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Regular version of the site
Bachelor 2021/2022

Introduction to Macroeconomics

Type: Compulsory course
Area of studies: Economics
When: 1 year, 3, 4 module
Mode of studies: offline
Open to: students of one campus
Language: English
ECTS credits: 6
Contact hours: 108

Course Syllabus

Abstract

a. Pre-requisites Since the course of Introductory Macroeconomics is taught in English, students need to have the fluent knowledge of this language. Besides, students should possess basic mathematics and graphing skills. b. Abstract The course gives the introduction to the macroeconomic fundamentals and to the main concepts and principles of macroeconomic theory and policy. The course deals with the analysis of aggregate product and national income as well as price level determination; measurement and problems of unemployment and inflation and their trade-off; money and banking; commodity market, financial market, loanable funds market and labour market equilibrium; economic growth and economic fluctuations, primarily in order to understand the key instruments, mechanisms and consequences of the stabilization – fiscal and monetary – policies in the short and in the long run and different theories regarding these policies. A special part of the course is devoted to the issues of the international economics such as the international trade and finance, the balance of payments structure, exchange rates and the determinants of their changes, ends of the stabilization policies in the open economy.
Learning Objectives

Learning Objectives

  • The purpose of the course is to give students a thorough understanding of the principles of economics that apply to an economic system as a whole and of the mechanism of macroeconomic processes and different types of macroeconomic policy.
  • The specific aims of the course are:  to give the knowledge of macroeconomic terminology and basic macroeconomic concepts and issues;  to show the economic intuition of macroeconomic performance and aggregate economic activity;  to form the economic way of thinking, that is to use the intuitive analysis of economic process and macroeconomic policy;  to explain the main principals of macroeconomic analysis using simple algebra and graphs;  to teach students to apply their knowledge to analyze, interpret and explain specific macroeconomic problems, stylised economic facts and real macroeconomic situations;  to form ability in reading and understanding economic literature.
  • Having completed this course, the student is expected to be able:  to learn and acquire new knowledge and skills;  to work with information: to find, evaluate and use information from various sources, necessary to solve scientific and professional problems;  to conduct research, including problem analysis, setting goals and objectives, identifying the object and subject of research, choosing the means and methods of research;  to identify and critically evaluate the main trends of modern economics;  to collect, analyze and interpret the data of domestic and foreign statistics on socio-economic processes and phenomena;  to solve analytical and research problems with modern technical means and information technologies.
Expected Learning Outcomes

