INTRODUCTION TO

MACROECONOMICS
INTRODUCTION
Lecturer
• My name is Phuong, Do Hoang (Đỗ Hoàng Phương).
• I have a Bachelor degree from Foreign Trade University (VN),
completed my Master study at University of Trento (Italy), and
earned my PhD in Economics at Virginia Tech (USA).
• My research interests lies on empirical macroeconomics (mostly
about inflation), industrial policy and political economy of Vietnam.
• Office hours: Thursday 9:00am-11:00am, or by appointment.
• Email address: [email protected]
Lectures’ times and locations

Time Room Starting Week

Monday 13:15 – 15:45 L108 03/02/2025

Tuesday 13:15 – 15:45 A2.302 03/02/2025

Thursday 13:15 – 15:45 A2.507 03/02/2025

Assessments
• Mid-Term Exam: 30%
• Weekly Quizzes + Written Assignment: 30%
• 10-12 random in-class quizzes: 20%. The lowest 4 are dropped. It will
be conducted at the end of the lecture.
• 2 take-home assignment: 10%. Due days are before the two exams.

• Final Exam: 40%

Class participation requirements
• No participation check.
• However, it is strongly encouraged to attend class to learn and
do the quizzes (worth 20% of your total grades).
• For unexpected reasons, if you cannot attend classes on the
regular time, you can join in my other classes.
Course’s objectives
• Understand the key concepts of macroeconomics (GDP, growth,
inflation, unemployment…) and macroeconomic issues.
• Obtain fundamental knowledge on how the economy works.
• Learn to evaluate basic macroeconomic policies (fiscal policy,
monetary policy…).
• Develop the capabilities to follow and understand economic news.
• Lay foundation for further advanced courses and future works
(depend on your major).
Textbooks
• Required text: Mankiw, N.G. “Principles of Economics”, Cengage Learning, 8th ed.
• Other editions are also accepted.

• Additional texts:
• Krugman P., Wells R. “Economics”, Worth Pub 5th ed
• Timothy, Taylor, “Principles of Economics”, 2nd ed, free-access textbook.
Tips to be successful for the course
• You need to read the textbook’s chapters or review the slides
because it is essential for you to perform well on in-class
quizzes.
• It also helps you not to be overwhelmed by the time of the
midterm and final exams.
• Slowly develop your reading skills which are hugely beneficial
for your whole life.
 Knowledge from microeconomics
• We are heavily use demand and
supply model from the Introduction
to Microeconomic course.
• The strong understanding of the
framework is the key requirements for
you to succeed in this course.
• You need to review the framework if
there are any doubts during this
course
Introduction to
macroeconomics
The differences between economics and
business studies (1)
• Economics is a discipline to understand the behaviors of the
economy. It is theory-based, highly abstract and have different
subjects of analysis: the economy as the whole (macroeconomics),
individual firms or consumers (microeconomics), a single economic
sector or specific economic relationships (international/ labor/
development economics).
• Business focuses more on the practical side on how to make money.
The subfields include: management, human resources, project
management, marketing, finance…
The differences between economics and
business studies (2)
• Both business and economics (finance/accounting included)
majors share fundamental courses.
• For business-major students, the understandings of economics
provide essential information to make business decisions. For
example: before you open a new business, you need to consider
the state of the economy: under a “hot” condition or in trouble?
• For economics/finance/accounting students, this is one of the
foundational courses.
What is macroeconomics?
• Macroeconomics is the major field of the overall economics
discipline.
• It considers the economy as a whole and studies the economy’s
performance, structure, and how various factors or actors can
affect the economy.
• It differs from microeconomics which focuses on the individual-
, firm- or sector-level analysis.
The economy
• An economy encompasses all of the human activities related to the production,
consumption, and exchange of goods and services.
• Human extracts natural resources (coal, oil, metal ores, water, land,…) and use
machines and labors to transform the raw materials into physical products
(houses, foods, cars,…).
• Using physical facilities, services are provided to support our lives (healthcare,
education, entertainments, banking, …).
• A highly-developed economy (more precisely, a developed nation) is
sophisticated and has its people enjoy a high level of living standards: abundant
products and services (having cars, comfortable housing, high-quality healthcare
or education…); and vice versa.
The economy
Economic units
• There are millions of individuals/ families, hundred thousands of economic
establishments and firms in a country, the government at different levels (central,
provincial, districts) and consisting of various department (finance, industry, central
bank,…).
• In macroeconomics, we pool these similar actors together into aggregate (more or
less abstract) units.
• The basic economic units of analysis include:
• Households: provides labors, earn wages, make savings and buy goods/services.
• Firms (nonfinancial): produce goods/services, borrow money, hire people and pay salaries.
• Financial sector: accept deposits and lend money to other sectors (e.g. banks).
• Government: a huge actor that make large-scale purchasing/borrowing decisions and set up
regulations for other sectors.
• The rest of the world: all other units outside of the national borders.
Market
• In economics, market is a concept refer to the
infrastructure, rules, and systems where buyers and
sellers exchange goods and services.
• We have a variety of markets:
• Labor market: exchange labor for wages.
• Goods market: exchange goods/services for money.
• Capital market: exchange capital (long-term investment)
for interests.

