Economics is about the choices and priorities we must make in a society due to the scarcity of resources. Typical topics include markets, prices, demand and supply, taxes, unemployment, interest rates, economic fluctuations, long-term growth, and economic policy.

This cource build upon 6003 Economics. Some of the topics overlap, but we will go deeper into the theories and reasoning and make more use of formal models and mathematics. Economic models are central to this subject. The models are formulated with equations, functions and graphical representations.

As in the introductory Economics course, we distinguish between microeconomics and macroeconomics.

In microeconomics, you will learn about costs, revenues, the firm's optimal supply in the goods market, and optimal demand in the labor and capital market. You will also learn how the quantity produced in a firm is affected by changes in costs, technology, etc. Furthermore, you will learn about the consumer's optimal demand, based on a desire to maximize their utility for a given budget restriction. Finally, we will look at how trade between consumers and producers occurs when the market is characterized by imperfect competition, such as monopolies.

In macroeconomics, we study total/aggregated variables such as GDP, unemployment, the government budget, inflation, and interest rates. In the study of the development of GDP, a distinction is made between the short and long run. You will learn different explanations for short run business cycle fluctuations and how these propagate through the economy. Since the labor market is largely affected by and affects the business cycles, this will be linked to the study of business cycle fluctuations. We will also study wage formation in the labor market. Finally, we will examine economic policy, especially how we can analyze monetary policy and fluctuations within a macroeconomic model.

Subject description 6274

Economics II

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