Answers Principles Of Economics Mankiw

[Manric Hock]

Thiscourse is designed to provide a fundamental knowledge of macroeconomics to students who will learn macroeconomics for the first time.

First we will learn some basic concepts regarding macroeconomic data, such as GDP and its component and measuring inflation. Then, we will cover the fact and theory of economic growth. The growth theory is the standard economic theory for the economy in the long-run. The theory aims to provide answers to the following questions: Why are there rich and poor countries in the world? Why are some countries growing faster than others?

After that, we will focus on the short-run fluctuation of the economy. We will learn the standard IS-LM and AS-AD models for analyzing the economy in the short-run. Using the models, we will analyze the role of monetary and fiscal policies on the aggregate demand, and short-run tradeoff between inflation and unemployment.

We also apply the theories we learn to understand current global macroeconomic issues. The topics we will cover are, for example, economic growth and inequality, social security reform, unconventional monetary policies, etc.

But there is another, more fundamental reason: Despite the enormity of recent events, the principles of economics are largely unchanged. Students still need to learn about the gains from trade, supply and demand, the efficiency properties of market outcomes, and so on. These topics will remain the bread-and-butter of introductory courses.

The role of financial institutions. Students have always learned that the purpose of the financial system is to direct the resources of savers, who have extra funds they are willing to lend, to investors, who have projects that need financing.

The effects of leverage. Not long ago, I was explaining to a freshman that the economic crisis arose because some financial institutions had, in effect, invested in housing by holding mortgage-backed securities. When housing prices fell by about 20 percent nationwide, these institutions found themselves nearly insolvent.

The answer was leverage, the use of borrowed money to amplify gains and, in this case, losses. Economists have yet to figure out what combination of mass delusion and perverse incentives led banks to undertake so much leverage. But there is no doubt that its effects have played a central role in the crisis and will need a more prominent place in the economics curriculum.

The limits of monetary policy. The textbook answer to recessions is simple: When the economy suffers from high unemployment and reduced capacity utilization, the central bank can cut interest rates and stimulate the demand for goods and services. When businesses see higher demand, they hire more workers to meet it.

The challenge of forecasting. It is fair to say that this crisis caught most economists flat-footed. In the eyes of some people, this forecasting failure is an indictment of the profession.

Knowledge and understanding.

The course aims to provide students with the basic concepts and principles of political economy, considering the major recent advances that have characterized the frontier areas of research in economics. In particular, the course intends to provide students with fundamental knowledge related to: the characteristics of different types of market structures, the market failures, the behavior of firms, the principle of comparative advantage, the components and measurement of GDP, the notion of economic growth, the functions of money and the short-run economic fluctuations.

Applying knowledge and understanding.

The student will be able to understand and discuss clearly, through appropriate arguments, possible proposals and considerations related to problems and issues of various complexity in the economic sphere related to issues discussed in the course, such as market efficiency and equity and the key issues in a macroeconomic perspective, such as unemployment, inflation, and the determinants of economic growth.

Making judgements.

At the end of the course students will have acquired the ability to critically interpret the main economic events at the center of the national and international debate, also through the collection of data and information from reliable sources.

Communication skills.

Students will be able to communicate their own comments and ideas on the issues of political economy analyzed in the course to various interlocutors effectively and appropriately.

Learning skills.

Student will develop a personal method of study and acquire the ability to undertake, in the most independent way possible, more complex and thorough studies, particularly in respect to economic issues.

GENERAL PART

Written and oral exam.

Written test.

The knowledge and understanding will be assessed with two open questions (each worth 5 points), which ask a short answer that is specifically aimed at verifying the knowledge of the concepts and principles discussed in the course.

The communication skills, the ability to apply the acquired knowledge through appropriate arguments and reflections and the autonomy of judgment will be assessed with two open questions (each worth 10 points), structured on several points which require the articulation of a discourse which integrates different notions acquired during the course in a coherent and logical way.

Learning skills will be assessed on the basis of an assessment across the various answers to the different questions of the exam.

The oral test concerns all the issues of the course and fills any gaps which eventually emerge in the written test.

SPECIAL PART

Optional written test (max 3 points) consisting of two true-false questions with explanation of the answer and of an open question associated with a comment on a graph.

Further information on the readings may be indicated during the course

and reported online ( ).

Slides presented in class by the instructor will be posted online ( )

For students who attend lectures written exercises are held during the course.

In this module students become familiar with the way of thinking of economists, facilitating an understanding of the application of microeconomics principles to environmental problems, and how economics can contribute to policy decision-making. This module will explain how markets and market failures affect the environment. Students will see economic examples in context directly linked to their interest in environmental management and policy issues.

The material of this module is delivered through lectures and small-group tutorials. Tutorials are based on problem sets and short-answer questions, which will be distributed in class prior to the tutorial and working on groups is recommended. Tutorials are design to fully understand core concepts, and help you to identify which areas you understand well, and where you may need to improve your knowledge. Extra practices and quizzes are available at the VLE.

Generic feedback on the progress of the students and discussion on problems and exercises will be provided during small-group tutorials. Students will be able to seek advice on good practices and improvement actions by visiting the offered office hours.

Intermediate Macroeconomics builds on concepts introduced in Principles of Macroeconomics. It is designed to provide a more in-depth understanding of the fundamental principles and analytic concepts related to economic growth, inflation, unemployment and interest rates.

Aims:

You should develop a clearer understanding of the specific determinants of growth, the causes of unemployment and inflation and also the importance of interest rates in the economy. In addition, you should have a deeper appreciation of the interrelationship between these macroeconomic variables and government policy, and thus, be able to critically analyze relevant issues discussed in newspapers, magazines, and by politicians.

Assessable learning outcomes:

At the end of the module students should be able to:

Understand and explain the basic development of macroeconomics during the twentieth century, develop simple macroeconomic models based on differing assumptions about the underlying economy, economically and mathematically explain the links between the major variables of importance in macroeconomics, apply these models to real world situations.

Additional outcomes:

You should:

Be able to provide analysis for the likely impact of both future events and also future policies on the key variables of interest, understand and interpret basic macro data sets, be able to coherently link data, mathematical models and the real world.

Outline content:

This course has been broken down into two parts. The first part of the course focuses on the long-run determinants of economic growth, while the second part examines the theory underlying short-run fluctuations in the economy. Finally, time permitting, we will explore how modern macroeconomics builds upon the previous two parts of the course.

Brief description of teaching and learning methods:

Lectures will develop all the main module material. Tutorials will cover exercise material designed to facilitate understanding of lecture topics.

Penalties for late submission:

The Support Centres will apply the following penalties for work submitted late: where the piece of work is submitted after the original deadline (or any formally agreed extension to the deadline): 10% of the total marks available for that piece of work will be deducted from the mark for each working day (or part thereof) following the deadline up to a total of five working days; where the piece of work is submitted more than five working days after the original deadline (or any formally agreed extension to the deadline): a mark of zero will be recorded.The University policy statement on penalties for late submission can be found at:

You are strongly advised to ensure that coursework is submitted by the relevant deadline. You should note that it is advisable to submit work in an unfinished state rather than to fail to submit any work.

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