BUSN2040 Macroeconomics

This topic analyses the causes of, and policy responses to, the major macroeconomic policy problems likely to confront policymakers such as unemployment, inflation, public debt, terms of trade shocks, current account deficits, foreign debt and economic growth. The impact that these have for financial markets through their effects on government spending, taxes, public debt, interest rates, exchange rates and capital flows is covered.

This topic aims to:

• Identify and analyse the key factors that influence policymakers, and contribute to decisions on economic growth or recovery
• Explain the impacts of behaviour and decision making on financial markets, both nationally and globally
• Use standard macroeconomic models to analyse the probable consequences of economic shocks and policy changes

2. Identify the major macroeconomic policy objectives and their relationship to the business cycle
4. Use the IS-LM model to analyse the effects of changes in fiscal and monetary policies on interest rates, output and employment
6. Describe how monetary policy is implemented and the monetary policy transmission mechanism
8. Explain the term structure of interest rates and the inverse relationship between bond prices and interest rates
10. Analyse the implications of fiscal policy changes for government budgets, interest rates and the public debt
12. Explain the difference between fixed and flexible exchange rate regimes
14. Use the Mundell-Fleming model to analyse the effects of fiscal and monetary policies in fixed and flexible exchange rate regimes
16. Use the AD-AS model to analyse the short-run and long-run consequences of policy changes and non-intervention
18. Use the Philllips curve to analyse inflation
20. Explain the conditions that occasionally lead to extremely adverse outcomes for the macroeconomy and suggest appropriate policy responses