Other university all, General , Business Economics II Syllabus

Business Economics II

Introduction to Macroeconomic Data and Theory
• Macroeconomics: Meaning, Scope and Importance.
• Circular flow of aggregate income and expenditure: closed and open economy
models
• The Measurement of national product: Meaning and Importance - conventional and
Green GNP and NNP concepts - Relationship between National Income and Economic
Welfare.
• Short run economic fluctuations : Features and Phases of Trade Cycles
• The Keynesian Principle of Effective Demand: Aggregate Demand and Aggregate
Supply - Consumption Function - Investment function - effects of Investment
Multiplier on Changes in Income and Output

Money, Inflation and Monetary Policy
• Money Supply: Determinants of Money Supply - Factors influencing Velocity of
Circulation of Money
• Demand for Money : Classical and Keynesian approaches and Keynes’ liquidity
preference theory of interest
• Money and prices : Quantity theory of money - Fisher’s equation of exchange -
Cambridge cash balance approach
• Inflation: Demand Pull Inflation and Cost Push Inflation - Effects of Inflation- Nature
of inflation in a developing economy.
• Monetary policy :Meaning, objectives and instruments, inflation targeting

Constituents of Fiscal Policy
• Role of a Government to provide Public goods- Principles of Sound and Functional
Finance
• Fiscal Policy: Meaning, Objectives - Contra cyclical Fiscal Policy and Discretionary
Fiscal Policy
• Instruments of Fiscal policy : Canons of taxation - Factors influencing incidence of
taxation - Effects of taxation Significance of Public Expenditure - Social security
contributions- Low Income Support and Social Insurance Programmes - Public Debt -
Types, Public Debt and Fiscal Solvency, Burden of debt finance
• Union budget -Structure- Deficit concepts-Fiscal Responsibility and Budget
Management Act.

Open Economy : Theory and Issues of International Trade
• The basis of international trade :Ricardo’s Theory of comparative cost advantage - The
Heckscher – Ohlin theory of factor endowments- terms of trade - meaning and types
Factors determining terms of trade - Gains from trade - Free trade versus protection

• Foreign Investment : Foreign Portfolio investment- Benefits of Portfolio capital flows-
Foreign Direct Investment - Merits of Foreign Direct Investment - Role of Multinational

corporations
• Balance of Payments: Structure -Types of Disequilibrium - Measures to correct
disequilibrium in BOP.
• Foreign Exchange and foreign exchange market : Spot and Forward rate of Exchange -
Hedging, Speculation and Arbitrage -Fixed and Flexible exchange rates- Managed
flexibility