Economic Theory

2017/2018

Academic Year

ENG

Instruction in English

3

ECTS credits

Delivered at:

Department of Sociology

Course type:

Compulsory course

When:

2 year, 4 module

Instructor

Rozmainsky, Ivan V.

Course Syllabus

Abstract

Economics is the study of human choice in the conditions of the deep interdependency of people. The most part of economics is about interactions of people under the regime of market capitalism. We will spend time for analyzing this one and some other economic systems, and consider demand and supply analysis. The government can play the important role by dealing with market failures but its activities can generate different kinds of government failure. After discussing micro level problems we will turn to macroeconomic dimension of economics. This dimension is about economic variables like GDP, consumption, investment, inflation, and the rate of unemployment. Another major objective of macroeconomics is to explain the determinants of economic growth and development in the long run. In the short run economy experiences nominal rigidities (sticky prices and wages) and expectational errors (differences between actual and expected prices). Rigidities and expectations make nominal aggregate demand, which could fluctuate because of some shock, affect real economic activity such as output and unemployment. Therefore, it is necessary to engage in aggregate demand management in order to stabilize the economy. We will study such stabilization policies (fiscal and monetary) and the most efficient ways of performing them. In the long run, economy’s output is a function of productive capacity (capital and labor inputs) as well as technologies (methods of transforming these resources into output) and institutions (laws and informal rules). We will discuss opportunities and limitations of economic growth.

Learning Objectives

• discuss both advantages of the market system and its defects
• speak about various types of market failures.

Expected Learning Outcomes

• Understand main features of the capitalism and other economic systems
• Understand building blocks of the demand and supply model
• Know the main forms of market failures and government failures
• Understand the building blocks of the aggregate demand and aggregate supply model
• Understand causes of inflation and effects of anti-inflationary policy
• Understand the reason for short-run stabilization policy being welfare-improving
• Know main forms of stabilization policies (fiscal and monetary), and be able to describe their effects graphically
• Understand the main driving forces of the economy in the long run
• Know main properties of the labor market functioning and causes of unemployment
• Understand causes of exchange rate fluctuations

Course Contents

• Economic Systems: Markets, Directives, etc.
• The Fundamentals of Demand and Supply Analysis
• Market Failures and Government Failures
• The Foundations of Macro Analysis: Determination of GDP
• Short-Run Macro Dynamics: Business Cycles, Unemployment and Inflation
• Long-Run Macro Dynamics: Economic Growth and Technical Progress
• Introduction to International Macroeconomics

Assessment Elements

• Test
• In-class Participation
• Exam

Interim Assessment

• Interim assessment (4 module)
  0.6 * Exam + 0.2 * In-class Participation + 0.2 * Test

Bibliography

Recommended Core Bibliography

• Richardson, G. B. (2013). Economic Theory. Hoboken: Routledge. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=661518

Recommended Additional Bibliography

• Mino, K. (2017). Growth and Business Cycles with Equilibrium Indeterminacy. Tokyo, Japan: Springer. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1550336