Studying Economics & Finance
What is Economics?
Economics is the study of how societies allocate scarce resources among competing uses. It is about the choices made by people, individually and collectively, in the production, exchange, distribution and consumption of goods and services. Central to economic analysis is the study of how people respond to incentives in a market economy, how these incentives may be modified by government intervention, and whether and how government intervention is warranted. At Canterbury, emphasis is placed on the three core areas of study. These are:
- Microeconomics, which examines the behaviour of individuals, households and firms, and their interactions in markets. Microeconomics examines economic choices in decentralised markets and reaches conclusions about economic welfare. Markets which are regulated by government, or have only a few participants, or are characterised by different amounts of information, are also examined.
- Macroeconomics examines the performance of an economy as a whole, and provides insights into the reasons for fluctuations and trends in national income, unemployment, inflation, interest rates, and exchange rates. It also involves examination of a government's taxation, expenditure, monetary and exchange rate policies.
- Econometrics brings economic theories to the data. It is the study of methods aimed at i) testing economic theories and ii) providing quantitative information on economic relationships for policy analyses and decisions. Courses provide both an accessible amount of available econometric methods, and numerous illustrations of these methods with applications to real data sets in hands-on laboratory classes that introduce students to the latest developments in computing and web technology.
What is Finance?
Finance is the study of savings, investment and risk. It describes the ways in which individuals form, or should form, investment portfolios; the ways in which firms make, or should make, investment decisions, and how they can best pay for these investments; and the ways in which markets, institutions, regulators and governments facilitate these decisions. As in economics, incentives play a pivotal role, but with the added dimension that responses have uncertain and long-reaching consequences. Finance draws heavily on the tools of mathematics, statistics (including probability), and accounting, as well as economics and econometrics. At Canterbury, emphasis is placed on the three core areas of finance. These are:
- Corporate Finance focuses on the financial decisions of the business firm. Topics include the cost of investment capital, the impact of firm value of managerial decisions about investment, and the methods used to pay for these investments.
- Investments is the application of scientific tools to personal investment decisions. Topics include the ways in which assets and securities can best be combined for individual investors, how these instruments are priced by markets, and how their performance can be measured.
- Financial Institutions and Markets describes the role of banks, regulators and other institutions intrinsic to the financial system, explains the ways in which financial markets operate, and analyses the determination of interest rates.
Both Economics and Finance are about decisions and decision-makers, consumers, employers, investors and policy-makers in government agencies and industry. The objective of both disciplines is to help decision-makers make better decisions. By studying economics or finance (either as your major or simply as part of your degree) you may have the chance to have an important impact on the well-being of many people - and there is also the possibility of earning a good living yourself.
You can choose to major in economics or finance (or both), but even if you don't, including some courses in your degree will equip you with some valuable critical thinking and analytical skills that will enhance your understanding of the world we live in.
Frequently-Asked Questions About Economics
- Do I need to have studied economics before?
- What should I study at secondary school?
- What Mathematics and Statistics do I need?
- I have studied economics at school. Can I go directly into 2nd year classes?
- What level of English language do I need?
- What is the difference between ECON 201-203 and 206-208?
- In what circumstances can prerequisites be waived?
- Do any courses have limitation of entry?
- Should I do a B.A, B.Com. or a B.Sc.?
- What can I combine Economics and/or Finance with?
- How do marks relate to grades in the Department of Economics and Finance?
- How is the class of honours determined in the Department of Economics and Finance?
No. Success in economics (either as your major or as part of your study) is not dependent on the prior study of Economics at school, although school work in this area can help.
Students are recommended to devote their secondary school study to gaining a broad liberal education, giving priority to mathematics (particularly the calculus option) and subjects such as history and English that develop the ability to write clearly and analyse written material. Studying economics (and accounting in the case of finance) is useful but not essential.
