Skip to main content
Unit of study_

ECOS2002: Intermediate Macroeconomics

Intensive February, 2022 [Block mode] - Remote

This unit of study develops models of the goods, money and labour markets, and examines issues in macroeconomic policy. Macroeconomic relationships, covering consumption, investment, money and employment, are explored in detail. Macro-dynamic relationships, especially those linking inflation and unemployment, are also considered. Exchange rates and open economy macroeconomics are also addressed. In the last part of the unit, topics include the determinants and theories of economic growth, productivity and technology, the dynamics of the business cycle, counter-cyclical policy and the relationship between micro and macro policy in the context of recent Australian experience.

Unit details and rules

Unit code ECOS2002
Academic unit Economics
Credit points 6
ECON2002 or ECON2902 or ECOS2902
ECON1002 or ECON1040
Assumed knowledge


Available to study abroad and exchange students


Teaching staff

Coordinator Matthew Smith,
Lecturer(s) Matthew Smith,
Type Description Weight Due Length
Final exam (Record+) Type B final exam Final Exam
20 multiple choice questions and essay questions covering topics 4 to 8.
50% Formal exam period
Due date: 22 Feb 2021 at 12:00
2 hours
Outcomes assessed: LO1 LO2 LO3 LO4 LO6 LO7 LO9
In-semester test (Record+) Type B in-semester exam Mid-Term Exam
15 multiple choice questions and essay questions from Topics 1 to 3
30% Week 03
Due date: 02 Feb 2021 at 12:00
1.5 hours
Outcomes assessed: LO1 LO2 LO3 LO6 LO7 LO9
Assignment Article Review Assignment
Summarise and appraise one article from a choice of three.
20% Week 04
Due date: 08 Feb 2021 at 17:00
800 words essay
Outcomes assessed: LO1 LO2 LO3 LO4 LO5 LO6 LO7 LO8 LO9
Type B final exam = Type B final exam ?
Type B in-semester exam = Type B in-semester exam ?

Assessment summary

Assessment criteria

The University awards common result grades, set out in the Coursework Policy 2014 (Schedule 1).

As a general guide, a High distinction indicates work of an exceptional standard, a Distinction a very high standard, a credit a good standard, and a pass an acceptable standard.

Result name

Mark range


High distinction

85 - 100



75 - 84



65 - 74



50 - 64



0 - 49

When you don’t meet the learning outcomes of the unit to a satisfactory standard.

For more information see

For more information see guide to grades.

Late submission

In accordance with University policy, these penalties apply when written work is submitted after 11:59pm on the due date:

  • Deduction of 5% of the maximum mark for each calendar day after the due date.
  • After ten calendar days late, a mark of zero will be awarded.

Academic integrity

The Current Student website  provides information on academic integrity and the resources available to all students. The University expects students and staff to act ethically and honestly and will treat all allegations of academic integrity breaches seriously.  

We use similarity detection software to detect potential instances of plagiarism or other forms of academic integrity breach. If such matches indicate evidence of plagiarism or other forms of academic integrity breaches, your teacher is required to report your work for further investigation.

You may only use artificial intelligence and writing assistance tools in assessment tasks if you are permitted to by your unit coordinator, and if you do use them, you must also acknowledge this in your work, either in a footnote or an acknowledgement section.

Studiosity is permitted for postgraduate units unless otherwise indicated by the unit coordinator. The use of this service must be acknowledged in your submission.

Simple extensions

If you encounter a problem submitting your work on time, you may be able to apply for an extension of five calendar days through a simple extension.  The application process will be different depending on the type of assessment and extensions cannot be granted for some assessment types like exams.

Special consideration

If exceptional circumstances mean you can’t complete an assessment, you need consideration for a longer period of time, or if you have essential commitments which impact your performance in an assessment, you may be eligible for special consideration or special arrangements.

Special consideration applications will not be affected by a simple extension application.

Using AI responsibly

Co-created with students, AI in Education includes lots of helpful examples of how students use generative AI tools to support their learning. It explains how generative AI works, the different tools available and how to use them responsibly and productively.

