Course Code:                    ECON 2003

Course Title:                     Intermediate Macroeconomics II

Level:                                2

Semester:                          2

No. of Credits:                    3

Pre-requisite(s):                 ECON 1001and ECON 1002





We warmly welcome you to this course: ECON 2003-Intermediate Macroeconomics II!! We do hope that you are enthusiastic and committed to hard work—all of which will ensure your success in this course. This course offers you the opportunity to advance your knowledge and application of macroeconomic theory. You must be willing to attend all lectures and tutorial sessions…having the right attitude is essential! Follow a routine that suits you best and this will prove to be a manageable and intellectually rewarding experience. Please remember that we are always willing to assist you throughout your journey, do not hesitate to contact us either via email or during office hours. Good luck and hope you enjoy this course!





The course delivery will take the form of a weekly lecture supported by a weekly tutorial. The two (2) hour lectures will be delivered via PowerPoint presentations, which correspond to the chapters covered in the main textbook. The lecturer encourages student participation during classroom discussions and welcomes feedback from students.


Tutorial classes will be based on tutorial sheets, which will be accessed via myelearning.  Tutorials are meant to reinforce key concepts covered in lectures. Tutorial attendance is mandatory for ALL students. University regulations allow for students to be debarred from final examinations, if they do not attend at least 75% of tutorial classes. Student attendance will be monitored regularly to ensure that the regulation is enforced.





Mid-term Examination: 20%


Final Examination 80%


Total: 100%


The final exam usually consists of four (4) questions. It is a combination of short notes, theoretical and calculation and/or graphical questions. The duration is 2 hours.





This is the final component of a two (2) part series on Macroeconomics. Intermediate Macroeconomics II covers the additional standard topics of mainstream macroeconomics. Topics include: Open economy analysis, Economic Growth, Consumption, Investment, Money Supply and Demand and Business Cycle Theory. The course offers in-depth information on these key macroeconomic issues. In the context of the open-economy, the Mundell-Fleming model is discussed, expanding the discussion of the IS-LM model (introduced in part one (1)). The issue of economic growth is analyzed with the use of the Solow Model. The other topics such as, consumption and investment are highlighted through the use of various models. The course is enhanced through the use of graphical representations and mathematical applications. Delivery of the course material is done through lectures and complementary tutorial sessions.





This course is designed to deepen students understanding of modern mainstream macroeconomic theory and methods.  It allows students to gain an appreciation of how economists use particular models in attempting to understand economic activity.








  • The Open Economy (Chapter 5: N.G. Mankiw, 2010)
  • The international flows of capital and goods
  • Saving and investment in a small open economy
  • Exchange rates
  • The Open Economy Revisited: The Mundell-Fleming Model and the Exchange-Rate Regime.  (Chapter 12: N.G. Mankiw, 2010)
  • The Mundell-Fleming Model
  • The Small Open Economy under Floating Exchange Rates
  • The Small Open Economy Under Fixed Exchange Rates
  • Interest- Rate Differentials
  • Should Exchange Rates Be Floating or Fixed?
  • From the Short Run to the Long Run: The Mundell- Fleming Model with a changing Price level
  • A Short Run Model of the Large Open Economy






  • Economic Growth I (Chapter 7: N.G. Mankiw, 2010)
  • The Accumulation of Capital
  • The Golden Rule Level of capital
  • Population Growth
  • Economic Growth II (Chapter 8: N.G. Mankiw, 2010)
  • Technological Progress in the Solow Model
  • From Growth Theory to Growth Empirics
  • Policies to Promote Growth
  • Beyond the Solow Model: Endogenous Growth Theory
  • Accounting for the sources of Economic Growth






  • Consumption (Chapter 17: N.G. Mankiw, 2010)
  • John Maynard Keynes and the Consumption Function
  • Irving Fisher and Intertemporal Choice
  • Franco Modigliani and the Life-Cycle Hypothesis
  • Milton Friedman and the Permanent Income Hypothesis
  • Robert Hall and the Random-Walk Hypothesis
  • Investment (Chapter 18: N.G. Mankiw, 2010)
  • The Neo-classical model of Business Fixed Investment
  • Inventory Investment
  • Money Supply and Money Demand (Chapter 19: N.G. Mankiw, 2010)
  • A simple Money Supply Model
  • The Baumol-Tobin Money Demand model
  • Advances in Business Cycle Theory (Chapter 19: Mankiw (6th Edition))
  • Theory of Real Business Cycle
  • New Keynesian Economics




This course aims to ensure that students are knowledgeable and competent in macroeconomic theory and its application.





