• University of Exeter Business School
• Module

Economics

Module description

This module is intended for Financial Services Degree Apprenticeship students who are looking to develop a sound knowledge in fundamental microeconomic and macroeconomic concepts relevant to financial analysis and investment management. The module addresses several important concepts that extend the basic market model of demand and supply to assist the financial analyst in assessing a firm’s breakeven and shutdown points of production.

The module introduces important macroeconomic concepts and principles for macroeconomic forecasting and related investment decision making. You will be able to understand fiscal and monetary policies’ economic impact on and implications for inflation, household consumption and saving, capital investment and exports.

Module aims - intentions of the module

The general aim of this module is to build an understanding of the importance of market structure. As different market structures result in different sets of choices facing a firm’s decision makers, an understanding of market structure is a powerful tool in analysing issues such as firm’s pricing of its products and more broadly, its potential to increase profitability. Understanding the forces behind the market structure will aid your role as a financial analyst in determining firms’ short- and long-term prospects.

The module addresses questions such as:

• What determines the degree of competition associated with each market structure?
• Given the degree of competition associated with each market structure, what decision are left to the management team developing corporate strategy?
• How does a chosen pricing and output strategy evolve into specific decisions that affect the profitability of the firm?

The module introduces fundamental concepts of demand and supply analysis for individual consumers and firms. Also covered are the various market structures (perfect competition, oligopoly, monopoly) in which firms operate. Key macroeconomic concepts and principles follow, including aggregate output and income measurement, aggregate demand and supply analysis, and analysis of economic growth factors. The coverage of the business cycle and its effect on economic activity are also discussed.

From an investment perspective, you will be able to evaluate a country’s current economic environment and forecast its future economic environment in order to identify asset classes and securities that will benefit from economic trends occurring within the country. Monetary and fiscal policy are discussed, including their use by central banks and governments. The underlying concepts of the foreign exchange market and the major players are also introduced in the module.

Skills acquisition: You will develop a range of transferable skills required in making investment decision in an environment of risk.

Research in teaching: The module builds on recent investment management research within the finance disciplines to define decision making tools and theories.

The module is supported by a series of webinars, videos, group forums, learning logs, online reading material, and facilitated online group sessions will be offered in addition to a masterclass.

Intended Learning Outcomes (ILOs)

ILO: Module-specific skills

On successfully completing the module you will be able to...

• 1. calculate and interpret price, income, and cross-price elasticities of demand and describe factors that affect each measure;
• 2. describe characteristics of perfect competition, monopolistic competition, oligopoly and pure monopoly;
• 3. explain relationships between price, marginal revenue, marginal cost, economic profit, and the elasticity of demand under each market structure;
• 4. analyse how fluctuations in aggregate demand and aggregate supply cause short-run changes in the economy and business cycle;
• 5. identify the tools of monetary and fiscal policy, including their advantages and disadvantages;
• 6. explain the relationships between the monetary policy and economic growth, inflation, interest and exchange rates;
• 7. interpret a set of economic indicators and describe their uses and limitations.

ILO: Discipline-specific skills

On successfully completing the module you will be able to...

• 8. demonstrate a sound understanding of market structures and identify the type of market structure within which a firm operates;
• 9. generate qualitative and quantitative insights on relevant economic issues;
• 10. apply risk management skills to investment research and practice.

ILO: Personal and key skills

On successfully completing the module you will be able to...

• 11. keep up-to-date with sector relevant changes and contribute to development of specific changes through to implementation;
• 12. understand the impact the external environment has on Financial Services as appropriate to their role, together with relevant best practice;
• 13. provide flexible and innovative solutions under current economic environment.

Syllabus plan

• Topics in Demand and Supply Analysis
• The Firm and Market Structures
• Aggregate Output, Prices and Economic Growth
• Understanding Business Cycles
• Monetary and Fiscal Policy
• International Trade and Capital Flows
• Currency Exchange Rates

Details of learning activities and teaching methods

Formative assessment

Summative assessment (% of credit)

Details of summative assessment

Details of re-assessment (where required by referral or deferral)

Re-assessment notes

Defer – As first time

Refer – capped at 40%

Indicative learning resources - Basic reading

• Economics, CFA® Program Curriclum Level I Volume 2, CFA Institute.
• Besanko, David and Ronald R. Braeutigam, (2014). Microeconomics, 5th Edition, Wiley, International Student Version, ISBN: 978-1-118-71653-3
• Blanchard, O., Amighini, A., and Giavazzi, F., (2017); 3rd  Edition Macroeconomics: A European Perspective (BAG)

Key words search

Market structure, microeconomics, macroeconomics