ECON1002 · Introductory Macroeconomics
The Complete Exam Bible · S2 2026Introductory Macroeconomics
ECON1002 Introductory Macroeconomics is the University of Sydney's first-year companion to micro: it scales up to the whole economy — measuring output with GDP, tracking inflation and unemployment, and asking what drives long-run growth, interest rates and the exchange rate. You build a single analytical toolkit (the Keynesian cross, the AD-AS model with a policy reaction function, the Solow-Swan growth model and the foreign-exchange market) and run it across fiscal policy, the Reserve Bank, and the open economy. It is taught from Bernanke, Olekalns & Frank's Principles of Macroeconomics (5th Australian edition).
The stakes are closed-book and computational: a 25% in-person In-Semester Test on Weeks 1-6 and an in-person, pen-and-paper final exam worth 50% (2 hours; Section A = 20 MCQ for 40 marks, Section B = analytical/essay for 60 marks, with more focus on Weeks 8-13), backed by tutorials (15%), four open-book online quizzes (8%) and an Early Feedback Task (2%). There is no single-component hurdle — you pass on a weighted average of at least 50% — but a non-programmable calculator and a printed bilingual dictionary are the only aids, so marks come from fast, correct number-work and four well-drilled exam diagrams, not from memorised formulas. This free layer maps every examinable topic; the full Exam Bible unlocks the worked drills, labelled diagrams and mark-by-mark model answers.
What ECON1002 covers
The whole subject → one exam-ready map. Each topic links to its free chapter guide.
How ECON1002 is assessed
| Component | Weight | Format |
|---|---|---|
| Early Feedback Task (EFT) | 2% | Online quiz; 10 MCQ on Week 1 content; 30-min limit; government-mandated for transitional units |
| Online quizzes (4 × 2%) | 8% | Online, OPEN book; 10 MCQ each; 30-min single attempt; cover the 2-3 preceding weeks; AI use discouraged & monitored |
| Tutorial participation + team quizzes + presentation | 15% | In-tutorial; Participation 5% (attend ≥9 tutorials + active team) + Team Quizzes 5% + Team-based individual presentation 5%; fixed teams of ≤6 |
| In-Semester Test (IST) | 25% | In person, CLOSED book, 60 min; ~25 MCQ on a Gradescope bubblesheet; covers Weeks 1-6; non-programmable calculator + printed bilingual dictionary permitted; 4 versions A-D |
| Final exam (end-of-semester) | 50% | In person, pen & paper, CLOSED book, 2 hrs (+10 min reading); Section A = 20 MCQ (40 marks) + Section B = analytical/essay (60 marks); covers ALL material with more focus on Weeks 8-13 |
Solow-Swan steady state: capital and income per worker
- 2 marksState the steady-state condition. In Solow-Swan, capital per worker is constant when saving per worker exactly funds break-even investment: Δk = 0 ⇒ θ·A·k^0.5 = (d + n)·k.
- 1 markSubstitute the numbers: 0.3 × 1 × k^0.5 = (0.05 + 0.05) × k, i.e. 0.3·k^0.5 = 0.10·k.
- 1 markDivide both sides by k^0.5 to isolate k: 0.3 = 0.10·k^0.5 ⇒ k^0.5 = 3 ⇒ k* = 9.
- 1 markFind income per worker from the production function: y* = A·(k*)^0.5 = 1 × 9^0.5 = 3.
- 1 markInterpret: at the steady state the economy stops accumulating capital per worker, so without TFP growth (A constant) the long-run growth of income per worker is 0 — growth happens only while k is still below k*.
Key terms
- Gross Domestic Product (GDP)
- The market value of all final goods and services produced within a country in a given period. It can be measured three equivalent ways — expenditure (C + I + G + X − M), value-added, and income — and 'final' means intermediate goods are excluded to avoid double counting.
- Real vs nominal GDP / GDP deflator
- Nominal GDP values output at current prices; real GDP holds prices at a base year so only quantities move. Their ratio is the GDP deflator = (Nominal GDP / Real GDP) × 100, a broad measure of the price level.
- Fisher equation
- The link between nominal and real interest rates: i = r + π (so r = i − π). The nominal rate i is set in the contract; the real rate r is the inflation-adjusted reward to lenders, and unanticipated inflation transfers wealth from creditors to debtors.
