Ateneo - UPO

The module introduces students to several key concepts of modern economics, like the phenomenon of economic growth, the production choice of firms, the consumer choices, the modus operandi of markets the business cycle, the labour market and unemployment, aggregate demand (AD) and national production (GDP), and the impact of fiscal and monetary policies on output and prices.

The Core The Economy Italian edition edited by Il Mulino 2018 freely available at https://www.core-econ.org/the-economy/it/

The course provides students with the microeconomic and macroeconomic tools needed to interpret how modern market economies work and to assess the effects of economic policy on output, employment and prices. Specifically, the course aims to enable students to: 1) reconstruct the decisions of consumers and firms and the equilibrium of a competitive market, and recognise their implications in terms of surplus and social welfare; 2) use the income-expenditure model to determine equilibrium output and employment; 3) assess the effects of a fiscal or monetary policy measure on unemployment, output and inflation; 4) relate the economic concepts covered to legally and institutionally relevant questions, such as market regulation, the working of the labour market and the role of the government and the central bank. A large proportion of credits is devoted to lecture-based teaching, whereas a much smaller proportion is devoted to interactive teaching (seminars).

Fundamentals of algebra.

The course comprises 60 hours in total, divided between lectures held in person (lecture-based teaching) and seminars (interactive teaching). Lectures present the concepts and theoretical models that make up the syllabus. Seminars discuss practical applications of the concepts covered theoretically in the lectures. Attendance at lectures and seminars is recommended. All teaching material needed to prepare for the examination is made available on the DIR platform.

Students with disabilities, with Specific Learning Disorders (DSA) or with Special Educational Needs (BES) may request dedicated services and tools by contacting the Staff for Career Development and Student Services and by consulting the dedicated page on the University website: https://uniupo.it/it/servizi/servizi-studentesse-e-studenti-condizione-di-disabilit%C3%A0-e-dsa. Once they have contacted the University Staff, students with disabilities, DSA or BES may contact the teacher responsible for the course regarding the arrangements for the examination and other teaching matters.

The exam consists of a written test lasting 90 minutes, to be taken at the end of the course, divided into two parts. Part A consists of as many as 16 multiple-choice questions (8 in microeconomics and 8 in macroeconomics), intended to assess knowledge and understanding of the concepts, definitions and mechanisms presented in the syllabus. Each correct answer is worth 1 point, while incorrect answers and unanswered questions are worth 0 points, with no penalty. The maximum score is therefore 16 points. Part A is selective: a minimum score of 8 points is required (4 in microeconomics and 4 in macroeconomics); if this threshold is not reached, Part B is not marked and the examination is failed. Part B consists of as many as 8 open questions (4 in microeconomics and 4 in macroeconomics), intended to assess the ability to apply the models studied, independent judgement in comparing alternative policies, and the ability to set out economic reasoning in writing using appropriate terminology. Each question is worth up to 2 points, awarded on the basis of the correctness of the application, the completeness of the argument and the command of language. The maximum score is therefore 16 points. The two parts carry equal weight. The final mark is given by the sum of the scores obtained in the two parts, up to a maximum of 32 points. A total score of 31 or 32 awards a distinction (lode). The examination is passed with a minimum mark of 18/30.

The grading criteria are as follows:
18–21: the student knows the fundamental definitions and mechanisms of the syllabus and can apply the basic models to simple cases; the answer is intelligible and free of significant conceptual inaccurancies, though it remains essentially descriptive; 22–26: the student applies the models correctly to cases that are not straightforward, gives a complete account of the effects of an economic policy measure and argues their conclusions using appropriate terminology; 27–30: the student independently connects topics covered in different parts of the syllabus, critically discusses the assumptions of the models and the limits of the analysis, and compares alternative policies, identifying their costs and unintended effects; the answer is clear, rigorous and well structured; 30 with distinction: to the abilities described above the student adds full command of the analytical tools and the ability to formulate original, logically ordered conclusions on critical aspects of the subject.

Labour productivity, consumer preferences and utility maximisation, firm profit maximisation, demand elasticity, equilibrium in a perfectly competitive market, consumer and producer surplus, social welfare, long-run equilibrium in perfect competition, market for capital goods, The labour market, the Phillips Curve: Inflation and unemployment, banks and money, the credit market, economic fluctuations and unemployment, issues of the business cycle: unemployment and inflation, unemployment and fiscal policy, employment rate and gender gap, active labour market policies, aggregate consumption, public spending, business investment, aggregate demand (AD), output (Y), the income–expenditure model (Y=AD), prices and inflation, Phillips curve: unemployment and inflation, types of fiscal policy, types of monetary policy, the central bank and its official discount rate, effects of fiscal and monetary policies on output, unemployment and inflation, counter-cyclical fiscal and monetary policies. The gender dimension is not specifically addressed in the course programme, as it is not relevant to the content covered.

After completion of the course students will be able to understand the fundamental concepts underlying the modus operandi of modern market economies, namely: 1) the determinants of the choices of consumers and firms and the notion of demand elasticity; 2) the short-run and long-run equilibrium conditions of a perfectly competitive market, and the notions of surplus and social welfare; 3) the working of the labour market and of the credit market; 4) the relationship between unemployment and inflation, as described by the Phillips Curve; 5) the components of aggregate demand (AD) and the income-expenditure model; 6) the instruments of fiscal and monetary policy, as well as the role of the government and of the central bank.

Students will demonstrate the ability to apply this knowledge. In particular, they will be able to: 1) determine the equilibrium of a competitive market and assess the effect of a change in demand or supply conditions; 2) use the income-expenditure model to compute the equilibrium level of output; 3) sketch the effects of an expansionary or restrictive fiscal or monetary measure on output, unemployment and inflation; 4) recognise whether an economic policy measure is pro-cyclical or counter-cyclical.

Students will also acquire independent judgement by: 1) discussing the limits of competitive equilibrium analysis and the rationale for public intervention; 2) comparing alternative economic policies directed at the same objective, identifying their costs and possible unintended effects; 3) assessing the consistency between an economic policy measure and its stated objectives.