WK Topic Learning activity Learning outcomes
Week 01 National Accounting, the Keynesian Income-Expenditure Model and Fiscal Policy Lecture and tutorial (6 hr) LO1 LO2 LO3 LO4 LO5 LO6 LO7 LO8 LO9
The Financial System and Monetary Policy Lecture and tutorial (3 hr) LO1 LO2 LO3 LO4 LO5 LO6 LO7 LO8 LO9
Week 02 The IS-LM Model and Macroeconomic Policy Lecture and tutorial (3 hr) LO1 LO2 LO3 LO4 LO5 LO6 LO7 LO9
The AS-AD Model Lecture and tutorial (6 hr) LO1 LO2 LO3 LO4 LO5 LO6 LO7 LO8 LO9
Week 03 Inflation and Unemployment: The Phillips Curve Lecture and tutorial (6 hr) LO1 LO2 LO3 LO4 LO5 LO6 LO7 LO8 LO9
Economic Growth Lecture and tutorial (3 hr) LO1 LO2 LO3 LO4 LO5 LO6 LO7 LO8 LO9
Week 04 Economic Growth Lecture and tutorial (3 hr) LO1 LO2 LO3 LO4 LO5 LO6 LO7 LO8 LO9
Consumption and Investment Lecture and tutorial (3 hr) LO1 LO2 LO3 LO4 LO5 LO6 LO7 LO8 LO9
Open Economy Macroeconomics Lecture and tutorial (3 hr) LO1 LO2 LO3 LO4 LO5 LO6 LO7 LO8 LO9

Attendance and class requirements

  • Attendance: According to Faculty Board Resolutions, students in the Faculty of Arts and Social Sciences are expected to attend 90% of their classes. If you attend less than 50% of classes, regardless of the reasons, you may be referred to the Examiner’s Board. The Examiner’s Board will decide whether you should pass or fail the unit of study if your attendance falls below this threshold.
  • Lecture recording: Most lectures (in recording-equipped venues) will be recorded and may be made available to students on the LMS. However, you should not rely on lecture recording to substitute your classroom learning experience.
  • Preparation: Students should commit to spend approximately three hours’ preparation time (reading, studying, homework, essays, etc.) for every hour of scheduled instruction.

Study commitment

Typically, there is a minimum expectation of 1.5-2 hours of student effort per week per credit point for units of study offered over a full semester. For a 6 credit point unit, this equates to roughly 120-150 hours of student effort in total.

Required readings



Note: Dates shown below are only approximate. Essential readings are starred. 

The text for this unit is R. Gordon, Macroeconomics, Pearson International Edition, 2012.

For preliminary reading students are referred to Chapter 1 of Gordon. For those interested in current issues of the Australian economy you are referred to the monthly Reserve Bank of Australia (RBA) Bulletin, the quarterly statement of monetary policy and the RBA Annual Report available at

The Australian Economic Review also publishes articles that are closely related to material covered in the course. 

Topic 1: National Accounting, the Keynesian Income-Expenditure Model and Fiscal   Policy

(Week 1, 17 & 19 January)
The circular flow and national accounting; conception of macroeconomic equilibrium; Keynesian Income-Expenditure Model and Fiscal Policy Issues; an open economy model and trade balance constraint


* Gordon Chs 2 (25-50), 3 (pp. 58-80, 89-91), and 6 (pp. 168-97, 184-91).

* Stegman T. and Junor B. (1993) Introductory Macroeconomics, Harcourt Brace-Jovanovich, Ch. 6 (pp. 84-113).


Topic 2: The Financial System and Monetary Policy

(Week 1, 21 January)

The demand for money, its supply and a financial market model; the conduct of monetary policy and the key causal relationship between interest rates and expenditure; the yield curve and the expectations hypothesis


* Gordon Chs 3 (pp. 76-83), 5 (pp. 129-60), 13 (pp. 446-57, 462-4).

* McLeay, M., Radia, A. and Thomas, R. (2014) ‘Money Creation in a Modern Economy’, Bank of England Quarterly Bulletin, Q1, pp. 14-27.

