• The main components of the national income accounts and aggregate statistics – what they measure and how they are related.
• The determinants of prices, output, unemployment, interest rates and growth in the long run.
• The role of money, how it is created and controlled, and what determines its supply and demand.
• The consequences of short-run adjustments where prices and wages move slowly, and the effects of fiscal and monetary policy (Keynesian aggregate demand model and the IS-LM model).
• The causes of unemployment and its relation to inflation in the short and long run (the Phillips curve).
• Basic macroeconomic phenomena in open economies and how the existence of trade affects macroeconomic policy.
• The functioning of international capital and foreign exchange markets, how they determine exchange rates in the short run, and how they interact with domestic money markets.
• Determinants of exchange rates, prices, and interest rates in the long run (purchase power parity theory, Fisher effect)
• The dynamics of exchange rate markets and exchange rate overshooting.
• Exchange rate regimes and the role of central banking and international monetary cooperation.
• How exchange rate regimes affect the scope for domestic macroeconomic policy.

Macroeconomics introduces students to economic issues and mainstream theories related to the entire national economy as well as the world economy. The course introduces the system of national income accounts and national statistics and its use in terms of measuring the overall material standard of living, price levels, inflation, unemployment, etc. Students will learn how to look at how these entities are determined in the long run by capital investment, growth and innovation, and then look at the notion of money, how money is created and controlled by the Central Bank, and how the supply of money influences price levels in the long run. Students will be asked to consider the situation where prices and wages are stable, how the result may cause overheating or recessions, and how fiscal policy (government expenditure and taxes) and monetary policy (Central Bank regulation of the money market) can be used to alleviate this situation. Another subject is the causes of unemployment and the phenomenon itself and how it relates to the movement of prices and wages, after which focus will shift to open economies where goods, people, and capital are traded with other countries, and how the nature of macroeconomic policy changes in an open economy. From this, focus again shifts to the functioning of international capital and foreign exchange markets, and how they relate exchange rates to domestic financial markets. The long-run determinants of exchange rates, inflation and interest rates between different countries are considered, and the course is concluded with issues and insights related to international monetary cooperation and the particular issues raised by the needs of less developed countries.

To be decided, but most likely:

• [MT]: Mankiw, NG; Taylor, MP (2008) Economics (5th European ed.), South-Western,
  ISBN 978‑1‑84880‑133‑6. (Also used in the Microeconomics course)
• [KO]: Krugman, PR; Obstfeld, M (2009) International Economics: Theory & Policy (8^th ed.), Pearson/Addison-Wesley, ISBN 978‑0‑321‑55398‑0. (Also used in the International Economics and Competitiveness course, 3rd semester, BLC programme)
• Companion on-line material for Mankiw and Krugman textbooks.

Teachers’ notes.