Postgraduate Course: Macroeconomics (MBA) (BUST11208)
Course Outline
| School |
Business School |
College |
College of Humanities and Social Science |
| Course type |
Standard |
Availability |
Not available to visiting students |
| Credit level (Normal year taken) |
SCQF Level 11 (Postgraduate) |
Credits |
10 |
| Home subject area |
Business Studies |
Other subject area |
None |
| Course website |
None
|
Taught in Gaelic? |
No |
| Course description |
This course is designed to provide a sufficient understanding of macroeconomics to allow an understanding of relevant articles in the Financial Times, Economist, etc and reports by government agencies, the World Bank, or consultants. This is seen as essential to an understanding of business because:
Macroeconomics affects all companies by
(a) level of demand for products;
(b) interest rates - with their effect on the costs of the firm;
(c) the exchange rate - which tends to intensify or reduce competition even for firms not overtly engaged in trade;
(d) and each of these elements interact both with themselves and with other factors, such as government policy.
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Entry Requirements (not applicable to Visiting Students)
| Pre-requisites |
|
Co-requisites |
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| Prohibited Combinations |
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Other requirements |
None
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| Additional Costs |
None |
Course Delivery Information
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| Delivery period: 2011/12 Semester 1, Not available to visiting students (SS1)
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WebCT enabled: Yes |
Quota: None |
| Location |
Activity |
Description |
Weeks |
Monday |
Tuesday |
Wednesday |
Thursday |
Friday |
| No Classes have been defined for this Course |
| First Class |
First class information not currently available |
| No Exam Information |
Summary of Intended Learning Outcomes
Knowledge and Understanding:
&· The elements measured by GNP, GDP and National Income
&· The role of savings and investment - and more generally the role of leakages (savings, taxation and imports) and injections (Investment, Government expenditure and Exports) in determining the level of GDP
&· The implications of rising GNP for tax revenues and the current account of the balance of payments
&· The role of government in expanding aggregate demand through fiscal policy
&· The creation of money by the banking system and the limits due to reserve requirements
&· The role of the interest rate in affecting the demand for money
&· The role of money supply in inflation
&· The use of monetary policy to control inflation and the role of the central bank
&· The determinants of changes in the current and capital accounts of the balance of payments $ú and their impact on exchange rates
&· The consequences of exchange rate changes on demand and inflation on the economy
This course complements other courses in the Programme as follows:
(a) Finance courses - by providing an understanding of the determinants of interest and exchange rates in the economy.
(b) Strategic Management - by providing the analysis of demand, interest rates, inflation, and foreign exchange rates which influence many strategic decisions.
More widely, macroeconomics is probably the clearest example of systems thinking and as such provides many students with a new approach to analysis.
Cognitive Skills:
This course is principally geared to providing an understanding of the macro-economy. Skills training is not explicitly part of the course. However, developing this understanding inevitably develops and exercises the following important skills:
(a) Logical thought in analysing cause and effect in the presence of interdependence
(b) Clarity of exposition in explaining complex systems
(c) The use of symbols and simple equations to model real-world phenomena
(d) Understanding data in the presence of multi-causal phenomena (in which it complements the course on statistical analysis)
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Assessment Information
| 90 minute examination worth 100% of assessment. |
Special Arrangements
| None |
Additional Information
| Academic description |
Not entered |
| Syllabus |
1. Demand, Supply and the Market
The "Market"; demand and supply curves; behind the demand curve; Tastes, Prices and Incomes; behind the supply curve: technology, input costs and government regulations
2. The Determination of National Income
The circular flow of income; actual values of consumption, investment, saving, government expenditure, and foreign payments. Components of aggregate demand: planned amounts of consumption, planned investment spending; aggregate demand; equilibrium output; the equality of planned savings and planned investment expenditures.
3. The Multiplier, Fiscal Policy and Foreign Trade
a) The Multiplier
The multiplier; the paradox of thrift.
b) Fiscal Policy and Foreign Trade
The government and aggregate demand; the balanced budget multiplier; the government budget; deficits and the fiscal stance; automatic stabilisers; the limitations on active fiscal policy; The National Debt and the deficit; foreign trade and income determination.
4. Money and Modern Banking
Money and its functions; commercial banks and the money supply; the money multiplier; competition between banks. The demand for money.
5. Interest Rates and Monetary Transmission
The Bank and the money supply; reserve requirements; the discount rate; open market operations; the repo market; the lender of the last resort. Equilibrium in financial markets.
Monetary control; the targets and instruments of monetary policy; the transmission mechanism: wealth effects and the credit channel.
6. Aggregate Supply, Prices and the Control of Inflation
a) Definition of Inflation; the CPI (Consumer Price Index); using the CPI to adjust from monetary to real prices. The Aggregate Supply Curve and Capacity Utilisation in the Economy. The impact on Prices of rises in Aggregate Demand. Imported inflation; the role of expectations.
b) Analysis of the control of inflation by the Bank of England.
7. Exchange Rates and the Balance of Payments
The Forex market; Exchange rate regimes; the balance of payments, determinants of the current account; the capital account; speculation and interest rate parity; internal and external balance. Long run equilibrium, the role of foreign debt or assets.
8. Open Economy Macroeconomics and Revision
Policies under fixed and floating exchange rates: balance of payments and the money supply, monetary and fiscal policy.
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| Transferable skills |
Not entered |
| Reading list |
Not entered |
| Study Abroad |
Not entered |
| Study Pattern |
Not entered |
| Keywords |
Not entered |
Contacts
| Course organiser |
Prof Jonathan Crook
Tel: (0131 6)50 3802
Email: j.crook@ed.ac.uk |
Course secretary |
Mr Stuart Mallen
Tel: (0131 6)50 8071
Email: Stuart.Mallen@ed.ac.uk |
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copyright 2011 The University of Edinburgh -
1 September 2011 5:43 am
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