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EA-II-X07
(Exec - PGP 2007-10 : Term-II)

ECONOMIC ANALYSIS – II
(Macro-economic Analysis)

I Course Objectives:

With the basic understanding of the theories of firms (that deal with the issues operational within the firms), this course is designed to make a systematic coverage of fundamental concepts and relationships that exist among various macro-economic entities. This course provides a basic understanding of the theories and principles relating to the macro-economic environment (that deal with the external or environmental issues operating outside the firms). The course focuses primarily on how an economy functions, the reasons for macro-economic fluctuations and the corrective and regulatory measures from various spheres such as monetary, fiscal and international arena.

The major purpose of the course is to enable the management students to develop a familiarity with the fundamentals of macro-economic principles; understand the complexity and implications of fluctuations in macro-economic entities; and relate the nuances found in various theories and models to real life business environment.

II Course Contents:

Topic 1: (1 session)
Introduction
ü What does the subject matter of economics deal with?
ü Resources of an economy
ü Two-sector model of circular flow of economic activities
ü Goals of an economy
ü Challenges to achieve the goals

Suggested Readings:
Topic 2: (3 sessions)
Overview: How do we measure an economy’s progress?
ü Gross National Income and Product
ü Approaches to estimating GNP
ü Related indicators
ü Deflating for inflation
ü Is GNP a measure of society’s well being?

Suggested Readings:
Topic 3: (1 session)
Macroeconomic models – the Classical Approach
ü Say’s law of markets
ü Full employment equilibrium
ü Critical appraisal of the model

Suggested Readings:
Samuelson & Nordhaus
Topic 4: (2 sessions)
Macroeconomic models – the Contemporary Approach
ü Effective demand
ü Consumption function
ü Investment function
ü Multiplier and accelerator
ü Determination of rate of interest

Suggested Readings:
Samuelson & Nordhaus
Topic 5: (3 sessions)
Business Fluctuations: What and Why?
ü Phases of business cycles
ü Business cycle theories
ü Case analysis of various phases of business cycles

Suggested Readings: Topic 6: (1 sessions)
The Twin Traps: Inflation and Unemployment
ü Inflation: Measures
ü Inflation: Causes, Consequences and Cures
ü Unemployment: Types and methods of measurement
ü Unemployment or Inflation – the Phillip’s Curve
ü Unemployment and Inflation – The Supply Shock
ü Case analysis on the twin traps

Suggested Readings:
Topic 7: (2 sessions)
Money, Banking, Creation and Control of Credit
ü Money: Definition, evolution, functions and composition
ü Principles behind the issue of paper currency
ü Functions of commercial banks
ü Role of central bank
ü Measures of credit control

Suggested Readings:
Topic 8: (1 session)
Role of Government – How much should a Government do?
ü Economic scope and functions of governments
ü Social goods and redressal of spill over effects
ü Fiscal policy: their efficacy and implications
ü Sources of revenue: where does the money come from?
ü Public expenditure: where does the money go?
ü Taxation and shifting and incidence
ü Budget at a glance: learn to read in between lines
ü Fiscal deficits and its policy implications

Suggested Readings:
Topic 9: (1 session)
International trade and Balance of Payments
ü Theories of absolute and comparative advantage
ü Balance of Payments in a double entry book-keeping sense
ü Measures to check imbalances in Balance of Payments
ü Tariff and non-tariff barriers - their purpose and implications
ü A case on voluntary export restraint

Suggested Readings:
(Please note: Besides the text books, reading business related articles, reports and so on, published in periodicals, journals, news magazines and websites, are some of the key requirements for the course.)

III Course Evaluation:

Components
Weights
Quizzes
20%
Mid-term Examination
25%
End term Examination
35%
Term paper
20%

The Submission deadlines for the term paper:
For the selection of a topic: 6th October 2007
For the submission of term paper: 9th December 2007
Permissible grace period allowed for submission: 18th December 2007
Beyond 18th December 2007 penalty as per the manual of policy
Created By: Lingaraj Pattanaik on 09/25/2007 at 08:48 AM
Category: ExPGP-I Doctype: Document

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