Macroeconomics in business

obligatory courses

(in Polish) Podstawy matematyki, mikroekonomia, podstawy finansów.

The aim of the course is to familiarize students with the basic concepts, categories and models of contemporary macroeconomic analysis that are useful in business, in particular when making financial decisions in enterprises and managing financial institutions. After a preliminary analysis of the subject of macroeconomics, the main macroeconomic concepts and relationships are explained: measures of product volume and national income, the conditions of equilibrium in the goods and money markets in the short term in a closed economy and the issues of economic growth are analyzed. An important part of the lecture concerns the issues of monetary and fiscal policy and its impact on production, income and employment.

Topics covered during the lecture:

1. The world of macroeconomic phenomena

1.1. An enterprise in a macroeconomic environment

1.2. Economic situation, crises and economic growth

1.3. Inflation and unemployment

1.4. Macroeconomic theories and models

1.5. Short, medium and long term in macroeconomic analysis

1.6. Closed and open economy

1.7. Macroeconomic policy

2. The subject of macroeconomics in business 2.1. Macroeconomics is the study of the economy

2.2. Gross Domestic Product as a measure of economic activity

2.3. Nominal and real GDP, GDP deflator

2.4. Circular movement model (total production, income and expenditure)

2.5. Macroeconomic dependencies

2.6. System of National Accounts (GNP at market prices, GDP at market prices, GDP as total expenditure, national income and other measures)

3. Production and total demand - goods market

3.1. Factors determining the volume of production in the short term

3.2. Aggregate Demand Analysis

3.3. Equilibrium in the goods market

3.4. Graphical model of equilibrium of production and aggregate demand (Keynesian model)

3.5. Changes in production volume depend on changes in autonomous demand

3.6. Multiplier effect analysis

3.7. The importance of government spending

3.8. Fiscal policy

4. Money and financial markets

4.1. Money - functions and types

4.2. Money demand function (liquidity preference, income volume)

4.3. Money supply and interest rate

4.4. Central bank and monetary policy

4.5. Open market operations and their effects

5. Money and financial markets II

5.1. Banks and financial intermediation

5.2. How do banks create money?

5.3. Money supply model and money creation multiplier

5.4. Monetary policy – reserve requirement rate and discount rate

5.5. Effectiveness of money supply control

5.6. Monetary policy transmission mechanism

6. The Goods and money markets - IS-LM model 6.1. The impact of money and interest rates on the volume of production and income

6.2. Consumption and investment and the interest rate

6.3. Derivation of the IS-LM model

6.4. Monetary and fiscal policy and the volume of production and income

6.5. Shocks in the IS-LM model

6.6. Stabilization of production and income at the potential level

7. Production and price level - AD-AS model

7.1. Production volume and price level changes 7.2. Aggregate demand function – AD

7.3. The impact of monetary and fiscal policy on aggregate demand

7.4. Total supply function - AS

7.5. Aggregate supply curve – SRAS and LRAS 7.6. Classic dichotomy - money neutrality in the long term

7.7. Long-run equilibrium in the AD-AS model

7.8. Demand and supply shocks and stabilization policy

8. AD – AS model – extension

8.1. Stagflation in the interpretation of the AD–AS model

8.2. Total supply function in the short and long run 8.3. "Frictions" and deviations of production from the natural level

8.4. Models explaining "frictions"

8.5. Expectations and imperfect information

8.6. Demand shock and long-term adjustments

8.7. The problem of money neutrality

9. Unemployment and inflation - Philips curve

9.1. Labor market and unemployment

9.2. Theories of unemployment

9.3. Natural unemployment rate

9.4. Social costs of unemployment

9.5. Inflation

9.6. Inflation and interest rate - Fisher's equation 9.7. Social costs of inflation

9.8. Derivation of the Philips curve

9.9. The Phillips curve and economic policy

9.10. Short-run and long-run Philips curve

10. The economic crisis caused by the pandemic and contemporary inflation

10.1. The nature of the current crisis

10.2. Two shocks and a stabilization policy

10.3. The current crisis in the interpretation of the AD-AS model

10.4. Financial policy

10.5. Unconventional monetary policy

10.6. Health and the economic crisis

11. Problems of economic growth

11.1. Why are some countries rich and others poor?

11.2. Factors of economic growth

11.3. Motivations and incentives to work

11.4. Institutions, culture, religion

11.5. Introduction to the Solow model

11.6. The theory of endogenous growth, the process of creative destruction…

12. Dilemmas of macroeconomic policy

12.1. Should macroeconomic policy be active or passive?

12.2. Should policy be discretionary or rule-based?

12.3. Politics in a world of uncertainty and crises

12.4. Government debt and budget deficit

The thematic scope of the exercises includes (minimum scope):

1. Basic concepts of macroeconomics

 Outlining the macroeconomic perspective

 Definition of macroeconomics

 Macroeconomic dependencies

 Introduction of differentiation between nominal and real values

 Enterprise and business decisions, including financial ones, in the macroeconomic environment

2. National income account

 Macroeconomic measures

 Methods of measuring GDP

 Other measures of national income

 Meaning and interpretation of economic data regarding national accounts

3. Circular motion model

 Classification of the main macroeconomic sectors of the economy

 Circular movement of products and money in a closed economy

 Circular movement of products and money in an open economy

4. Changes in the price level in the economy

 Inflation – definition and types

 inflation measurement (CPI, PPI, HICP)

 Business and financial decisions in conditions of inflation (debt inflation effect)

 Costs and consequences of inflation.

