counts as investment in national accounts (not buying shares), and how the interest rate drives it.
5. Business cycles. Peaks, troughs, recessions, and what fluctuates most. Mostly conceptual.
6. The market for loanable funds. Saving supplies funds, investment demands them, the real interest rate clears the market. Government deficits shift the supply curve; this is where crowding out lives.
7. The IS-MP model. The centrepiece of the course. The IS curve from goods-market equilibrium, the MP curve from the central bank's rule, and the equilibrium output and interest rate they produce. Every policy question for the rest of the term is a shift of one of these curves.
8. Fiscal policy. Government spending and taxes shift IS. The multiplier, automatic stabilizers, and the limits of fiscal policy.
9. The Phillips curve. The short-run trade-off between inflation and unemployment, expectations, and why the trade-off vanishes in the long run.
10. Monetary policy. How the Bank of Canada sets the policy rate, how that moves MP, and the transmission to output and inflation.
11. The full model. IS-MP with the Phillips curve together: a demand shock, a supply shock, and the policy response to each, traced through to output, unemployment and inflation.
12. Labour market and the Phillips curve. Natural rate of unemployment, frictional versus structural unemployment, and how the labour market anchors the long-run Phillips curve.
13. Exchange rates. Nominal versus real exchange rates, purchasing power parity, how interest rates move capital flows, and the effect of a depreciation on net exports.
How ECO102 exams work
Expect multiple choice that tests one step of reasoning at a time, and graph-based questions where the mark is for the shift, the direction, and the new equilibrium, in that order. Three habits pay off:
1. Draw every graph yourself while studying, with axes labelled. Recognizing a correct graph is much easier than producing one, and exams make you produce one.
2. Chain the effects. For any shock, write the chain: what shifts, which way, what happens to output, then unemployment, then inflation, then the policy response. The full model (module 11) is just this chain done carefully.
3. Practice under time. Rottly's ECO102 timed practice exams are built from the modules above; use the mistake review afterwards to find the module you keep dropping.
Pairing with ECO101
If ECO101 is still fresh, elasticity and supply-and-demand reasoning carry straight over into loanable funds and exchange rates. If it is not, Rottly's ECO101 course is the quickest refresher: the supply and demand, elasticity and government intervention modules are the ones that matter for ECO102.