Course Pre-requisites:
1. Student must have completed Bachelor’s Degree
2. Must Have aptitude for macroeconomics
3. Must possess analytical thinking
Course Objective(s): This course Introduces students to the main classes of models in modern macroeconomics. The first half of the
course will be aimed at providing students with astound knowledge of modern macroeconomic theories of
income and employment determination while the second half will deal with the theories of consumption and
investment along with measures to analyze unemployment and inflation including contrasting economic views
on unemployment. Final part of the course will mainly focuses on integration of goods and money market and
the use of fiscal and monetary police to achieve economic goals.
Course Outcomes: The students will be able to
1. Demonstrate the problem of macroeconomic
aggregations using partial and general equilibrium analysis.
2. Examine how the economy behaves at the aggregate
level and how national income is measured and determined both in closed and
open economy context.
3. Demonstrate various theories explaining the major factors determine consumption expenditure on final goods and services.
4. Define money and describe the theories on money
demand and money supply including the process of money creation by the banking
system and the role of the central bank.
5. Apply macroeconomic measures to analyze
unemployment and inflation including contrasting economic views on
unemployment.
6. Explain the components of aggregate economic
activity, fluctuations and effects for the national economy and how fiscal
policy is used to achieve economic goals.
Course Content:
Unit-I
Introduction to Macroeconomics: Why and how to study macroeconomics; Scope of macroeconomics,
Macroeconomic Variables- Stocks and Flows, Problem of Aggregation:
Macroeconomic Equilibrium. National Income Accountings. Macroeconomic Debate
(Introductory)
Unit-II
Classical Macroeconomics: The Economy in the long
run; Keynesian approach of Macroeconomics.
Models of Income and Employment Determination: An
Overview. Walrasian interpretation of Keynesian unemployment; New Keynesian
Interpretation, Post-Keynesian Interpretation. New classical economics.
Unit-III
Consumption Function and Investment Function:
Keynes consumption theory, Kuznet’s Puzzle,
Life Cycle Hypothesis, Permanent Income Hypothesis, Random Walk
Hypothesis, Keynesian Theory of Investment, Accelerator principles,
Neo-Classical and New Classical Theories of Investment.
Unit-IV
Money and Inflation: Demand for Money- Friedman,
Baumol, Tobin, Patinkin’s Real Balance Effect, Issues regarding endogenous and
exogenous supply of money,
Unit-V
R.B.I.’s Approach to Supply of Money Demand-Pull
and Cost-Push Inflation, Phillips Curve Controversy, Natural Rate of
Unemployment-Adaptive expectations and Rational expectations models of
inflations. The quantity theory of
money.
Unit-VI
Economy in the short-run: Goods markets and the IS
curve, Financial or money market and the LM curve, Goods market and money
market together-The IS-LM model- closed economy case; Fiscal policy and
monetary policy under alternative supply assumptions, Policy Mix. Aggregate
demand and supply.
Reference Books:
1. Mankiw Gregory N. Macroeconomics, Worth publishers
2. Dornbusch Rudi, Fischer, Stanley and Startz
Richard. Macroeconomics, Tata
McGraw-Hill Publishing Co. Ltd.
3. Blanchard Olivier. Macroeconomics, Prentice Hall
- Teacher: Department of Economics