Macroeconomics

This Macroeconomics module will equip the learner with an understanding of how an economy is measured, and the ability to graphically represent the macroeconomic models. This will assist the learner in understanding the reasons for movements in macroeconomic indicator, and the broader economic logic for fiscal and monetary policy decisions.

Introduction to Macroeconomics

• Introduce Gross Domestic Product (GDP);
• Break GDP down into its expenditure components: Consumption (C), Investment (I), Government Spending (G), Exports (X), and Imports (M)
• Real vs. Nominal GDP; GDP and Economic Well-Being;
• GDP does not measure sustainability
• Describe how economic growth is driven by increases in:

1. Labour;
2. Capital, and
3. Productivity

Demographics and Economic Growth

• How a “demographic dividend” drove economic growth in China;
• How declining population growth will affect economic growth, and how they will affect the environment
• Capital and Economic Growth
• The role of Investment (I) in economic growth;
• Introduction to Keynesian theory, and its contrast with Classical theory
• Productivity and Economic Growth
• Determinants of Productivity;
• The role of innovation in determining productivity;
• Industrial policy, and whether government support boosts productivity growth
• Compare the 4th Industrial Revolution with the first three industrial revolutions

Government and Fiscal Policy

• The role of government in the economy
• Introduction to the circular flow of income and the leakages due to savings, imports and taxes
• Keynesian theory and how government spending can have a multiplier effect on the economy in a recession
• Introduction of Aggregate Demand and Supply schedules to explain changes in inflation
• Adaptation of Keynesian theory to discuss whether large investments in green technology will boost economic growth

Money and Inflation

• How central-bank money is printed, and how the central bank can use the money supply to influence the economy;
• How commercial bank money is printed, and its role in causing the financial crisis in Ireland in 2008
• The quantity theory of money and how excess money-printing can cause inflation

The Exchange Rate

• How the prices of goods and services affect the exchange rate through the Purchasing Power Parity (PPP) theory;
• Fixed versus floating exchange rates and the formation of the Euro zone
• The controversial role of a depreciating exchange rate in fighting recession