MACROECONOMIC THEORY - I

Paper Code: 
ECO 122
Credits: 
4
Contact Hours: 
60.00
Max. Marks: 
100.00
Objective: 

Course Objectives:

The objectives of this course are-

  1. To introduce the students to national income accounting.
  2. To acquaint them with the theories of consumption and investment as well as money demand and supply.
  3. To make them understand the models of income and output determination under classical and Keynesian schools of thought. 

 

Course Outcomes (COs):

Course

Outcome (at course level)

Learning and teaching strategies

Assessment Strategies 

Paper Code

Paper Title

ECO 122

Macroeconomic Theory -I

CO3: Develop a deeper understanding of the various concepts of macroeconomics related to national income accounting, consumption, investment and money.

CO4: Answer the central question of macroeconomics, namely, determination of aggregate output and employment in the economy.

Approach in teaching: Interactive Lectures, Discussion,  Case studies.

 

Learning activities for the students:

Presentations, Assignments and Group discussions.

Class activity, Assignments, Quiz and  Semester end examinations.

 

12.00
Unit I: 
Introduction

Origin and Development of Macroeconomics- Classical, Keynes, New Classical sand New Keynesian views.

National Income Accounting

National income - concepts and measurement, Recent Changes in National Income Estimation in India, Interrelationship between National Income and Economic Welfare, Flaws in conventional system of National Income Accounting, Green Accounting.

12.00
Unit II: 
Theory of Consumption

Keynes’ psychological law of consumption; short run and long run consumption functions; Kuznets’ consumption Puzzle, Irving Fisher and Inter-temporal Choice; Consumption hypotheses -Absolute, relative, life-cycle and permanent income.

12.00
Unit III: 

Theory of Demand for Money

Classical, Keynesian and Post Keynesian Theories of demand for Money (Baumol, Tobin, Friedman and Patinkin)

Supply of Money

Components of money supply, RBI’s approach to money supply, H theory of Money Supply.

Theory of Investment

Components of investment; marginal efficiency of capital and marginal efficiency of investment; Neoclassical theory, Accelerator theory, Tobin’s Q theory.

12.00
Unit IV: 
Classical Macroeconomics

Simple Classical model –equilibrium output and employment; Says law of Market and Quantity Theory of Money; Classical theory of interest rate; policy implications of the Classical equilibrium model; Classical model with savings and investment, Classical Model by the aggregate demand and aggregate supply approach.

12.00
Unit V: 
Keynesian System

Equilibrium in the Product Market – The aggregate demand and aggregate supply approach, Savings- Investment approach; Multiplier-  Working, Static and Dynamic and different concepts of multipliers.  Keynesian theory of interest rate and money demand. Keynesian Theory of Employment, Complete Keynesian Model.

Essential Readings: 
  1. Rastogi Saurabh and Aiyar Shekhar, National Income and Accounting, Lotus Books.
  2. Richard,T.Froyen, Macroeconomics: Theories and Policies, Pearson Education India; 10 edition ,2013.
  3. Branson, W. H., Macroeconomic Theory and Policy, Affilated East-west Press Pvt Ltd.; 3rd edition, 2005.
  4. Gregory Mankiw, Macroeconomics, Worth Publishers Inc.,5th Revised edition, 2002.
  5. Edgemond, P., Macroeconomics, PHI, New Delhi, 1999.
  6. Vaish, M.C. Macroeconomic Theory, Vikas Publishing House, New Delhi, 14th Edition, 2014.
Academic Session: 
2019-20
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