Faculty of Business: Finance and Economics
Credit points: 6 cp

Subject level: Undergraduate

Result Type: Grade and marks

Requisite(s): (25115 Economics for Business AND (26134 Business Statistics OR 26133 Business Information Analysis OR 35101 Introduction to Linear Dynamical Systems OR 33130 Mathematical Modelling 1))
These requisites may not apply to students in certain courses.
There are also course requisites for this subject. See access conditions.

Handbook description

In this subject, students gain a thorough introduction to the main macroeconomic problems facing modern economies. The subject develops a framework for understanding these problems and examines the major policy tools used to deal with them. Topics covered include unemployment; inflation; determination of national income; monetary policy; and fiscal policy. The subject also deals with models of consumption and investment spending and problems which arise in attempting to estimate these models for economies like Australia. Linkages with the international market are also considered.

Subject objectives/outcomes

On successful completion of this subject students should be able to:

1. Increase their awareness of current problems and issues in the Australian and international macro-economies
2. Equip themselves with models and frameworks used by economists to understand macroeconomic problems and issues such as the determination of GDP, inflation, unemployment, and a country's balance of payments, as well as movements in key market variables such as interest rates and exchange rates
3. Enable themsleves to use these models and frameworks to critically analyse current problems and issues in the Australian and international macro-economies, and Government policy responses to these problems and issues
4. Improve their ability to deliver good quality written analysis of economic conditions and developments.

Contribution to graduate profile

This subject provides students with a foundation for understanding the environment within which business operates and makes decisions. It prepares students for further study in economics and finance by providing a framework for understanding the forces which drive a modern economy including the determination of interest rates and exchange rates that are employed in later courses. It also enhances students' abilities to understand, interpret and use financial and economic data.

Teaching and learning strategies

The subject is presented in lecture and tutorial format. Essential principles are presented and analysed in lectures and discussed in tutorials. Simulated policy problems give students opportunities to consolidate and apply the central principles and skills of the curriculum.

Content

• An introduction to the key economic problems of inflation and unemployment
• National income determination and interest rates determination, the IS/LM model
• The effects of monetary and fiscal policies on the macroeconomy
• Price determination within the aggregate demand/aggregate supply framework
• Theories of consumption and investment behaviour
• Open economy issues: the structure of the balance of payments, determination of exchange rates, the IS/LM/BP and Mundell Fleming models, external policy.

Assessment

Assignment (Individual & Group)	30%
The assignment provides students with an opportunity to develop skills under objectives 3 & 4.
Mid-Semester Examination (Individual)	20%
The mid semester examination will assess and provide students with feedback on their understanding of foundational principles of the course consistent with objectives 1 and 2.
Final Examination (Individual)	50%
The final examination will assure objectives 2 & 3. Students will be tested for their understanding of problems facing the Australian economy. They will be required to demonstrate proficiency in analysing the major linkages between Australian economy and the rest of the world.

Examinations will be conducted under University examination conditions, and hence thoroughly address concerns regarding secure assessment. The case study will be secured through a combination of updating of assessment tasks across semesters and/or plagiarism detection software.

Recommended text(s)

Dornbusch R. , Bodman P. , Crosby M. , Fischer S. & Startz R. (2006), Macroeconomics, 2nd edition, Sydney: McGraw Hill.