MACRO ECONOMICS COURSE DURATION: 2 HRS PER WEEK FOR 10 WEEKS COURSE CREDITS: 02 1.

INTRODUCTION (1 HR) Definition & scope of macroeconomics Income and its measurement; their interpretation Circular flow of income, output, and spending NI and allied measures for India 2. INCOME DETERMINATION IN SHORT RUN: BASIC MODEL (2 HRS) Determinants of aggregate spending Equilibrium income Changes in income Concepts of inflation, unemployment, business cycle, multiplier, etc. 3. INCOME DETERMINATION IN A FOUR SECTOR MODEL (2 HRS) Introduction of govt. in income determination model Income determination in an open economy Changes in income in a four sector model Govt. and external sector in Indian economy 4. PRICE SETTING IN AD-AS FRAMEWORK (2 HRS) Aggregate demand, aggregate supply, and equilibrium Changes in income and price level 5. INCOME AND PRICES IN THE LONG RUN (2 HRS) Induced changes in input prices Aggregate demand shocks and their consequences on income Income in short run and long run Business cycle and fiscal operations Fiscal policy in India and its implications for income determination & change 6. INSTITUTION OF MONEY IN A MODERN ECONOMY (1 HR) Definition, nature, role, and function of money Money and credit Banking system: A preliminary idea of credit creation 7. MONEY IN MACROECONOMICS (2 HRS) Demand for money: General and in India Supply of money: General and in India (monetary aggregated) Monetary forces and aggregate demand Macroeconomic cycles and aggregate shocks

(Note: IS/LM model is NOT in course)

8. BALANCE OF PAYMENTS AND EXCHANGE RATES (2 HRS) Balance of payments: Concept; Indian BOP Foreign exchange: Market; determination Foreign exchange markets and systems in India 9. MACROECONOMIC POLICY IN AN OPEN ECONOMY (2 HRS) Meaning of an open economy and openness Macro policy in a world with perfect capital mobility Implications of an open economy; Indian case 10. MACROEONOMIC ISSUES: INFLATION (1 HR) Inflation in the macro model The Philips curve The Lucas AS function Inflation in India 11. UNEMPLOYMENT (1 HR) Meaning, types, and characteristics of unemployment Unemployment in India: Nature. Causes, and consequences Cyclical and structural unemployment Policies to reduce unemployment 12. INTERNATIONAL TRADE (2 HRS) Basis of trade Trade theories for the nations Trade theories at the firm level Gains from trade BASIC TEXT Lipsey and Chrystal: Economics (11th Indian Edition): Chs. 15-25 (OUP) Ministry of Finance: Economic Survey (Latest Edition): All Chapters (OUP) V. IMPORTANT NOTES: All the case studies given in Lipsey & Chrystal are in course. The questions in examination will be application (of macroeconomics concepts) based.