* Atkin, T. and La Cava G. (2017) ‘The Transmission of Monetary Policy: How does it work?’, Reserve Bank Bulletin, September Quarter, pp. 1-8.

*Also see ‘Explainer: Transmission of Monetary Policy’ in RBA’s March Bulletin via link:

Lewis, M.K. and Mizen, (2000) ‘The transmission mechanism’, Monetary Economics, Oxford University Press, Ch. 13.

Goodhart C. (1989) ‘Monetary Base’, The New Palgrave: Money, Eatwell J, Milgate M & Newman P (eds), pp. 206-11.

Otto, G. (2007) ‘Central bank operating procedures: How the RBA achieves its target for the cash rate’, Australian Economic Review, 40 (2), pp. 216-24. 


Topic 3: The IS-LM Model and Macroeconomic Policy

(Week 2, 24 January)

Constructing IS and LM curves on the basis of interest-setting monetary policy; fiscal and monetary policy in the IS-LM model; economic crisis and the policy response


* Gordon Chs 3 (pp. 80-84), 4 (pp. 94-118), 5 (pp. 129-40, 147-60).

* Romer, D. (2000) ‘Keynesian Macroeconomics without the LM Curve’, Journal of Economic Perspectives, 14 (2), pp. 149-169.


Topic 4: The AS-AD Model

(Week 2, 25 & 28 January)

Short run and long run equilibrium; aggregate demand with an interest rate rule using a price level target; aggregate supply and the natural level of income; price-wage flexibility versus non-flexibility;  inflationary and deflationary shocks and policy responses


* Gordon Ch 8 (pp. 243-73), 10 (pp. 353-62), 13 (pp. 464-72). 

* Bernanke, B., Olekalns, N., and Frank R. (2005) ‘The Reserve Bank and the Economy’, Principles of Macroeconomics, 2nd edition, McGraw-Hill Irwin, Ch. 10, pp. 254-91.

Stegman and Junor (1993), pp. 248-67.


Mid-Term Exam: Week 3, 1 February


Topic 5: Inflation and Unemployment: The Phillips Curve

(Week 3, 31 January & 2 February)

Inflation, unemployment and the Phillips Curve analysis; expectations and price inflation; the natural rate of unemployment; anti-inflationary policy, hysteresis and central bank independence; nominal and real interest rates and the Fisher hypothesis   


* Gordon Chs 9 (pp. 279-307) and 10 (pp. 330-43, 362-8).  

* Dawson, G. (1996) ‘Unemployment and Inflation’, Economics and changing economics, MacIntosh M, Brown

V, Costello N, Dawson G, Thompson G & Trigg A (eds), The Open University, International Thomson Business Press, pp. 815-53.

Stevens, G. (2003) ‘Inflation Targeting: A Decade of Australian Experience’, RBA,


Topic 6: Economic Growth

(Weeks 3, 4 February)

The aggregate production function and the Swan-Solow growth model;  technological change and convergence theory; human capital and endogenous growth theory; critique of supply driven theories of growth and the alternative demand-led approach to explaining growth and development   


* Gordon Chs 11 (pp. 376-98) and 12 (pp. 407-440).

* Jones, C. I. (2002) Introduction to Economic Growth, 2nd edn., New York: W.W. Norton, Ch. 8 (pp. 156-68). 

Kurz, H. and Salvadori, N. (2008) ‘New Growth Theory and Development Economics’, International Handbook of Development Economics, Dutt A K & Ros J (eds), Edward Elgar, ch. 15, pp. 207-22.


Essay Assignment Due: Week 4, 7 February


 Topic 7: Consumption and Investment

(Week 4, 7 February)

Theories of consumption: permanent income hypothesis, lifecycle hypothesis & relative income hypothesis; theories of investment: accelerator theory & the neoclassical theory; investment and cyclical activity


* Gordon Chs 14 (pp. 479- 510) & 15 (pp. 517-39)

Ceballero, R.  (1999) ‘Aggregate Investment’, Handbook of Macroeconomics, Taylor J B & Woodford M (eds), Elsevier,  vol. 1B, Ch. 12, pp. 813-62. 

