ECON7074 Macroeconomic Analysis
The Complete Exam Bible · S2 2026ECON7074 Overview
- Semester 2 2026
- Australian National University
- Postgraduate
- 6 units
- Closed-book final exam
Macroeconomic Analysis is the Research School of Economics postgraduate course on how a whole economy behaves: what national output measures, why living standards differ so widely between countries, and how money growth feeds into inflation.
- Assessed by Half of the final mark rests on a closed-book final exam, and at least 40% on that exam is required to pass the course.
- Exam coverage The Class Summary expects roughly one third of the final to test the first half of semester and two thirds the second half.
- Hardest step Turning a policy change or shock into a shift in the Solow diagram, then tracing capital, output and growth through time.
What you get in the full ECON7074 Exam Bible
- 9 chapters, 52 pages — every examinable topic, week by week
- 26 original practice questions, each with a model answer in the Final exam format
- 9 worked examples, solved the way ECON7074 marks
- 17 computed figures, redrawn from the course’s own numbers
- Exam-morning plan for the Final exam (50%) — what to revise last, where marks are lost
Free on this page: assessment table, chapter map, one worked example, key terms, FAQ. The rest is in the full exam bible.
How ECON7074 is assessed
| Component | Weight | Format |
|---|---|---|
| Final exam · hurdle | 50% | Invigilated, closed-book, in-person paper in the examination period, probably 3 hours, most likely with multiple-choice, short-answer and long-answer parts (format not yet confirmed); a non-programmable calculator is the only permitted material; at least 40% on this exam is required to pass the course |
| Mid-semester exam | 20% | Invigilated, closed-book, in-person exam in Week 6 or 7 on the first six weeks, with multiple-choice and short-answer questions and a non-programmable calculator only |
| Tutorial quizzes | 14% | Short quizzes in tutorials each week from Week 3 on the previous week's concepts; the seven best count |
| Assignment 1 | 8% | Individual take-home problem-solving and modelling task, typed and submitted through Canvas |
| Assignment 2 | 8% | Individual take-home task similar to Assignment 1, typed and submitted through Canvas |
Weights follow the Semester 2 2026 Class Summary and the opening lecture and total 100%. The Class Summary states a hurdle: you must score at least 40% on the final exam to pass the course. It describes the final format as probable and says full details and a practice exam are released on Canvas by the end of Week 10.
Assessment structure
What other students are asking about ECON7074
- Where can I find lecture notes or study guides for ECON7074 at ANU?
- The ECON7074 study guide in AskSia Library covers Macroeconomic Analysis in 9 chapters, with the assessment table, a chapter-by-chapter topic map, key terms and a worked example, free to read on this page.
- Is there a final exam in ECON7074, and how much is it worth?
- Yes. In the offering this AskSia Library guide is built from, Final exam carries 50% of the ECON7074 mark; the full split is Final exam 50%, Mid-semester exam 20%, Tutorial quizzes 14%, Assignment 1 8%, Assignment 2 8%.
- What does ECON7074 cover on gdp: production, expenditure and income?
- In AskSia Library's ECON7074 guide, the GDP: Production, Expenditure and Income chapter explains value added, the expenditure identity, factor incomes, GNP and GNI, and what GDP leaves out.
- What does ECON7074 cover on real gdp, price indexes and unemployment?
- In AskSia Library's ECON7074 guide, the Real GDP, Price Indexes and Unemployment chapter explains nominal versus real GDP, the deflator, Laspeyres, Paasche and Fisher indexes, CPI bias, unemployment and participation.
- What does ECON7074 cover on long-run growth facts and growth arithmetic?
- In AskSia Library's ECON7074 guide, the Long-Run Growth Facts and Growth Arithmetic chapter explains the Great Divergence, ratio scales, compound growth, convergence evidence, and growth benefits and costs.
Current ECON7074 dates
| Date | Item | Control |
|---|---|---|
| 24 August 2026 | Assignment 1 | 8% individual take-home task |
| 19 October 2026 | Assignment 2 | 8% individual take-home task |
| 5 November 2026 | Final exam | Date shown in the Class Summary; confirm your sitting in the examination timetable |
Dates are as published in the Semester 2 2026 Class Summary. Confirm exact deadlines and submission settings in the live LMS.
What ECON7074 covers
The first half of the course moves from measuring an economy to explaining why some economies grow rich, then links money growth to inflation.
Macroeconomic Questions, Models and Causality
Micro versus macro, the fallacy of composition, endogenous and exogenous variables, parameters and causal testingThis opening chapter sets out what macroeconomics studies and how it reasons.
