Macroeconomics A

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Course Unit Code114-0301/03
Number of ECTS Credits Allocated6 ECTS credits
Type of Course Unit *Compulsory
Level of Course Unit *First Cycle
Year of Study *First Year
Semester when the Course Unit is deliveredSummer Semester
Mode of DeliveryFace-to-face
Language of InstructionCzech, English
Prerequisites and Co-Requisites Course succeeds to compulsory courses of previous semester
Name of Lecturer(s)Personal IDName
KOL50Dr. Ing. Eva Kolcunová
JAN77Ing. Ivana Jánošíková, Ph.D.
PAL32Ing. Irena Paličková, Ph.D.
JAN27Ing. Hana Janáčková, Ph.D.
LOK02Ing. Aleš Lokaj, Ph.D.
LIB009doc. Dr. Ing. Jan Libich
SUL080Ing. Monika Šulganová, Ph.D.
BAD0012Ing. Ondřej Badura
Summary
The aim of this course is to explain macroeconomic phenomena and processes in
the economy. Strong emphasis is laid on the understanding of mutual
relationships among macroeconomic variables. Also economic policy practised by
governments and central banks has a very important role in the course. The
basic course Macroeconomics A is followed by the intermediate course
Macroeconomics B in the 4th study year, and in case of doctoral studies by
advanced course Macroeconomics C.
Learning Outcomes of the Course Unit
The pedagogical aim of this course is students´ ability
- to understand and to define basic macroeconomic entities
- to identify main connections (relations) among them
- to interpret topical processes and events in national, European and world economy from the position of the macroeconomic theory
- to discuss macroeconomic problems in the environment with differentiated opinions
- to compare current macroeconomic processes in different countries
- to use the knowledge in macroeconomics to assess processes on microeconomic level
- to continue to study the inter - mediate course in macroeconomics (Macroeconomics B)
Course Contents
I. INTRODUCTION TO ECONOMICS
(Only course taught in the winter semester)
- Economic assumptions and contexts of production.
- Production factors, production possibility frontier.
- Money, their formation and economic functions.
- Market and market mechanism.
- The main directions of contemporary economic thought.

II. Macroeconomics

1st MEASURING PRODUCT ECONOMY.
- Macroeconomic aggregates. Product gross and net, the real and nominal.
- Methods for calculating GDP and GNP.
- Alternative indicators of economic activity.
- The economic level of the country.

2nd PRODUCT AND TOTAL EXPENSES (spending pattern).
- Assumptions macroeconomic equilibrium in terms of the relationship of the product of the economy and total expenditure - 4 sector model.
- The function of consumption, savings and investments.
- Multiplier effects of changes in spending.
- Multipliers - investment, government spending, taxation and foreign trade.
- A real product and product potential. Deflation (recessionary) gap.

3rd Aggregate supply and aggregate demand (AS - AD model).
- Neoclassical and Keynesian approach to shaping the aggregate supply curve.
- Attempt of synthesis - the Keynesian and neoclassical band.
- Aggregate demand curve.
- Equilibrium product and the equilibrium level.
- Product Spaces and ways of closing through economic and political measures.

4th MONEY IN MACROECONOMIC SYSTEM - commercial and central banking.
- Identification of money. Monetary aggregates.
- The quantity theory of money.
- Transaction equation shifts.
- Factors affecting demand for money. Transaction demand and speculative.
- Offer money. The role of banks in the process of making money. Central Bank.
- The level of required reserves. Money multiplier.
- Equilibrium in the money market and the equilibrium interest rate.

5th INFLATION. MEASUREMENT OF PRICE LEVELS.
- Price indices (CPI, IPD, PPI).
- The definition of inflation. Typology of inflation.
- Measurement of inflation.
- Causes of inflation.
- The consequences of inflation.
- Possibilities of anti-inflationary policy.

6th UNEMPLOYMENT.
- Concept of the unemployed. Typology of unemployment.
- Measurement of unemployment.
- Causes of Unemployment - neoclassical and Keynesian views.
- The natural rate of unemployment and "full employment".
- Consequences of unemployment.
- Policy options for employment.

7th Monetary Theory and Policy.
- The objectives of monetary policy - the intermediate and final.
- Influencing the monetary base. Monetary policy is restrictive and expansive.
- Discount Policy.
- Open market operations.
- Changes in the reserve requirement.
- "Dilemma" central bank.
- Theory of neutrality of money.

8th FISCAL THEORY AND POLICY.
- Definition of fiscal policy.
- State budget - revenue and expenditure side.
- Types of taxes.
- State budget deficit - a cyclical and structural. Public debt - internal and external.
- Financing of the state budget - crowding out effect - direct, indirect.
- Tools fiscal policy. Built-in stabilizers. Discretionary action.
- Supply side economics. Laffer curve.

9th OBJECTIVES OF ECONOMIC POLICY.
- Consistency and inconsistency of economic policy goals.
- Phillips curve and its genesis.
- Magic quad - interpretation.
- "Hardship index" (Misery Index).

10th ECONOMIC GROWTH AND ECONOMIC CYCLE.
- The theory of economic growth. The concept of "growth" and "development".
- Measuring economic growth.
- Quantitative and qualitative growth factors, barriers to growth.
- Production function - the essence.
- The concept of technological change and innovation.
- The concept of the economic cycle. Comparison of neoclassical and Keynesian interpretations of the cycle.
- Causes of the cycle on the demand side and supply side. Phase cycle.
- Okun's Law.
- Theory of a real cycle. The political cycle.

