Economic Theory II
- to teach students the economic way of thinking about a business decision and strategies
- to provide a basic knowledge of the mac roeconomic environment in which consumers, businesses, and governments operate
- to provide the students with an understanding of the various notions and concepts of economics
- Demonstrate economic reasoning and decision making skills
- Explain the relationship between aggregated supply, aggregated demand and prices
- Analyze and apply the theory of consumer behavior to determine how consumers make optimal choices
- Evaluate the nature and function of product and factor markets
- Analyze the role of government in the economy
- Explain and justify positive and normative macroeconomic policy propositions with integration of the appropriate literature
- Interpret basic macroeconomic variables
- Analyze and identify the possible effects of macroeconomic policies on business activities
- Market regulation
- Macroeconomics basicsMacroeconomics and its central issues: inflation, unemployment, economic growth, stabilisation policy. The problem of aggregation. Gross domestic product, value added, final and intermediate goods. Double counting. Personal disposable income. Gross national product, national income. GDP deflator, CPI. Real vs. nominal variables. Some important national accounting identities.
- National income. Aggregate supply and aggregate demandAD – AS model (prices, wages and adjustment process). Prices and output. Short-run and long-run aggregate supply. The AD-AS schedule. Actual and potential output. Aggregate supply in the case Keynesian unemployment and in case of fully flexible prices and wages. Aggregate-supply shock and stagflation.
- Consumption and savings. InvestmentsDeterminants of consumption (consumption function) and marginal propensity to consume. Savings and marginal propensity to save. Relationship between consumption and savings in a closed economy without government. Investment. Savings and transmission mechanism. Interest rate and the present value concept.
- Economic growth . Cycles of economic activityThe sources of growth. Business cycles.
- Markets of economic resourcesDemand for labor. Derived demand. Marginal revenue product. Marginal resource cost. B. Perfectly competitive labor market. Labor Unions. Effects of Minimum Wage. Wage differentials.
- UnemploymentLabor force. Types of unemployment: frictional, structural, demand-deficient (cyclical), classical unemployment. Natural rate hypothesis. Private and social costs of unemployment.
- Money, inflation and banking systemMoney and Banking. Functions of Money. Demand for Liquid Assets. Central Bank, Commercial Banks and Supply of Liquid Assets. Money Base, Public Cash, Reserves, Deposits. Money Creation process. Money multiplier, deposit multiplier and loans multiplier. Upward sloping money supply. Inflation: CPI, PPI and GDP deflator, core inflation. Hyperinflation and flight from money. The role of expectations and inflation persistence. Output-inflation trade-off. Short-run and long-run Phillips curves. AS shocks and stagflation.
- Market failures
- Regulation of businessThe government sector. The federal Budget, Fiscal Policy. Public consumption and the marginal propensity to spend of the government. Government revenues and forms of taxation: lump-sum and proportional (marginal) taxes, progressive and regressive taxes, income and expenditure taxes, corporate tax.
- An open economyBalance of payments: current account, capital account and foreign reserves. Real and nominal exchange rate. Exchange rate determination and the money sector. Foreign exchange market, foreign currency reserves. Exchange rate regimes: fixed and flexible.
- Written examFinal exam economic theory II Final exam consists of the two parts. If your system does not work, wait for a while (about 1 minute). Make a screenshot in case of nothing happens or an error appears. Then send this file to me in a personal chat in MS Teams immediately. I will write you what you need to do. A short-run communication failure during the exam is considered a communication failure within 5 minutes. Long-run communication failure during the exam is considered a communication failure for 5 minutes or more. The student cannot continue to participate in the exam in case of long-run communication failure. The retake procedure involves more complex tasks. Part 1. Test. Platform – LMS: 9.30-10.00 Time to log in to the testing section in LMS – 9.30 (from 9.30 to 9.35) Your test consists of 15 questions. The duration of the test is 25 minutes. There is only one correct answer in each question. Each correct answer gives you 3 points. You have only one attempt to complete this test. You will see the test in disciplines according to the number of your group: 250173 Ec.theory2 190 250174 Ec.theory2 191 250175 Ec.theory2 192 First of all, refresh the page with this discipline. Then you start the test. You should not go back to the previous task. LMS will offer the following question. It is forbidden to go to other pages during the test. It is forbidden to update the test page. When time gets over, the test will close. The system will save everything that you answered earlier. Breakdown before the second part – 20 min. Please, prepare your own sheets of answers for each task. It will be A4 sheets for each task. Write down your name, surname, group №___, 09.06.2020. Use a new A4 sheet for each task. If you need additional A4 sheet for a task, you are to use another A4 sheet and write down “task №__, answer sheet 2” Part 2. Tasks. Platform – MS Teams. Link for tasks: https://teams.microsoft.com/l/channel/19%3a2b664422952b4c44933aad852698a049%40thread.tacv2/%25D0%259E%25D0%25B1%25D1%2589%25D0%25B8%25D0%25B9?groupId=7167d132-2c54-4e6c-ac63-5dcfaa788dad&tenantId=21f26c24-0793-4b07-a73d-563cd2ec235f Task 1. 10.20-10.30 Task 2. 10.35-10.45 Task 3. 10.50-11.00 Task 4. 11.05-11.15 Task 5. 11.20-11.30 Task 6. 11.35-11.45 Task 7. 11.50-12.00 This part consists of 7 tasks. Each correct answer gives you 8 points. You have only the one attempt to do this work. You should not go back to the previous task. MS Teams will offer the following question. It is forbidden to go to other pages during your work. When the time gets over, each task of your work will close. This form for tasks looks like your Home assignment. Use rounding to the hundredths (for example, 1.89). You should start your solution with “Task №__”. All solutions must be handwritten. At the end of the solution write down your answer according to the question. Please, write your answers neatly and legibly. How should you end the task in MS Teams? You should make a photo of your handwritten solution and download this file to the task in MS Teams.
- Control test
- Home assignment
- Interim assessment (4 module)0.25 * Control test + 0.1 * Home assignment + 0.25 * Quizes + 0.4 * Written exam
- Blanchard, O. (2017). Macroeconomics, Global Edition (Vol. Seventh edition). Harlow, UK: Pearson. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=nlebk&AN=1426555
- Acemoglu, D., Laibson, D. I., & List, J. A. (2016). Economics, Global Edition (Vol. Global edition). Boston: Pearson. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=nlebk&AN=1419560
- Farrokh K. Langdana. (2016). Macroeconomic Policy. Springer. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.spr.sptbec.978.3.319.32854.6
- Henning Schwardt. (2017). The Path to a Modern Economics. Springer. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.spr.sprbok.978.3.319.52785.7
- Kathuria, R., & Nagpal, N. K. (2016). Global Economic Cooperation : Views From G20 Countries. New Delhi: Springer. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1102145
- Volker Böhm. (2017). Macroeconomic Theory. Springer. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.spr.sptbec.978.3.319.60149.6