- Scarcity, choice and incentives
- Microeconomics versus macroeconomics
- The fallacy of composition
- Exogenous, endogenous and parameter roles
- Solving a model and running an experiment
- Correlation, causation and model testing
GDP: Production, Expenditure and Income
Value added, the expenditure identity, factor incomes, GNP and GNI, and what GDP leaves outGross domestic product condenses an economy's output into one number, and this chapter shows how that number is assembled and where it falls short.
- Definition of GDP and final output
- Value added and double counting
- The expenditure identity, imports and inventories
- Factor incomes, depreciation and NDP
- What GDP counts and leaves out
- GNP, GNI and purchasing power parity
Real GDP, Price Indexes and Unemployment
Nominal versus real GDP, the deflator, Laspeyres, Paasche and Fisher indexes, CPI bias, unemployment and participationOnce output is measured, the next task is to separate quantity from price and to measure joblessness. This chapter starts with nominal and real GDP and shows that real growth depends on which prices are held fixed.
- Nominal versus real GDP and growth rates
- Laspeyres, Paasche and Fisher chain indexes
- The GDP deflator as a price measure
- Building the CPI and its four biases
- Core inflation, the trimmed mean and substitution bias
- Unemployment, participation and discouraged workers
Long-Run Growth Facts and Growth Arithmetic
The Great Divergence, ratio scales, compound growth, convergence evidence, and growth benefits and costsThis chapter sets out the facts any theory of growth must explain and the arithmetic needed to read them.
- Real GDP per person as a living-standard measure
- Modern growth and the Great Divergence
- Ratio scales and straight-line growth
- Cross-country growth rates and convergence
- Benefits, costs and happiness
- Compound growth and doubling times
The Production Model and Productivity
Cobb-Douglas production, profit maximisation, factor shares, development accounting and the TFP residualThis chapter builds the static production model and uses it to ask how much of the gap between rich and poor countries capital can explain.
- Cobb-Douglas technology and constant returns
- Diminishing returns to capital per person
- Profit maximisation and marginal products
- Equilibrium wages, rents and factor shares
- Development accounting and the TFP residual
- Human capital, technology and institutions
Solow-Swan Capital Accumulation and Dynamics
Investment and depreciation, the Solow diagram, transition dynamics, and output and consumption pathsThis chapter turns the static production model into a growth model by explaining where capital comes from.
- Why the model makes capital endogenous
- The five equations of the Solow-Swan system
- Saving, investment and the real interest rate
- Reading the Solow diagram
- Solving the steady state in levels
- Transition dynamics and the time path of capital
Solow Steady States, Convergence and New Growth
Steady-state algebra, income-gap decomposition, parameter experiments, convergence and endogenous growthThis chapter solves the Solow-Swan model at its rest point and asks what the solution says about the world.
- Closed-form steady-state capital and output
- Why productivity carries an exponent of 3/2
- Splitting income gaps into investment and productivity
- Parameter experiments and the absence of long-run growth
- Convergence among OECD countries and the world
- Endogenous growth, AK and growth policy
Money, the Quantity Theory and Interest Rates
Functions and measures of money, the quantity equation, neutrality, and the Fisher equationThis chapter explains what money is and how its long-run growth governs the price level.
- What makes an asset money
- The four functions of money
- Monetary base, M1, M3 and broad money
- The quantity equation and velocity
- Neutrality and the classical dichotomy
- Nominal, real and ex post interest rates
Inflation Costs, Hyperinflation and Deflation
Seigniorage and the inflation tax, hyperinflation, redistribution and distortion costs, and debt deflationThis chapter asks why inflation is costly, why it sometimes explodes, and why falling prices can be worse than they sound.
- The government budget constraint
- Seigniorage and the inflation tax
- How hyperinflations start and end
- Expected versus unexpected inflation
- Redistribution and distortion costs
- Debt deflation in the 1930s
The first six weeks, which this guide covers in depth, follow the Jones textbook from measurement to long-run growth. You learn how GDP is built three ways from production, spending and income, why real and nominal GDP differ, how the GDP deflator and the CPI are constructed and why the CPI can overstate inflation, and how the unemployment and participation rates are defined. Growth then becomes the central question.
A ratio-scale view of the very long run, compound-growth arithmetic and cross-country evidence set up the production model, where Cobb-Douglas technology, competitive factor markets and total factor productivity explain income gaps. The Solow-Swan model adds capital accumulation, a steady state and transition dynamics, and shows why saving alone cannot sustain growth.
