© John Petroff


Fundamentals of Economics I



This course is a review of fundamental concepts of macroeconomics. Together with Principles of Economics II, this represents the indispensable body of knowledge for anyone to undertake college education in general, and professional courses, in particular. The core of the course deals with fiscal policies applying to taxation and government spending, and monetary policy affecting investments and currency value. The emphasis is placed on periodic setbacks in economic prosperity and the choice of policy tools to deal with them. Major theoretical view points are contrasted. The first chapters offer basic definitions and general descriptions of economic processes and concepts. The last chapter touches upon economic growth.


After completing this course, a student should have an adequate understanding of
- the role of government and limitations of its policies
- the major causes of economic disruptions to prosperity
- what corrective policies are available and how they have been used in the past
- to what extent economic disruptions affect every person and business
- the role of money, the effect of inflation and the methods to keep the value of money stable
- the importance of monetary policies for every person and business

Organization of chapters:

The topics are arranged in a sequence most commonly used to teach the material in college courses.

Chapter 1: Introduction to the Economic Science
Chapter 2: Definition of the Economic Problem
Chapter 3: Demand and Supply
Chapter 4: Mixed Capitalism
Chapter 5: National Income Accounting
Chapter 6: Business Cycle
Chapter 7: Classical vs Keynesian Controversy
Chapter 8: Keynesian_theory
Chapter 9: Fiscal Policy
Chapter 10: Definition of Money
Chapter 11: Central Banking
Chapter 12: Monetary Policy
Chapter 13: Monetary Controversy
Chapter 14: Supply-side Economics
Chapter 15: Economic Growth

The list of chapters always appears on the left side of the screen so that one can quickly move from chapter to chapter when necessary.

Design of content:

The course is written for a rapid review of material that was previously studied. The text is short, but every word counts. The content is not designed for approaching the subject matter for the first time: it can be used only as a study guide for an introductory course in economics which must otherwise have a complete text.

Studying approach:

One would normally read the text starting from chapter 1 and move on to each subsequent chapter as the material builds on concepts presented in previous chapters. One is urged to take careful notes as explained in studying recommendations.

After reading the text, the student is urged to use the review quizzes present at the end of each chapter. The quizzes test the knowledge of each concept in the chapter with the ability to link back to the chapter if it is not clear why the correct answer is what it is.


Taking the comprehensive test available at the end of the course should give a good assessment of the overall knowledge of course content. Because this content is fundamental for business studies a grade of 70 correct answers out of 100 is the very minimum that any student should achieve. If one does not achieve close to that, it is strongly recommended that a full text introductory course be used to clarify concept misunderstood from this review course. For a complete introductory course, the provided comprehensive test is not sufficient for student evaluation. Written assignments should be required.

One should note that the comprehensive test does not allow linking back to the underlying text. Although the questions and the answers in all tests are randomized to avoid memorizing correct answers (rather than underlying concepts), this comprehensive test is inferior to review quizzes for learning purposes. The comprehensive test is only designed for a quick overall evaluation. Moreover, because the test taking is not proctored and the student can use his/her notes, the reliability of the grade has some limitations.

The comprehensive test can be taken several times, and only the last result will count. Nevertheless, you are advised to take the comprehensive test seriously if you plan to use its results for further studies. The grade of the comprehensive test is entered into the public record if you register for the course.

See typical grade composition.

Registration and enrollment recommended:

We recommend that you register as a PEOI student, and enroll in fundamental courses as well as professional courses if you plan to study the content of these fundamental courses. By registering and enrolling you will have two major useful outcomes. First, once you sign in, the time and grade in each chapter will be recorded in a personal record seen only by you and your instructor (if you choose to have an instructor). This record will show your progress in the course and your instructor can offer suggestions for improvement (if necessary). Second, the combined result of your quizzes and comprehensive test will be entered in the public record and give you the ability to use this grade as proof of knowledge of the course content.

To register simply fill out the registration form which is accessible through the Registration menu. There is no fee. The information is kept strictly confidential.

To enroll for this course (if you did not select it when you first registered), choose Macroeconomics as the course in which you want to enroll in student enrollment.

Questions or comments:

Your comments, corrections and suggestions are most welcome: please email them to or you may contact us directly.



Go to Chapter I : Introduction