MACROECONOMIC THEORY - I

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

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. 

12.00
Unit I: 
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 Income, Relative Income, 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 and Friedman.)

Supply of Money

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; Accelerator theory.

12.00
Unit IV: 
Classical Macroeconomics

Simple Classical model –equilibrium output and employment; Say’s law of Market and Quantity Theory of Money; Effect of changes on the full employment equilibrium values; Classical theory of interest rate; Classical model with savings and investment.

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 Employment, Complete Keynesian Model.

Essential Readings: 

1.      RastogiSaurabh and AiyarShekhar, National Income and Accounting, Lotus Books.

2.      Richard,T.Froyen, Macroeconomics: Theories and Policies, Pearson Education India; 10 edition ,2013.

3.      Vaish, M.C. Macroeconomic Theory, Vikas Publishing House, New Delhi, 14th Edition, 2014.

References: 

1.      Branson, W. H., Macroeconomic Theory and Policy, Affilated East-west Press Pvt Ltd.; 3rd edition, 2005.

2.      Gregory Mankiw, Macroeconomics, Worth Publishers Inc.,5th Revised edition, 2002.

3.      Edgemond, P., Macroeconomics, PHI, New Delhi, 1999.

4.      Rana, K.C.&Verma, K.N., Macroeconomic Analysis, Vishal Publishing Co., 11th edition, 2014.

5.       Ahuja, H. L.,Macroeconomics – Theory & Policy, S. Chand, 20th edition, 2019.. 

Academic Session: 
2023-24
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