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Economic Policy and Principles

  • Module code: EC4003
  • Year: 2018/9
  • Level: Year 4
  • Credits: 30.00
  • Pre-requisites: None
  • Co-requisites: None

Summary

In this module, students are introduced to the techniques of model building and analytical reasoning used in microeconomics. Some of these techniques are then used as an input into the analysis of economics at the macroeconomic level.  In the early phase of the module, students are taught about microeconomic models and explore the application of these models, to current economic issues. Whilst, in the later phase, students learn about the main macroeconomic aggregates, the basic model of aggregate demand and supply and the importance of the time horizon in macroeconomics.

Throughout the course, there is an emphasis on highlighting and considering the pros and cons of the suggested solutions to real problems faced by market economies.

Aims

  • To introduce students to the techniques of model building, and analytical reasoning in micro and macroeconomics;
  • To provide some early insights into the power of economic reasoning in the context of the real world.

Learning outcomes

 On completion of the course the student should be able:

  • To demonstrate their ability to construct simple microeconomic and macroeconomic models, showing the use of appropriate geometric and algebraic techniques;
  • To understand and explain microeconomic concepts and how markets interact to generate macroeconomic outcomes;
  • To recognize the use of microeconomic and macroeconomic models in the analysis of current economic issues in the popular media and provide supplementary insights.

Curriculum content

  • The comparative statics of market analysis, shifts in demand and supply, elasticities, revenues and expenditures. Taxation and subsidies. Price controls and non-clearing markets.
  • Applications to agricultural support systems and minimum wage laws.
  • Consumer behaviour - rational choice making, optimal decisions, and individual demand. From individual to market demand. Applications to rationing and taxation.
  • Costs and outputs - the behaviour of costs and outputs in the short - and long-run. Production functions, cost functions and the laws of production.
  • Market structure - price and output decisions under competition and monopoly. Welfare costs of monopoly. Applications to privatisation and monopoly regulation.
  • Market structure - imperfect competition and oligopoly. Applications to cartel formation and the case of OPEC.
  • Factor markets and the theory of derived demand. The determination of factor incomes in competitive and monopsony markets. Applications to job subsidies and social security taxes.
  • Macroeconomic variables and macroeconomic activity
  • Saving, investment and the financial system
  • Unemployment
  • The monetary system
  • Money, growth and inflation
  • Open economy macroeconomics
  • Aggregate demand and aggregate supply
  • The influence of fiscal and monetary policy on aggregate demand
  • Unemployment vs inflation

Teaching and learning strategy

Lectures will provide an introduction to the main concepts and demonstrate their use.  Seminars will generally be conducted on the basis of periodic problem sets issued, in advance of classes. As well as reinforcing and deepening understanding of the lecture material, seminars will be used to highlight relevant applications. Outside of the classroom, students will be expected to read recommended materials and prepare for seminars. Where available, the use of appropriate software for learning micro and macroeconomics may be encouraged directly or through the companion module ‘Becoming an Economist'

Breakdown of Teaching and Learning Hours

Definitive KIS Category Indicative Description Hours
Scheduled learning and teaching Lecture 44 [22 x 2 hours]
Scheduled learning and teaching Seminar 22 [22 x 1 hour]
Guided independent study Preparation of problem sets 120
Guided independent study General independent study and exam revision 114
Total (number of credits x 10) 300

Assessment strategy

Two short seen tests - both comprising problem sets issued in advance and written in class - provide formative and summative assessment. These assess the ability of students to understand and use basic micro and macroeconomic reasoning in simple situations. In both cases, students will receive a mark and feedback and be allowed to then submit their revised responses. These submissions will receive additional marks according to value added. This will help students to pay attention to and react to feedback, improve their technique and use the guidance received as an input into exam preparation.

The two hour exam is a summative, assessment of the achievement of students over the full range of learning outcomes and subject coverage.

Mapping of Learning Outcomes to Assessment Strategy (Indicative)

Learning Outcome Assessment Strategy
1) To demonstrate their ability to construct simple microeconomic and macroeconomic models, showing the use of appropriate geometric and algebraic techniques; Two short seen tests (F/ S), examination (S).
2) To understand and explain microeconomic concepts and how markets interact to generate macroeconomic outcomes; Two short seen tests (F/S), examination (S).
3) To recognize the use of microeconomic and macroeconomic models in the analysis of current economic issues in the popular media and provide supplementary insights. Two short seen tests (F/S), examination (S)

Breakdown of Major Categories of Assessment

Assessment Type Assessment Name Assessment Weighting
EXT One hour in class test in TB1 20
EXT One hour in class test in TB2 20
EXWR 2 hour unseen examination 60
Total (to equal 100%) 100%

Achieving a pass

It IS NOT a requirement that any major assessment category is passed separately in order to achieve an overall pass for the module

Bibliography core texts

Krugman, P., R. Wells and K.Graddy (2013). Economics: International Edition, New York: Worth Publishers.

Bibliography recommended reading

Mankiw, N.G. and M.P.Taylor (2010). Economics, Andover: South-Western.

McDowell, M., R. Thom, I. Pastine, R. Frank, and B. Bernanke (2012). Principles of Economics, Maidenhead: McGraw-Hill.

O'Sullivan, A,  S. Sheffrin and S. Perez (2008). Microeconomics: Principle and Tools, New Jersey: Pearson.

Plus recommended articles from:

  • The Economist
  • Financial Times

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