Course Catalogue

Module Title:             Macroeconomics I

Programme:               BA Economics +, BA (Hon) Economics

Module Code:            MAC 101

Credit Value:             12

Module Tutor:           Miss Sonam Cheki

 

General Objectives:

The aim of the module is to familiarize the student with the tools of macroeconomic analysis and show how these tools can be applied in macro-policy issues and provide Foundation for the next module on Macro Economics in the later semester.

 

Learning Outcomes

At the end of this module, the students are expected to be able to:

·         Apply analytical reasoning

·         Evaluate critically alternative macroeconomic policies

·         Formulate arguments in the realm of introductory macroeconomics and related policy issues

·         Present material in a graphical and mathematical form using economic terminology in a clear and concise manner

·         Use these forms and way of thinking to solve economic problems

·         Demonstrate and understand the key concepts and principles of economics

·         Explain the demand for money

 

Learning and teaching approach:

Lectures (60 hours in 15 weeks)

Tutorials (15 hours in 15 weeks)

Discussions (10 hours in 15 weeks)

Assignments (20 hours in 15 weeks)

Video and IT for modeling (5 hours in 15 weeks)

 

Assessment:

Semester end examination (60%)

Assignments (20%)

Project work (20%)

 

Subject Matter

1.      Introduction                                                                                              (5 hours)

Circular flow of income, National Income Accounting, Production boundary concept, Domestic and national product, National product at market price and at factor cost.  Flow of funds account, national wealth and balance sheet.                                                                                                                                                      

2.      Income and Spending                                                                               (35 hours)

Keynesian Model: Aggregate Demand and Equilibrium Income. Consumption and Aggregate Demand. The Multiplier. Government Sector and Budget. Money Interest and Income: Goods Market and IS Curve. Money Market and LM Curve.  Simultaneous Equilibrium. Efficacy of Monetary and Fiscal Policy and Policy Mix.  Derivation of Aggregate demand Schedule.  Aggregate Demand and Aggregate Supply Analysis, Multiplier using Aggregate Supply and Aggregate demand.              

 

3.      Behavioral Functions:                                                                               (20 hours)

Consumption and Saving, Investment and demand for Money. Long Term theories of Consumption: Fisher’s Inter-temporal consumption Decision model, Life Cycle and Permanent Income Theory. Consumption under Uncertainty and liquidity Constraint. Investment Spending: Capital Stock Adjustment Model and Accelerator Principle. Tobin’s q theory.  Discounted Cash Flow Model. Residential and Inventory Investment. Demand for Money: Components of Money Stock. Quantity theory of Money. Functions of Money. Demand for Money, Income Velocity of Money. Money Multiplier. Instruments of Monetary policy.                                                     

 

Reading list

Essential Reading:

1.      Dornbusch, R., Fischer, S. and Startz, R. (2010); Macroeconomics. (11th Edition), Tata McGraw Hills Publication.

2.      Dequech, D. (1997). Post keynesian economics: Debt, distribution and the macro economy. Journal of Economic Issues, 31(3), 872-875.

Suggested reading:

1.      Blanchard, O. (2002). Macroeconomics (3rd edition), Prentice Hall.

2.      Mankiw, N. G. (2010). Macroeconomics (7th edition), Worth Publishers.

3.      Krugman, P. R., & Wells, R. (2013). Macroeconomics. New York, NY: Worth.

4.      Hubbard, R. G., & O'Brien, A. P. (2006). Macroeconomics. Upper Saddle River, N.J: Pearson Prentice Hall.

5.      http://www.hoffmanmarcom.com/marketing-communications/case-studies.php

6.      http://economics.about.com/od/economics-basics/u/Macroeconomics-101.htm

7.      http://global.oup.com/uk/orc/busecon/economics/gillespiebusiness/01student/cases/

 

(Updated June, 2013)