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The University of Southampton

ECON2002 Macroeconomic Policy 2

Module Overview

The main objective of this module is to provide analytical understanding of how economic policy affects macroeconomic outcomes. The main macroeconomic outcome that we will look at is output (what we usually measure as GDP). We will approach the study of the evolution of output from two very different time horizons. First, we will look at the long-run trend of output, that is, we will study why economies grow and which policies might help promote growth. Secondly, we will look at the short-run fluctuations of output. We will try to understand the patterns behind economic booms and busts and we will study which are the effects of different fiscal and monetary policies. Pre-requisite for ECON3008

Aims and Objectives

Learning Outcomes

Learning Outcomes

Having successfully completed this module you will be able to:

  • Demonstrate knowledge and understanding of how economic policy affects macroeconomic outcomes


Part 1: The Economy in the Long Run 1. Determinants and Distribution of National Income 2. Money and Inflation 3. Basic Explanations for Unemployment Part 2: Growth Theory, The Very Long Run 4. The Solow Model 5. More on Growth Part 3: The Economy in the Short Run 6. Economic Fluctuations 7. The IS-LM Model 8. Macroeconomic Policy using the IS-LM Model 9. Aggregate Supply Part 4: More on Macroeconomic Policy 10. New Perspectives on Stabilisation Policies 11. New Perspectives on Public Debt and Deficits

Learning and Teaching

Teaching and learning methods

Lectures and classes.

Independent Study126
Total study time150

Resources & Reading list



Assessment Strategy

The final mark for the course will be determined on the basis of a take-home assignment at the end of the semester (70%), two problem sets (20%) and successful participation in class. During the semester, all problem sets will be discussed in tutorial sessions. These problem sets are designed to help you put in practice the concepts covered in lectures, and also aid your preparation for the final examination. In the event of you having to resit this unit, your coursework marks will not be carried forward.


MethodPercentage contribution
Assignment 70%
Participation 10%
Problem sets 10%
Problem sets 10%


MethodPercentage contribution
Final Assessment  100%


MethodPercentage contribution
Final Assessment  100%

Repeat Information

Repeat type: Internal & External

Linked modules

Pre-requisites: ECON1002 and (ECON1005 or ECON1008) and ECON1007


Costs associated with this module

Students are responsible for meeting the cost of essential textbooks, and of producing such essays, assignments, laboratory reports and dissertations as are required to fulfil the academic requirements for each programme of study.

In addition to this, students registered for this module typically also have to pay for:

Books and Stationery equipment

Recommended texts for this module may be available in limited supply in the University Library and students may wish to purchase reading texts as appropriate.

Please also ensure you read the section on additional costs in the University’s Fees, Charges and Expenses Regulations in the University Calendar available at

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