Economics A101, 30 Credits

Contents

Module 1, Microeconomics (7,5 ECTS)
The module starts by describing different tools and concepts used in (micro)economics. The module continues by introducing the behavior of the single individual; how much goods and services to consume and how much of production factors to supply. The firm’s resource allocation problem contains decisions on how much to produce and the form of production.
Later parts of the course discuss price theory, i.e. how the action of firms and individuals determines the price and quantity on different markets. The analysis focuses first on a partial equilibrium situation and comparative statics are used to understand how the behavior of individuals and firms changes when underlying factor changes. The role of the government, and how taxes and subsides can change actors behavior, is also introduced.
The last part of the course focuses on general equilibrium analysis, economic efficiency and how a market economy can, under certain circumstances, lead to an efficient resource allocation.

Module 2, Market failures and resource allocation problems (7,5 ECTS)
The module questions the assumptions fundamental for perfect competition and the resulting economic efficiency. The firms profit maximization problem under imperfect competition (monopoly, oligopoly and monopolistic competition), but also how the government shall act when market failures arises are central parts of the module. Can the government affect, and increase individuals' welfare? Related to this analysis is the concept of taxation and public consumption but also how the government shall design the competition policy.
A second part of the module focuses on environmental economics, how different kinds of taxes affect the economy and the environmental issue in focus but also how the system with tradable emission permits works. The module ends with a section dealing with cost-benefit analysis and other kinds of investment analyses.

Module 3, Macroeconomic analysis in the short-run – The business cycle and unemployment (7,5 ECTS)
The overall objective of the module is to introduce macroeconomic theory and how the economy works in the short-run. The module aims at giving the student the necessary tools to analyze welfare over time and across countries.
To facilitate an analysis of the economy central concepts as Gross Domestic Product (GDP), Balance-of-Payments (BoP), growth, unemployment, inflation and exchange rates are introduced. GDP will be the starting point for the further analysis of its determinants and how fluctuations in GDP affect unemployment. The BoP will be the starting point for an analysis of international trade where the students also are introduced to theoretical trade models.
The module continues with stabilization policy, i.e. active fiscal- and monetary policy, the different tools available for the Government or the Central Bank to use. The objective is to give the student a good understanding of macroeconomic models but also the possibilities and limitations of fiscal- and monetary policy.

Moment 4, Macroeconomic analysis in the long-run – inflation and growth (7,5 ECTS)
Module 4 continues where the previous module ends. The focus changes from the short-run to a medium to long-run analysis of the economy. The module starts by introducing how price changes and inflation affects the possibilities for stabilization policy. Focus lies on how changes in demand influence the inflation rate in the economy.
The second part of the module concerns economic growth and the determinants of growth in the long-run. Theories describing the role of savings and technology are introduced and the question of why some countries are rich and some poor are discussed. The moduletries to capture the variety of economic crises and discusses how to design the economic-political framework. Focus is on the European example and it current topics.
The objective is to give the student a good understanding of macroeconomic models but also the possibilities and limitations of fiscal- and monetary policy in the long-run.

Expected learning outcomes

Module 1, Microeconomics (7,5 ECTS)
Upon completing this module, students should be able to:
• Demonstrate the ability to apply the theories dealing with the individual's consumption choices, allocation of time between work and leisure and intertemporal consumption problem
• Demonstrate the ability to apply the theories dealing with the firm’s choice of production factors and the firm’s profit maximization problem given perfect competition
• Describe the price formation mechanism under perfect competition
• Explain how taxes and subsidies affect market equilibrium
• Explain how the market mechanism achieves an effective allocation of resources under perfect competition
• Explain basic welfare concepts and know how to use them in economic applications.

Module 2, Market failures and resource allocation problems (7,5 ECTS)
Upon completing this module, students should be able to:
• Explain the meaning of different market failures and the government’s ability to correct these
• Explain how different market structures affect the allocation of resources
• Describe individual organizations' strategic behavior
• Describe the basics of government competition policy
• Explain the conditions for public goods and service production.
• Explain how environmental taxes and regulation can correct for externalities
• Apply the decision rules for public investment

Module 3, Macroeconomic analysis in the short-run – The business cycle and unemployment (7,5 ECTS)
Upon completing this module, students should be able to:
• Define and calculate the level and change in material welfare over time and across countries
• Explain and illustrate the effects of different shocks to the economy on GDP in the short-run
• Explain and illustrate the relationship between the goods market and the money market in the short-run and describe the possibilities and limitations of monetary- and fiscal policy in an open economy.
• Describe the origins to, and consequences of, unemployment
• Describe basic trade theory
• Exemplify and apply macroeconomic models on relevant problems.

Moment 4, Macroeconomic analysis in the long-run – inflation and growth (7,5 ECTS)
Upon completing this module, students should be able to:
• Explain and illustrate the connection between aggregate supply and aggregate demand, and describe the possibilities and limitations of monetary- and fiscal policy in an open economy in the long-run.
• Describe the determinants of economics growth
• Explain and illustrate how changes in savings, technology and population growth affects material welfare in the long-run
• Explain the European integration, EMU and other monetary arrangements
• Explain different the implications of different exchange rate regimes and different economic policy frameworks
• Exemplify and apply macroeconomic models on relevant problems.

Required Knowledge

Form of instruction

The education is given in form of lectures, group sessions and seminars.

Examination modes

The examination can consist of mid-module exams (duggor), written examination in the end of each module, assignments and seminars. The result from the mid-module exams, assignments and seminars are only valid during the current semester.
A second exam opportunity is offered within a short time span after the regular exam date for those students not achieving a Pass, except Module 4 during spring semesters. Subsequent exam opportunities are either the re-take opportunity the week before the fall semester or the next regular exam date.
The following grading system will be used: Pass with Distinction (Väl Godkänd) Pass (Godkänd) Fail (Underkänd).
Grades on the course are awarded when the student has passed all examinations and compulsory course elements on all four modules. The grade Pass with Distinction on the course requires the grade Pass with Distinction on at least three out of four modules.
When a student has failed an examination on two occasions, he or she has a right to have another grading teacher. A written request for an alternative examiner should be handed to the Head of the Umeå School of Business and Economics no later than two weeks before the next examination opportunity.
Rules and regulations concerning the production of academic texts and correct referencing will be applicable to all written assignments.

Credit transfer
Academic credit transfers are according to the University credit transfer regulations.