Course Description:

School/Portfolio: Course Code/ID: Course Title: Teaching Location: Program(s): Author: Level: Semester: Prerequisite(s): Corequisite(s): Exclusion(s): Credit Points/ Progress Units: ASCED Code: The Business School BUECO1508 Business Macroeconomics All Partners Bachelor of Commerce/Bachelor of Business Alex Millmow Introductory Summer, 2012-2013 Nil Nil Nil 15 091901

Adopted Reference Style APA 1 COURSE ORGANISATION:

1.1 Handbook/s For full details of programs and school procedures, please refer to the University of Ballarat handbook (http://www.ballarat.edu.au/current-students/publications,-policies-andforms/handbook/2012) and The Business School Programs Handbooks available at http://www.ballarat.edu.au/business/handbooks Important information located in the handbooks includes: Student responsibility Appeal process Special Consideration process and Unsatisfactory progress - Early forms Intervention Submission of tasks and assignments Grading codes

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1.2 Staff The most appropriate contact is your teacher. If necessary they will contact the Course Coordinator at the University of Ballarat. Name: Email: UB Web: 1.3 Coordinator Alex Millmow a.millmow@ballarat.edu.a u www.ballarat.edu.au Lecturer Tutor

Consultation Hours

Your lecturer will inform you about consultation hours. Its best to contact me by email. 1.4 Prescribed Text This subject will be conducted on the presumption that students have a copy of: Sloman, J. and Norris, K., Principles of Economics, 2010, Third Edition, Pearson Education Australia and the study guide to the Sloman and Norris text (by Dwyer and Alhashimi). 1.5 Plagiarism Plagiarism is presenting someone else work as your own and is a serious offence with serious consequences. As set out in the University Regulation 6.1.1, students who are caught plagiarising will, for a first offence, be given a zero mark for that task. A second offence will result in a failing grade for the course(s) involved and any subsequent offence will be referred to the Student Discipline Committee. Student must be aware of the University Regulation 6.1.1 Student Plagiarism, available at http://www.ballarat.edu.au/legislation/6.1.1-plagiarism. The link to the library website for more information is: http://www.ballarat.edu.au/library/assignment-and-researchhelp/referencing Students must: fully reference the source(s) of all material, even if you have re-expressed the ideas, facts or descriptions; acknowledge all direct quotations; and not submit work that has been researched and written by another person Turnitin Turnitin is a software application that allows students to check their assignments for referencing and citation omission or incorrect paraphrasing.

1.6 UBOnline UBOnline is used to host course resources for all courses. Students can download lecture and tutorial notes to support class participation. Students login to the UBOnline at https://ubonline.ballarat.edu.au/login/index.php.
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2.

OBJECTIVES

This course is a prerequisite for second and third year Economics courses. It is also one of the prescribed courses accredited for professional qualifications in Accounting. The course aims to provide Students of B.Com, B.Bus. and B.Man. with the foundations for a better understanding of both the domestic and global macroeconomic business environment for firms and consumers. It focuses on the analysis of Economic Indicators to identify Economic problems, the use of Economic Theories to identify the causes of the problems, and the understanding of the impact of Economic Policies as solutions to Economic problems on business operations. Knowledge Students completing this course should attain the following:

Understand the framework of the Macroeconomic business environment: the relationship between Macroeconomic problems, theories and policies Appreciate the meaning of Macroeconomic indicators Understand the nature of Macroeconomic problems Understand the differences of Macroeconomic theories Understand the functions of Macroeconomic policies Understand the key economic forces within the global business environment

Skills Acquire basic Research skills in collecting and collating Macroeconomic data Be capable of identifying Economic trends and problems Have the capacity to apply relevant theories to explain the cause(s) of Macroeconomic problems Have the capacity to critically evaluate the impact of various policy options on business Be able to apply Economics skills in the analysis of implications of the business environment for business Have the oral and written communication skills to successfully conduct an Economic analysis for business purposes

Values Foster a habit to update with market information and follow key economic and business trends Be reflective on economic problems Value the role of economic theory as a way of analysing macroeconomic problems Value the implications of economic policies for business
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Course Description: BUECO1508 Business Macroeconomics

Develop an interest in economics and its association with business Value the knowledge of Economics as a life-long activity for the self development of business skills CONTENT:

Topics and sub-topics may include:

Economic Indicators, National accounts, Circular flows The Business cycle and Macroeconomic problems The relationship between Economic performance and Business performance Theories of Income Determination: the Classical model versus the Keynesian Income-Expenditure Theory The role of Money and interest rates, Banks and the Reserve Bank of Australia in the economy Economic Policies and Policy mix: Fiscal policy and Monetary policy, and the impact of Economic policy on business and consumers Trade and exchange rates, the impact of globalisation

