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ECON2004 – Macroeconomic Analysis and Applications

2021 – Session 1, Special circumstances


As part of Phase 3 of our return to campus plan, most units will now run tutorials, seminars and other small group activities on campus, and most will keep an online version available to those students unable to return or those who choose to continue their studies online.

To check the availability of face-to-face and online activities for your unit, please go to timetable viewer. To check detailed information on unit assessments visit your unit's iLearn space or consult your unit convenor.

General Information

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Unit convenor and teaching staff Unit convenor and teaching staff Unit Convenor
Ben Wang
4ER 443
Teaching Assistant
Ge Xu
Credit points Credit points
Prerequisites Prerequisites
50cp at 1000 level or above including ECON110 or ECON1021
Corequisites Corequisites
Co-badged status Co-badged status
Unit description Unit description

This unit builds on the IS-LM model by incorporating expectations into goods and financial markets, by introducing openness and by integrating the labour market. The aggregate supply and demand framework is used to examine the short- and medium-run effects of monetary and fiscal policy. Other topics may include: growth; inflation; unemployment; and financial crises. This unit should enable students to evaluate the recurrent debates on macroeconomic policy and to analyse important real-world problems.

Important Academic Dates

Information about important academic dates including deadlines for withdrawing from units are available at https://students.mq.edu.au/important-dates

Learning Outcomes

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

  • ULO1: Analyse and apply theoretical models in contemporary macroeconomics.
  • ULO2: Critically analyse models and theories to solve contemporary macroeconomic problems.
  • ULO3: Apply macroeconomic models and theories to understand macroeconomic phenomena, and critique macroeconomic phenomena both individually and as a member of a team.

Assessment Tasks

Name Weighting Hurdle Due
Final examination online 50% No Final exam period
Mid session online test 20% No Week 7
Online quiz 10% No Week 3-4, 6-7, 9-10, 12-13
Group presentation 20% No Week12

Final examination online

Assessment Type 1: Examination
Indicative Time on Task 2: 35 hours
Due: Final exam period
Weighting: 50%

A two-hour examination, consisting of descriptive short and long answer questions, will be held during the University Examination Period.

On successful completion you will be able to:
  • Analyse and apply theoretical models in contemporary macroeconomics.
  • Critically analyse models and theories to solve contemporary macroeconomic problems.

Mid session online test

Assessment Type 1: Quiz/Test
Indicative Time on Task 2: 10 hours
Due: Week 7
Weighting: 20%

Mid session online test

On successful completion you will be able to:
  • Analyse and apply theoretical models in contemporary macroeconomics.
  • Apply macroeconomic models and theories to understand macroeconomic phenomena, and critique macroeconomic phenomena both individually and as a member of a team.

Online quiz

Assessment Type 1: Quiz/Test
Indicative Time on Task 2: 10 hours
Due: Week 3-4, 6-7, 9-10, 12-13
Weighting: 10%


Several online quizzes will be held during the session. Details will be available in iLearn.


On successful completion you will be able to:
  • Analyse and apply theoretical models in contemporary macroeconomics.

Group presentation

Assessment Type 1: Presentation
Indicative Time on Task 2: 20 hours
Due: Week12
Weighting: 20%

Part 1: Tutorial solution presentations (10%) Part 2: Central Bank Simulation (10%)

On successful completion you will be able to:
  • Analyse and apply theoretical models in contemporary macroeconomics.
  • Critically analyse models and theories to solve contemporary macroeconomic problems.
  • Apply macroeconomic models and theories to understand macroeconomic phenomena, and critique macroeconomic phenomena both individually and as a member of a team.

1 If you need help with your assignment, please contact:

  • the academic teaching staff in your unit for guidance in understanding or completing this type of assessment
  • the Learning Skills Unit for academic skills support.

2 Indicative time-on-task is an estimate of the time required for completion of the assessment task and is subject to individual variation

Delivery and Resources

Lectures Wednesdays 3-5PM, ONLINE

Lecture slides will be available on the unit web page at http://ilearn.mq.edu.au, and (barring technical hitches, the possibility of which should be allowed for) videos of the lectures will be available on Echo. During the session, unforeseen circumstances may require the cancellation of a lecture and/or tutorial. Any changes will be announced as far as possible in advance both in lectures and on the unit website. Students are strongly advised that their learning is significantly enhanced by watching the lecture presentations online at the appointed time. It is assumed that students will attend all online lectures and tutorials at the prescribed times. Students who miss watching lectures put themselves at a significant disadvantage for several reasons, including:

(i) Not all the material in the text is covered in the unit, and not all the material in the unit is covered in the text. In some places the text deals with issues in greater depth than is necessary for the unit, and in other places it doesn’t go far enough. The lectures contain all the unit material taught at the level required for the assessment tasks, and are your guide to the unit content. The tutorials will demonstrate the way questions in macroeconomics are approached.

