To acquaint the students, with the concepts of macro economics.
Circular flow of income in two, three- and four-sector economy; National income aggregates – measurement and interrelationship; National income and welfare.
Simple Classical model –equilibrium output and employment; Quantity Theory of Money; Classical theory of interest rate; policy implications of the Classical equilibrium model; Classical model with savings and investment.
Keynes’ psychological law of consumption; short run and long run consumption function; Income consumption relationship – absolute income, relative income, life cycle and permanent Income hypothesis; consumption function puzzle; Kuznets’ consumption function and Kuznets’ findings.
Components of investment; marginal efficiency of capital and investment; the accelerator theory.
Equilibrium in the Product Market – The aggregate demand and aggregate supply approach, Savings- Investment approach; Changes in equilibrium income – the Multiplier; The Keynesian theory of interest rate and money demand.