Introduction to Economics — Decisions, Markets, and the Macroeconomy
Introduction to Economics — Course Guide
Economics studies how people and institutions choose under constraints, how those choices interact, and how we can test the resulting explanations.
The course has one recurring discipline:
Name the decision-maker, constraint, change, mechanism, outcome, distributional effect, and model boundary.
Teaching goal
By the end, a student should be able to take an unfamiliar economic claim—“a tax hurts consumers,” “GDP measures wealth,” “banks lend deposits,” or “a weaker currency helps exports”—and replace it with a conditional, testable explanation.
The sequence is designed for first-year undergraduates. Postgraduate students can use the extension prompts to audit assumptions before moving to microeconomics, macroeconomics, econometrics, finance, or policy analysis.
Learning outcomes
You will be able to:
- calculate opportunity cost and use marginal reasoning;
- solve and interpret a simple market equilibrium;
- use elasticity to analyse revenue, tax incidence, and adjustment;
- connect market power and market failure to appropriate policy tools;
- interpret GDP, inflation, unemployment, and productivity without confusing measurement with welfare;
- explain bank balance sheets, credit creation, and financial fragility;
- diagnose demand, supply, fiscal, monetary, and external shocks;
- write an economic argument that separates identity, model prediction, empirical estimate, and value judgment.
Two cases across the course
Micro case — a tax on sugary drinks
The case begins as a campus beverage market, then adds elasticity, tax incidence, health externalities, distribution, substitution, and evidence from implemented taxes.
Macro case — an energy-importing economy
The case begins with a rise in imported energy prices, then follows production costs, inflation, real income, interest rates, fiscal support, bank risk, exchange rates, and trade.
Using the same cases repeatedly makes one lesson visible: a model becomes richer by adding a necessary mechanism, not by adding unrelated jargon.
Course map
| Chapter | Central question | Main output |
|---|---|---|
| 1. Choice and opportunity cost | What is given up, and what changes at the margin? | decision table |
| 2. Demand, supply, and welfare | How do plans become prices, quantities, surplus, or shortage? | equilibrium analysis |
| 3. Elasticity, revenue, and tax incidence | How strongly do buyers and sellers adjust? | elasticity and incidence calculation |
| 4. Firms, market power, and market failure | When does private choice fail to produce a socially preferred outcome? | policy diagnosis |
| 5. GDP, income, wealth, and welfare | What do national accounts measure—and omit? | accounts table |
| 6. Inflation and labour markets | Are prices, purchasing power, and employment improving? | indicator brief |
| 7. Productivity and growth | Why does output per person rise over decades? | growth decomposition |
| 8. Money, credit, and banking | How do bank balance sheets create credit and fragility? | balance-sheet stress test |
| 9. Business cycles and monetary policy | Is the shock to spending or productive capacity? | shock diagnosis |
| 10. Fiscal policy and public debt | When does the budget stabilise, crowd out, or build capacity? | fiscal memo |
| 11. Trade and exchange rates | How do trade and finance transmit international shocks? | open-economy chain |
| 12. Integrated cases | Which model—or combination—answers the question? | final policy brief |
Preparation
No prior economics or calculus is required. You should be able to:
- rearrange a linear equation;
- calculate percentage and percentage-point changes;
- read axes, units, slopes, stocks, flows, and rates;
- distinguish an observation from a causal claim;
- explain a calculation in a complete sentence.
Five-minute diagnostic
- A wage rises 5% while prices rise 7%. What happens to purchasing power?
- A café cuts its own price and sells more. Did demand shift?
- A government pays an unemployment benefit. Is it directly part of
Gin GDP? - A bank's bond assets lose value. Which balance-sheet buffer absorbs the loss first?
- Inflation rises while output falls. Is a demand shock the only explanation?
Answers: real wages fall roughly 2%; movement along demand; no, it is a transfer; equity; no, a negative supply shock is a candidate.
The analysis routine
Use this on every diagram, calculation, news item, and policy claim:
- Frame — What exactly is the question and time horizon?
- Actors — Who chooses, and what constraint do they face?
- Change — Which price, income, technology, policy, or expectation changes?
- Model — What is held constant?
- Mechanism — How does behaviour adjust?
- Outcome — What happens to price, quantity, output, employment, or welfare?
- Distribution — Who gains, loses, or bears risk?
- Evidence — What observation would support or contradict the prediction?
- Boundary — Where might the result fail to travel?
Four kinds of economic statement
| Statement | Example | How to check it |
|---|---|---|
| accounting identity | Y = C + I + G + NX | follows from definitions |
| model prediction | a binding price ceiling creates excess demand | follows under stated assumptions |
| empirical estimate | a tax reduced sales by an estimated amount | depends on data and research design |
| normative judgment | the tax is fair | depends on values and distributional criteria |
Never cite an identity as proof that one component caused another. Never present a model prediction as an observed fact. Never hide a value judgment inside the word “efficient.”
A 12-session teaching route
Each session fits 75–90 minutes. Preparation is designed for 25–40 minutes.
| Session | Before class | Core activity | Checked output |
|---|---|---|---|
| 1 | rank three uses of one evening | opportunity-cost clinic | decision table |
| 2 | draw one demand and supply shift | market experiment | labelled equilibrium |
| 3 | calculate one midpoint elasticity | sugary-drink tax lab | incidence explanation |
| 4 | identify one market failure | digital-platform hearing | policy diagnosis |
| 5 | classify ten transactions | national-accounts workshop | GDP reconciliation |
| 6 | bring one inflation chart | indicator audit | 150-word data brief |
| 7 | calculate two doubling times | productivity case | growth chain |
| 8 | read one bank balance sheet | bank-run simulation | stress test |
| 9 | classify four macro shocks | AD–AS policy meeting | policy path |
| 10 | compare two fiscal packages | multiplier and debt debate | fiscal memo |
| 11 | state an exchange-rate quotation | pass-through exercise | open-economy chain |
| 12 | prepare one current headline | model-selection defence | final brief |
Students who prefer not to speak can submit the same reasoning as a diagram, calculation, or short memo. Group roles should rotate between modeller, sceptic, evidence checker, and reporter.
Assessment alignment
Adapt weights and formats to local requirements.
| Evidence of learning | What it tests |
|---|---|
| short problem set | calculation and diagram accuracy |
| data interpretation brief | definitions, units, uncertainty, and comparison |
| policy memo | mechanism, distribution, evidence, and limitation |
| oral or written model defence | transfer to an unfamiliar case |
Evidence base and recent cases
The course uses primary research and official standards as examples, including:
- implemented sugary-drink taxes and observed price/sales responses (Andreyeva et al., 2022);
- competition policy for digital platforms (OECD, 2024);
- the internationally agreed national-accounting framework and its 2025 edition (UN Statistics Division);
- evidence on pandemic-era inflation mechanisms (Bernanke & Blanchard, 2023);
- workplace productivity effects of generative AI (Brynjolfsson, Li & Raymond, 2025);
- the Federal Reserve's review of the 2023 Silicon Valley Bank failure (Federal Reserve, 2023);
- exchange-rate pass-through to inflation (Kemoe et al., 2024).
These are teaching cases, not universal laws. Each chapter states the design and transfer boundary before using a result.
Start
Open Chapter 1 and analyse one real choice before drawing any market curve.
Capstones, Data, and Reading Ladder
Finance and economics capstone routes, reproducibility requirements, authoritative data sources, and foundational-to-recent literature.
Chapter 1 — Choice, Opportunity Cost, and Trade
Scarcity, opportunity cost, sunk cost, marginal reasoning, incentives, the PPF, and comparative advantage.