Economics 214

Macroeconomics

The modern approach to macroeconomic theory is underpinned by microeconomic fundamentals; as such, this module utilizes a more modern approach to intermediate macroeconomic theory and model development. The module commences with an introduction and study of measurement of macroeconomic variables and issues pertaining contemporary macroeconomics. This is followed by the development of a set of key business cycle facts that is used throughout the module. Given the importance of microeconomic foundations for the module, a detailed study of the behaviour of consumers and firms is conducted before developing a one-period model of the economy. The next step is to consider a two-period model, which allows answers to complicated policy questions related to consumption-savings decisions and the impact government policy can have on the economy.

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