This document outlines a course on Macroeconomics & Business Environment. The course aims to understand macroeconomic goals, markets, and how policy changes influence business. Key topics include measuring GDP, aggregate demand and supply, unemployment, inflation, fiscal and monetary policy. The course utilizes case studies and has 30 sessions. It aims to explain the economic environment and impacts of macroeconomic policies on business.

1. Macroeconomics & Business Environment
Class of
: 2013
Academic Year
: First
Course Code
: SL EC 502
Semester
: II
Credit
: 3
Sessions
: 30
AIM
1.
2.
3.
To understand the three vital macroeconomic goals – viz Price stability, economic growth and
employment.
To learn the working of the three markets (goods, labour and money) and how these markets are
affected by macroeconomic policies.
To understand how business environment is influenced by macroeconomic policy changes and their
implications for business.
Learning Outcomes
●
●
●
●
●
To explain the economic environment.
Explain determination of equilibrium income and general equilibrium.
Analyze business cycles, and price instability.
Derive the impact of macroeconomic policy changes on business.
Evaluate changes in the global business environment and derive its implications for domestic
business.
REFERENCE BOOKS
AUTHOR / PUBLICATION
Macroeconomics
Dornbush, Rudiger/ Fischer, Stanley/
Stanz, Richard – 7ed - TMH
Macroeconomics, 2nd e
Farmer, Roger E.A. Thomson South Western 2002
Macroeconomic Analysis, 4th e
Shapiro, Edward. Harcourt Brace Jovanovich 1978
Macroeconomics, 18th e
Samuelson, Paul Anthony et al. Irwin/mcgraw-hill 2004
Macroeconomics
Delong, J. Bradford. Mcgraw Hills
Macroeconomics
Abel & Bernanke, Pearson, 7th e.
Macroeconomics
Richard T Froyen, Prentice Hall 2009,9th e

2. Detailed Syllabus
Introduction
to
Economic
Analysis:
Microeconomics Vs. Macroeconomics, Goals of
Macroeconomic policy, Objectives and Instruments
of Macroeconomics.
Measuring National output / Income: Concept of
national product, Variants of national product,
Methods of measuring national Income and
problems of measuring, Real Vs Nominal, Price
indices and its applications.
Aggregate Demand and
Meaning of AD and AS curves.
Aggregate
Unemployment:
Types
of
unemployment:
Okun’s Law, Impact of unemployment
Price Instability: Types of inflation, Economic
impacts of inflation, Price in the AD-AS framework,
The Phillips Curve.
Supply-
Determination of Equilibrium IncomeComponents of aggregate Demand, Consumption
function, Marginal propensity to Consume,
Determinants of Consumption, Saving function,
Investment function, Determinants of Investment,
Government spending, Net exports.
Product market - Shifts in AD, Concept of multiplier simple multiplier, investment multiplier, multiplier in
the presence of taxes and balanced budget, foreign
trade multiplier,
Money market - Functions of money, Demand for
money and supply of money- Determination of
interest rates, Real vs. nominal interest rate, Hicks –
Hansen Model: IS –LM analysis, Deriving aggregate
demand curve
Labour market - Demand function for labour, supply
function of labour, Labour market equilibrium under
classical and Keynesian models, Deriving the AS
curve.
General equilibrium using AD curve and AS curve
Economic Instability and Fluctuations:
Business Cycles: Features of business cycle, Factor
affecting phases of business cycle.
Monetary policy and the role of banking systemsDeposit creation, Balance sheet of a central bank,
Measures of monetary and liquidity aggregates,
Money multiplier, Instruments of money supply
control, Determination of money supply
Fiscal policy - Fiscal instruments, Tax structure,
Laffer curve, Types of deficits, Fiscal policy and
stabilization, Public debt, Crowding - out effect.
Open
Economy
Framework:
Theories
of
International Trade,
Issues related to tariff,
Determination of Exchange Rate, Floating exchange
rate, Fixed exchange rate, Balance of Payments.
Globalization and Global imbalance.
Business Environment in Indian context-Growth
phases, Evolution of institutional framework emphasis on planning, public and private sector,
Contemporary issues in Indian macroeconomic
management: Monetary, fiscal, foreign trade and
technology.

3. Cases
Macroeconomics
•
India: Before and After VAT
•
Should Energy be Subsidized?
•
The Indian Economy: Dealing with Inflation
•
Softwood Lumber Dispute between Canada and the USA
•
The US-China Exchange Rate Stand-Off
Business Environment
•
Hungary’s Reform Process
•
Gazprom - Naftogaz Ukrainy Dispute: Business or Politics?
•
The South African Economy: Coping with the Legacy of Apartheid
(Source: Case Studies in Management
Volume IX)
Overview of Macroeconomics
1
Measuring National Income/output
4
AD and AS curves – an introduction
1
Aggregate Demand and multiplier
2
Product market equilibrium
2
Money market equilibrium
2
Aggregate supply
2
General equilibrium using AD and AS curves
1
Economic instability and fluctuationsv–Business
cycles
1
Unemployment and price instability
2
Case on The Indian Economy:Dealing with Inflation
1
Monetary policy and the role banking system
(including case discussion)
3
Fiscal policy and instruments (including case
discussion)
3
Open economic framework
2
Case on The US-China Exchange Rate Stand-Off
1
Business environment in Indian context
2
Total
30