GA503 - Economics
Credit Points: 15 credit points
Workload: 36 hours
Aims & Objectives
This is a Year 1, Core Unit in the Graduate Diploma of Accounting. For Course Learning Outcomes and further information relating to Graduate Diploma of Accounting program please visit our website: http://www.mit.edu.au/study-with-us/programs/graduate-diploma-accounting.
The aim of this unit is to introduce business students to fundamental economic principles and demonstrate practical applications to concepts such as consumer behaviour, business decision-making and macroeconomic variables. The unit also aims to introduce students to the elementary analytical tools most often used by economists. Over the course of the semester, the unit will be divided into two broad sections: Microeconomics and Macroeconomics. Weekly lecture notes have significant content and will require considerable study time from the students outside class time. You are encouraged to read the lecture notes prior to coming to the lectures every week.
Unit topics include:
- Topic 1 introduces the study of economics, more specifically the nature of the “economic problem” and the methodologies that economists use to solve the problem. Models and graphical analysis are very important to an economic approach and this will be dealt with in topic 1 as well.
- Topic 2 will introduce the simple market model of demand and supply. This model is used to explain trade between consumers and producers of goods and services. Attention will be drawn to the use of demand and supply to better understand economic behaviour in some markets. The interaction of demand and supply in determining the price and quantity exchanged will be examined, together with changes in demand and supply conditions resulting in different allocation of resources.
- Topic 3 considers demand and supply in the context of understanding elasticity, which explains the sensitivity of consumers or producers to changes in prices, incomes and the prices of related goods. This analysis of sensitivity has important implications for the revenue earned by producers and the income spent by consumers.
- Topic 4 relates to the effect of demand and supply interaction in the market applications. Previous topics will be applied to particular markets and show how consumers and producers react by changing their choices where there are significant alterations in the market price-setting mechanism. We will look at the impact of sales taxes on market outcomes, the effect of price floors and price ceilings and so on. Also this topic covers briefly the concept of Externalities as misallocation of scarce resources occurs in the price-setting mechanism or sometimes known as market failures.
- Topic 5 examines more closely how the supply side of the basic model is derived. It focuses on the decision framework for individual producers. Students will be introduced to the structure of firms and the economic problems they all face. Students also will learn about the objectives of firms and the limits to profitability. The main purpose of this section is to show the links between the productivity of a firm’s resources and the nature of its costs of production.
- Topic 6 examines Market Structure – Perfect Competition, Monopoly, Oligopoly and Monopolistic Competition. We will further examine the mechanics of the market by looking at how firms interact and compete with each other and how their choices are constrained by the nature of competition between firms in the market.
- Topic 7 is an introduction to Macroeconomics: Measuring the size of the economy, GDP, Real and Nominal GDP and standard of living measure, Business Cycle and Economic Growth. In this section students will be exposed to the concept of calculating the nominal GDP and also the income method and expenditure method of calculating such measure. In addition, the concept of real GDP will be presented as well as inflation.
- Topic 8 considers Inflation and Unemployment. The idea of inflation is further developed in a theoretical framework whereby causes and reasons are explained at length. In addition, unemployment as a macroeconomic objective is introduced together with the measurement of that variable and the different types. The different phases of the business cycles are presented in accordance with the economic conditions prevailing in Australia.
- Topic 9 examines Aggregate Demand and Aggregate Supply. A more formal macroeconomic model is presented: the AD / AS model. The different factors explaining the shapes of the AD and AS curves are presented, together with a number of possible changes that will cause movements and shifts in those curves. Students are expected to thoroughly understand the diagrams and be able to relate to real life scenarios in an exam or assignment situation.
- Topic 10 starts by explaining the role and functions of money. Then we proceed to explain the role and functions of monetary policy as one of the macroeconomic tools or management policy. Constant reference will be made to the RBA website and students will be expected to regularly refer to this website. Topic 10 also looks at the other macroeconomic management tool at the disposal of the government, Fiscal Policy. The concepts of Taxation and Government revenue in an Australian context will be analysed in depth. Also reference will be made to the federal budget and students will be required to study the budget and relate it to assignment questions or exam situations.
- Topic 11: Balance of payments and Exchange Rate regimes, where the open economy is analysed together with concepts of foreign exchange regimes and the impact on macroeconomic objectives.
The Course learning outcomes applicable to this unit are listed on the Melbourne Institute of Technology’s website: http://www.mit.edu.au/study-with-us/programs/graduate-diploma-accounting.