(ii) The lectures and tutorials will include significant guidance about the style and content of the final exam and recommendations about study technique.

(iii) It is difficult (and often impossible) for staff to provide meaningful assistance to students outside class times on topics for which they did not attend the relevant lectures and tutorials.

Required Text

"Macroeconomics" Blanchard and Sheen, 4th edition, 2013 ISBN: 9781486041220 

This 4th edition is significantly different to the 3rd edition, and students are strongly advised to get access to the 4th edition. DO NOT get the 3rd (or earlier) edition. (Please do not email to ask if it's OK to get the earlier editions.)

Technology Used and Required Lecture and tutorial material as well as up to date information concerning any aspect of the unit, including any changes to the schedule, will be available to students by logging on to the unit web page at http://ilearn.mq.edu.au. Students are required to use word processing and presentation softwares such as Word and powerpoint in some of the assessment tasks.

Teaching and Learning Strategy This unit is taught as a mix of lectures and tutorials. The lectures are designed to provide the tools which can then be applied in tutorials. The tutorials comprise numerical problems and analytical questions and will be detailed in a separate document on iLearn at the end of Week 2. There should be the opportunity to explore issues raised in lectures and to ask questions. The tutorials aim to improve understanding of macroeconomic theory and policy.

Unit Schedule

Topic 1 Introduction; a brief look at global conditions with a focus on Australia’s recent performance; output and business cycles, inflation, unemployment.

B&S Chs 1, 2

Various statements and speeches on monetary policy by Reserve Bank of Australia, eg www.rba.gov.au/PublicationsAndResearch/ StatementsOnMonetaryPolicy/index.html

Tim Robinson, Sarantis Tsiaplias and Viet H. Nguyen "The Australian Economy in 2014–15: An Economy in Transition" Australian Economic Review, 48: 1–14

Christopher Kent "The Economic Transition in China" RBA 2016 p1-17 http://www.rba.gov.au/speeches/2016/sp-ag-2016-06-16.html

Topic 2 The IS-LM model: Short-run goods market and money market equilibrium; monetary policy & fiscal policy; the policy mix – comparing a money supply rule with an interest rate rule.

B&S Chs 3, 4, 5

Reserve Bank of Australia “Monetary Policy” http://www.rba.gov.au/monetary-policy/index.html

D Romer (2000), Keynesian Macroeconomics Without the LM Curve, Journal of Economic Perspectives, Spring, pp 149-169

Topic 3 The labour market; wage and price setting in the medium run; the natural rate of unemployment; tax distortions and full employment.

B&S Ch 6

Christopher Kent (2014) "Cyclical and Structural Changes in the Labour Market" http://www.rba.gov.au/speeches/2014/sp-ag-160614.html

Topic 4  The AS-AD model: All markets together from the short run to the medium run; aggregate supply; aggregate demand with a fixed money supply and with an interest rate rule using a price level target; monetary, fiscal and oil price shocks in the AS-AD model.

B&S Ch 7

G Stevens (2003) “Inflation Targeting: A Decade of Australian Experience” RBA 2003, http://www.rba.gov.au/publications/bulletin/2003/apr/pdf/bu-0403-3.pdf

Topic 5  Evolution of the Phillips curve; theories of expected inflation; the sacrifice ratio

B&S Ch 8

D Gruen, A Pagan, C Thompson (1999) “The Phillips Curve in Australia” RBA 1999, http://www.rba.gov.au/publications/rdp/1999/1999-01.html

Topic 6 The macroeconomics of financial market crises.

B&S Ch 9

L Ellis (2009) “The Global Financial Crisis: Causes, Consequences and Countermeasures”, RBA Bulletin, May 2009 http://www.rba.gov.au/PublicationsAndResearch/Bulletin/bu_may09/Pdf/bu_0509_4.pdf

B. Bernanke "The Federal Reserve and the Financial Crisis" 2012, http://www.federalreserve.gov/newsevents/lectures/about.htm

Topic 7  The Long run: Sources and theories of economic growth and productivity; convergence across countries - PPP comparisons; growth over 2000 years; savings and capital accumulation; the golden rule savings rate 

B&S Chs 10, 11

P. Romer (1994) “The Origins of Endogenous Growth”, Journal of Economic Perspectives, Winter 1994

Australian Treasury (2015) "Australia in 2055". http://www.treasury.gov.au/PublicationsAndMedia/Publications/2015/2015-Intergenerational- Report

