EC114 Introductory Macroeconomics Applications Lecture 5
J James Reade
12/02/2015
Introduction
- Basic recap.
- Exam tips/prep.
Not enough theory?
- Production possibilities frontier…
- Marginal returns, diminishing or otherwise…
- Financial markets (still to come)…
Settlers next week
- Come and play Settlers, 11:30am-2pm Monday, 12-2pm Tuesday.
Basic Recap
- Week 1: Chapters 1–3: What is Macro, National Accounts, the ``Supply Side’’.
- What is Macro? Covered in Part C question…
- National accounts: National income and measurement.
- Supply side: Growth, what causes growth (growth accounting).
- Week 2: Chapters 4–5: Growth
- Capital accumulation and growth, the golden rule.
- TFP, human capital and technology.
- Week 3: Chapter 7: Unemployment.
- Labour demand, labour supply, natural rate of unemployment (both approaches).
- Week 4: Chapters 8–9: Trade and Globalisation.
- Trade: Comparative advantage, Heckscher-Ohlin, intra-industry trade, strategic trade theory, …
- Globalisation: Trade liberalisation, FDI and MNEs, immigration.
Part C: Fact and Theory
- Did we cover this in lectures?
- Yes, applications lecture 1, slides 14–16.
- Why is it here?
- Because I want to emphasise the distinction between economic facts and theories.
- What are economic facts:
- The (many) events that happen around us.
- The objective events: E.g. in 2010 there was a hung parliament, in 2011–12 economic growth stagnated.
- What are economic theories?
- Collections of ideas to explain why economic events (facts) are linked, and in what way.
- Specify a causal mechanism from one kind of event (trade liberalisation) to another (greater economic growth).
- By nature they are simplified versions of reality, otherwise simply too complicated.
- What makes a good economic theory?
- It is fit for purpose.
- Are its simplifying assumptions appropriate?
- Is it consistent with the economic facts?
Exam Tips/Prep
- Time yourselves, keep to time.
- If you don’t answer a question, I can’t give marks.
- Answer the question set:
- Not the question you wanted to be set.
- Part A: Quick-fire, 1.8 minutes per question.
- Part B: Allocate 21 to this question.
- Choose 1 from 3 essays.
- Essays could be from any of five topics covered so far.
- Part C: Allocate 21 to this question.
- Compulsory question on economic facts and theory.
Response to Various Points Raised in Classes
- It’s too much to cover!
| Lectures |
|
30 |
1 |
| Tutorials |
|
9 |
| Guided independent study |
|
121 |
39 |
| Total hours by term |
|
160.00 |
40.00 |
- Above is from the module description, which is online:
121/10=12.1, did you do 12.1 hours in weeks 1–5?- If not, you’re packing a lot of hours into this week…
- 12.1 hours is plenty of time to read the textbook chapters and some extra reading…
- There isn’t enough time in the exam!
- How long is a piece of string?
- The point is: That is the amount of time you have.
- Time management.
- Determining what is important to write (ordering of knowledge).
- How much should I write for each (sub) question?
- However much you can write in the time you have available.
- Not enough theory in lectures?
- Go back through the slides, read the chapters.
- Be aware which lectures are core, which are applications.
- This is all too late!
- If you revise the material, you will be able to answer the questions.
- You all have my email address, I have had office hours.
- The slides are crap as I can’t print them:
- They have always been online before lectures.
- You have audio in addition to slides.
Definitions
- Unemployment: The state of being unemployed.
- How do you use the term?
- “I am unemployment”? “He is unemployment”? “The unemployment is 8%”?
- This is not economics, it’s the basics of communication. Be clear.
- Unemployed: adjective, (of a person) without a paid job but available to work.
- What is a state? It is being part of the stock of unemployed people.
- The stock is distinct from the flows into and out.
- My advice:
- Learn definitions for every economic term covered in the course. So…
- Get an Economics Dictionary: http://www.amazon.co.uk/Collins-Dictionary-Dr-Christopher-Pass/dp/0004703723
- Week 4: Output, Opportunity cost, exchange rate, bargaining power, terms of trade, Income elasticity, commodity and food prices, speculation, capital-intensive goods, trade restrictions, human capital,Technology, import, export, Intra-Industry Trade theory, Consumer preferences, returns to scale, factor prices, Capital stock, Machinery, workers, factor of production, skilled labour, Factor Price Equalisation Theory, competitiveness, Strategic Trade Theory, resource endowments, Protectionist policies, Stolper-Samuelson theorem, no lobby group, free trade, developed nations, Protected industries, employment, unskilled labour, monopoly power, goods and services, capital flows, tariffs, countries, trade, Comparative advantage, Import substitution, Prebish-Singer, agriculture, TFP, manufacturing, financial sector, Growth, Liberalisation, institutions, controlling interest, firm, investment, R&D, financial flows, FDI, Immigration, Wages, Inequality, MNEs, moral hazard, market, government, Globalisation.
- These are things you already know (e.g. covered in micro). Basic life skill to be able to define something.
Markscheme
- A First class answer will:
- Answer part (a) setting out basic concepts covered in lectures.
- Answer part (b) showing appreciation of the concepts referred to in the question, how they are linked together and to the question.
- Answer part (c), showing understanding of wider applications to real-life situations
- Upper Second
- Answer part (a) setting out basic concepts covered in lectures.
- Answer part (b) reasonably: can define concepts, and link them together, but cannot link them to the question.
- Answer part (c) in a basic way: define concepts but unable to link them together or to the question set.
- Lower Second
- Answer part (a) setting out basic concepts covered in lectures.
- Answer part (b) in basic way: define concepts but unable to link them together or to the question set.
- Unable to answer part (c)
- Third
- Answer part (a) setting out basic concepts covered in lectures.
- Unable to answer part (b) or (c) in any basic way.
- Fail
- Unable to answer part (a), or parts (b) and (c).
- Be aware: The third or fail could be you if you run out of time.
- Even if you are a better student than that, knowledge wise.
- Time-keeping, and ability to concisely express knowledge are vital life skills to be learnt.
Finally…
- All the best for the exam.
- It is set so I can learn how much of the course you have understood.
- It is not set to trip you up, confuse you, or anything sinister.
- Please be prompt:
- One we have begun, late-comers will not get extra time.
- If you have special needs, please identify yourselves:
- By email to me.
- Tomorrow when you get here.
- Some light relief…
- Come and play Settlers, 11:30am-2pm Monday, 12-2pm Tuesday.