Economics C100:1, 15 Credits

Contents

Module 1: Microeconomics, 7.5ECTS

The objective of the module is to give the student tools to formulate and analyze social problems relating to microeconomics. The course deals with theory for the individual's choice of consumer goods and labor supply as well as how economic theory can be used to formulate and apply empirical models in order to study consumer behavior.

The module consists of three parts. The first provides a brief introduction to the mathematical methods of constrained optimization and analysis using comparative statics. Derivatives of functions that prove useful in studies of consumption theory are also repeated in this part.

The second part analyzes the individual's choice of consumption and labor supply. First, the basic assumptions underlying a theory of rational choice as well as convenience assumptions are discussed. The individual's choice is then studied, both in the form of the so-called primary problem (utility maximization), and in the form of the dual problem (expenditure minimization). Marshallian and Hicksian demand functions are derived and their properties are discussed. The use of the expenditure function is demonstrated by deriving the monetary welfare measures compensated and equivalent variation. Calculations of demand and its characteristics as well as application of the welfare measures take place with the help of specific functional forms. In addition to the standard assumptions, some cases with special preferences are also studied which can explain certain phenomena and which can give rise to partly different conclusions.

In the third part, microeconomic theory is applied to empirical data. Demand models are employed and estimated using regression analysis on given data. The results are then analyzed based on the theory that was presented in part two of the module. The aims are that the participants shall gain an understanding of how empirical analysis can be used to test the basic assumptions of economic theory, as well as training in interpreting the results obtained.

Module 2: Macroeconomics, 7.5ECTS
The main objective of the module is to give the student a deeper understanding of macroeconomics and economic policy. The course is divided into four parts:
 
The first part concerns a short-run analysis of a closed economy where the framework for the analysis of the business cycle and the options for active stabilization policy are to be found in the IS-LM or IS-PC-MR models. The second part focuses on the Mundell-Fleming model and analyzes the open economy but also the aspects of inflation and unemployment in the medium-to-long run. The third part of the course deals with economic growth and describes endogenous- as well as exogenous growth models. The final part of the macroeconomic module are introducing analysis and interpretations of the reports and other economics information from public agencies as well as other agents that are forming the actual economic policy.
 
This module will provide the students with the tools necessary to analyze the options for active stabilization policy and to explain the consequences of the policy choices on the government budget and public debt. A focus on growth theories will help the student to conduct studies explaining differences in welfare over time and between countries.
 

Expected learning outcomes

Module 1: Microeconomics, 7.5ECTS

After completing the module, the student is expected to be able to:
Knowledge and understanding

• Explain central concepts in consumption theory.
• Describe the basic assumptions on which consumption theory rests and understand the empirically testable implications that follows from the assumptions.
• Explain the primary and dual problems in consumption theory and understand how these are connected.
• Analyze how the demand for consumer goods is affected by exogenous changes.

Competence and skills

• Mathematically formulate and solve consumer decision problems and apply the solutions to various structural models.
• Graphically derive monetary measures of welfare from price changes and carry out calculations using these measures.
• Formulate empirical models for the demand for goods and services, estimate these using regression analysis, and draw conclusions using the parameters of demand functions.

Judgement and approach

• Discuss and reproduce micro-oriented studies of consumption and labor supply

Module 2: Macroeconomics, 7.5ECTS
After the module, the student is expected to show ability to:

• Analyze the IS-LM-model and the relevance of the model for a closed economy the the monetary policy is based on controlling the money supply.
• Analyze and apply the IS-PC-MR-model for a closed economy on relevant problems when the monetary policy is based on controlling the inflation rate.
• Compare and analyze the functioning of the labor market, and how wages and incomes are generated, under perfect- as well as imperfect competition.
• Analyze the effects of monetary- and fiscal policy in the short- and medium run for an open economy.
• Describe the adjustment process towards equilibrium for an economy whit a focus on inflation and unemployment in the medium- and long-run-
• Apply, and problematize, the Solow-Swan-model for exogenous growth on relevant issues.
• Apply Schumpeter and other related models for endogenous growth to explain how capital formation, human capital and investments in R&D affects welfare.

Required Knowledge

Economics A100 (30 credits) and Economics B100 (30 credits), or equivalent courses.

Form of instruction

The teaching consists of lectures and seminars.

Examination modes

The examination is carried out partly in the form of seminars and assignments and partly in the form of a written exam after the end of each module. The results from seminars and assignments only apply during the current semester.
For students who do not have an approved module grade after the written exam (including results from submissions etc.), an additional exam will be arranged in close connection to the first. Thereafter, exam opportunities are usually offered in connection to the next time the module is organized. In addition, an extra exam is organized each academic year the week before the start of the autumn semester. Exact information is provided by the study advisor or study secretary.
For each module, the grades fail (U), pass (G), or pass with distinction (VG), are given. Students who have obtained a pass grade may not retake the exam for a higher grade. In order to receive the grade pass on the entire course, a pass grade must have obtained in both modules. For the grade pass with distinction, the grade pass with distinction is required in both modules.
Under normal circumstances, it is not possible to supplement a fail grade to obtain a pass grade. In exceptional cases, however, if the examiner (not the teaching teacher) deems it appropriate, a student who received the grade fail on any part of the examination may complete a supplementary task. The supplementary task must be of a minor nature, clearly related to the learning outcome that has not been met and be carried out in close connection to the original examination.
Students who have failed an exam twice have the right to request from the head of USBE to have another examiner appointed to determine the grade.

Credit transfer of courses
Crediting takes place in accordance with Umeå University's crediting system.