|Course No.: Econ 1201
|Course Title: Macroeconomics I
||Course Status: Core
The course is designed to make the beginners oriented with the basic macroeconomic tools to be used in courses at advanced level.
The aim of this course is to:
· Introduce the students with the basic concepts and tools of macroeconomics.
· Make the students conceptualize the basic theories in the branch of macroeconomics.
· Initiate understanding the link between macroeconomic theory and practice.
· Provide analytical skills to evaluate economic environment and related policy issues.
|Intended Learning Outcomes (ILOs):
At the end of this course students will be able to:
· Gather basic knowledge regarding concepts used in macroeconomics and their interrelationship.
· Understand and analyze the nature of major macroeconomic variables.
· Illustrate the determinants of national income and employment.
· Explore the root causes of unemployment and inflation occurring in the economy.
· Evaluate economic environment and related policy issues.
· Analyze real life happenings in the sphere of macroeconomics on the basis of acquired theoretical knowledge.
|Section – A
| Introduction: Definition; Basic macroeconomic concepts – GNP, GDP, NNP, NI, PI, DI – Interrelationship among these concepts; Nominal and Real GNP; Growth of GNP; GNP as an indicator of economic welfare; Potential and actual GNP; GNP gap; Fluctuation in GNP; Business cycle; Stabilization policy; Fiscal policy and monetary policy; Inflation; Unemployment.
National Income Accounting: Concept of – final good and intermediate good, injection into the economy and withdrawal from the economy, government expenditure, tax and transfer payment; Methods of measuring national income – product, income, expenditure and value added approach; Problem of double counting; Problems of national income accounting; Importance of national income accounting; Concept of circular flow of income and expenditure in two, three and four sector economy.
Consumption and Savings: Consumption expenditure and savings; Consumption and savings function; Concepts of – MPC, MPS, APC, APS and inter-relationship among them; Short-run and long-run consumption function.
Capital and Investment: Concept of capital and investment; Investment function; Gross and net investment; Induced and autonomous investment; Business fixed investment; Residential investment; Changes in inventories; Concepts of MEC and MEI; Investment decision; Concept of IRR and NPV.
|Section – B
Classical Income Determination Model: Say’s Law; Pigou’s wage-price flexibility theory; Quantity theory of money – Fisher’s and Cambridge versions; Output and employment determination in classical theory; Effect of changes in demand for and supply of labor on equilibrium output and employment in the classical theory; Keynesian criticism.
Keynesian Model of Income Determination: National income determination model for two, three and four sector economy; Concept of multiplier – investment multiplier, govt. expenditure multiplier, tax multiplier, transfer payment multiplier, foreign trade multiplier.
Inflation: Concept of inflation; Measurement of inflation – CPI, PPI, GNP deflator; Types and causes of inflation – cost-push, demand-pull, mixed, stagflation; Cost of inflation; Remedies for inflation; Inflationary and deflationary gap; Measurement and policies to reduce gaps.
Unemployment: Concept of – full-employment, unemployment and natural rate of unemployment; Measurement of unemployment; Types of unemployment – voluntary, involuntary, cyclical, seasonal, frictional, structural and disguised; Socioeconomic cost of unemployment; Remedies to and policies to tackle unemployment.