LEARNING TASKS AND ASSESSMENT:

Summary It is emphasised that this course requires a significant commitment outside of formal class contact. The learning tasks in this course may include classes (lectures, tutorials or seminars), required reading, the preparation of answers to set questions, exercises and problems, and self-study. In addition, students may be required to complete an assignment, test or examination. Summary of suggested time allocations for this course Classes Reading Preparation of set questions, exercises and problems Preparation of assignment Study and revision for test and end of semester examination TOTAL 3 hours per topic for 12 topics 2 hours per topic for 12 topics 4 hours per topic for 12 topics 36 hours 24 hours 48 hours 20 hours 22 hours 150 hours

Attendance and Participation It is in students interest to make every effort to attend all the classes for this course and to complete all preparatory and assessment tasks. It is our experience that those students

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who do not attend class or carry out the associated activities are more likely to do poorly or to fail the course completely. Learning Task A closed book midsemester test Assignment A closed book examination Note on Assessment The University of Ballarat PASS grade is achieved at 50%. To pass this course, students must achieve this AND pass the examination! Students are strongly advised to attempt ALL assessment tasks. Students who do not submit a task(s) or fail a task(s) in the semester will be identified as a student at risk of unsatisfactory academic progress (outlined in the Business School Handbooks) and will be directed to the Schools Intervention Program. Students who encounter difficulties or who are otherwise concerned regarding their progress should consult their lecturer. Assessment criteria set out the details by which performance in each task will be judged. This information will give a clear and explicit understanding of the expected standards to be achieved relative to the marks awarded. 4.1. MID-TERM TEST Before the middle of the Semester there will be a short Test worth 20%. The questions will be mostly Short Answer question(s). The Test will take place during one of the Lecture sessions. You do not have to pass this Test in order to pass the Subject. However it will determine your final aggregate score. . Macroeconomic Assignment Submit answers to all the following questions. Be sure to explain your reasoning clearly and fully and use diagrams where appropriate. The questions are applied and analytical. They can only be answered by the student having a knowledge of macroeconomic principles. Students should note that this learning task must be an individual piece of work. That is, it must be the creation of the person submitting it. DO NOT SCAN OR PHOTOCOPY MATERIAL INTO YOUR ANSWERS Assessment Mid-semester test Written Assignment Final Examination Weighting 20% 20% 60% Week Due Week 6 Week 10 Exam Period

1. Consider a macroeconomy was initially at equilibrium level of real GDP. Using an aggregate demand and aggregate supply diagram or model of the economy,
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graphically illustrate and discuss the short-run and long-run effects of the following events upon the economy: (a) The Central Bank within the economy reduces interest rates. (b) There is an increase in private domestic investment spending. (c) An increase in international oil prices. (d) A depreciation in the foreign exchange rate value of the economys currency. (e) A fall in real estate prices in the capital cities of the country in question (hint: think of the effect upon ones wealth level) (f) The country main exports rise in price while the goods the country imports from abroad fall in price ie its terms of trade improves in the country favour (3 marks)
2.

Collect an article from an Australian newspaper that relates to the current Australian macroeconomy. In a paragraph indicate which section of the course it applies to, why you selected the article and provide a brief summary of what the article is about (1 mark) Many people find the current unemployment figures for Australia a bit unbelievable. Why is this? Why might the official statistics be inaccurate (1 mark) equilibrium GDP and the level of savings of an increase in the savings function. What happens to the level of savings? What would happen to equilibrium income if there is a sustained rise in private investment spending? (2 Marks)

3.

4. Using the simple Keynesian (J-W) model to assess the implications for

5. State the difference between: Money multiplier and income expenditure multiplier. -between the interest rate and the exchange rate - between the balance of payments deficit and the budget deficit -between the trade deficit and net foreign debt (2 marks) 6. Assuming that the money market is initially in equilibrium, trace through the effects of a rise in the money supply on the money market on the interest rate and also on output, employment and the price level. (2 marks)
7. Distinguish between ongoing demand pull and ongoing cost push inflation.

Carefully draw them. Why might it be difficult to establish the extent to which a given rate of inflation is either demand pull or cost push? (2 marks)
8. Using the AD-AS model show how the Australian economy has continued to

expand year after year since 1991. What are the macroeconomic dangers facing Australia? When commentators suggest that the Australian economy is a two speed economy what are they referring to? (2 marks)

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9. The central bank (the Reserve Bank of Australia) decided to implement an

expansionary policy action. What would you expect to happen to the nominal interest rate, the real interest rate and the money supply? Under what economic circumstances IS this type of policy action be appropriate? What dangers might ensue from it (2 marks)
10. Why has the Australian dollar soared over the last five years? What are the

domestic economic implications for producers and for consumers? (3 marks)

Due Date: Week 10 4.2. Final Exam The Examination will be held during the official University Examination period. The Examination will be a formal supervised testing situation in which students are required to make responses to unit-related questions. The purpose of the Examination is to enable the student to:

Display their level of knowledge and understanding of the theories and content of the unit Test your ability to think clearly under time constraints and to record this process in a clear and concise form.

ASSESSMENT OF EXAMINATION The Examination will account for 60 percent of the total Assessment. The Examination will be of two-hour duration. Grading will be on an individual performance basis. The Examination will be assessed according to the following criteria:

The ability of students to display their level of knowledge and understanding of the theories and content of the unit The ability to think clearly under time constraints and to record this process in a clear and concise form.

CONTENTS TO BE EXAMINED will be the work covered in Class and by the prescribed Text. This will be further clarified during the Revision period, prior to the Examination.

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SCHEDULE:

As the semesters timetable will vary across the UB locations, the following schedule outlines a set of topics that will be covered in this unit. The nominal teaching load is three hours a week for 12 weeks. If your location runs this course for less than 12 weeks, your lecturer will adjust the timing of the delivery of the materials. Please note that the sequence and content of lectures and tutorials may need to be changed and the following information should be used as a guide. AN INTRODUCTION TO MACROECONOMICS Why does Economics matter? Introduction to Economics, What do Economists do exactly? Methodology in the Study of Economics The price is right- a quick look at the Market System. As Good as it Gets : A quick trip around the current Australian economy The Washing Machine of our Economy The Circular Income flow and macroeconomics What makes the economy grow? The driving force of Macroeconomics - the Theory of Income determination The Multiplier Income Determination - the Keynesian model of inflation and unemployment Business Cycles and the State of the Economy Income determination theory, the Keynesian analysis of the business cycle. What is inflation? What is unemployment? Peaks and troughs and booms and busts. READING Chapters 1 and 10 TUTORIAL S No Tutes First Week

Chapter 10 Chapters 10 and 11

Tutes Begin

Chapter 11 Chapter 11

Is it all about the Money? The Nature and Role of Money Functions of money, the Financial system The Money Market and supply and demand AS EASY AS AD-AS A new simpler model to understand the macroeconomy Showing inflation using AD-AS model Cost push inflation and demand pull inflation

Chapter 12

Chapter 13

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How to become the Federal Treasurer of Australia! The essentials of Macroeconomic Policy Macroeconomic Policy Goals Fiscal and Monetary Policy Transmission Mechanisms Long term approaches to Macroeconomic Policy Supply side Policy Contemporary overview of Australian Fiscal and Monetary policy Lets Trade The basis for international trade Free trade versus protectionism Trade blocks and free trade agreements Whats Globalisation got to do with it? A small, open and vulnerable economy: Australia in the global economy. Trade flows and the terms of trade The Balance of Payments Our foreign debt. Whats the Exchange rate? The economic consequences of Globalization Wrap up Fitting the theory to the practice-why are economic problems sometimes difficult to solve Revision lecture and an update on the state of Australian economy and the challenges it faces

Chapter 14

Chapter 14

Chapter 15

Chapter 16

Chapter 16

6.

ADDITIONAL RESOURCES:

References on Business Economics (Library Dewey decimal number is U330). Do not just quote these to make it look like you have done extensive research. The main text cited for your assignment should be the Prescribed Text). Any more should imply further research. Also Sloman has a great web site where you can test your understanding of the concepts you are trying to understand using multiple choice and true/false questions. To access it just Google Principles of Economics 3e Sloman Atkinson, G.B.J. (1998) Business Economics. Harlow, Esses: Addison-Wesley. Brewster, David (1997) Business Economics: decision-making and the firm. London: Fort Worth. Crompton, Paul, Swann, Michael, Hopkins, Sandra, and McEachern, William A. (2002) Macreconomics: a contemporary Introduction. Melbourne: Nelson.
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Greenwood, Malcolm S. and Carter, M.J. (1997) Business Economics: concepts and cases. London: International Thomson Business Press. Hornby, Win., Bob Gammie, and Stuart Wall. (2001) Business Economics. 2nd Edition. Sydney: Pearson. Jackson, John. and McIver, Ron. (2003) Macroeconomics. Seventh Edition. Boston: McGraw-Hill Neil Harris Business Economics: theory and application. 2001. Melbourne: Butterworth and Heinemann. McAleese, Dermot (2001) Economics for Business: Competition, Macro-stability and Globalisation. 2nd Edition. Sydney: Pearson. Perman, Roger. (1999) Business Economics. New York: Oxford University Press. M Stewart (19670 Keynes and After Penguin Keynes Still the best and simplest guide to

