Course Contents

Keynesian Economics  The expenditure sector: consumption, saving, investment, the multiplier, and equilibrium income,  The government sector: government expenditure and taxes multipliers.  The monetary sector: the demand for and supply of money, money markets equilibrium and monetary theory of the rate of interest. 2. Synthesis of the Classical and Keynesian Models  Linear version of the IS-LM curves and their interrelationship with Classical and Keynesian assumption.  Equilibrium in the two-sector model with constant price level. The problem of equilibrium with variable price level, derivation of aggregate demand. 3. Consumption  Absolute income Hypothesis of Consumption  Permanent Income Hypothesis  Relative Income Hypothesis  Life Cycle Hypothesis 4. Investment  Marginal Efficiency of Capital  Marginal Efficiency of Investment  Accelerator 5. The Production and Employment Sector  Supply side equilibrium  The Production Function  The demand for and supply of labour  Equilibrium in labour market  The derivation of the classical and Keynesian aggregate supply curves. 6. Aggregate Demand and Supply Analysis  The equilibrium level of output and employment in the three-sector model.  The Keynesian underemployment equilibrium and real balance effect.

Course Synopsis

The objective of this course is to develop a good understanding of functioning of the macro economy. This course covers the contents that enable the students for the decomposed analysis of major sectors of the economy and facilitate them for further research on macroeconomic problems for the development of the economy. Topics include Keynesian Economics, Synthesis of the Classical and Keynesian Models, Consumption, Investment, The Production and Employment Sector, Aggregate Demand and Supply Analysis. The prerequisite course includes Introduction to Macroeconomics (Maj/Eco-103).

Course Learning Outcomes

After completing the course, the students will be able to  analyze the functioning of the macro economy.  critically evaluate the macroeconomic policies in major sectors of economy and will be competent for further higher research-oriented studies.