Production functions of separate goods and services and society's production possibilities
frontier. Substantiation (for a two commodity market model) of the general equilibrium in
the point of the production possibilities frontier where the marginal rate of transformation
of one commodity into another equals the inverse value of their price ratio. The Pareto
efficiency of the general equilibrium point,
The model of a general equilibrium with due account for the time factor. The definition
of the equilibrium level of savings, investments and the rate of interest.
TOPIC 16 MARKET SETBAKS (FAILURES) AND THE ECONOMIC
FUNCTIONS OF THE STATE
Intervention by the government as a response to the market failures. The nature of the
present-day mixed economy.
The fundamentals of an anti-monopoly and and industrial policy. Nationalization ans
The state and the distribution of income: is intervention necessary? The social functions
of the contemporary state.
Budget as the state's major instrument. Introduction into the tax theory. The
nature of the market structure's distortions due to the activity by the state and
the "second best" policy.
TOPIC 1 TURNOVER OF GOODS AND PAYMENTS. THE NATIONAL
The subject-matter of macroeconomics.
Three ways of measuring the economic activity: by production scales, the size of income
and expenditure. The gross and intermediate output; value added by procession.
Aggregate demand and its elements (consumer and investment expenditures, government
spendings on goods and services, net export).
Injections into the goods and payments turnover and the outflows therefrom. Indirect and
direct taxes, government subsidies and transfers, savings.
Main indicators of economic activity (gross domestic and gross national product, the net
product and the national income), their advantages and disadvantages. The system of
TOPIC 2 THE KEYNESIAN MODEL OF OUTPUT AND INCOME
The purpose of the model and its basic prerequisites. Potential and actual output.
The consumption and savings function; the concept of the marginal propensity to
consume and the marginal propensity to save. Autonomous and non-autonomous
expenditures; plotting the curve of the aggregate demand function.
Determination of the equilibrium value of output and income by means of the "Keynesian
cross". Equilibrium income multiplier. The paradox of thrift.
TOPIC 3 THE INFLUENCE OF THE FISCAL POLICY AND FOERIGN TRADE
ON THE AGGREGATE DEMAND
General concepts: the fiscal policy, stabilization policy, state budget deficit (surplus),
The specificity of influence of public procurement and net taxes on the equilibrium
output and income. The balanced budget multiplier.
A soft and a contractionary fiscal policy. The influence of the national budget deficit and
the government debt on the economy.
Specificity of export's and import's influence on the aggregate demand. Equilibrium
income multiplier in the open economy.
TOPIC 4 MONEY AND THE CONTEMPORARY BANKING BUSINESS
Money and its functions. Main types of payment instruments.
Monetary reserves and bank reserve requirements. Money supply and "monetary
aggregates". The functions of commercial banks and their role in forming the monetary
stock (supply). The mechanism of non-cash transactions.
Particular features of the monetary system in the epoch of paper money. The monetary
base and money multiplier. Factors which determine the size of the money multiplier.
TOPIC 5 THE ACTIVITY OF THE CENTRAL BANK AND THE MONETARY
The instruments for the Central Bank to influence the money supply: the establishment of
minimum reserve requirements, discounting rates, performance of "open market
The Central Bank as the "borrower of last resort". The role of the Central Bank in
managing the government debt and financing the deficit of the state budget. What is
The concept of the demand for money and the motives laying the basis for the latter. The
mechanism for establishing equilibrium in the financial market. The interest rate as the
"price of money".
TOPIC 6 THE MONETARY AND FISCAL POLICY IN A CLOSED ECONOMY
The influence of money and the interest rate on the size of consumer demand for
investment-available funds. The essence of the transmission mechanism. The fiscal policy
and the "crowding-out effect".
The IS/LM model and its application for making