PRINCIPLES OF

MACROECONOMICS
Lecturer: Pham Xuan Truong
Foreign Trade University, Faculty of
International Economics
Email: [email protected]
Course content
Chapter 1 Introduction to macroeconomics
Chapter 2 Data of Macroeconomics
Chapter 3 Economic growth
Chapter 4 Saving, investment and financial
system
Chapter 5 Unemployment
Chapter 6 Aggregate demand and Aggregate
supply
Chapter 7 Aggregate expenditure and Fiscal
Policy
Chapter 8 Money and Monetary Policy
Chapter 9 Inflation and Phillips curve
Chapter 10 Macroeconomics in open
Objectives
⚫ Acquire basic background of
macroeconomics (GDP, CPI, AD-AS model,
unemployment, inflation, foreign
exchange rate, fiscal policy, monetary
policy)
⚫ Use knowledge of the course to study other
specialized economics (e.g. development
economics, public economics,
environmental economics, econometrics)
⚫ Apply academic background to practices
(understand what financial and economic
news imply, explain what happens in the
economy, estimate or forecast economic
Course implementation
⚫ Teaching and learning methods: In class contact
hours, there will be lectures, discussions and
assistance with student’s assignment works,
reading and using books. During the seminars the
students will be expected to discuss the provided
topics on the problems of real economy
⚫ Assessment methods: There is a written
assignment and final examination. It is worthy
30% and 60% respectively. Class participation is
10% .
 Reading Textbooks
1 N.Gregory Mankiw,Principle of Macroeconomic,
International Student Edition,Third edition,Worth
Pulisher,2003.
2 600 câu hỏi trắc nghiệm kinh tế học vĩ mô cơ bản, NXB
Thông tin và truyền thông, 2012.
3 Frank and Bernanke, Principles of Macroeconomics
Third edition, 2007.
4 Glenn Hubbard and Tony O’Brien, Macroeconomics,
Second edition, 2008.
5 D.Begg,S Fisher,R.Dorchbusch,Economics,Third
edition,McGraw-Hill Book Company,1991
 Other references
1 The richest man in Babylon – Geogre Sclason
2 Naked Economics – Charles Wheelan
3 The Undercover Economist – Tim Harford
4 80/20 Principle – Richard Kock
5 Currency War – Song Hongbing
6 The exlusive quest for growth – William Easterly
7 Blue Ocean Strategy – Wchankim, Renee Mauborgne
8 Good luck – Alex Rovira, Fernando Trias de Bes
9 How to stop worrying and start living – Dale Carnegie
10 If you want it done right, You don’t have to do it yourself –
Donna M.Genett
11 Who moved my cheese – Spencer Johnson
12 More sex is safer sex – Steve E. Landsburg
13 Three idiots (Indian version) film
 Useful Websites
Domestic statistical websites
http://www.gso.gov.vn/default.aspx?tabid=217
http://www.customs.gov.vn/Lists/TinHoatDong/TinTuc.aspx
?Category=Th%E1%BB%91ng%20k%C3%AA%20H%E
1%BA%A3i%20quan
http://www.mof.gov.vn/portal/page/portal/mof_vn/1351583
http://fia.mpi.gov.vn/Default.aspx?ctl=FIAs&TabID=4&mI
D=265
http://www.vietnamtourism.gov.vn/index.php?cat=2020
http://vneconomy.vn/tai-lieu.htm
http://www.vnep.org.vn/vi-VN/Trang-chu/.htm
 Useful Websites
Foreign statistical websites
http://pwt.econ.upenn.edu/
http://www.oecd.org/statsportal/0,3352,en_2825_293564_1_1_1_1_1,00.html
http://www.adb.org/Economics/
http://www.imf.org/external/data.htm
http://www.un.org/en/databases/ http://data.worldbank.org/data-catalog/world-development-indicators
http://www.bis.org/statistics/index.htm
http://finance.yahoo.com/actives?e=us
http://www.mhhe.com/economics/dornbusch8e/quizzes/quizzes.mhtml
http://stat.wto.org/CountryProfile/WSDBCountryPFReporter.aspx?Language=E
http://www.trademap.org/tradestat/Country_SelProduct_TS.aspx
http://www.gapminder.org/data/
http://www.amis-outlook.org/
http://www.numbeo.com/common/
Economic information website
http://cafef.vn/
http://gafin.vn/
http://vneconomy.vn/
http://www.vnep.org.vn/vi-VN/Default.html
http://ecna.gov.vn/Pages/Index.aspx
http://kinhtetrunguong.vn/
Chapter 1 Introduction to
macroeconomics
Mentor Pham Xuan Truong
[email protected]
Content
I Basic concepts in Economics
1 Scarcity
2 Opportunity cost
3 Three fundamental questions in economic
II Overview of macroeconomics
1 What is macroeconomics
2 Objects and methods of research
3 Macroeconomic system
4 Objectives and policy tools of government
to adjust macro-economy
 I Basic concept in Economics
1 Scarcity
- Definition: The situation in which
unlimited wants exceed the limited
resources available to fulfill those wants
- The law of diminishing marginal
returns/ product/ productivity
2 Opportunity cost
- Definition: The value of the next-best
alternative that must be forgone in
order to undertake the activity
- The law of increasing opportunity cost
Scarcity → Trade off (make a choice) → Optimal (max
benefit, min cost, max net benefit (benefit – cost)) →
economics
1776 – The wealth of nation book written by Adam
Smith
Economic Cost = explicit cost (real cost) + implicit cost
(opportunity cost)
- CPI: consumer price index
- GDP: gross domestic products
 I Basic concept in Economics
3 Economics
The study of the choices people make to attain
their goals, given their scare resources
Three fundamental questions in economic
- Produce what
- How produce
- Produce for whom
Normative economics vs positive economics
Normative economics is a part of economics that
expresses value or normative judgments about
economic fairness, or what the outcome of the
economy or goals of public policy ought to be.
Positive economics is the branch of economics that
concerns the description and explanation of economic
phenomena. It focuses on facts and cause-and-effect
behavioral relationships and includes the development
and testing of economics theories
 II Overview of macroeconomics
1 What is macroeconomics
Macroeconomics (from the Greek
prefix makro- meaning "large" and economics) is a
branch of economics dealing with the performance,
structure, behavior, and decision-making of
an economy as a whole, rather than individual
markets. This includes national, regional, and global
economies. With microeconomics, macroeconomics
is one of the two most general fields in economics.

