Introduction to macroeconomics (KINH tế vĩ mô 1)

MACROECOMICS I


Course content
Chapter
Chapter
Chapter
Chapter
Chapter
Chapter
supply
Chapter
Chapter
Chapter
Chapter

1
2
3
4
5
6

Introduction to macroeconomics
Data of Macroeconomics
Economic growth
Saving, investment and financial system
Unemployment
Aggregate demand and Aggregate

7 Aggregate expenditure and Fiscal Policy

8 Money and Monetary Policy
9 Inflation and Phillips curve
10 Macroeconomics in open economy


Objectives
Acquire basic background of macroeconomics

(GDP, CPI, AD-AS model, unemployment,
inflation, foreign exchange rate, fiscal policy,
monetary policy)
Use knowledge of the course to study other
specialized economics (e.g. development
economics, public economics, environmental
economics, econometrics)
Apply academic background to practices
(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
Pulisher,2003.
2 600 câu hỏi trắc nghiệm kinh tế học vĩ mô cơ bản, NXB
Thông tin và truyền thông, 2012.
3 Frank and Bernanke, Principles of Macroeconomics
Third edition, 2007.
4 Glenn Hubbard and Tony O’Brien, Macroeconomics,
Second edition, 2008.
5 D.Begg,S Fisher,R.Dorchbusch,Economics,Third
edition,McGraw-Hill Book Company,1991


Other references
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


Useful Websites
Domestic statistical websites
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Useful Websites
Foreign statistical websites
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Chapter 1 Introduction to
macroeconomics


Content
I Basic concepts in Economics
1 Scarcity
2 Opportunity cost
3 Three fundamental questions in economic
II Overview of macroeconomics

1 What is macroeconomics
2 Objects and methods of research
3 Macroeconomic system
4 Objectives and policy tools of government
to adjust macroeconomy


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


I Basic concept in Economics
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


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
understand
the
determinants
of
longrun economic growth (increases in national
income). Macroeconomic

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


II Overview of
macroeconomics
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
Models are important because their simplicity
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
Collecting
that all other relevant
remain
Building factors data
and
Observatio Hypothe
unchanged.
model with
check
ns

sis

assumptions

accuracy
of the


II Overview of
macroeconomics
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
Economic goals

Content

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


II Overview of
macroeconomics
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


Key concepts
 Scarcity
 Opportunity cost
 Economics
 Macroeconomics
 Economic model
 Normative economics, Positive economics
 Macroeconomic system
 Fiscal policy, Monetary policy, Income

policy, Trade policy