To acquaint the students about the importance of various issues related to macroeconomics.
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.
Monetarist-Fiscalist debate on Policy Activism. New classical approach to macro economics. Real Business Cycles, New Keynesian Macroeconomics- Sticky Price (Menu Cost) Model, Efficiency Wage Hypothesis.
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.
Concept and Phases of Trade Cycle, Theories of Trade Cycle- Kaldor’s Theory , Samuelson’s Multiplies-Accelerator Model, Hicks Theory ; Goodwin’s model; Control of business cycles – relative efficacy of monetary and fiscal policies.
Mundell - Fleming model of a small open economy under imperfect and perfect capital mobility with fixed and flexible exchange rate regimes. Analysis of effectiveness of monetary and fiscal policies.