Kinh tế vĩ mô Chap 1

Course contentChapter 1 Introduction to macroeconomics Chapter 2 Data of Macroeconomics Chapter 3 Economic growth Chapter 4 Saving, investment and financial system Chapter 5 Unemploymen

Lecturer: Pham Xuan Truong Foreign Trade University, Faculty of International

Economics Email: truongpx@ftu.edu.vn

MACROECOMICS I

Course content

Chapter 1 Introduction to macroeconomics

Chapter 2 Data of Macroeconomics

Chapter 3 Economic growth

Chapter 4 Saving, investment and financial system Chapter 5 Unemployment

Chapter 6 Aggregate demand and Aggregate

supply

Chapter 7 Aggregate expenditure and Fiscal Policy Chapter 8 Money and Monetary Policy

Chapter 9 Inflation and Phillips curve

Chapter 10 Macroeconomics in open economy

macroeconomics (GDP, CPI, AD-AS model, unemployment, inflation, foreign exchange rate, fiscal policy, monetary policy)

specialized economics (e.g development economics, public economics,

environmental economics, econometrics)

(understand what financial and economic news imply, explain what happens in the

economy, estimate or forecast economic

policy)

Course implementation

Teaching and learning methods: In class contact hours, there will be lectures, discussions and assistance with student’s assignment works, reading and using books During the seminars the students will be expected to discuss the provided topics on the problems of real economy

Assessment methods: There is a written assignment and final examination It is worthy 30% and 60% respectively Class participation is 10%

Reading Textbooks

1 N.Gregory Mankiw,Principle of Macroeconomic,

International Student Edition,Third edition,Worth

1 The richest man in Babylon – Geogre Sclason

2 Naked Economics – Charles Wheelan

3 The Undercover Economist – Tim Harford

4 80/20 Principle – Richard Kock

5 Currency War – Song Hongbing

6 The exlusive quest for growth – William Easterly

7 Blue Ocean Strategy – Wchankim, Renee Mauborgne

8 Good luck – Alex Rovira, Fernando Trias de Bes

9 How to stop worrying and start living – Dale Carnegie

10 If you want it done right, You don’t have to do it yourself – Donna M.Genett

11 Who moved my cheese – Spencer Johnson

12 More sex is safer sex – Steve E Landsburg

13 Three idiots (Indian version) film

Other references

Mentor Pham Xuan Truong

truongpx@ftu.edu.vnChapter 1 Introduction to

macroeconomics

I Basic concept in Economics

1 Scarcity

- Definition: The situation in which unlimited wants exceed the limited resources available

to fulfill those wants

- The law of diminishing marginal returns/

product/ productivity

2 Opportunity cost

- Definition: The value of the next-best

alternative that must be forgone in oder to

undertake the activity

- The law of increasing opportunity cost

3 Economics

The study of the choices people make to attain their goals,

given their scare resources

Three fundamental questions in economic

 Produce what

 How produce

 Produce for whom

Normative economics vs positive economics

Normative economics is a part of economics that expresses value or normative judgments about economic fairness,

or what the outcome of the economy or goals of public policy ought

to be.

Positive economics is the branch of economics that concerns the

description and explanation of economic phenomena It focuses on facts and cause-and-effect behavioral relationships and includes the development and testing of economics theories

I Basic concept in Economics

II Overview of

macroeconomics

1 What is macroeconomics

Macroeconomics (from the Greek prefix makro- meaning "large"

and economics) is a branch of economics dealing with the performance, structure, behavior, and decision-making of

an economy as a whole, rather than individual markets This

includes national, regional, and global economies With microeconomics, macroeconomics is one of the two most general fields in economics.

Macroeconomists study aggregated indicators such

as GDP, unemployment rates, and price indices to understand how the whole economy functions Macroeconomists develop models that explain the relationship between such factors as national income, output, consumption, unemployment,

inflation, savings, investment, international trade and international

finance In contrast, microeconomics is primarily focused on the

actions of individual agents, such as firms and consumers, and how their behavior determines prices and quantities in specific markets.

II Overview of

macroeconomics

1 What is macroeconomics

While macroeconomics is a broad field of

study, there are two areas of research that

are emblematic of the discipline: the attempt

to understand the causes and consequences of short-run fluctuations in national income (the business cycle), and the attempt to

long-run economic growth (increases in national

forecasts are used by governments to assist in the development and evaluation of economic policy

What is the object of macro and micro

1 Should FPT invest in new technology

2 Effect of increase of petroleum price on transportation

3 Whether Increase in input cost leads to increase in CPI

4 How Productivity affects GPD

II Overview of

macroeconomics

2 Objects and methods of research

Objects

Macroeconomics focuses on 4 fundamental objects

 Total output (aggregate output), economic

growth, business cycle

 Price level, inflation

 Unemployment, social welfare

 International trade, balance of payment, foreign exchange rate

Questions revolving 4 abovementioned objects are the issues researched by macroeconomists

II Overview of

macroeconomics

2 Objects and methods of research

Methods of reasearch

Economists use economic models to explore the

choices people make and the consequences of those

choices A model is any simplified representation of

reality that is used to better understand real-life

situations

In economics, a model is theoretically constructed

to explain economic processes by a set

of variables and a set of logical and/or quantitative relationships between them The

economic model often but not always using

mathematical techniques

II Overview of

macroeconomics

2 Objects and methods of research

Methods of reasearch

allows economists to focus on the effects of only one change at a time That is, they allow

us to hold everything else constant and study how one change affects the overall economic outcome So an important assumption when

building economic models is the other

things equal assumption, which means

that all other relevant factors remain unchanged

II Overview of macroeconomics

Observatio

ns

Hypothe sis

Building model with assumptions

Collecting data and check

accuracy

of the model

3 Macroeconomic system

Macroeconomic system has three components: input,

marcoeconomic activities recording system (black box), output

+ input: exogenous and endogenous variables

+ black box: AD – AS model under affect of variables will

produce macroeconomic outcome

+ output: total output, inflation, unemployment, foreign

exchange rate, interest rate

Inputs will go to black box, in which they interacts with market principles and then outcomes of economy will be produced under aggregate numbers

For example: draught occurs then price level increases and

output of the economy decreases, which resulted from

interaction of AD and AS

II Overview of

macroeconomics

4 Objectives and policy tools of

government to adjust macroeconomy

Objectives

II Overview of

macroeconomics

Economic efficiency Making the most resources

Economic freedom Freedom from government intervention in the

production and distribution of goods and services Economic security and

predictability Assurance that goods and services will be available, payments will be made on time, and a

safety net will protect individuals in times of economic disaster

Economic equity Fair distribution of wealth

Economic growth and

innovation Innovation leads to economic growth, and economic growth lead to higher standard of living Other goals Environmental protection, human right protection

4 Objectives and policy tools of government to adjust

macroeconomy

Policy

+ Fiscal policy: the use of government revenue collection

(taxation) and expenditure (spending) to influence the economy + Monetary policy: the process by which the monetary

authority of a country controls the supply of money, often

targeting a rate of interest for the purpose of

promoting economic growth and stability

+ Income policy: economy-wide wage and price controls, most commonly instituted by governments as a response to inflation, and usually below market level

+ Trade policy (commercial policy): a set of rules and

regulations that are intended to change international trade

flows, particularly to restrict imports

II Overview of

macroeconomics

policy, Trade policy