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Macroeconomics & Business Environment

Class of Course Code Credit : 2012 : SL EC 502 :3 Academic Year Semester Sessions : First : II : 33

Learning Objective
After completing the course the student will be able to Understand and explain the economic environment Explain determination of equilibrium income and general equilibrium Analyse business cycles, and price instability banking systems Discuss fiscal policy Evaluate open economy frame work REFERENCE BOOKS Macroeconomics Macroeconomics Global Business Environment Macroeconomics, 10th e Macroeconomics, 2
nd

AUTHOR / PUBLICATION Dornbush, Rudiger/ Fischer, Stanley/ Stanz, Richard 7ed - TMH IUP IUP Dornbusch, Rudiger et al. Mcgraw Hill - 2008 Farmer, Roger E.A. Thomson South Western 2002 Shapiro, Edward. Harcourt Brace Jovanovich 1978 Samuelson, Paul Anthony et al. Irwin/mcgrawhill - 2004 Delong, J. Bradford. Mcgraw Hills Ministry of Finance, Govt. of India, OUP - 2008 Determinants of Investment, Government spending, Net exports Product market - Shifts in AD, Concept of multiplier - simple multiplier, investment multiplier, multiplier in the presence of taxes and balanced budget, foreign trade multiplier, Money market - Functions of money, Demand for money and supply of money- Determination of interest rates, Real vs. nominal interest rate, Hicks Hansen Model: IS LM analysis, Deriving aggregate demand curve Aggregate Supply - Demand function for labour, supply function of labour, Labour market equilibrium under classical and Keynesian models General equilibrium using AD curve and AS curve
Second Semester

Macroeconomic Analysis, 4th e Macroeconomics, 18th e Macroeconomics Economic Survey 2007-08

Detailed Syllabus
Analysis: Microeconomics Vs. Macroeconomics, Goals of Macroeconomic policy, Objectives and Instruments of Macroeconomics
Introduction to Economic

Measuring National output / Income: Concept of national product, Variants of national product, Methods of measuring national Income and problems of measuring, Real Vs Nominal, Price indices and its applications
Aggregate Demand and Aggregate Supply-

Meaning of AD and AS curves


Determination of Equilibrium Income-

Components of aggregate Demand, Consumption function, Marginal propensity to Consume, Determinants of Consumption, Saving function, Investment function,
Detailed Syllabus The Class of 2012

Economic Instability and Fluctuations: Business Cycles: Features of business cycle, Business cycle theories
Unemployment: Types of unemployment:

The South African Economy: Coping with the Legacy of Apartheid (Source:Case Studies in Management Volume IX)

Okuns Law, Impact of unemployment Price Instability: Types of inflation, Economic impacts of inflation, Price in the AD-AS framework, The Phillips Curve, Monetary policy and the role of banking systems- Deposit creation, Balance sheet of a central bank, Measures of monetary and liquidity aggregates, Money multiplier, Instruments of money supply control, Determination of money supply Fiscal policy - Fiscal instruments, Tax structure, Laffer curve, Types of deficits, Fiscal policy and stabilization, Public debt, Crowding - out effect. Open Economy Framework: International Vs. domestic trade, Theories of International Trade, Protectionism and WTO, Issues related to tariff, Determination of Exchange Rate, Floating exchange rate, Fixed exchange rate, Balance of Payments. Globalization and Global imbalance. Business Environment in Indian contextGrowth phases, Evolution of institutional framework - emphasis on planning, public and private sector, Recent policy measuresmonetary fiscal, foreign trade and technology. Cases Macroeconomics India: Before and After VAT Should Energy be Subsidized? The Indian Economy: Dealing with Inflation Softwood Lumber Dispute between Canada and the USA The US-China Exchange Rate Stand-Off Business Environment Hungarys Reform Process Gazprom - Naftogaz Ukrainy Dispute: Business or Politics? Suggested Schedule of Sessions Topic Overview of Macroeconomics Measuring National Income/output AD and AS curves an introduction Aggregate Demand and multiplier Product market equilibrium Money market equilibrium Aggregate supply General equilibrium using AD and AS curves Economic instability and fluctuations Business cycles Unemployment and price instability Case on The Indian Economy: Dealing with Inflation Monetary policy and the role banking system (including case discussion) Fiscal policy and instruments (including case discussion) Open economic framework (including case discussion) Case on The US-China Exchange Rate Stand-Off Business environment in Indian context Total No. of Sessions 1 4 1 2 2 2 2 1 1 2 1 3 3 3 1 4 33