MACROECONOMICS 1

KTEE203
MSc Nguyen Minh THUY - FTU
Introduction about me
• Nguyen Minh Thuy, email:
thuynm@[Link]
• Faculty of International
Economics– B208
• MSc Investment Management
(CASS Business School – UK)
• BSc Economics (Warwick
University – UK)
Introduction about the course
• Course name: Macroeconomics 1
• Course code: KTEE203
• Number of Credits: 3
• Lecture time: 45 (15 sessions)
• Duration: 16/09/2024 – 29/12/2024
Introduction about the course (cont)
Textbook:
• (English) Principles of
Macroeconomics – George Mankiw -
8th edition
• (Vietnamese) Kinh tế vĩ mô cơ bản -
PGS, TS Hoàng Xuân Bình
Exercise book
• Materials sent by the lecturer
• Bài tập Kinh tế vĩ mô cơ bản và nâng
cao – PGS, TS Hoàng Xuân Bình
Assessment method: 10% attendance,
30% mid-term exam and 60% final
exam
 CHAPTER 1
INTRODUCTION ABOUT MACROECONOMICS
Readings : Textbook (Chapter 1,2,3)
I. What is Economics and Macroeconomics?
• Economics is the study of how individuals and societies choose to use the scare
resources that nature and previous generations have provided.
• Resources: land, labour and capital and technological knowledge
• Scarcity means that society has limited resources and therefore cannot produce all
the goods and services people wish to have.
• Trade - off
• The opportunity cost of an item is what you give up to get that item
Why study Economics?
• To learn a way of thinking
• To understand society
• To be an informed citizen
The scope of Economics
• Microeconomics deals with the functioning of individual industries
and the behavior of individual economic decision-making units: firms
and households. Firms’ choices about what to produce and how much
to charge and households’ choices about what and how much to buy
help to explain why the economy produces the goods and services it
does.
• Macroeconomics looks at the economy as a whole
 Examples of Microeconomics and Macroeconomics Concerns
Production Prices Income Employment
Microeconomics Production/output in Prices of individual Distribution of Employment by
individual industries and goods and services income and wealth individual businesses
businesses Wages in automobile and industries
industry
Macroeconomics National Aggregate price level National income Employment and
production/output unemployment in the
economy
The method of economics
• Positive economics attempts to understand behavior and the operation of
economic systems without making judgments about whether the outcomes are
good or bad. It strives to describe what exists and how it works
• Normative economics looks at the outcomes of economic behavior and asks
whether they are good or bad and whether they can be made better. Normative
economics involves judgments and prescriptions for courses of action. Normative
economics is often called policy economics.
Macroeconomic Concerns
• Output growth
• Unemployment
• Inflation and deflation
• Interest rate
• Exchange rate
• The position of government budget, trade balance, international
payment system
What would government policy makers like to have?
Output growth

business cycle The cycle of short-term ups and downs in the economy.
U.S Aggregate output (Real GDP, 1900-2017)

Source: Case (2020)

Nguồn: Statista
Inflation in Japan (deflation)

Source: Tradingeconomics
Government tools to control the economy
• Fiscal policy refers to the government’s decisions about how much to
tax and spend.
• Monetary policy is conducted by the nation’s central bank and as its
tools are short-term interest rates and/or money supply in the
economy.
Ten notable economic events in 2023
1. Chat GPT and the boom of AI
2. Earthquake in Turkey – Largest magnitude
within 100 years
3. The wave of bank runs in American
4. India takes the first place in terms of population
5. The real estates crisis in China
6. BRICS+
7. The conflict Israel - Hamas
8. Hottest Summer recorded in 125.000 years
9. COP 28 reaches fruitful outcomes
10. The conflict between Russia – Ukraina enters
the second year
The world economic outlook for 2024?
• Global growth is projected to be in line with the April 2024 World Economic Outlook (WEO) forecast, at 3.2 percent
in 2024 and 3.3 percent in 2025
• Global activity and world trade firmed up at the turn of the year, with trade spurred by strong exports from Asia,
particularly in the technology sector.
• The momentum on global disinflation is slowing, signaling bumps along the path. This reflects different sectoral
dynamics: the persistence of higher-than-average inflation in services prices, tempered to some extent by
stronger disinflation in the prices of goods
• Risks to the outlook have become somewhat more balanced, given the continued resilience of the global economy to
high financing costs. However, risks to the global outlook continue to be tilted to the downside amid heightened
uncertainty
• Worsening conflicts or escalating geopolitical tensions could have adverse impacts on global growth through
commodity markets, trade, and financial linkages. Further trade fragmentation amid resurgent inward-looking
industrial policies carries the risk of additional disruptions to trade networks, supply chains, and economic activity.
Stubbornly elevated core inflation in advanced economies could forestall anticipated monetary easing, tightening
financial conditions, including in EMDEs, and weighing on global growth. Weaker-than-expected growth in China
could have negative global spillovers through commodity markets and trade channels. Climate change looms ever
larger, with more frequent and extreme weather events presenting risks to both near and long-term growth.
The world economic outlook for 2024?
• Climate change is a growing threat to food security, with the impacts of rising temperatures and
extreme weather events becoming increasingly evident in reduced crop yields and disruptions to
food supply chains (IFPRI 2022). For wheat, rice, and maize in tropical and temperate regions,
climate change, without adaptation measures, is projected to impair crop production at local
temperature increases of 2 degrees Celsius (Aggarwal et al. 2024).
• Worsening conflicts or escalating geopolitical tensions could have adverse impacts on global
growth through commodity markets, trade, and financial linkages. Further trade fragmentation
amid resurgent inward-looking industrial policies carries the risk of additional disruptions to trade
networks, supply chains, and economic activity. Stubbornly elevated core inflation in advanced
economies could forestall anticipated monetary easing, tightening financial conditions, including in
EMDEs, and weighing on global growth. Weaker-than-expected growth in China could have
negative global spillovers through commodity markets and trade channels. Climate change looms
ever larger, with more frequent and extreme weather events presenting risks to both near and long-
term growth.
Vietnam’s economy to pick up pace in
2024
• Vietnam’s economy is projected to expand by close to 6 percent in 2024, up from 5
percent in the previous year, driven by a recovering export sector, robust foreign direct
investment, and policy support.
• Monetary and fiscal policies are expected to remain supportive given sluggish domestic
activity, but will also need to manage downside risks, including if inflation pressures were
to increase. Policies should also continue to strengthen the health of the financial system.
• A new wave of reforms to boost productivity growth is needed to maintain Vietnam’s high
growth over the medium term amidst demographic and climate headwinds.
• Growth was supported by the strong recovery of both imports and exports and the revival
of domestic demand as monetary policy remained accommodative. External demand for
major electronics exports fuelled industrial production, but subdued global economic
prospects left some uncertainty. Growth has also been supported by fiscal measures such
as the continued two per cent reduction in VAT and efforts to better implement public
investment.
• Going forward, the economic recovery should continue, with growth forecasts remaining
at 6 per cent for 2024 and 6.2 per cent for 2025.
• Ensuring the stability of the financial sector remains paramount, with a focus on
managing potential risks associated with increasing bad debts, including due to declining
asset values in the real estate market. Capital buffers of commercial banks are relatively
thin, and the real estate market’s downturn could further depress their capital.
Keywords
• Economics
• Scarity
• Opportunity cost
• Trade off
• Normative statement
• Positive statement
• Fiscal policy
• Monetary policy
• Inflation
• Unemployment
• Economic growth