Topic 8  Technology, population growth and the Solow model; institutions, technological progress and growth

B&S Chs 12, 13

R Gordon (2000) “Does the ‘New Economy’ Measure up to the Great Inventions of the Past?” Journal of Economic Perspectives, Fall 2000

Topic 9  Expectations - expected presented discounted value; nominal vs real interest rates; interest rates and monetary policy; the Fisher hypothesis; macroeconomic determinants of the yield curve or term structure; and of stock market prices; housing prices; expectations and consumption & investment; Tobin’s q; expectations and the IS-LM model.

B&S Chs 14, 15, 16, 17

Topic 10  The exchange rate; nominal & real, bilateral & multilateral exchange rates; the balance of payments; interest parity condition; the goods market in an open economy; exchange rates and net exports; J-curve; saving, investment and the trade balance.

B&S Chs 18, 19

Reserve Bank Bulletin (2005), “Recent Trends in World Saving and Investment Patterns” October 2005, http://www.rba.gov.au/publications/ bulletin/2005/oct/pdf/bu-1005-4.pdf

Topic 11  The Mundell-Fleming model under floating exchange rates (with interest rate setting and inflation targeting); fixed exchange rates and exchange rate crises; exchange rate overshooting; choosing the exchange rate regime.

B&S Chs 20, 21

G Kelly and G La Cava (2013) "Value-added trade and the Australian economy" RBA Bulletin March 2013 http://www.rba.gov.au publications/bulletin/2013/mar/pdf/4.html

I. MacFarlane (2000) “Recent Influences on the Exchange Rate”, RBA Bulletin December 2000, http://www.rba.gov.au/publications/bulletin/2000/dec/pdf/bu-1200-1.pdf

Topic 12  Back to Policy: Uncertainty and macro policy; credibility of policy-makers; fiscal policy and government budget constraint, government debt; challenges from the crisis - the liquidity trap, macroprudential policy.

B&S Chs 22, 23, 24

R. Gregory (2013) "Living standards, terms of trade and foreign ownership: reflections on the Australian mining boom" April 2012, The Australian Journal of Agricultural and Resource Economics, Special Issue (http://onlinelibrary.wiley.com/doi/10.1111/

RDP2014-08 P. Downes, K.Hanslow and P Tulip The Effect of the Mining Boom on the Australian Economy , Reserve Bank of Australia Discussion paper, RDP2014-08 http://www.rba.gov.au/publications/rdp/index.html

Policies and Procedures

Macquarie University policies and procedures are accessible from Policy Central (https://staff.mq.edu.au/work/strategy-planning-and-governance/university-policies-and-procedures/policy-central). Students should be aware of the following policies in particular with regard to Learning and Teaching:

Students seeking more policy resources can visit the Student Policy Gateway (https://students.mq.edu.au/support/study/student-policy-gateway). It is your one-stop-shop for the key policies you need to know about throughout your undergraduate student journey.

If you would like to see all the policies relevant to Learning and Teaching visit Policy Central (https://staff.mq.edu.au/work/strategy-planning-and-governance/university-policies-and-procedures/policy-central).

Student Code of Conduct

Macquarie University students have a responsibility to be familiar with the Student Code of Conduct: https://students.mq.edu.au/admin/other-resources/student-conduct


Results published on platform other than eStudent, (eg. iLearn, Coursera etc.) or released directly by your Unit Convenor, are not confirmed as they are subject to final approval by the University. Once approved, final results will be sent to your student email address and will be made available in eStudent. For more information visit ask.mq.edu.au or if you are a Global MBA student contact globalmba.support@mq.edu.au

Student Support

Macquarie University provides a range of support services for students. For details, visit http://students.mq.edu.au/support/

Learning Skills

Learning Skills (mq.edu.au/learningskills) provides academic writing resources and study strategies to help you improve your marks and take control of your study.

The Library provides online and face to face support to help you find and use relevant information resources. 

Student Enquiry Service

For all student enquiries, visit Student Connect at ask.mq.edu.au

If you are a Global MBA student contact globalmba.support@mq.edu.au

Equity Support

Students with a disability are encouraged to contact the Disability Service who can provide appropriate help with any issues that arise during their studies.

IT Help

For help with University computer systems and technology, visit http://www.mq.edu.au/about_us/offices_and_units/information_technology/help/

When using the University's IT, you must adhere to the Acceptable Use of IT Resources Policy. The policy applies to all who connect to the MQ network including students.