MIDLANDS STATE UNIVERSITY

FACULTY OF COMMERCE

DEPARTMENT OF ECONOMICS

MODULE: EC104 MACROECONOMICS 1

PROGRAMMES: B.Com. ECONOMICS/ ACCCOUNTING/MARKETING/ INSURANCE &RISK MGT/

RETAIL & LOGISTICS/ TOURISM & HOSPITALITY/ BANKING & FINANCE

Lecturer: Mr. E. Ndlovu Cell 0772367995 E Mail: ndlovue@staff.msu.ac.zw

: Mr. F Mhere Cell 0775149774 E-mail: mheref@staff.msu.ac.zw

Module Description The purpose of this module is to provide students with a solid introduction to macroeconomic analysis.
This module will teach students the basic tools of macroeconomics and apply them to real world economic policy issues. The
module is intended to provide students with some working knowledge of how the macroeconomy works especially
government policies and their impact on the economy. How macroeconomic problems are solved. Topics include business
(trade) cycles, money and banking, multicurrency systems, international trade, national income accounting and
determination, role of government policy in promoting growth, role of fiscal and monetary policies in stabilising the
economy, relationship between inflation and unemployment, monetary and fiscal policies. Emphasis is placed on developing
countries, but drawing experiences from developed countries scenarios. Practical examples to be drawn from current events
in and outside Zimbabwe. It is assumed that students are familiar with basic algebra and also able to solve and graph
equations.

Module Aims
 The student should be able to identify phases in the business cycle and recommend appropriate policies.
 Compute national income and evaluate the impact of a policy change on the national income.
 Evaluate the various policies on economic growth and development and also on international trade.

Module Objectives
After completing this course, the students should be able to:
 Understand how to evaluate macroeconomic conditions such as unemployment, inflation and economic growth
and development.
 Understand what determines economic growth (and development).
 Understand how monetary policy and fiscal policy can be used to influence macroeconomic conditions both in the
short run and long run.
 Understand accounts of macroeconomic events as reported in the media and take a critical view of the accounts.
 Understand why there is a role for the government to play in market economies.
 Understand the impact of macroeconomic forces (trade, growth, globalization) on business performance and the
wider economy.

Approaches
Lectures, independent study, discussions, group work and brief student presentations.

Assessment
It is recommended that students complete all assignments, tasks and tests in order to achieve the learning outcomes of the
course. The total mark will be determined on the following basis: 30% is from tests/presentation/ and assignments
(continuous assessment), while the remaining 70% is from the 3 hour final examination composed of multiple choice
questions and essays.

Module Content

1 Introduction

 Definition of macroeconomics
 Macroeconomics vs microeconomics
 Business cycles

1
  Macroeconomics objectives and policies

2. National Income Accounting and Determination

 Definition of national income

 The circular flow of income
 The National Accounts
 Determination of equilibrium national income
 Multiplier Analysis

3. Money and Banking

 Origins of Money
 Functions and properties of money
 Money Supply
 Demand for Money
 Monetary Policy

4. Unemployment

 Definition
 Types and causes of Unemployment
 Consequences of unemployment
 Possible solutions to unemployment
 Discussion of policies meant to curb unemployment
 Problems faced by the informal sector

5. Inflation

 Definition
 Measures of inflation
 Advantages and effects of inflation
 Causes of inflation
 Discussion of disinflationary policies

6. International Trade

 Exchange rates
 Benefits and reasons for Trade
 Protectionism

7. Balance of Payments (BOP)

 Definition
 Components of BOP
 BOP Problems

8. Economic Growth

 Definition and Measurement of economic Growth

 Factors affecting economic growth
 Developing countries: definition and characteristics
 Barriers to and disadvantages of economic growth
 Economic Development

9. Macroeconomic Blueprints

 Transitional Stabilization Programme, Vision 2030

 Rationale for introducing the Economic blue prints.
 Their thrust in relation to economic revival of the economy.
 Opportunities and challenges in attaining the desired objectives.
 Programmes in relation to Economic Growth and Development.

10. Dollarisation/ Multicurrency System

2
  Definition
 Why dollarize or use multicurrency?
 Consequences of dollarization/ using multicurrency system
 Evaluation of alternative options

References

Main Texts
Mankiw, N.G (2013) Macroeconomics. Worth Publishers/ Palgrave Macmillan.
McConnell, C. R and Brue, S.L (2005) Economics: Principles, Problems, and Policies. McGraw-Hill Irwin.

Recommended Texts

1. Lipsey R.G and Chrystal, K.A (2015); Economics;

2. Beardshaw J (2001); Economics: A student Guide; 5th Edition; Financial Times Prentice Hall
3. Jochmzen P (2010): Essentials of Macroeconomics; Peter Jochumzen and Ventus Publishing ApS
4. Kennedy P.E (2010); Macroeconomics Essentials; 3rd Edition
5. Lim G.C and Marvelis P.D (2008); Computational Macroeconomics for the Open Economy
6. Garba, A-G,; Egwaikhide, F and Adenikinju, A (eds)(2004) Leading Issues in Macroeconomic Management and Development.

Other Publications
Transitional Stabilization Programme, Vision 2030
Newspapers