Economics 214

Macroeconomics

Different aspects of the macro economy are dealt with. The first part is a continuation and extension of the macroeconomic model from the first year. Part of the macro module deals with incorporating interest rates into the model. Where investment was previously regarded as exogenous, it is now specified as a function of the rate of interest in this module. Where does the rate of interest originate? Interest rates are derived from the interaction between the demand for and the supply of money. Consequently, we need to understand how interest rates are determined. It is here that monetary economics has its foundations.

Microeconomics

The module builds on the first year and has a dual objective. The first relevant question is "How does the market system work?" In other words, how does a market system organise the production of goods and services and their distribution in society? A second important question is "How well does a market system work?" The Neo-classical theoretical framework (the type of theory you have studied in your first year) is used to study the functioning of a market system in particular and to provide answers to these two questions. In the process, specific issues will be dealt with, for example, whether a monopoly is good or bad, why factories and consumers pollute the environment and whether minimum wages cause unemployment.

Prerequisite Pass modules (PP): Economics 114, Economics 144

Credits: 16

Classes per week: 3 lectures, 1 tutorial

Module convenor: Prof Pierre de Villiers

Work programme: Macroeconomics

Work programme: Microeconomics