Third Year (Honours in Economics) Detailed Syllabus 1

Subject Code-2231: Macro Economics 1.0                                                                Unit (100 Marks)

1. Income Determination: The Classical and Keynesian theories of income and employment. The theory of multiplies, change in multiplies as a result of Govt., tax structure, foreign trade etc. 

2. Theory of Consumption: absolute, Permnent, Life cycle and Relative income hypothesis. 

3. Theory of Investment: Business fixed investment, Residential investment and Inventory investment, Autonomous and induced investment. Investment decision making. The Theory of accelerator. The interaction of multiplier and accelerator. 

4. Money Market: The demand for and supply of money Components of demand for and supply of money. Old and Quantity theory. Inventory theoretic approach Speculative demand for money. Liquidate Trap, the determinants of money supply.

5. The IS-LM model: Definition, derivation and shift of IS-LM curves. Classical and Keynesian LM Curves. Equilibrium in the IS-LM model. Changes in the equilibrium, fiscal and monetary policy and their effects on the equilibrium. Stability of the equilibrium.

6. Aggregate Demand and Aggregate Supply: Aggregate  demand-Derivation of aggregate demand function. Aggregate supply-Wage, price and employment. The labor demand and labor supply curve. The Classical and Keynesian aggregate supply function. Interaction of aggregate demand and aggregate supply effects of fiscal and monetary policy under Classical and Keynesian supply assumptions.