• Note: in microeconomics, you have learned

monopoly, oligopoly, perfect competition structure.
Circular flow diagram: the interaction
between economic units
Circular flow diagram: the interaction
between economic units (2)
Time frame
There are two general time horizons (more or less abstract and not
necessarily identical to fixed time periods):
• The short run (e.g. a few years to a decade): over the short run, business
cycles – “good” and “bad” times of the economy - happen. We need to
look at the effects of fiscal and monetary policies to see its short-run effects
on the economy.
• The long run (e.g. a decade or more): if we do not count short-run
economic fluctuations, the economy tends to follow its “natural” tendency.
Over the long run, the economy’s performance depends on various slowly-
changing factors, such as: capital accumulations, technological changes, or
key long-term policies from the government.
Examples on the topics of
macroeconomics (1)
• Citizens of which country are the wealthiest in the world?
→ Average annual income: Vietnam at ~$3,600, USA at ~$70,000, but the highest
is Monaco (~$173,000)

• What are the top three biggest economies in the world?

→ Top 5 biggest economy in the world: USA, China, Japan, Germany, India.

• We will learn how to measure an economy, compare the living

standard of people in different countries, and how a country and its
people get richer over time (economic growth).

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Examples on the topics of
macroeconomics (2)
• Prices of a bowl of Phở over time in Vietnam:
• 5k VND in 2000.
• 15k VND in 2010.
• 45k VND in 2024.
• Why the price of a bowl of Phở and other products was
changing over time?
• We will learn about the concept of inflation and the causes of
inflation.
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The essential concepts of macroeconomics
• Time frame: the short run vs the long run.
• Economic units: households, firms, the government…
• Output and income (GDP), unemployment, inflation and deflation
(CPI, GDP deflator…).
• Open economy (import, export, exchange rate…).
• Money, the monetary system, and the financial market.
• Economic growth, economic recession.
• Monetary policy, fiscal policy.
Syllabus
No. Topic Notes
1 Measurement of a nation’s income (GDP)
2 Measurement of the cost of living (inflation) How to track an economy.
3 Production and economic growth
Understand the economy in the long
4 Saving, investment and the country’s financial system run.
5 Unemployment and its natural rate
6 The monetary system
The financial sector of the economy.
7 Money growth and inflation
8 The open economy Open-economy concepts: the
9 Macroeconomic theory of the open economy economy and the world.
10 Aggregate demand and aggregate supply
11 Monetary and fiscal policies Short-run economic fluctuations.
12 The relationship between inflation and unemployment
Summary
• Key concepts you need to understand today:
• Economics vs business disciplines
• Macroeconomics.
• Economic units (households, firms, the government) and their
interaction via various markets.
• The economy, economic time frame (the short and long runs).

• Read chapter 10 of the textbook on the concept of GDP to

prepare for the next lecture.