With the importance and use in economics of mathematical methods and statistical tools, a formal knowledge of Mathematics and Statistics should be obtained by all students of Commerce. Many economics courses at the 200 and 300 levels have mathematics or statistics pre-requisites. To keep all their options open, students intending to major in economics should take MATH 102 and STAT 101, preferably in their first year.
However, economics and finance should not be thought of as a solely mathematical subject area - their essence is more logical than mathematical. There is a premium on clear thinking and the ability to reason from general principles to particular solutions.
In order to obtain direct entry to 200 level economics (ECON 201 and 202) in their first year of university study, high school students must study economics at year 13 level (and preferably mathematics with calculus) and meet the requirements as follows:
ECON 202 Microeconomics - to gain direct entry to ECON 202 students must gain either:
- a NZ scholarship award in economics; or
- an "excellence" in standards 90630 (3.1) and 90629 (3.2) microeconomics; or
- ECON 199 or ECON 104 via the STAR programme; or
- a grade of 6 or 7 in International Baccalaureate Economics; or
- a mark of 80% or higher in Cambridge "A" level (year 13 equivalent) Economics
Students must also enrol in MATH 102 or have achieved a sufficient level of mathematics to have MATH 102 waived by the Department of Mathematics and Statistics (e.g. by having taken STAR math or via high school achievement).
ECON 201 Macroeconomics - to gain direct entry to ECON 201 students must gain the requirement for ECON 202 and either:
- a NZ scholarship award in economics; or
- an "excellence" in standard 90632 macroeconomics; or
- ECON 105 via the STAR programme; or
- a grade of 6 or 7 in International Baccalaureate Economics; or
- a mark of 80% or higher in Cambridge "A" level (year 13 equivalent) Economics.
All direct entry to 200 level economics coursers are at the discretion of the Head of Department regardless of achievement in high school economics or other study.
Competence in English expression is essential. All students are presumed to be competent in English.
Overseas students must have achieved appropriate standards in the International English Language Testing System (IELTS) or equivalent.
Students wishing to pursue further programmes in English language and communication may wish to seek advice from the International Student Centre (tel: 3642 391) or the English Language Centre (tel: 3642 905).
Students take either ECON 201 or 206 and either 202/203 or 207/208. All serve as prerequisites for 300-level courses.
The two different sets offer students alternative approaches covering the same basic material. As the name suggests, ECON 201-203 have a mathematics co-requisite (MATH 102) and will require students to use some calculus in examinations. A co-requisite is a course you must have already taken or be taking at the same time. Therefore, having MATH 102 as a co-requisite means that students who did not take MATH 102 in their first year but who now wish to continue on in economics, particularly to honours level, can take ECON 201 and 202. ECON 206 and 207 have no mathematics prerequisite, and although some calculus will be used in lectures, will not require students to know the calculus for exams. The difference between the two courses, however, is not simply one of the use of calculus. ECON 201-203 is the more abstract of the two sets. The focus is more on developing the basic modelling methodology that underpins most economic analysis and less on direct illustrations of how the analysis can be applied to thinking about current economic issues than does the more applications-oriented ECON 206-208. Students who intend continuing on to Honours in Economics should take ECON 201-203.
The first two classes for ECON 201 & 206 and 202 & 207 will be repeated early in the second week of the semester in which they occur. This will allow students to have a look at both courses and therefore make the best decision for them. Note that a number of 300-level economics courses also have a mathematics prerequisite. Students who take ECON 206-208 can still take the calculus-based courses in their third year provided they have the required mathematics prerequisite. However, ECON 201-203 provide the better preparation for those courses. Students who wish to continue on to honours in 2013 will need to take ECON 321 in2012 which will be re-designed as a mathematics tool for economics courses.
Prerequisites can only be waived where this is noted in the Calendar and is at the discretion of the Head of Department. However, there are some common circumstances in which a wiaver will usually be given. These are as follows:
ECON 203: Students who wish to take ECON 203 after having taken ECON 207 should consult the Department.
