Course Contents

• An introduction to macroeconomics: What is macroeconomics? Why do we need macroeconomics? Key macroeconomic phenomena: output and income, employment, unemployment and the labor force, Inflation and the Price level, the interest rate, the balance of payments, cycles and trends. • Measuring macroeconomic variables: Natural output concepts, National Income accounting: gross domestic product, interpreting national income measures • Introduction to the theory of national income determination: Key assumptions, what determines aggregate expenditure? Equilibrium national income, changes in national income. • National income in an open economy with government: Government spending and taxes, net exports, equilibrium national income, the income- expenditure approach, the augmented saving-investment approach, changes in aggregate expenditure. • National income and the price level in the short run. • Exogenous changes in the price level, equilibrium national income and the price level, changes in national income and the price level. • National income and the price level in the long run: Induced changes in factor prices, the Long run consequences of aggregate demand shocks, National income in the short and long run. • The nature of money and monetary institutions: The nature of money, what is money, the origins of money, modern money, monetary institutions and markets. • The role of money in macroeconomics: The supply of money and the demand for money, monetary equilibrium and aggregate demand, aggregate demand, the price level, and national income. • The balance of payments and exchange rates: The balance of payment accounts, the meaning of payments balances and imbalances, the determination of exchange rates. • Inflation: Inflation in the macro model, supply shocks, Demand shocks, the Philips curve with respect to short run and long run. • Business cycles: Characteristics of business cycles, theories of the cycles, cyclical controversies.

Course Synopsis

The objective of this course is to provide the students a good understanding of principles of Macro Economics and explain its relevance and importance to the students of management.

Course Learning Outcomes

After completing the course students should be able to: • Explain the determination of the equilibrium levels of national income in terms of the simple Keynesian macroeconomic model. • Describe the functions of money and the role of the banking system in the creation of money. • Explain the relationship between the money supply, growth and inflation. • Understand and interpret the main objectives of government macroeconomic policy and the rationale for the various policies used to achieve these objectives. • Employ the aggregate supply and demand model to analyze the likely effects of fiscal and monetary policy upon output, employment, the price level, and the balance of payments. • Explain the fundamental principles of comparative advantages and specialization and their relevance to international trade. • Explain the terms of trade, balance of trade and balance of payments accounts.