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ECO 202
Macroeconomics Analysis
Subject Lecturer/Tutor:
Consultation:
By appointment only
PRE-REQUISITE (S)
ECO101
ECO102
SYNOPSIS
The focus of this subject is on understanding the impact of domestic policies, global
macroeconomic activities and international financial markets on the domestic economy.
Malaysia can be described as a small open economy that is integrated into the global
economy. Events in the major economies and key financial markets can have strong
impacts on the domestic Malaysian economy. Exchange rates, interest rates, stock
prices and foreign economic policies are vital factors in determining Malaysias future
economic progress. Students are expected to remain cognisant of currency economic
and financial issues throughout the semester and be able to analyse these issues using
the tool kit of economic techniques provided in this subject.
OBJECTIVES
Upon completion of this subject, students should be able to:
explain and illustrate the IS-LM model which links goods market theories and
money market theories using both graphical and mathematical techniques;
analyse the impacts of fiscal and monetary policies on the macroeconomic variables
using the IS-LM model (short run analysis);
explain the relationship between real wages and the level of unemployment (or
employment) in the labour market;
explain the AD-AS model which links goods, financial and labour markets;
analyse the impacts of fiscal and monetary policies on the macroeconomic variables
using the AD-AS model (medium run analysis);
explain and illustrate the IS-LM model in the context of open economy (in both
goods and financial markets) and different exchange rate system (i.e. flexible or
fixed exchange rate system);
explain the distinction between real and nominal exchange rates, interest parity and
balance of payment, and
TOPICS
Topic 1
Introduction to Macroeconomics
Topic 2
Topic 3
Topic 4
Topic 5
Topic 6
Topic 7
Topic 8
Topic 9
PRESCRIBED TEXT
Blanchard, O. (2013) Macroeconomics, Global edition (6th ed.), Prentice Hall: New
Jersey.
RECOMMENDED REFERENCES
Froyen, R.T. (2002) Macroeconomics: Theories and Policies, 7th edn, Prentice Hall.
Gordon, R. J. (2003) Macroeconomics, 9th edn, Addision-Wesley.
Parkin, M. (2003) Macroeconomics, 6th edn, Addision-Wesley.
: Business Studies
: Mr. Wan Cheong Kin
SUBJECT DELIVERY
WEEK
LECTURE TOPIC
CHAPTERS
Chapter 1 and 2
Chapter 3, 4 and 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 14 and 15
Chapter 16 and 17
10
Chapter 18 to 21
11
Chapter 18 to 21
12
Chapter 22 and 23
13
Chapter 24 and 25
14 15
Final Examination
ASSESSMENT
There are 2 assessment items for this subject:
Assessment Items
Value
Due Date
40%
60%
REQUIREMENTS
To gain a pass in this subject, students must:
Attempt BOTH areas of assessment; and achieve a total result of 50% or better
overall.
** - Please check on the notice board and My Acel for the actual date. HELP
University reserves the right to make any changes to the above where appropriate.
ACADEMIC INTEGRITY
Honesty and Responsibility
Academic integrity is an important tenet for HELP University. In pursuit of the highest
standards of academic integrity, the Department of Business Studies holds it students to
the highest ethical standards defined by the Rules and Regulations section of the
Academic Handbook. All students at the Department of Business Studies are subjected
to and are bound by the Student Academic Misconduct Rule to assure academic
honesty. Students are required to sign a pledge on the assignment cover sheet before
submitting your assignments to the Administration Office of the Faculty of Business,
Economics & Accounting.
What is Plagiarism?
Plagiarism is academic dishonesty or academic theft, and it is a serious academic
offence. Plagiarism includes, but is not limited to, the followings:
1. quote, paraphrase or summarize someone elses ideas, theories or data, in whole
or in part, without appropriate acknowledgement
2. borrow ideas, opinion or words, in whole or in part, from other sources without
properly crediting the author(s)
3. use any facts, statistics, diagrams or graphs, in whole or in part, without
acknowledging the source clearly
4. claim or imply original authorship of someone elses ideas, theories or data, in
whole or in part, as your own
5. employ or allow someone to help to revise, amend or write your work and pass
off as your own original work
6. collaborate with or allow other students to copy your work
7. draw on sources more than what you have acknowledged by citations
While a student is not discouraged to discuss an assignment with his/her friends or
classmates, the work he/she submits must be done by the student alone. If a student
shares his/her assignment with other students and they plagiarize it, the student is as
guilty as those students who plagiarized his/her assignment. All parties to plagiarism
are considered equally guilty. Under no circumstances should a student be involved in
collusion with other students unless he/she is permitted to work on an assignment
jointly by the lecturer/tutor. If a student is unsure what constitutes plagiarism, he/she is
obliged to consult the lecturer/tutor on the matter before submission of his/her
assignment.
When and How to Reference?
Knowing when and how to cite is a students responsibility. If he/she is in doubt or
need more help on this matter, the student may consult the lecturer/tutor. The following
list comprises some of the sources a student will need to reference. The list is by no
means exhaustive, but simply consists of the most common sources used by students to
complete their work.
1. Books
6
2.
3.
4.
5.
6.
7.
8.
Chapters in books
Journal articles
Conference papers
Newspaper articles
Magazines
Websites
Study guide
1 st offence
ECO202
Subject Name
MACROECONOMIC ANALYSIS
This examination carries 60% of the total assessment for this subject
Examiner(s)
Moderator(s)
DR. ABC
Day
Date
Time :
Time allowed:
3 HOURS
INSTRUCTION(S):
1. Answer ALL the questions.
2. Writing on the examination answer book is NOT permitted during reading time.
3. This is a CLOSED BOOK examination.
4. Students are permitted to bring in a non-programmable scientific calculator in the exam hall.
5. Students must pass the final examination paper (i.e. obtain 50 marks from 100 marks) to obtain a passing grade
in this subject.
(This question paper consists of 4 questions in XX printed pages, including cover page)
10
(5 marks)
b) Sketch separate diagrams indicating the equilibrium income for (i) and (ii).
(5 marks)
c) Calculate the expenditure multiplier. What does the computed value imply?
(3 marks)
d) What is the government budget at the equilibrium income?
(2 marks)
e) What is the problem faced by the economy if full employment income is 120?
Draw and label on graph (appropriate values must be calculated).
(5 marks)
f) What policy (ies) would you recommend to solve the macroeconomic problem
in part (e)?
(5 marks)
QUESTION 2
The money market and goods market of Inland may be characterized by the functions
below:
Money demand: L = 200 + 0.20Y 10r
Money supply: MS = 250
Consumption function: C = 100 + 0.80Yd
Taxation: T = 20 + 0.25Y
Investment: I = 300 40r
Government spending: G = 66
a) Derive the IS and LM functions.
(5 marks)
b) Calculate the equilibrium income and interest rate. Indicate the equilibrium income
in a diagram.
(5 marks)
11
(b)
QUESTION 4
With the aid of diagram explain appreciation and depreciation of currency. Discuss the
effects of depreciation and appreciation currency to the economy.
(25 marks)
12