The money and inflation topic links the quantity equation, the Fisher equation, the inflation tax and the costs of inflation, hyperinflation and deflation. Assessment combines weekly tutorial quizzes, two individual take-home assignments, a mid-semester exam and a closed-book final worth half the mark, with a hurdle on the final.
The second half of semester turns to the short run, the IS curve, monetary policy and the Phillips curve, the AS/AD model and the open economy, and the final weights that half more heavily. This guide names those later topics so you can plan, but its worked material is built only on the first-half teaching available here.
Worked example · free
Solving a Solow steady state and reading the transition
- +1Set investment equal to depreciation in the steady state: 0.2 × 2k1/3 = 0.1k, so 0.4k1/3 = 0.1k.
- +1Rearrange to k2/3 = 0.4 / 0.1 = 4, so k* = 43/2 = 8.
- +1Substitute back: y* = 2 × 81/3 = 2 × 2 = 4, and consumption c* = (1 − 0.2) × 4 = 3.2.
- +1Check the ratio: k*/y* = 8 / 4 = 2, which equals s/d = 0.2 / 0.1 = 2.
- +1At k = 1, investment is 0.2 × 2 = 0.4 and depreciation is 0.1, so net investment of 0.3 raises k toward 8, with growth slowing as the gap closes.
Key terms
- Gross domestic product
- The market value of all final goods and services produced inside an economy over a period, with intermediate inputs excluded so each item is counted once.
- Value added
- A producer's sales revenue minus the cost of intermediate inputs bought from other firms; summing it across producers gives GDP without double counting.
- GDP deflator
- An index of the average price of domestic output, equal to nominal GDP divided by real GDP and set to 100 in the base year.
- Consumer price index
- A fixed-basket price index for household consumption, used to track the cost of living and measure consumer inflation.
- Unemployment rate
- The share of the labour force that is not employed but is actively looking for work, written u = U / L.
- Total factor productivity
- The efficiency parameter A in the production function, often measured as the residual once capital and labour are accounted for.
- Cobb-Douglas production
- A production function of the form Y = AKaL1−a; with the exponents summing to one it has constant returns to scale.
- Steady state
- The point in the Solow-Swan model where investment exactly replaces depreciation, so capital, output and consumption stop changing.
- Transition dynamics
- Movement of the capital stock toward its steady state, faster the further the economy starts from that point.
- Quantity equation
- The identity MV = PY linking the money supply and its velocity to the price level and real output.
- Fisher equation
- The relationship stating that the nominal interest rate equals the real interest rate plus expected inflation.
- Inflation tax
- Revenue a government gains by printing money, paid by holders of currency whose purchasing power falls.
- Fallacy of composition
- Reasoning error that assumes what is true for one individual must hold for the whole economy when everyone acts together.
ECON7074 FAQ
How is Macroeconomic Analysis at ANU assessed?
Five components make up the mark in Semester 2 2026: tutorial quizzes worth 14%, two individual take-home assignments worth 8% each, a closed-book mid-semester exam worth 20% and a closed-book final exam worth 50%. The quizzes run weekly from Week 3 and only the best seven count, so a missed week is not fatal.
Is there a hurdle on the final exam?
Yes. The Class Summary states that you must obtain at least 40% on the final exam to pass the course, whatever your marks elsewhere. Strong assignment and quiz results therefore cannot carry a weak final, so plan revision to secure a solid score across the whole paper rather than chasing a few topics.
What format does the final exam take?
The Class Summary describes a probable three-hour, invigilated, closed-book paper with a non-programmable calculator as the only permitted material. It expects a multiple-choice part followed by short-answer questions on single concepts and longer multi-part questions that test technical skill and intuition. Exact details and a practice exam are released on Canvas by the end of Week 10.
Which weeks does this study guide cover?
The worked chapters cover Weeks 1 to 6: measurement, long-run growth, the production model, the Solow-Swan model, and money and inflation. The later topics on the short run, the IS curve, monetary policy and the Phillips curve, AS/AD and the open economy are listed for planning but are not taught here, and they carry about two thirds of the final.
Is the course mathematically demanding?
The algebra is moderate but must be fluent. You need growth-rate arithmetic, exponents in Cobb-Douglas functions, solving a steady state from sY = dK, and index-number calculations. Practice papers pair these calculations with diagrams and short explanations, so being able to say what a result means matters as much as reaching the number.
Are practice exams available for this course?
