University of Wollongong - ECON205: Macroeconomic Theory and Policy

This subject, Macroeconomic Theory and Policy (ECON205) - analyses the major factors which determine economic behaviour in the aggregate and evaluate how alternative macroeconomic policies may improve economic performance. In doing so the course examines the major determinants of aggregate demand equilibrium, namely consumption and investment demands, international factors, money and interest. Monetary and fiscal policies are examined using this analytic structure to determine the effectiveness of these policies for an open economy. Aggregate supply equilibrium is analysed in terms of wages, prices and employment. The problems of inflation and employment are also considered along with possible wages policies. Longer term explanations of economic growth and associated policy prescriptions are also considered.

✔ On successful completion of this subject, you will be able to: 

• identify the important determinants of real output, interest rates, exchange rates, prices, and employment for a small open economy;
• analyse monetary and fiscal policies and be able to evaluate their effectiveness;
• analyse the problems associated with inflation and unemployment; and,
• understand explanations of economic growth and policy prescriptions.