First, the course aims to provide a basic framework to help understand how contemporary economics explains dramatic events in the national and international economy. An important part of this explanation focuses on the role of confidence, expectations and crowd psychology behaving in a different manner than would be suggested by studying individual behaviour. Without some form of coordination, individual behaviour can lead to inferior outcomes.
Second, to understand such aggregate level (or "macroeconomic") behaviour, the course introduces students to the workings of individual firms and markets. We explain how markets do not always work perfectly, due to lack of competition, monopoly power, and externalities like pollution. In light of these "market failures", we discuss how the right kinds of public policies and institutions can be developed which focus the uncoordinated actions of individual households on good, rather than bad, overall outcomes. Understanding what constitute good policies and institutions and how they can be designed to influence economic and business behavior in desirable directions is crucial.
Third, the course examines how private firms affect social outcomes in nations and whether they should perform a "responsible" role outside of pure profit maximisation. As part of this debate, we discuss the workings of the Māori economy.
Finally, we study how globalisation has impacted countries and compare different economic systems throughout the world.