Expected Learning Outcomes

  • - define disinflation policy, explain its mechanism and interpret the sacrifice ratio under the two strategies of disinflation policy
  • - to construct the short-run and long-run Phillips curves, and to give the intuition how economy moves from the short run to the long run under different types of inflationary expectations;
  • - to define aggregate demand (AD) and aggregate supply (AS), and to interpret the equilibrium in the AD-AS model and the process of its restoration;
  • - to define inflation and its types, and to interpret the causes of inflation;
  • - to define labour demand and labour supply; to explain the labour market equilibrium; to derive the long-run aggregate supply (LRAS) curve and the short-run aggregate supply (SRAS) curves from the long-run equilibrium and the short-run equilibrium of the labour market, respectively; to list and interpret modern approaches to the causes for the deviations in the short run of actual output from its potential level and thus of the positive slope of the SRAS curve
  • - to define the exchange rate, to list the factors that influence the demand for national currency and the supply of national currency, and to explain the exchange market equilibrium and the causes and consequences of its changes;
  • - to define the long-run economic growth and its main goal, and to show the long-run economic growth on the graphs;
  • - to define unemployment and the way of its calculation, and to interpret sources and types of unemployment;
  • - to derive the short-run consumption function, the saving function and the investment function, and to give the intuition of the market clearing process in the goods market in the short run, of the multiplier effect, of the “paradox of thrift” and of the output gaps, and to show them on the Keynesian Cross graph
  • - to determine the types of AD and AS shocks and to explain the mechanism and the consequences of each type of shocks in the short run and in the long run
  • - to discuss and explain the costs of inflation, and to show why inflation is a deterrent for the long-run economic growth;
  • - to discuss the balance of payments and its structure; and to explain how the balance of payments becomes balanced under the fixed exchange rate system and under the flexible exchange rate system;
  • - to discuss the consequences of unemployment both economic and non-economic, individual and societal, especially the Okun’s law, and to list government policy measures to reduce unemployment
  • - to discuss the types and the sources of the long-run economic growth using the production function, and to explain how government policy can stimulate the long-run economic growth
  • - to distinguish expected inflation from unexpected inflation, and to explain the Fisher effect
  • - to distinguish natural unemployment rate from the actual rate of unemployment and to use the labour force dynamics model to calculate the natural rate of unemployment;
  • - to explain the mechanism and the ends of fiscal and monetary policy in the open economy under the fixed exchange rate system and under the flexible exchange rate system
  • - to explain the role of the foreign sector and of the change in the functions of aggregate expenditures and of aggregate saving in the three sector and four sector models of the goods market, and to calculate all types of the goods market multipliers in the open economy;
  • - to explain the trade-offs between inflation and unemployment, and to interpret the Phillips curve relation and the history of its development;
  • - to explain the way of defining of equilibrium real output in the long run and in the short run, and to interpret the importance of aggregate demand for determination of the short-run equilibrium in macroeconomy;
  • - to interpret the aggregate demand curve, to derive the AD curve from the Keynesian Cross graph, and to explain the main properties of the AD curve (slope, shifts and movement along)
  • - to interpret the effect of government purchases, lump-sum taxes, transfer payment, balanced budget and proportional taxes on aggregate demand and aggregate output, and to calculate government sector multipliers;
  • to define financial assets and their types; to define money and to list the functions and the kinds of money; to give the intuition of the money creation process and of the multiplier effect in the money market; to interpret the determinants of the money demand and of the money supply, and to give intuitive explanation of the money market equilibrium and the process of its restoration
  • to define gross domestic product (GDP) and the three methods of its calculation, to calculate other variables of aggregate output and aggregate income; to distinguish between nominal GDP and real GDP, between actual GDP and potential GDP; to calculate the key macroeconomic variables such as unemployment rate, inflation rate, output growth rate, level of economic welfare
  • to define the science of macroeconomics; to distinguish between macroeconomic and microeconomic problems and variables; to explain the main principles and methods of macroeconomic analysis; to give the intuition of how the whole macroeconomy performs using the circular flows model, and to describe the macroeconomic system and its key elements
  • to define the ultimate goals and the intermediate targets of monetary policy, to list the tools and the types of monetary policy; to give the intuition of the money transmission mechanism and to show it on the graphs; to list and to interpret the drawbacks and problems associated with monetary policy; to estimate the absolute and the comparative effectiveness of monetary and fiscal policy
  • to list the targets, the instruments and the types of fiscal policy; to interpret the mechanism of each type of fiscal policy and to show it on the appropriate graphs; to explain the drawbacks and limitations of fiscal policy, especially the crowding-out effect and the budget deficit; to discuss the alternative approaches to fiscal policy in macroeconomic theory and practice, the way of reasoning and the conclusions
Course Contents

Course Contents

  • Introduction to Macroeconomics
  • Measuring National Output and National Income
  • Goods Market Equilibrium in the Private Closed Economy
  • Goods Market Equilibrium in the Mixed Closed and in the Open Economy
  • Fiscal Policy
  • Money and Money Market Equilibrium
  • Monetary Policy
  • Labour Market Equilibrium and Aggregate Supply
  • Aggregate Demand and Aggregate Supply
  • Unemployment
  • Inflation
  • The Phillips Curve
  • The Long-Run Economic Growth
  • The Open Economy
Assessment Elements

Assessment Elements

  • non-blocking final International Exam
    The final International Exam includes all themes.
  • non-blocking midterm Mock Exam
    The midterm Mock Exam covers the first half of the course.
  • non-blocking Test
    The Test covers the whole course.
  • non-blocking home assignments
Interim Assessment

Interim Assessment

  • 2021/2022 4th module
    0.2 * Test + 0.5 * final International Exam + 0.2 * midterm Mock Exam + 0.1 * home assignments
Bibliography

Bibliography

Recommended Core Bibliography

  • Principles of economics, Case, K. E., 2016

Recommended Additional Bibliography

  • Economics, , 2014
  • Макроэкономика. Ч.1:, Матвеева, Т. Ю., 2017
  • Макроэкономика. Ч.2:, Матвеева, Т. Ю., 2017