 Deflation and its types

 Business and financial decisions in deflation conditions (debt deflation effect)

5. Labor market

 Basic concepts of the labor market and macroeconomic indicators

 Demand and supply in the labor market

 Short- and long-term balance in the labor market

 Definition of economic and registered unemployment

 Economic classification of unemployment

 Effects of unemployment

 Unemployment and inflation – the Phillips curve

 Okun's Law

6. Economic growth

 Growth and economic development

 Measurement of economic growth and development

 Growth factors and economic development factors

 Technological factor in economic development

 Solow-Swan model of economic growth

 knowledge and institutions in economic development

7. The business cycle in the economy

 Definition and stages of the business cycle

 Business cycle models

 Assessment of the economic environment and business decisions using the business cycle (leading indicators)

 Business cycle and capital market cycle

8. Keynes' model - global demand

 Consumption function (AD) and saving function (AS)

 Investment demand

 State of short-term equilibrium

 The impact of investments on the equilibrium level

 The paradox of thrift

 Global demand, its components and importance in the economy - impact on the decisions of economic entities

9. The role of the state in the economy - fiscal policy

 The state and global demand.

 Instruments of the state's economic policy

 Budget and budget deficit

 Public debt

 Fiscal policy and its types

 The influence of the state on the decisions of economic entities, including financial ones

 Maastricht criteria

10. Foreign trade and its impact on the macroeconomic environment

 Aggregate demand in an open economy

 Effectiveness of fiscal policy in the modern economy

11. Money and the bank

 Money, its functions and importance

 Cost of money – interest rate

 Banks and the banking system

 Central bank – its functions in the economy

 Monetary policy

12. Policy mix – IS-LM model

 Demand for money

 Equilibrium in the money market

 Coordination of monetary and fiscal policy

 Policy mix and the business cycle

13. Global, supply prices and macroeconomic adjustments

 Global supply

 Macroeconomic demand curve

 Credit channel in the economy

 Potential production

 Wage adjustments

14. Dilemmas of macroeconomic policy

Textbook:

D. Begg, G. Vernasca, S. Fisher, R. Dornbush, Makroekonomia, PWE, wyd. V zmienione, 2015

Other:

A.Z. Nowak, T.Zalega, red. Naukowa, Makroekonomia, PWE, 2015

O. Blanchard, Makroekonomia, Wydawnictwo nieoczywiste, 2017

N.G. Mankiw, Macroeconomics, Worth Publishers, 2010

It is also recommended to read economic reports published by the World Bank, ECB, NBP, as well as the Economist, Financial Times and Rzeczpospolita

Knowledge: the student knows and understands

K_W01 - Knows and understands at an advanced level economic terminology in business organizations in the discipline of economics and finance and in complementary disciplines (management and quality sciences, legal sciences), in particular for financial management and accounting.

K_W03 - Knows and understands at an advanced level economic theories and models regarding the functioning of organizations and the entire economy.

K_W05 - Knows and understands to an advanced degree technological, social, political, legal, economic and ecological processes and phenomena and their impact on financial decisions in organizations, the functioning of the organization and the entire economy, including the principles of protection of industrial property and copyright.

Skills: student can

K_U01 - Is able to use the theory of the discipline of economics and finance and complementary disciplines (management and quality sciences, legal sciences) to recognize, diagnose and solve problems related to financial decisions in organizations and management of financial institutions, using the appropriate selection of sources and adapting existing methods.

K_U02 - Is able to correctly interpret technological, social, political, legal, economic and ecological processes and phenomena and their impact on financial decisions in organizations, the functioning of the organization and the entire economy, using the appropriate selection of sources.

K_U05 - Is able to plan and organize own and team work.

K_U06 - Has the ability to self-educate and improve acquired qualifications.

Social competences: the student is ready to

K_K01 - Is ready to assess and critically approach situations and phenomena in the economic environment related to financial management in organizations, accounting, management of financial institutions and strategies of financial institutions.

K_K02 - Is ready to use an economic approach to think and act in an entrepreneurial way.

K_K03 - Is ready to comply with professional ethical standards.

The lecture ends with an exam. The exam can be conducted on-site or remotely. You can take the exam after passing the exercises.

The exam involves writing an essay. The student chooses one question out of four. He has 60 minutes to write the essay. Standard grading scale. The essay grade is 50% of the overall course grade. The remaining 50% is the grade from the exercises. The final result from teaching the subject is entered into the USOS.

The evaluation of the student's work results during the exercises is comprehensive. It consists of: a final colloquium (in the form of a multiple-choice test, possibly remotely, on the same date for all groups), completion of at least 2 case studies in groups, activity in classes (including solving tasks, participating in discussions, homework ). The grade for passing the exercises is the result of:

- 50% final test;

 35% final presentations – case studies;

 15% work during classes and at home

The learning effects during the exercises will be verified on an ongoing basis using the tasks performed by participants during the exercises and their activity.