This is a Year 1, Core Unit in the Master of Professional Accounting. For Course Learning Outcomes and further information relating to Master of Professional Accounting program please visit our website:  http://www.mit.edu.au/study-with-us/programs/master-professional-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 has 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.