Macroeconomics Syllabus

Semester I · Credit Hours 3 · Full Marks 100 · Pass Marks 50 · Lecture Hours 48

Course Objective: The objective of this course is to provide advanced knowledge on macroeconomic analysis. Upon completion, students will be able to understand analytical tools and apply them in formulating and analyzing economic models, theories, and policies.

Unit I: Introduction (4 Hours)

Introduction to macroeconomics; economic performance — output, output gap, unemployment, inflation, exchange rate, budget deficit, trade deficit, interest rate, instability of output, stock and flow variables; macroeconomic policy goals.

Unit II: National Income Accounting (10 Hours)

Key concepts of national income accounting; measurement of national income: expenditure approach, income approach, and value-added approach; sector accounting — household sector, business sector, government sector, and rest-of-world sector, and consolidated national account; national income accounting practices in Nepal; limitations.

Unit III: Classical Macroeconomics: Money, Price and Interest (6 Hours)

Classical theory of employment and output; Say's law of markets; quantity theory; theory of interest; complete classical system; applicability and limitations.

Unit IV: Basic Keynesian Model (6 Hours)

Basic Keynesian model of two, three, and four sector economy; multiplier analysis in two, three, and four sector economy (derivation, interpretation, and application).

Unit V: Keynesian System with Money, Income, and Interest (8 Hours)

Money in the Keynesian system; goods market equilibrium — the IS curve, factors affecting the slope and position of the IS curve; money market equilibrium — the LM curve, factors affecting the slope and position of the LM curve; system equilibrium with IS and LM curves; policy effects.

Unit VI: Keynesian System with Aggregate Demand and Aggregate Supply (8 Hours)

Derivation of the aggregate demand curve; derivation of the aggregate supply curve; effect of change in money supply and government expenditure on interest rate, price, output, and employment under rigid money wage; effects of shifts in the aggregate supply curve.

Unit VII: Consumption Demand (6 Hours)

Short-run and long-run consumption function; relative income hypothesis, permanent income hypothesis, and life-cycle hypothesis.

References

• Branson, W. H. (1983). Macroeconomic theories and policy (2nd ed.). All India Book Seller.
• Central Bureau of Statistics. (2007). Manual in national income accounts. National Planning Commission.
• Dornbush, R. & Fischer, S. (1987). Macroeconomics (4th ed.). McGraw Hill.
• Dornbush, R., Fischer, S., & Startz, R. (2012). Macroeconomics (10th ed.). McGraw Hill.
• Froyen, R. T. (2003). Macroeconomics: Theories and policies (7th ed.). Pearson Education.
• Froyen, R. T. (2016). Macroeconomics: Theories and policies (10th ed.). Pearson Education.
• Levacic, R. (1978). Macroeconomics. Macmillan.
• Ott, D. J., Ott, F. A., & Yoo, J. G. (1975). Macroeconomic theory. Kogakusa, McGraw Hill.
• Shapiro, E. (Various editions). Macroeconomic analysis. Galgotia Publication Pvt. Ltd.