To acquaint the students about the importance of various issues related to macro economics.
The IS LM model; graphic and algebraic derivation of IS and LM curves; factors that affect the equilibrium income and interest rate; relative effectiveness of monetary and fiscal policies.
The Keynesian Theory and the New Classical (Lucas) critique; Rational Expectations Model and its policy implications; A critical evaluation of Rational Expectations Model.
Mundell-Flemming model of a small open economy with fixed exchange rate regime and flexible exchange rate regime (case of imperfect capital mobility and perfect capital mobility).
Theories of Kaldor, Samuelson and Hicks; Goodwin’s model; Control of business cycles – relative efficacy of monetary and fiscal policies.
Inflation –Unemployment trade off - The Phillips Curve; The natural rate of unemployment hypothesis and Adaptive expectation hypothesis;
Relationship between short run and long run Phillips’ Curve; Sacrifice Ratio and Policy of disinflation.