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Every Business operates with an outlook. The exposure to the working of the macro economy helps one to shape the future outlook of business. Macroeconomic concepts involve abstractions as one deals with economic aggregates such as GDP, Inflation, and Exchange rate etc. Though abstract, we may be very much conversant with some of the macroeconomic concepts in our day-to-day life or can relate to them very easily. For instance, consider the case of the inflation, a macroeconomic aggregate. Inflation is measured by the rise in the price index. We do not observe the price index (an abstraction), though we can observe the prices of individual items such as price of a candle, watch etc. which contribute to the price index. Nonetheless, many people (especially the salaried class) can easily relate to the price index!

We would be primarily interested in three macroeconomic parameters i.e. growth, employment and inflation. The discussions in the class would be oriented to appreciate the factors governing the above three parameters. Coverage of this course would include discussion of macroeconomic fundamentals, various macroeconomic policies (Monetary and fiscal) and policy options under alternate macroeconomic scenario. On completion of the course, participants are expected to appreciate the complexity and implications of fluctuations in macroeconomic entities for business.

Session Plan

Session-1	What is Macroeconomics? Distinction between Micro and Macro Key Macroeconomic Variables: Growth, Inflation, Unemployment What is more important?- Output or Wealth Kinds of Macroeconomic Policy: Monetary and Fiscal, Exchange rate
Session-2	Schools of Macroeconomic Thought – Major tenets Mercantilism Classical Marxian Neoclassical Keynesian Measuring the Value of Economic Activity
Session-3	Concepts of GDP, GNP, NDP, NNP Nominal vs. real GDP GDP at market price and factor cost Interrelations amongst different concepts of GDP GDP as a measure of economic welfare Long run Growth Determinants of a Nation
Session-4	Measuring Economic Transactions with the Rest of the world Basics of Balance of Payments Current vs. Capital Account Balance in the Balance of Payments Exchange rates-Fixed vs. Flexible National Savings Identity The Monetary System The meaning and functions of money Banks and the money supply
Session-5	Consumption function The concept of multiplier The algebra of Multiplier Multiplier in presence of leakages (taxes) Aggregate demand and Determination of equilibrium output Deviation from equilibrium and adjustments
Session-6	Business Cycles Leading Indicators Model Aggregate Demand and Aggregate Supply Analysis

Evaluation Criteria

Comprehensive End Term Exam
Readings and References

Text Book

Principles of Economics: Mankiw (Fourth Edition), 2007. Thomson (South-Western)

Further Readings: