Preliminary informations Microeconomics Macroeconomics Exams and rules

Economics

A.Y. 2018-19

October 1, 2018

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Preliminary informations Microeconomics Macroeconomics Exams and rules

Lecturers

1 Luigi Benfratello
luigi.benfratello@polito.it
Office: 3rd floor, DIGEP department, phone number 7237 (it
might change soon)
Office hours: usually Tuesday 2:00 pm-4:00 pm; or send a
email to fix an appointment

2 Anna D’Ambrosio
anna.dambrosio@polito.it
Office: 1st floor of the DIGEP department, Ufficio Professori
Esterni (it might change soon)
Office hours: usually Tuesday, 10:00 am-11:30 am; or send a
email to fix an appointment

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Preliminary informations Microeconomics Macroeconomics Exams and rules

Program and references, I

Theory:
Slides on the portal, Material folder
Besanko & Braeutigam: Microeconomics, 4th ed., 2011,
Pearson
Blanchard: Macroeconomics, 6th ed., 2012, Prentice Hall

Exercises:
past exams in the Material folder

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Preliminary informations Microeconomics Macroeconomics Exams and rules

Program and references, II

The course analyses the functioning of an economic

system, composed of economics agents interacting each
other, and the ensuing equilibria reached by economic
variables. To this end, it builds on both micro and macro
theories.
Microeconomics: individual units interact on individual
markets, trading goods and services; it studies the partial
equilibrium, because the solution is related to a specific
operator or a specific market. The focus is on finding the
optimal allocation of available resources.
Macroeconomics: economic operators are handled as
aggregates who behave according to the prediction of
microeconomics; the focus is on the production growth,
unemployment and inflation.

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Preliminary informations Microeconomics Macroeconomics Exams and rules

Preliminaries

Economics is a social science

Science: it must explain economic phenomena, not just
describe them; it adopts a scientific method (observation,
induction, deduction, verification) and to do so, it constructs
economic models.
Models are useful mainly: (a) to explain, and (b) to predict
Models are a conceptual construct, the “lab” of social sciences
Social:
Economic phenomena are results of decisions of human beings,
usually not deterministically predictable
Rarely possible to have repeated observations of the same
phenomena =⇒ not easy to adjust theories to facts;
sometimes it is the description of facts that may be adjusted.

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Preliminary informations Microeconomics Macroeconomics Exams and rules

Microeconomics: Themes, I
Economics is the science that deals with the allocation of
limited resources to satisfy unlimited human wants.
Alternative definition:
Economics is the science of the decisions of rational agents
living in societies, that aims to suggest action guidelines to
improve welfare.
Microeconomics deals with limits and choices
Resources are said to be scarce because their supply is limited
Limited budgets
Limited time
Limited ability to produce
The scarcity of resources means that we are constrained in the
choices we can make about the goods and services we
produce, and thus also about which human wants we will
ultimately satisfy.
“The science of constrained choice” 6 / 16
Preliminary informations Microeconomics Macroeconomics Exams and rules

Microeconomics: Themes, II

How do we make the most of limits?

How do we allocate scarce resources?

Three key analytical tools:

1 optimization,
2 equilibrium analysis, and
3 comparative statics.

Main fields of application:

Consumer theory : it describes how consumers maximize their
well-being, using their preferences, to make decisions about
trade-offs
Theory of the Firm: Constraints on production capacity and
financial resources create needs for trade-offs. It describes how
these trade-offs are best made
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Preliminary informations Microeconomics Macroeconomics Exams and rules

Microeconomics: Themes, III

Prices & Markets

How are prices determined?

Centrally planned economies: governments control prices
Market economies: prices determined by interaction of market
participants

Markets: collection of buyers and sellers whose interaction

determines the prices of goods
The market mechanism is automatic, invisible, impersonal

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Preliminary informations Microeconomics Macroeconomics Exams and rules

Macroeconomics: Preliminaries

What are the key themes of macroeconomics?

1 How are GDP, Inflation, unemployment, money defined and
related each other?

2 What is the value of these variables reached at the equilibrium

of the system?

3 How the equilibrium can be affected by the Government,

through fiscal and monetary policies?

4 How these findings change once we consider open, and not

closed, economies?

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Preliminary informations Microeconomics Macroeconomics Exams and rules

Macroeconomics: Themes, I

Macroeconomics is focused on the level and the growth over

time of aggregate variables for a specific economic system,
usually a country

These variables are production (GDP), average price of goods

and services, unemployment rate, consumption, investments,
quantity of money, interest rates and price of financial assets

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Preliminary informations Microeconomics Macroeconomics Exams and rules

Macroeconomics: Themes, II

How these variables are measured?

These variables are defined and measured according to some

statistical conventions

National accounts record the value of those variables in a

specific time period

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Preliminary informations Microeconomics Macroeconomics Exams and rules

Macroeconomics: Themes, III

How these variables are related?

Economic theories suggest:

the determinants of these variables
how they are related

The equilibrium value they will reach in two markets: the

market of goods and the monetary market

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Preliminary informations Microeconomics Macroeconomics Exams and rules

Macroeconomics: Themes, IV

Role for government interventions

The equilibrium these variables reach can be unsatisfactory

from the government point of view

Through fiscal policy (i.e. taxes, subsidies and public spending)

and monetary policy (i.e. changes in the quantity of money)
the government can change the equilibrium of the economy

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Preliminary informations Microeconomics Macroeconomics Exams and rules

Macroeconomics: Themes, V

Economies are open, not closed

The conclusions for a closed economy must be generalized by

allowing goods and capitals flows with the rest of the world

Balance of payments, fixed and floating exchange rates

How the effect of fiscal and monetary policies change once the
we allow the economy to be open?

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Preliminary informations Microeconomics Macroeconomics Exams and rules

Exams and rules, I

Dates (provisional)
I trial January 28th , 2019, 8:30 am - 10:30 pm
II trial February 12nd , 2019, 11:00 pm - 1:00 pm
III trial June 17th , 2019, 11:00 am - 1:00 pm
The exam is written and it consists of three questions
It is permitted to use one calculator and writing material.
Paper will be provided. The consultation or use of any kind of
material during the exam is strictly forbidden.
Any form of communication is strictly forbidden, as well as
the use of any electronic device other than the calculator.

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Preliminary informations Microeconomics Macroeconomics Exams and rules

Exams and rules, II

For the first inscription to the exam only, students benefit

from a 2 points bonus
Marks cannot be refused but students can keep the mark
on hold (“freeze”) and try a second time
If the student decides for this second test to be corrected,
then the old mark is eliminated, and the final mark is the one
of the second test
Students cannot keep the mark on hold for more than
once
After September 2019, all frozen marks are cancelled

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