UWA Business School

Unit Outline

Macroeconomics: Money and Finance

ECON1102
SEM-2, 2014
Campus: Crawley
Unit Coordinator: Dr Ishita Chatterjee

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(Cth).
Copying of this material by students, except for fair dealing purposes under the Copyright Act, is prohibited. For the purposes
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the course material itself
The University of Western Australia 2001

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Unit details
Unit title
Unit code
Availability
Location

Macroeconomics: Money and Finance

ECON1102
SEM-2, 2014 (28/07/2014 - 22/11/2014)
Crawley

Credit points

Mode

Face to face

Contact details
Faculty
School
School website
Unit coordinator
Email
Telephone
Consultation hours
Lecturers

Business School
UWA Business School
http://www.business.uwa.edu.au/
Dr Ishita Chatterjee
ishita.chatterjee@uwa.edu.au
6488 5654
By appointment

Name

Position

Email

Telephone
Number

Assistant Professor Ishita

Chatterjee
Assistant Professor Bei Li
Aunchisa Foo

Unit
ishita.chatterjee@uwa.edu.au 6488 5654
Coordinator
Lecturer
li.bei@uwa.edu.au
6488 7160
Tutor in charge aunchisa.foo@uwa.edu.au
6488 5655

Unit contact hours

Lecture time:

Mondays 11:00am 12:00pm; (Repeat 12:00pm - 1:00pm)

Tuesdays, 11:00am 12:00pm; (Repeat 12:00pm - 1:00pm)
Lecture venue: Please refer to http://www.timetable.uwa.edu.au for the unit timetable.

Lecture capture system

Online handbook
Unit website

LCS is implemented for this unit.

http://units.handbooks.uwa.edu.au/units/ECON/ECON1102
http://www.lms.uwa.edu.au/login

Unit description
This is an introductory unit in macroeconomic theory with extensive policy applications. Topics include an introduction to
macroeconomics; national accounting concepts; theory of income determination; inflation and unemployment; economic growth;
money, banking and monetary policy in Australia; fiscal policy; and an introduction to international trade and international finance. The
unit uses only simple algebra and graphs.

Introduction
Macroeconomics is the study of the economy as a whole, which can be national, regional and global economic systems. The
Macroeconomics branch deals with many interesting issues:
Why it is that unemployment rises during recessions, but there are always unemployed people even during good times? Why does
unemployment differ markedly across countries at different times?
Why do some countries grow faster than others? What are the reasons for extraordinary growth for some countries and stagnation
or even deterioration for others?
Why does inflation vary over time and across countries?
Why do economies go through fluctuating patterns with some periods of expansion and some periods of recession? What should
governments do to mitigate economic fluctuations? How much should they do?
Why are some countries strongly affected by economic crisis, while others seem to be less affected?
Although not an easy task, finding answers to so many important questions is the main goal of macroeconomics. In Macroeconomics,
Money and Finance 1102, we will try to accomplish this in the most intuitive way possible. We will start with introducing several key
economic concepts - such as the real gross domestic product, the rate of unemployment, the consumer price index, and so on. Then
you will be steered on a journey of translating abstract symbols, graphs, figures and models into concrete economic stories. These are
the stories that are discussed and debated in news media every day and these are issues that the majority of Australians are
concerned about: growth, living standards, prices and inflation, interest rates, mortgage and other debt, jobs and unemployment, the
Australian dollar, and our current account deficit. How did we get here? Where are we heading as a nation? How will the European
economic meltdown hit us? Why should we be concerned about emerging markets like China, India and Brazil? At the end of the
journey, your efforts and hard work will be rewarded through your developing a new perspective and better understanding of the
mundane details of everyday life around us just like an economist.
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Welcome aboard Macroeconomics, Money and Finance 1102 and enjoy the journey!

Unit content
This unit is a first-year introductory course in macroeconomics (both domestic and international aspects are covered) and assumes no
prior knowledge of macroeconomics or microeconomics. We will start from the very beginning in terms of macroeconomics and build
our understanding each week. For those of you who have not studied macroeconomics before, there is no need to be concerned as we
assume all students have no prior knowledge. For those students who have studied macroeconomics before (perhaps in the TEE) we
expect a much deeper understanding than many of you will have. Either way, there is much we need to learn about the macroeconomy
and financial markets.

Unit goals
The goal of this unit is to develop a solid understanding of the key principles and relationships in macroeconomics to help you
understand the functioning of modern economies and financial markets. Both macroeconomic theory and case studies will be covered
in this course. By the end of the course you should have a better understanding of major historical and contemporary macroeconomic
issues. This will help you read papers such as The Australian and The Financial Review and have a deeper appreciation of the
macroeconomic issues that are written about daily.

