Macroeconomics Business & European Studies Program 2016/2017 Year - Barcelona

This course is an introduction to Macroeconomics, the branch of economics that deals with the workings of the economy as a whole. The purpose of this course is to give the students a broad overview of the theoretical foundation that supports Macroeconomic decision making. It is from this theoretical grounding that the students can understand how decisions related to Macroeconomics issues can impact not only themselves but others as well. It is important to help students understand the importance of the variations of aggregate (economy-wide) variables, such as GDP, unemployment rates, aggregate demand, aggregate supply, total profits, wages, price levels, etc, taking into consideration the crucial fact that it is within a capitalist economic system that these variables are examined.

As an introduction, the course will explain the foundations of Economics and will present a descriptive model of production that establishes the relationships between the main types of economic goods. The concept of surplus and the basic implications of opening up the economy to international exchange will be examined. The contribution of different approaches and schools of thought within macroeconomics will be overviewed, under the assumption that each of them has its own merits and shortcomings.

Explaining the determinants of profits, aggregate supply and aggregate demand will allow us to introduce the concept of macroeconomic equilibrium, both in terms of output and employment, and to present the different means through which the periodic fluctuations of the economy can be stabilized.

Both fiscal and monetary policy can be effective tools for dampening the business cycle, but as we will show they sometimes work at cross-purposes. In those cases, which is the best way to promote employment? If wages were to be lowered, would the result be a higher or lower level of unemployment? Such questions will be answered both in terms of purely domestic implications and in terms of the effects on the foreign competitiveness of the economy.

Finally, the causes and consequences of inflation will be examined and as the role that Government and the public sector in general should play in the economy.