Other university, General , Macroeconomics Syllabus

Unit I
Introduction – concepts and variables of macro-economics, income, expenditure and the
circular flow, components of expenditure. Static macro economic analysis short and the long
run – determination of supply, determination of demand, and conditions of equilibrium

Unit II
Economy in the short run – IS–LM framework, fiscal and monetary policy, determination of
aggregate demand, shifts in aggregate demand, aggregate supply in the short and long run, and
aggregate demand- aggregate supply analysis.

Unit III
Inflation, causes of rising and falling inflation, inflation and interest rates, social costs of
inflation. Unemployment – natural rate of unemployment, frictional and wait unemployment.
The trade-off between inflation and unemployment.

Unit IV
Open economy – flows of goods and capital, saving and investment in a small and a large open
economy, exchange rates, Mundell – Fleming model with fixed and flexible prices in a small
open economy with fixed and with flexible exchange rates, interest-rate differentials case of a
large economy.

Unit V
Behavioral Foundations - Investment –determinants of business fixed investment, effect of tax,
determinants of residential investment and inventory investment. Demand for Money – Portfolio and transactions theories of demand for real balances, interest and income elasticity
of demand for real balances, Supply of money.