Yes. Two practice mid-semester papers with solutions from earlier offerings mix one-point multiple-choice items with a longer written question on growth, one a Solow-Swan policy analysis and one a convergence graph, and the Class Summary promises a final practice exam with answers by the end of Week 10. This guide models its question types on those papers but every question here is newly written.
Can I use AskSia to study for this course?
Yes, as a revision reference. The guide explains each model in its own words and uses original numbers, so it supports your preparation without replacing lectures, tutorials or the textbook. It does not complete or sit any assessment, and the course's own rules on generative AI use in assignments still apply to your submitted work.
Questions students ask in each ECON7074 chapter
- What is the difference between micro and macroeconomics?
- Microeconomics studies the choices of individual households and firms and how they interact in particular markets. Macroeconomics studies the performance of an economy as a whole, using aggregates such as total output, the general price level and the unemployment rate. The course treats macro as a separate field because aggregate outcomes can differ from the sum of individual plans. Chapter 01 · Macroeconomic Questions, Models and Causality
- Why do the production, expenditure and income approaches give the same GDP?
- Every dollar spent on final output is received by the producers of that output, and producers pay it out as wages, interest, rent and profit. Summing value added captures the same output from the production side. Because these are three views of one set of transactions, careful accounting must reach the same total; differences in published figures reflect measurement error, not economics. Chapter 02 · GDP: Production, Expenditure and Income
- Why can real GDP growth differ depending on the base year?
- Real GDP values quantities at fixed prices, and goods whose output grows fastest often become cheaper. Early-year prices give those goods a heavy weight and late-year prices a light one, so measured growth changes with the base. Chain weighting compares neighbouring years and averages the two answers, which keeps the result stable over long periods. Chapter 03 · Real GDP, Price Indexes and Unemployment
- Why does the course measure living standards with real GDP per person?
- It is a single number that can be measured for most countries across long periods. The lecture surveys several development indicators, such as life expectancy, and then adopts real GDP per person as a simple working measure. It leaves out leisure, the environment and distribution, so treat it as a practical yardstick for comparison rather than a complete measure of wellbeing. Chapter 04 · Long-Run Growth Facts and Growth Arithmetic
- Why does the production model use a Cobb-Douglas function?
- Cobb-Douglas is simple to solve and matches a key fact: labour's share of income has been roughly two thirds and capital's one third over long periods. With exponents of one third and two thirds summing to one, the function has constant returns to scale, while each input separately shows diminishing returns. Chapter 05 · The Production Model and Productivity
- Why does the Solow-Swan model need a steady state?
- Investment grows with capital but by less and less because of diminishing returns, while depreciation grows in proportion to the capital stock. Sooner or later the two are equal, and at that point net investment is zero, so capital, output and consumption all stop changing. That rest point is what the model calls the steady state. Chapter 06 · Solow-Swan Capital Accumulation and Dynamics
- Why does productivity have an exponent of 3/2 in the Solow steady state?
- A rise in productivity raises output directly, as in the production model, but it also raises investment, so the economy accumulates more capital before reaching its new rest point. That extra capital adds still more output. The combined effect shows up as an exponent of 3/2 on productivity in steady-state income per person, compared with an exponent of one when capital is held fixed. Chapter 07 · Solow Steady States, Convergence and New Growth
- Why does paper money have value if it is not backed by gold?
- Modern currency is fiat money. Its value rests on expectations: each person accepts it because they are confident others will accept it in turn, and the government declares it legal for settling debts. In hyperinflations governments issue ever larger notes as money loses value. Chapter 08 · Money, the Quantity Theory and Interest Rates
- Who actually pays the inflation tax?
- People and firms holding currency pay it. When the government finances spending by issuing new money, prices rise and every note already in circulation buys less. The loss of purchasing power on existing money balances is the tax, even though no one receives a bill, and it grows with both the inflation rate and the money held. Chapter 09 · Inflation Costs, Hyperinflation and Deflation
How to study for the exam
Treat the first half of the course as one chain and revise it in order. Start with the accounting identities, because almost every later result depends on them: write Y = C + I + G + NX from memory, then rebuild value added from a short production chain and check that the three approaches agree.
Next, practise index numbers with small two-good examples until you can compute a deflator, a CPI and a Fisher chain index without notes. For growth, drill compound-growth arithmetic and logs, then solve the production model and the Solow-Swan model on paper, labelling every curve in the Solow diagram before you shift it.
When a question changes a parameter, write three lines: the curve that moves, the new steady state, and the path of capital and output over time. Finish each session with one past-paper style written answer in under a page. Because the final carries a 40% hurdle and weights the second half more heavily, leave real time for the later topics as well.
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