Williams, Jeremy B. and Lawrey, Roger. (2000) New Economics for the Asia-Pacific: an issues-based modular approach. Sydney: The McGraw-Hill Companies, Inc. Worthington, Ian., Chris Britton, and Andy Rees. (2001). Economics for Business: Blending theory and practice. Sydney: Pearson. Additional References on Macroeconomics (Library Dewey Number is U338) Abel, Andrew B. and Ben S. Bermanke (2001). Macroeconomics. 4th Edition. Sydney: Pearson. Baumol, W.J; Binder, A.S; Gunther, A.W, & Hicks, J.R.C. (1992). Economies: Principles and Policy. 2nd Ed., Sydney: Harcourt Brace Jovanovich. Blanchard, Olivier Jean. (2000) Macroeconomics with Active Graphs CD. 2nd Edition. Sydney: Pearson. Colander, David and Edward Gamber (2002). (2002). Macroeconomics. Sydney: Pearson. Cowie, Judy, John Snelling, and Vern Marshall. (2001) Reading Between the Lines 7th Edition. Sydney: Pearson. Fraser, I; Fraser, S; Gionea, J. and Vickers, D. (1994). Economics for Business. Sydney, McGraw Hall Froyen, Richard T. (2002) Macroeconomics: theories and policies. 7th Edition. Sydney: Pearson.

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Gordon, Robert J. (2000) Macroeconomics. 8th Edition. Sydney: Pearson. Hastings, T; Spiers, D. & Davis, B. (1996). Study Guide to Accompany Microeconomics, Third Australian Edition. Melbourne: Longman. Jackson, J; McIver, R. (2003). Macroeconomics. 8th Ed., Sydney: McGraw Hill textbook we used in 2004, not a bad book if you can get your hands on it) (A

Lewis, Philip, Peter Drake, Anne Garnett, D Johannes Juttner, Keith Norris, and Malcolm Treadgold. (1998) Issues, Indicators and Ideas: a guide to the Australian economy. 2nd Edition. Sydney: Pearson. Neal, Penny. (2002) Macroeconomics Study Guide to the 2nd edition of Economics and Macroeconomics by Sloman and Norris. Sydney: Pearson. Waud, R.N. Maxwell, P.; Hocking, R; Bonnici, J. and Ward, I. (1996). Economics: Third Australian Edition. Sydney: Longman. Williamson, Stephen (2002) Contemporary Macroeconomics. Sydney: Pearson. Library resources: Dont forget the Librarys PRINT and online databases. Attend a library skill session if you need help with these. Internet resources: Australian Securities and Investment Commission: www.asic.gov.au The Stock Exchange: www.asx.com.au The Australian Bureau of Statistics: www.abs.gov.au The Reserve Bank of Australia: www.rba.gov.au The Commonwealth Treasury: www.treasury.gov.au

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7.

ADDITIONAL TIPS: How to Study BUECO1508

The following is a guide assisting Students in studying this course.

i) ii)

Have complete access to the textbook (and if possible study guide) over the whole course and the exam questions are built around it. PLEASE DOWNLOAD THE POWERPOINT LECTURE NOTES, TAKE THEM TO CLASS AND SUPPLEMENT THEM BY TAKING DOWN NOTES FROM WITH WHAT YOUR LECTURER IS SAYING!!!! The Lectures are not taped.

iii) Attend all lectures and read all recommended materials as this will give you a broad understanding of the topic and where it fits into the subject.
iv) Tutorials will begin in the second week of the semester and follow weekly.

v) Tutorial exercises will be placed on Moodle. vi) Prepare answers to all tutorial / workshop questions as you may be asked to present and explain a solution in class.
vii) Tutors are not expected to cover all questions in tutorials, so access the solutions from

the relevant Moodle folder in the following week.

viii) Tutorials will be a forum for practical application of the theories you are taught in

lectures.
ix) Some interactive discussion and participation will be expected in tutorials.

x) Lectures, tutorials and readings are not substitutes but complementary.

xi) For some assignment and exam preparation extra reading may be required and you

will be advised what to read in advance. xii) Revision exercises in the form of past mid-term tests and exam paper solutions will be made available for students to work through.

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