Petri, F. (2005) ‘Capital Theory and Macroeconomics I: The Theory of Aggregate Investment’, General Equilibrium, Capital and Macroeconomics, Edward Elgar, Ch. 7, pp. 256-81.


Topic 8: Open Economy Macroeconomics  

(Week 4, 9 February)

Nominal and real exchange rates; the balance of payments; international capital mobility and interest-rate parity conditions; Mundell-Fleming (IS-LM) model and macroeconomic policy; fixed versus flexible exchange rate regimes; optimal currency areas and external adjustment issues


*Gordon Ch 7 (pp. 201-37).

*Blanchard, O. and Sheen, J. (2008), Macroeconomics, Australian 3rd edition, Pearson, pp. 421-5, 455-66.  

* Hamilton, A. (2018) ‘Understanding Exchange Rates and Why They Are Important’, RBA Bulletin (December Quarter).

Pomfret, R. (2005) ‘Currency Areas in Theory and Practice’, The Economic Record, 81 (June), pp. 166-76.


Learning outcomes are what students know, understand and are able to do on completion of a unit of study. They are aligned with the University's graduate qualities and are assessed as part of the curriculum.

At the completion of this unit, you should be able to:

  • LO1. understand theoretical models that form the body of contemporary macroeconomics
  • LO2. understand and apply macroeconomic models to various economic problems and policy issues
  • LO3. understand the associated empirical implications of policy issues
  • LO4. apply new ways of thinking and appreciate the importance of intellectual curiosity and reflection as foundation for continuous learning
  • LO5. identify, define and analyse problems and recommend creative solutions within real world constraints
  • LO6. demonstrate a capacity to work independently including the ability to plan and achieve goals
  • LO7. critically evaluate underlying theories, concepts, assumptions, limitations and arguments in disciplinary and cross-disciplinary fields of study
  • LO8. intellectually participate in public policy discussions arising in business and government environments
  • LO9. manage, analyse, evaluate and use information efficiently and effectively.

Graduate qualities

The graduate qualities are the qualities and skills that all University of Sydney graduates must demonstrate on successful completion of an award course. As a future Sydney graduate, the set of qualities have been designed to equip you for the contemporary world.

GQ1 Depth of disciplinary expertise

Deep disciplinary expertise is the ability to integrate and rigorously apply knowledge, understanding and skills of a recognised discipline defined by scholarly activity, as well as familiarity with evolving practice of the discipline.

GQ2 Critical thinking and problem solving

Critical thinking and problem solving are the questioning of ideas, evidence and assumptions in order to propose and evaluate hypotheses or alternative arguments before formulating a conclusion or a solution to an identified problem.

GQ3 Oral and written communication

Effective communication, in both oral and written form, is the clear exchange of meaning in a manner that is appropriate to audience and context.

GQ4 Information and digital literacy

Information and digital literacy is the ability to locate, interpret, evaluate, manage, adapt, integrate, create and convey information using appropriate resources, tools and strategies.

GQ5 Inventiveness

Generating novel ideas and solutions.

GQ6 Cultural competence

Cultural Competence is the ability to actively, ethically, respectfully, and successfully engage across and between cultures. In the Australian context, this includes and celebrates Aboriginal and Torres Strait Islander cultures, knowledge systems, and a mature understanding of contemporary issues.

GQ7 Interdisciplinary effectiveness

Interdisciplinary effectiveness is the integration and synthesis of multiple viewpoints and practices, working effectively across disciplinary boundaries.

GQ8 Integrated professional, ethical, and personal identity

An integrated professional, ethical and personal identity is understanding the interaction between one’s personal and professional selves in an ethical context.

GQ9 Influence

Engaging others in a process, idea or vision.

Outcome map

Learning outcomes Graduate qualities

This section outlines changes made to this unit following staff and student reviews.

Some changes have been made to this unit since it was last offered.


The University reserves the right to amend units of study or no longer offer certain units, including where there are low enrolment numbers.

To help you understand common terms that we use at the University, we offer an online glossary.