Educational principles and graduate attributes

In this unit, you will be encouraged and facilitated to develop the ability and desire to:
master the subject matter, concepts and techniques of their chosen discipline(s) at internationally-recognised levels and standards;
adapt acquired knowledge to new situations;
think and reason logically and creatively;
undertake problem identification, analysis and solution;
question accepted wisdom and be open to new ideas and possibilities;
acquire mature judgment and responsibility in ethical, moral, social, and practical, as well as academic matters;
work independently and in a team.

Learning outcomes
Students are able to (1) describe the operation of the Australian economy and the causes and effects of economic growth, inflation,
unemployment and government policy; (2) demonstrate how foreign political and economic events affect the Australian economy; (3)
read and critically evaluate the financial press as it relates to the macro economy; (4) assess how government policies and changing
macroeconomic conditions affect their own welfare; and (5) cite recent economic history and its impact on current policy initiatives.

Unit schedule
Week

Date

Lecture Topic

Tutorial

Part 1 MEASURING
MACROECONOMIC PERFORMANCE
1
2
3
Part 2 - LONG RUN
MACROECONOMICS
4

Part 3 SHORT RUN

MACROECONOMICS
6

28 July

Measuring macroeconomic performance I

B.O.F. Ch 1: Output and prices
4 August Measuring macroeconomic performance II B.O.F. Ch 2: Saving and wealth
11 August Measuring macroeconomic performance III B.O.F. Ch 3: Unemployment

Tutorial on week 1 lecture

material
Tutorial on week 2 lecture
material

18 August Understanding economic growth B.O.F. Ch 11: Economy in the long run:
introduction to growth
B.O.F. Ch 12: Production function approach
25 August A model of economic growth B.O.F. Ch 13: Saving, capital formation and
comparative economic growth

Tutorial on week 3 lecture

material

1
Economic fluctuations, spending and output September B.O.F. Ch 4: Short-term economic fluctuations
B.O.F. Ch 5: Spending and output in the short
run
8
Government as a policy maker September B.O.F. Ch 6: Fiscal policy

Tutorial on week 5 lecture

material

Page 3

Tutorial on week 4 lecture

material

Tutorial on week 6 lecture

material

8
9

10

Part 4 - OPEN ECONOMY

MACROECONOMICS
11

12
13

15
September
22
September

B.O.F. Ch 7: Money, prices and the reserve

bank
Measuring money and prices B.O.F. Ch 7: Money, prices and the reserve
bank
monetary policy B.O.F. Ch 8: The reserve bank and the
economy
Study break

No regular tutorials; review

tutorial (optional)
Tutorial on week 7-8
lecture material

29
September
6 October Modelling short-run economic fluctuations B.O.F. Ch 9: The aggregate demand
aggregate supply model
B.O.F. Ch 10: Macroeconomic policy

Tutorial on week 9 lecture

material

13
October

Tutorial on week 10 lecture

material

20
October
27
October

Exchange rates and exchange rate regimes B.O.F. Ch 15: Exchange rates and the open
economy
Balance of payments B.O.F. Ch 16: The balance of payments
Review

Tutorial on week 11 lecture

material
Tutorial on week 12 lecture
material

Teaching and learning responsibilities

Teaching and learning strategies
Success in this unit requires that you understand the entire lecture, tutorial, textbook and reading materials. Lectures and tutorials will
cover both the theoretical material covered in the textbooks and readings, as well as practical examples and case studies.
In this unit you need to first master the theoretical economic models, and then be able to discuss their implications in a wide range of
real-world situations.

Teaching and learning evaluation

You may be asked to complete two evaluations during this unit: the Student Perception of Teaching (SPOT) and the Students Unit
Reflective Feedback (SURF). The SPOT is optional and is an evaluation of the lecturer and the unit. The SURF is completed online and
is a university wide survey and deals only with the unit. You will receive an email from the SURF office inviting you to complete the
SURF when it is activated. We encourage you to complete the forms as your feedback is extremely important and can be used to
make changes to the unit or lecturing style when appropriate.

Attendance
Participation in class, whether it is listening to a lecture or getting involved in other activities, is an important part of the learning
process. It is therefore important that you attend classes. More formally, the University regulations state that to complete a course or
unit students shall attend prescribed classes, lectures, seminars and tutorials. Where a student due to exceptional circumstances, is
unable to attend a scheduled class, they are required to obtain prior approval from the unit coordinator to be absent from that class.
Any student absent from class withour having had such absence approved by the unit coordinator may be referred to the faculty for
advice and may be required to withdraw from the unit.

