University of the South Pacific
Area of Study
Taught In English
EC101: Introduction to Economics
Course Level Recommendations
ISA offers course level recommendations in an effort to facilitate the determination of course levels by credential evaluators.We advice each institution to have their own credentials evaluator make the final decision regrading course levels.
Credits3 - 4
Recommended U.S. Semester Credits3 - 4
Recommended U.S. Quarter Units4 - 6
Hours & Credits
OverviewEC201 is an intermediate level (second year) course in Macroeconomics. The prerequisite for the course is a successful completion of EC101 (Macroeconomics I). Basic knowledge of mathematics (high school algebra and calculus), and familiarity with geometric concepts (curves and slopes) are essential components for understanding the course.The course content has been organized in such a way that student gets a mixture of descriptive material, theoretical insights, and policy dialogues. As you can expect, the level of difficulty of the subject-matter will increase as we progress through the course - the later chapters containing more difficult materials than the earlier ones and requiring greater patience and perseverance with the course material.One key thing about the organization of the course material is the fact that progression of the theme of macroeconomics is like a story telling or seeing a feature film. This means that all parts of the course material are linked therefore one cannot pick and choose the topics (chapters/lectures); studying the chapters sequentially will also make the course material easy to comprehend and ensure clarity during class presentation.The objective of the course is therefore to expose students to policy analysis role of government.Learning Outcomes- Comprehend the mechanics of aggregate supply and demand;- Grasp the workings of the goods and the assets market;- Understand the basics of monetary and fiscal policies, as well as, certain macroeconomic disturbances in both the closed and open economy contexts;- Comprehend the microeconomic foundations of macroeconomics; and- Grasp the basic issues with regards to growth policy.Course Content- Introduction (week 1)- Economic thought; national income accounting;Reading: Chapter 1-2 and lecture notes- Goods Market; Financial Market (IS-LM model) (week 2)- Composition of GDP- Demand for goods- Determinants of equilibrium output- Investment, savings- Money market equilibrium- Money demand, money supply, and equilibrium interest rate- Monetary policy and open market operations- Goods market and the IS relation- Financial markets and the LM relation- IS-LM relationship- Policy analysis using IS-LM relationsReading: Chapter 3-5 [ two lectures]- Labour Market and AS-Ad Model (week 3)- Introducing labour market- Movements in unemployment, wage determination, price determination, natural rate of unemployment and tax distortion.- Aggregate supply and aggregate demand- Equilibrium in the short run and medium run- Effects of monetary policy- Budget deficitReading: Chapter 6-7 [three lectures]- Natural Rate of Unemployment and Inflation & Economic activity (week 4)- Phillips curve, inflation, expected inflation and unemployment- Output, unemployment and inflation- Effects of monetary policy- Expectations, credibility and nominal contracts- DisinflationReading: Chapter 8-9 [three lectures]- Growth, Saving, Capital Accumulation and Output (week 5)- Growth in rich countries- Sources of growth- Interactions between output and capital- Saving rates- Physical versus human capitalReading: Chapter 10-11 [three lectures]- Technological Progress and Growth, wages and unemployment (week 6)- Technological progress and the rate of growth- Dynamics of capital and output- Determinants of technological progress- Productivity, output and unemployment- Technological progress and distribution effects- Institutions, technological progress and growthReading: Chapter 12-13 [three lectures]- Theories of Consumption (week 7)- Keynesian Consumption function- Permanent Income Hypothesis- Life Cycles Hypotheses- Dusenbury?s Ratchet Effect- Theories of Demand for Money (week 8)- Regressive expectation- Portfolio choices- Expectations and financial markets (week 9)- Nominal versus real interest rate- Expected present discounted values- Nominal versus real interest rates and the IS-LM model- Monetary policy, inflation and nominal and real interest rates- Bond prices and bond yields- Stock market movements, bubbles and asset pricesReading: Chapter 14-15 [three lectures]- Expectations and consumption & investment (week 10)- Volatility in consumption and investment- IS-LM relations; monetary policy; deficit reduction.Reading: Chapter 16-17 [three lectures]- Openness in Goods & financial markets (week 11)- Openness in goods markets- Openness in financial markets- IS relation in open economy- Equilibrium output and trade balance- Domestic and foreign demand- Depreciation, trade balance and output- Dynamics of J-curveReading: Chapter 18-19 [three lectures]- Output, interest rate, exchange rate and exchange regimes (week 12)- Equilibrium in goods market and financial markets- Policy effects in short run (monetary and fiscal policy)- Fixed exchange rate and aggregate demand- Flexible exchange rate- Exchange rate volatilityReading: Chapter 20-21 [three lectures]- Macroeconomic Issues of Pacific Island Economies (week 13)- Monetary policy and fiscal policy- Taxes, debts and government budget- Pacific Economic developmentReading: Chapter 28 and notes from the lecture [three lectures]TextbooksBlanchard, Oliver and Sheen, Jeefery (2009), Macroeconomics, 3rd Edition (Australian Edition), Pearson.Branson, Macroeconomics Theory and PoliciesRudiger Dornbusch, Philip Bodman, Mark Crosby, Stanley Fischer, and Richard Startz, Macroeconomics, Edition 2, McGraw-Hill Australia Publishers, 2006.AssessmentTest 1: 20%Test 2: 20%Tutorial Participation: 5%Tutorial Presentation: 5%Final Exam: 69%
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Credits earned vary according to the policies of the students' home institutions. According to ISA policy and possible visa requirements, students must maintain full-time enrollment status, as determined by their home institutions, for the duration of the program.
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