III. INTERNATIONAL ECONOMICS

11th INTERNATIONAL MONETARY SYSTEM. MONETARY AND SHAPING COURSE.
- The essence of the exchange rate. Types of exchange rates and exchange rate regimes.
- Floating free and controlled.
- Graphic presentation of the formation and exchange rate changes help invitation demand graph.
- Devaluation (depreciation) and revaluation (appreciation) - their influence on the trade balance. J - curve.
- Factors affecting exchange rates. The theory of purchasing power parity.
- Intervention in currency markets - intervention purchases and sales - the logic of these operations.
- The problem of optimal currency area. Monetary Union and the Euro.

12th EXTERNAL BALANCE OPEN ECONOMY - BALANCE OF PAYMENTS AND ITS STRUCTURE.
- Economy in a matrix of international economic relations.
- Structure of balance - the balance of payments components.
- Analysis of partial balance.
- Balance of payments deficit.
- Extempore: mercantilism.

13th INTERNATIONAL TRADE - ABSOLUTE AND COMPARATIVE ADVANTAGES.
- Closed and open economy. The causes of international trade exchange.
- Theory of absolute advantage in trade.
- The theory of comparative advantage in trade.
- The law of one price. Arbitration - the essence of the process.
- Protectionism and free trade. The consequences of the introduction (removal) of import duties - graphic interpretation.
- Free Trade Area. Customs Union. World Trade Organization.


Exercise:
Practice is defined by the content of lectures, exercises used to practice and application of lectures on specific model problem situations.

Credit will be awarded to students who obtain at least 18 out of a maximum possible 35 points.


1. Current macroeconomic problems of the Czech Republic. Debate.
2. The calculation of gross domestic product (GDP) and Gross National Product (GNP).
3. spending pattern with a multiplier. Calculation of individual types of multipliers. Compared multiplier effects of various types of expenses.
4. AS-AD model. Determination AD curve. Analysis of the shape and curves. Shaping the macroeconomic balance.
5. Process of shaping the supply of money: money multiplier.
6. The calculation of the consumer price index and the implicit price deflator. Calculating the rate of inflation. Inflation - diagnosis of various types.
7. Unemployment - calculate the unemployment rate. Analysis of the causes and consequences of unemployment. Phillips curve.
8. Objectives and instruments of monetary policy (in the Czech current context).
9. The objectives and instruments of fiscal policy. (in the Czech current context).
Deficit financing from the state budget - the "crowding out effect" cover the deficit, the state and public debt. Supply-side economics.
10. Formation of the exchange rate. Intervention in the foreign exchange markets. Analysis of the balance of payments.
11. Confrontation keynes and neoclassical theory.
12. Test.
Recommended or Required Reading
Required Reading:
JUREČKA V. a kol. Makroekonomie. 2. aktualizované vydání. Praha. Grada 2013. ISBN 978-80-247-4386-8.
HOLMAN, Robert. Ekonomie. 6. vydání. Praha: C. H. Beck, 2016. ISBN 978-80-7400-278-6.
KRUGMAN, P. R., WELLS, R.: Macroeconomics. 3rd edition. Worth Publishers, 2012. ISBN 978-1429283434.
Samuelson P. A., Nordhaus W. D.: Economics. New York. McGraw-Hill 2005
JUREČKA V. a kol. Makroekonomie. 2. aktualizované vydání. Praha. Grada 2013. ISBN 978-80-247-4386-8.
HOLMAN, Robert. Ekonomie. 6. vydání. Praha: C. H. Beck, 2016. ISBN 978-80-7400-278-6.
KRUGMAN, P. R., WELLS, R.: Macroeconomics. 3rd edition. Worth Publishers, 2012. ISBN 978-1429283434.
Recommended Reading:
FRANK, R., B. BERNANKE, K. ANTONOVICS and O. HEFFETZ. Principles of Macroeconomics. 6th ed. McGraw-Hill Higher Education. 2016. 816 Pages. ISBN: 978-0073518992.
HEYNE, P., P. J. BOETTKE and D. L. PRYCHITKO. The Economic Way of Thinking. 13th ed. Prentice Hall, 2013. 456 pages. ISBN 978-0-13-299129-2.
KRUGMAN, P. and R. WELLS. Macroeconomics. 4rd. ed. Macmillan Learning, 2015. 595 p. ISBN: 978-1-4641-1037-5.
STONECASH, R. E., J. LIBICH, J. GANS, S. KING, M. BYFORD and N. G. MANKIW. Principles of Macroeconomics. 6th ed. South Melbourne, Cengage Learning Australia, 2014. ISBN 9780170248518.
FRANK, R. a BERNANKE, B. Ekonomie. Praha: Grada Publishing, 2003.
HEYNE P., BOETTKE P. J., PRYCHITKO D. L.: The Economic Way of Thinking, 13th edition. Pearson, 2013. ISBN 978-0132991292.
MANKIW, N. G.: Macroeconomics. 9th Edition. Worth Publishers, 2015. ISBN 978-1464182891.
WAWROSZ, P., H. HEISSLER, P. MACH a M. HELÍSEK. Makroekonomie. Základní kurs. Praha: Eupress, 2012. ISBN 978-80-7408-059-3.
Planned learning activities and teaching methods
Lectures, Seminars
Assesment methods and criteria
Task TitleTask TypeMaximum Number of Points
(Act. for Subtasks)
Minimum Number of Points for Task Passing
Exercises evaluation and ExaminationCredit and Examination100 (100)51
        Exercises evaluationCredit35 (35)18
                Průběžná kontrola studiaWritten test15 0
                Zápočtový testWritten test20 0
        ExaminationExamination65 26