Macroeconomists study aggregated indicators such

as GDP, unemployment rates, and price indices to
understand how the whole economy functions.
Macroeconomists develop models that explain the
relationship between such factors as national
income, output, consumption, unemployment,
inflation, savings, investment, international
 II Overview of macroeconomics
1 What is macroeconomics
While macroeconomics is a broad field of
study, there are two areas of research that are
emblematic of the discipline: the attempt to
understand the causes and consequences of
short-run fluctuations in national income
(the business cycle), and the attempt to
understand the determinants of
long-run economic growth (increases in
national income). Macroeconomic models and
their forecasts are used by governments to
assist in the development and evaluation
of economic policy.
II Overview of macroeconomics
What is the object of macro and micro
1 Should FPT invest in new technology
2 Effect of increase of petroleum price on
transportation
3 Whether Increase in input cost leads to
increase in CPI
4 How Productivity affects GDP
II Overview of macroeconomics
2 Objects and methods of research
Objects
Macroeconomics focuses on 4 fundamental
objects
- Total output (aggregate output), economic
growth, business cycle
- Price level, inflation
- Unemployment, social welfare
- International trade, balance of payment,
foreign exchange rate
Questions revolving 4 abovementioned
objects are the issues researched by
macroeconomists
II Overview of macroeconomics
2 Objects and methods of research
Methods of reasearch
⚫ Economists use economic models to explore
the choices people make and the
consequences of those choices. A model is
any simplified representation of reality that
is used to better understand real-life
situations
⚫ In economics, a model is
theoretically constructed to explain
economic processes by a set
of variables and a set of logical and/or
quantitative relationships between them.
The economic model often but not always
 II Overview of macroeconomics
2 Objects and methods of research
Methods of reasearch
⚫ Models are important because their
simplicity allows economists to focus on the
effects of only one change at a time. That is,
they allow us to hold everything else constant
and study how one change affects the overall
economic outcome. So an important
assumption when building economic models
is the other things equal assumption, which
Collecting
means that all other relevant Building factors remain
data and
Observati Hypothe
unchanged. model with
2 things have positive relationship check
ons sis
assumptions
Observation -> Hypothesis -> Building model w/ assumption
accuracy->
collecting data & check accuracy of the model of the
 II Overview of macroeconomics
3 Macroeconomic system
Macroeconomic system has three components:
input, marcoeconomic activities recording system
(black box), output
+ input: exogenous and endogenous variables
+ black box: AD – AS model under affect of variables
will produce macroeconomic outcome
+ output: total output, inflation, unemployment,
foreign exchange rate, interest rate
Inputs will go to black box, in which they interacts
with market principles and then outcomes of
economy will be produced under aggregate
numbers
For example: draught occurs then price level
increases and output of the economy decreases,
 II Overview of macroeconomics
4 Objectives and policy tools of
government to adjust macroeconomy
Objectives
Economic goals Content
Economic efficiency Making the most resources
Economic freedom Freedom from government intervention in the
production and distribution of goods and services
Economic security and Assurance that goods and services will be
predictability available, payments will be made on time, and a
safety net will protect individuals in times of
economic disaster
Economic equity Fair distribution of wealth
Economic growth and Innovation leads to economic growth, and
innovation economic growth lead to higher standard of living
Other goals Environmental protection, human right protection
 II Overview of macroeconomics
4 Objectives and policy tools of government to
adjust macroeconomy
Policy
+ Fiscal policy: the use of government revenue
collection (taxation) and expenditure (spending) to
influence the economy
+ Monetary policy: the process by which
the monetary authority of a country controls
the supply of money, often targeting a rate
of interest for the purpose of
promoting economic growth and stability
+ Income policy: economy-wide wage and price
controls, most commonly instituted by governments
as a response to inflation, and usually below market
level
 aggregate supply
excess supply/
price
Key concepts
surplus

equilibrium point
- Scarcity
- Opportunity cost aggregate demand
- Economics excess demand/ quantity
shortage
- Macroeconomics
- Economic model
- Normative economics, Positive economics
- Macroeconomic system
- Fiscal policy, Monetary policy, Income
policy, Trade policy
input -> idea -> outcome