Macroeconomics SYBAF Semester III Manan Prakashan

Syllabus

1. Introduction to Macroeconomics (15 Lec.)
♦ Macroeconomics : Meaning, Scope and Importance
♦ Circular Flow of Aggregate Income and Expenditure : Closed and Open Economy Models
♦ The Measurement of National Product : Meaning and Importance – Conventional and Green GNP and NNP Concepts – Relationship Between National Income and Economic Welfare
♦ Short run Economic Fluctuations : Features and Phases of Trade Cycles
♦ The Keynesian Principle of Effective Demand : Aggregate Demand and Aggregate Supply – Consumption Function – Investment Function – Effects of Investment Multiplier on Changes in Income and Output

2. Money, Inflation and Monetary Policy (15 Lec.)
♦ Money Supply : Determinants of Money Supply – Factor influencing Velocity of Circulation of Money
♦ Demand For Money : Classical and Keynesian Approaches and Keynes’ Liquidity Preference Theory of Interest
♦ Money and Prices : Quantity Theory of Money – Fisher’s Equation of Exchange – Cambridge Cash Balance Approach
♦ Inflation : Demand-Pull Inflation and Cost-Push Inflation – Effects of Inflation – Nature of Inflation in a Developing Economy
♦ Monetary Policy : Meaning, Objectives and Instruments, Inflation Targeting

3. Constituents of Fiscal Policy
♦ Role of Government to provide Public Goods – Principles of Sound and Functional Finance
♦ Fiscal Policy : Meaning, Objectives – Contra Cyclical Fiscal Policy and Discretionary Fiscal Policy
♦ Instruments of Fiscal Policy : Canons of Taxation – Factors Influencing Incidence of Taxation – Effects of Taxation – Significance of Public Expenditure – Social Security Contributions – Low Income Support and Social Insurance Programmes – Public Debt – Types, Public Debt and Fiscal Solvency, Burden of Debt Finance
♦ Union Budget : Structure – Deficit Concepts – Fiscal Responsibility and Budget Management Act

4. Open Economy : Theory and Issues of International Trade
♦ The Basis of International Trade : Ricardo’s Theory of Comparative Cost Advantage – The Hecksher-Ohlin Theory of Factor Endowments – Terms of Trade – Meaning and Types – Factors Determining Terms of Trade – Gains from Trade – Free Trade versus Protection
♦ Foreign Investment : Foreign Portfolio Investment – Benefits of Portfolio Capital Flows – Foreign Direct Investment – Merits of Foreign Direct Investment – Role of Multinational Corporations
♦ Balance of Payments : Structure – Types of Disequilibrium – Measures to Correct Disequilibrium in BOP
♦ Foreign Exchange and Foreign Exchange Market : Spot and Forward Rate of Exchange – Hedging, Speculation, and Arbitrage – Fixed and Flexible Exchange Rates – Managed Flexibility