PASS program
PASS is a peer facilitated, cooperative student support scheme for students. PASS gives first year students enrolled in some of the
large core units the opportunity to work collaboratively in groups with the help of competent, caring ,subject experienced student peers.
In PASS, the focus is on the group and learning together. Peer learning is recognised as a powerful learning technique and research
has shown that students who study together outside the classroom achieve better results.
See
http://www.business.uwa.edu.au/studentnet/learning/pass

Charter of student rights and responsibilities

The Charter of Student Rights and Responsibilities upholds the fundamental rights of students who undertake their education at the
University of Western Australia.
The University's charter of Student Rights and Responsibilities is available at
http://www.secretariat.uwa.edu.au/home/policies/charter

Student Guild contact details

Contact details for the University Student Guild can be found at http://www.guild.uwa.edu.au/. The Guild Education Officer is available to
provide assistance and advice on a range of issues.

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ACE/AISE/CARS
Your academic orientation includes three online units which you must complete within the first 10 weeks of your enrolment:
AACE1000 Academic Conduct Essentials (ACE)
AISE1000 Indigenous Study Essentials
CARS1000 Communication and Research Skills

Information for students with disabilities

The University has a range of support services, equipment and facilities for students with a disability. If you would like to receive advice
on
these
services
please
email uniline@uwa.edu.au
or
visit
http://www.studentservices.uwa.edu.au/information_about/disability_programme

Assessment
Assessment overview
Assessment information is provided in the unit outline.

Assessment mechanism
# Component

Due Date

Relates To
Outcomes

1 Tutorial participation

Ongoing

All

Weeks 2-13, deadline Mondays 11:00am every

week.
28 August, 12:00pm
16 October, 12:00pm
19 September, Time and Venue TBA

All

Semester 2 examination period: 8 - 22

November.

1,2,4,5

3
4
5
6

Weight

8%
(3% attendance + 5%
participation)
LMS Quiz
12%
(1% each over 12 weeks)
Individual assignment I 5%
Individual assignment II 5%
Mid-semester
30%
examination
Final examination
40%

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1,2,4,5
All
1,2,4,5

Assessment items
Item

Description

#1 - Tutorial participation

Tutorial marks will be based on two different parts: i) attendance, and ii)
participation.
Attendance: Will be checked at every tutorial section, starting on Week 2. You
are expected to attend your own tutorial group; otherwise your attendance will
not be marked. If you are absent without a medical certificate or special
consideration waiver from the student centre you will be given a mark of zero for
that particular tutorial which will reduce your average.

#2 - LMS quizzes
#3, 4 - Individual
assignments 1 - 2

#5 - Mid-semester
examination
#6 - Final examination

Submission
Procedure

Participation: At each tutorial you are supposed to solve the weekly assignments
and take part in the discussions. Discussion topics may require previous
reading of additional material, posted on LMS. Your tutor will evaluate your
participation in discussion sessions and your performance at solving problems
and exercises posted on LMS. We expect active participation by all students
individually and in group discussions. Tutors have been advised to award the
entire range of marks between 0 and 5 on your participation. Your ability to
present your answers and opinions at your tutorial will contribute to your
participation marks. If you do not make a contribution to tutorial discussions or
problem solving then you will be awarded a mark of 0/5. In other words, students
who do not talk and contribute in tutorials will be throwing away 5% of their final
grade for the unit. If you are absent without a medical certificate or special
consideration waiver from the student centre you will be given a mark of zero for
that particular tutorial which will reduce your average.
There will be 12 online quizzes.
Via LMS.
There will be 2 assignments Assignments need to be type-written, must include Via UniPrint.
an assignment cover sheet.
Full details will be released on LMS during the semester. ** No late submission
allowed. **
The mid-semester examination will cover topics from weeks 1 to 7 and be of 1
hour duration. Examination structure will be announced on LMS, closer to the
examination week.
The final examination will cover the whole course, with a higher weight for topics
from weeks 8 onwards and will be of 2 hours duration. Examination structure
will be announced on LMS, closer to the examination week.