Unit Learning Outcome
At the completion of this unit students should be able to:
a. Identify and explain the key ideas that define economic way of thinking and the maximisation of scarce resources.
b. Analyse how prices are determined in a market.
c. Compare and contrast the key characteristics of various market structures and market strategies adopted by firms in different market environments.
d. Differentiate the objectives and consequences of macroeconomic policy in Australia and debate the conflicts between the achievements of those objectives.
e. Analyse economic fluctuations and Gross Domestic Product.
f. Describe and discuss the concept and consequences of unemployment.
g. Examine the relationship between exchange rate and international trade.
h. Compare monetary policy and fiscal policy in a macroeconomics context.
|Assessment Task||Due Date||A||B||Unit Learning Outcomes|
|1. Contribution and Participation||Weeks 1-12||-||6%||a-h|
|2. Formative Assessment||Week 3||-||4%||a|
|3. Assignment [Individual]||Week 6||20%||-||a-c|
|4. Assignment [Group]||-||20%||-||d-f|
|5. Case Study Analysis [Individual] (3 hours)||TBA||-||50%||c-h|
Task Type: Type A: unsupervised, Type B: supervised.
Contribution and Participation (6%)
This unit has class participation as an assessment. The assessment task and marking rubric will follow the Guidelines on Assessing Class Participation (https://www.mit.edu.au/about-us/governance/institute-rulespolicies-and-plans/policies-procedures-and-guidelines/Guidelines_on_Assessing_Class_Participation). Further details will be provided in the assessment specification on the type of assessment tasks and the marking rubrics.
NOTE: All School of Business units 3-hour workshops Flipped Classroom Mode.
Textbook and Reference Materials
Note: Students are required to purchase the prescribed textbook and have it available each week in class.
Copies of the textbook are available in the MIT Library.
Prescribed Text Book
- Gans, J.; Kings, S.; Stonecash, R.; Byford, M.; Libich, J. and Mankiw, N. G. (2018). Principles of Economics, (7 Ed), Australia, South Melbourne: Cengage Learning Pty Limited.
Other recommended references
- Abel, A. B., Bernanke, B.S. and Croushore, D. (2011). Macroeconomics, (7 Ed), Prentice Hall.
- Hubbard, R.G., Garnett, A., Lewis, P.T., and O’Brien, A.P. (2016). Essentials of Economics, (3 Ed). Frenchs Forest, NSW, Australia: Pearson.
- Gordon, R. J. (2012), Macroeconomics, (12 Ed), Frenchs Forest, NSW, Australia: Pearson.
- Layton, A., Robinson, T. and Tucker, I. (2016).Economics for Today, (5 Asia Pacific ed), South Melbourne, Australia: Cengage Learning Pty Ltd.
- Mankiw, N. G. (2014). Essentials of Economics, (6 Ed). USA: South Western Cengage Learning.
- McTaggart, D., Findlay, C. and Parkin, M. (2010). Microeconomics, (6 Ed), Frenchs Forest, NSW, Australia: Pearson.
- Chhabra, V. (2009) Domestic and International Responses to the Global Financial Crisis, RBA ECONOMICS COMPETITION 2009 Best Essay from a First Year Student https://www.rba.gov.au/education/talks-and-events/economics-competition/2009/pdf/first-year.pdf.
- Hagerty, M. R., & Veenhoven, R. (2003). Wealth and happiness revisited–growing national income does go with greater happiness. Social indicators research, 64(1), 1-27. https://personal.eur.nl/veenhoven/Pub2000s/2003e-full.pdf.
- RBA Statement on Monetary Policy NOV 2018.https://www.rba.gov.au/publications/smp/2018/nov/
- Shin, D. C. (1980). Does economic growth improve the human lot? Some empirical evidence. Social Indicator Research, vol. 8, No. 2 (pp. 199-221).https://www.researchgate.net/publication/226098638_Does_Rapid_Economic_Growth_Improve_the_Human_Lot_Some_Empirical_Evidence.
Check the unit Moodle page for additional recommended readings throughout the trimester.
The Referencing style for this unit is APA: See the MIT Library Referencing webpage: https://library.mit.edu.au/referencing/APA and the Unit Moodle page for additional referencing support material and weblinks.
MIT is committed to ensure the course is current, practical and relevant so that graduates are “work ready” and equipped for life-long learning. In order to accomplish this, the MIT Graduate Attributes identify the required knowledge, skills and attributes that prepare students for the industry.
The level to which Graduate Attributes covered in this unit are as follows:
|Ability to communicate||Independent and Lifelong Learning||Ethics||Analytical and Problem Solving||Cultural and Global Awareness||Team work||Specialist knowledge of a field of study|
|Levels of attainment||Extent covered|
|The attribute is covered by theory and practice, and addressed by assessed activities in which the students always play an active role, e.g. workshops, lab submissions, assignments, demonstrations, tests, examinations.|
|The attribute is covered by theory or practice, and addressed by assessed activities in which the students mostly play an active role, e.g. discussions, reading, intepreting documents, tests, examinations.|
|The attribute is discussed in theory or practice; it is addressed by assessed activities in which the students may play an active role, e.g. lectures and discussions, reading, interpretation, workshops, presentations.|
|The attribute is presented as a side issue in theory or practice; it is not specifically assessed, but it is addressed by activities such as lectures or tutorials.|
|The attribute is not considered, there is no theory or practice or activities associated with this attribute.|