Economics A101:2, 15 Credits

Contents

Module 1: Macroeconomic analysis in the short run, 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 briefly 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 includes stabilization policy, i.e. active fiscal and monetary policy, the different tools available for the government or the central bank to use. The understanding of the goods and financial markets is in focus. The objective is to give the student a good understanding of macroeconomic models but also the possibilities and limitations of fiscal and monetary policy.

Module 2: Macroeconomic analysis in the long run, 7.5 ECTS
Module 2 continues where the previous module ends. The focus changes from short-run to medium to long-run analysis of the economy. The module starts by introducing the concept of the medium run and by explaining the equilibrium in the labour market as well as the relation between inflation, unemployment, and output. Focus lies on how changes in the aggregate demand influence inflation in the economy and how fiscal and monetary policies can be used to stabilise the economy. Examples and experience of the European fiscal and monetary policy are presented.

The second part of the module concerns economic growth and the determinants of growth in tte long run. Theories describing the role of capital, savings, and technology are introduced and the question of why some countries are rich and some poor are discussed.

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: Macroeconomic analysis in the short run, 7.5 ECTS
After completion of this module, students should be able to:

• Define and calculate the level and change in 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 basic trade theory.
• Exemplify and apply macroeconomic models on relevant problems.
• Describe the Swedish economy of today and relate the situation to monetary and fiscal policy.

Module 2: Macroeconomic analysis in the long run, 7.5 ECTS
After completion of this module, students should be able to:

• Describe the origins and consequences of unemployment.
• Understand and explain the relations between the economy’s output, inflation and unemployment.
• Understand and describe the possibilities and limitations of monetary and fiscal policy in open and closed economies in the longer run.
• Understand the role of the Eurozone’s monetary policy.
• Describe the determinants of economic growth in the long run.
• Explain and illustrate how changes in savings, technology and population growth affect welfare in the long run.
• Exemplify and apply macroeconomic models on relevant contemporary problems.

Required Knowledge

Form of instruction

The teaching consist of lectures, exercises and seminars.

Examination modes

The examination consist of mid-module exams (duggor), written examination at 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 always offered within a short time span after the regular exam date for those students not achieving a Pass. The subsequent exam opportunity is 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, VG), Pass (Godkänd, G) and Fail (Underkänd, U). Grade on the course is awarded when the student has passed all examinations and compulsory course elements on both modules. The grade Pass with Distinction on the course requires the grade Pass with Distinction on both 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 Dean of the Business School no later than two weeks before the next examination opportunity.

Credit transfer
Academic credit transfers are subject to Umeå University's credit transfer regulations.