- Income-expenditure multiplier
- The factor by which equilibrium output changes for a one-dollar change in autonomous spending. In the simple model it is 1/(1−c); with a proportional tax t and import rate m it is 1/(1−[c(1−t)−m]), and it is always larger than one.
- Output gap & potential output
- Potential output y* is what the economy produces at normal resource use; the output gap = 100 × (Y − Y*)/Y*. A negative (recessionary) gap means under-use and rising unemployment; a positive (expansionary) gap means over-use and rising inflation.
- Real exchange rate
- rer = eP/Pᶠ, where e is the nominal exchange rate (foreign currency per domestic), P the domestic price level and Pᶠ the foreign price level. A real depreciation (rer falls) makes a country more competitive — exports up, imports down.
ECON1002 FAQ
Is ECON1002 hard?
ECON1002 is challenging mainly because it is closed-book and computational under time pressure, not because the maths is advanced. The algebra is light — multiplier fractions, the Fisher equation, the real exchange rate, the Solow-Swan steady state — but you must apply it fast and correctly without notes. Students who keep up weekly, drill the MCQ number-types, and rehearse the four exam diagrams (Keynesian cross, AD-AS, Solow-Swan, FX market) find it very manageable; leaving it to the end is what makes it feel hard.
Is the final exam a hurdle in ECON1002?
No single-component hurdle is stated in the unit materials; you pass on a weighted average of at least 50% across the EFT (2%), online quizzes (8%), tutorials (15%), the In-Semester Test (25%) and the final (50%). That said, the final is worth 50% and the IST 25%, so the two closed-book exams together decide three-quarters of your mark. Always confirm the current rules in your unit outline.
What does the In-Semester Test cover versus the final?
The In-Semester Test (25%, closed-book, ~25 MCQ, 60 minutes) covers Weeks 1-6 only — GDP, inflation and interest, saving and investment, the labour market, the business cycle and the Keynesian model. The final covers ALL material but with more focus on Weeks 8-13 (AD-AS, long-run growth, Solow-Swan, exchange rates and the balance of payments), so weight your revision toward the back half of the unit for the final while not neglecting the foundations.
Can I use a calculator or notes in the exams?
The IST and the final are both in-person and closed-book. You may bring a non-programmable (non-graphing) calculator and a printed bilingual dictionary, but no notes, formula sheet or programmable device. Because no formula sheet is provided, you must memorise the key relationships (the multiplier, Fisher, Okun's Law, the steady-state condition, rer and PPP) and be able to set them up by hand.
How computational is ECON1002, and what should I practise?
Most marks are computational. The IST and the final's Section A (40 of 100 marks) are MCQ that reward fast, correct number-work: GDP three ways, CPI inflation, the Fisher real rate, the Keynesian multiplier and equilibrium Y, the balanced-budget multiplier, Okun's Law, the Solow-Swan steady state, the real exchange rate, PPP depreciation and NS − I = NX. Section B then rotates through four labelled diagrams — the Keynesian cross, AD-AS with the policy reaction function, Solow-Swan, and the FX market. Drill the number-types and the four diagrams and you cover the paper.
How to study for the exam
Treat ECON1002 as a skills subject won under closed-book conditions, and build two muscle groups in parallel. (1) Number-work: keep a running drill of every MCQ type — GDP three approaches, CPI inflation and the deflator, the Fisher real rate, VMP labour hiring, Okun's Law, the Keynesian and balanced-budget multipliers, the money multiplier, the policy reaction function, the Solow-Swan steady state, the real exchange rate, PPP, and NS − I = NX — and practise them by hand on a non-programmable calculator until setup is automatic, because there is no formula sheet. (2) Diagrams: master the four Section-B exam diagrams — the Keynesian cross, AD-AS with the policy reaction function, Solow-Swan steady state, and the FX market — and for each learn the shift it shows and the one-line decision rule it encodes ('G↑ shifts PAE up, ΔY = multiplier × ΔG'; 'θ↑ raises the saving curve, higher k* and y*'). (3) Use the open-book online quizzes and tutorials as a weekly diagnostic, then re-drill weak topics under timed conditions. (4) Weight revision toward Weeks 8-13 for the final and Weeks 1-6 for the IST, and always finish a calculation with the one-sentence economic interpretation — examiners reward the reasoning, not just the number.