  1. To make the course student-friendly and ensure the information is conveyed in a simple and comprehensive manner.
  2. To demonstrate the relevance of macroeconomics and its practical (real world) applications.
  3. To enhance students understanding of macroeconomic concepts and techniques.
  4. To ensure students know the main theories (e.g. Mundell-Fleming model) and their graphical and mathematical representations.
  5. To lay the theoretical foundation for further work at third year and at the graduate level.





Main textbook:


N. Gregory Mankiw (2010). Macroeconomics, 7th Edition.  New York:  Worth Publishers.  (


Some other useful texts are:


  1. Dornbusch and Fischer, Macroeconomics (4th or later edition)
  2. Abel, A. and Bernanke, B. S. (2001) Macroeconomics, 4th Edition, New York: Addison Wesley.


Students can also read other macroeconomics textbooks that are available online or at the library.





  1. Attendance at the Post National Budget Forum: students are advised to check the Departmental Website ( after the annual presentation of the National Budget in the Parliament.
  2. Attendance at the Department of Economics’ Conference on the Economy (COTE).




Please refer to the Examinations Booklet (available online) for information on the following regulations:

General Examination Regulation

 19.        Any candidate who has been absent from the University for a prolonged period during the  teaching of a particular course for any reason other than illness or whose attendance at prescribed lectures, classes, practical classes, tutorials, or clinical instructions has been unsatisfactory or who has failed to submit essays or other exercises set by his/her teachers, may be debarred by the relevant Academic Board, on the recommendation of the relevant Faculty Board, from taking any University examinations. The procedures to be used shall be prescribed in Faculty Regulations.



97.        (i) Cheating shall constitute a major offence under these regulations.

(ii) Cheating is any attempt to benefit one’s self or another by deceit or fraud.

(iii) Plagiarism is a form of cheating

(iv) Plagiarism is the unauthorized and/ or unacknowledged use of another person’s  

intellectual effort and creations howsoever recorded, including whether formally published or in manuscript or in typescript or other printed or electronically presented form and includes taking passages, ideas or structures from another work or author without proper and unequivocal attribution of such source(s), using the conventions for attributions or citing used in this University.


103.       (i) If any candidate is suspected of cheating, or attempting to cheat, the circumstances shall be reported in writing to the Campus Registrar. The Campus Registrar shall refer the matter to the Chairman of the Campus Committee on Examinations. If the Chairman so decides, the Committee shall invite the candidate for an interview and shall conduct an investigation. If the candidate is found guilty of cheating or attempting to cheat, the Committee shall disqualify the candidate from the examination in the course concerned, and may also disqualify him/her from all examinations taken in that examination session; and may also disqualify him/her from all further examinations of the University, for any period of time, and may impose a fine not exceeding Bds$300.00 or J$5000.00or TT$900.00 or US$150.00 (according to campus). If the candidate fails to attend and does not offer a satisfactory excuse prior to the hearing, the Committee may hear the case in the candidate’s absence.



Lecturer’s in-class rules

  • Please turn off or switch your mobile phones to vibrate or silent modes during classes.
  • Please pay attention and ask questions whenever you are unsure about a topic that is being taught (do not wait until “the last minute” to make your concerns known).
  • Please do refrain from any distracting behavior or activities during class time.





  1. Attend ALL lectures. Please don’t disregard the importance of these sessions!
  2. Read the required chapters BEFORE class and ensure you understand the course material.
  3. Ask questions…don’t be afraid to approach the lecturers or tutors to address any concerns you may have…we’re here to assist you!
  4. Attend tutorials and attempt ALL questions…this is a way to personally assess whether you understand what is being taught in lectures.
  5. Attempt past paper questions after the completion of each topic…this helps you become more familiar with the material and the requirements of the exam. Practice makes perfect!
  6. Always begin studying early…don’t procrastinate!







      Introduction to the course: course overview, requirements.


The Open Economy


The Open Economy Revisited: The Mundell-Fleming Model


Economic Growth I


Economic Growth II






Money Supply and Money Demand


Advances in Business Cycle Theory


Review Session