ECON 321, 322, 323, 324, 325, and 326: Students who have received a restricted pass (C-) in the MATH prerequisite can still enrol in these ECON courses.
ECON 321 and 322: Students who have received a restricted pass (C-) in the STAT prerequisite can still enrol in these ECON courses.
ECON 321: Students who have received a B+ or better grade in ECON 231 can still enrol in ECON 321 (providing the other prerequisites are also met).
ECON and FINC courses with MATH 108 or MATH 102 as a prerequisite: Students who achieve an A+ in MATH 101 will usually be allowed to enrol in economics courses where MATH 108 or MATH 102 is a prerequisite.
FINC 331 and ECON 331: Students who have received a B+ or better grade in ECON 231 can still enrol in FINC 331 or ECON 331 if they have also attained at least a B+ grade in MATH 102.
PSYC 206: For students who are majoring in Psychology and at the discretion of the Head of Department of Economics & Finance, PSYC 206 will be allowed as an alternative to STAT. Students seeking this waiver will normally have a solid study record at both 100 and 200 levels.
FINC 302, 305 and 311 are limited to 70 students. FINC 312 is limited to 50 students.
It is not the title of your degree that matters – more important are the subjects that it contains and the grades achieved. What type of degree you get in economics is determined by the other subjects that you do. For any of the general degrees, approximately 70% of the points in the degree must come from the schedule for that degree and the remaining points can be from any schedule. Some courses are in more than one schedule (e.g. Economics is in Arts, Commerce and Science; Finance is in Commerce and Science) while some are only in one (e.g. Accounting is only in Commerce). It is important to select your courses first which determines the focus of your degree and then the title of your degree will look after itself. You can seek further advice on this at enrolment time.
Students who elect to complete a B.Com. in economics will need to complete the five compulsory first-year courses. Students who elect to complete a B.A. in economics will also need to complete a minor in another Arts subject. See the Enrolment Handbook for further information.
A degree in Economics or Finance is not only useful on its own but also makes a strong partner when combined with other subjects:
Students may enrol in any two degrees concurrently and cross-credit courses in common up to a maximum of 120 points (and not including 300-level courses).
Special provisions have been made, however, in the case of the LLB and BCom degrees which, with careful planning, allow an even more generous amount of cross-crediting between these two degrees, and make possible the completion of both degrees within a five-year period. For details, students should consult the student advisors in the School of Law and School of Business and Economics.
Other Double degree combinations include BCom/BA; BCom/BE; BCom/Bachelor of Forestry Science.
Students who have a strength in mathematics and are wanting to combine this with another subject can consider the joint Mathematics/Economics Honours programme. For more details on this option please contact the undergraduate studies coordinator (Steve Hickson).
The Department of Economics and Finance uses the following mapping between percentage marks and their respective grade equivalentsfor purposes of assessment in its courses.
A pass is 50 marks and over.
For first-class honours, students require an average GPA of 7 or greater over all their honours courses (A- and above).
For second-class honours division 1, students require an average GPA of 5.5 or greater but less than 7 (averaging half-way between B and B+ but less than A-).
For second-class honours division 2, students require an average GPA of 4 or greater but less than 5.5 (averaging at least B- but less than half-way between B and B+).
Third class honours is awarded to students who do not qualify for any of the above but whose GAP is at least 2 (C or C+).
Failed courses will obviously lower the maximum attainable aggregate and affecgt the potential class of honours that a student can attain, but regulations for each degree impose additional penalties for course failures (note that ECON 680) is interpreted as "one course" for the purpose of the following four regulations).
BSc(Hons) regulations require that "All courses must normally be passed at the first attempt".
BA(Hons) and BCom(Hons) regulations require that: "No candidate for the degree shall graduate who has failed more than one of the courses offered".
MA Part 1 regulations require that: "No candidate for the degree shall pass Part I who has failed more than one of the courses offered".
MCom Part I regulations require that: "No candidate for the degree shall graduate who has failed more than one of the courses offered'.