Academic literacy and academic misconduct

The University of Western Australia takes very seriously the matter of academic misconduct by students and has policies in place that
define misconduct (including plagiarism) and the penalties that apply. The consequences for misconduct can be severe, including
exclusion from the University.
All students are expected to make themselves aware of the definitions and the policies relating to academic misconduct, found at the
websites below, and with any additional requirements or stipulations that may be provided by individual coordinators.
http://www.teachingandlearning.uwa.edu.au/tl4/for_uwa_staff/policies/student_related_policies/academic_conduct

Appeals against academic assessment

The full regulations governing appeals procedures are available in the University Handbook available online at
http://rules.handbooks.uwa.edu.au/rules/student_rules/

Textbooks and resources

Recommended texts
Bernanke, B, Frank, R, & Olekalns, N 2014, Principles of Macroeconomics, 4th edn, Mc-Graw Hill
OR
Bernanke, B, Frank, R, & Olekalns, N 2011, Principles of Macroeconomics, 3rd edn, Mc-Graw Hill
[These two books are very similar in content. We will use LMS for practise online materials and will not be using the Mc-Graw Hill online
portals. Students buying new books with registration code for online content of Mc-Graw Hill will find some maths and graphs tutorial as
extra resources compared to students who buy second hand books. However, we will be putting up alternative tutorials on maths and
graphs on LMS which will be freely accessible to all enrolled students]

Additional resources and reading

Additional readings will be uploaded on LMS, progressively.
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Other important information

LCS lecture recordings: most of the lectures will be recorded. But due to equipment failure or such reasons, if a lecture is not properly
recorded, it is at the discretion of the lecturer when or if a replacement recording will be made available. Students should make it a point
to attend lectures and not completely rely on recorded lectures.
Supplementary exams are not offered in this unit unless some special considerations apply. Please refer to the UG student handbook
for details.

Standard of assessment
The Business School must ensure that the processes of assessment are fair and are designed to maintain the standards of the School
and its students. The School follows the UWA marks and grades distribution:
Higher distinction
Distinction
Credit pass
Pass
Fail
Fail
Failed component

(HD)
(D)
(CR)
(P)
(N+)
(N)
(FC)

80-100%
70-79%
60-69%
50-59%
45-49%
0-44%

The scaling of marks to ensure comparability between classes is an acceptable academic practice. The School and Board of
Examiners have the right to scale marks where it is considered necessary to maintain consistency and fairness.

Quality assurance
Your assessed work may also be used for quality assurance purposes, such as to assess the level of achievement of learning
outcomes as required for accreditation and audit purposes. The findings may be used to inform changes aimed at improving the quality
of Business School programs. All material used for such processes will be treated as confidential, and the outcome will not affect your
grade for the unit.

Approved calculators for examinations

The University permits only the use of calculators in examinations when the calculator has an approved sticker and the examiner
permits their use. If the student does not have an approved sticker on their calculator, they will not be permitted to use the calculator.
Calculators can be approved at the Undergraduate Student Centre, the Postgraduate Student Centre or at Student Administration.
Further information is available on the Business School website at http://www.business.uwa.edu.au/students/assessments

Special consideration/alternative arrangements

If you are unable to attend a class, tutorial or examination due to circumstances beyond your control and are seeking an extension for
submission of an assignment or a deferred exam, please read valid reasons for special consideration
a t http://www.student.uwa.edu.au/life/health/uniaccess/special-consideration, complete the application form and submit at the
Undergraduate Student Centre or Postgraduate Student Centre.
PLEASE NOTE that deferred exams are not available in Summer School units.

Acknowledging Sources of Information and the Business School Policy on Plagiarism

Student Services provides an online plagiarism portal that includes a definition of plagiarism and a link to FAQ
http://www.studentservices.uwa.edu.au/ss/learning/online_services/plagiarism_portal
Turnitin' Originality Checking & Plagiarism Prevention is used in the Faculty to allow both educators and their students check written
work for improper citation or misappropriated content. More information about 'Turnitin' can be found at
http://turnitin.com/static/index.html

Referencing
It is important that the referencing of any sources used in your written work is done properly, if only to substantiate the points you are
making in your assignment or project. The Harvard style is the preferred and there are some notes for guidance which have been
prepared by the library staff: Citing your Sources Harvard Style http://libguides.library.uwa.edu.au/harvard
The EndNote software package is a really good system for building up a database of references. Not everyone will want to invest the
time in using this system but you should consider it if you intend to build up resource materials or plan to undertake extensive research
in a particular area. The library staff have also developed a tutoring package: A Quick Guide to Using EndNote which provides the
basics for using EndNote with an essay http://libguides.library.uwa.edu.au/endnote

Last day to add a unit offered in a semester

From 2014, the final date to add a unit has been changed to the end of week 2 of the semester. For further information on important
dates for 2014, refer to http://www.student.uwa.edu.au/course/dates/important

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