Principles of Macroeconomics

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Principles of Macroeconomics

This course is a study of theories of income, employment, inflation and money. Emphasis will be placed on Macroeconomic theory and policy and analysis of macroeconomic data for decision- making. Course objectives are:

  • To learn the principle concepts, theories and policies of macroeconomics
  • To analyze macroeconomic trends and apply them to societal conditions
  • To be informed of historical and current economic events.

These objectives are achieved by classroom lectures and discussions, data analysis projects, historical and current events and examinations.

  1. It is the student’s responsibility to gather information about the assignments and covered topics during the lectures missed. Regular class attendance is mandatory. Points will be taken off for missing classes. Without 70% of attendance, sitting for final exam is NOT allowed. According to IUB system students must enter the classroom within the first 20 minutes to get the attendance submitted.
  2. The date and syllabus of quiz, midterm and final exam is already given here, however, announcements will be given ahead of time. There is NO provision for make-up quizzes.
  3. The reading materials for each class will be given prior to that class so that student may have a cursory look into the materials.
  4. Class participation is vital for better understanding of sociological issues. Students are invited to raise questions.
  5. Students should take tutorials with the instructor during the office hours. Prior appointment is required.
  6. Students must maintain the IUB code of conduct and ethical guidelines offered by the School of Business.
  7. Students must refrain from any type of cheating and/or plagiarism in a course. Any student acting otherwise will receive an “F” grade in the course. School of Business, IUB, maintains a zero tolerance policy regarding violation of academic integrity.
  1. Students are not allowed to keep bags, handouts, books, mobile phones, smart watches or any other smart electronic devices with them during any exam. Students are advised to keep everything in the front of the class room before the exam starts. Please note that, just carrying any smart electronic devises (even if the devise is turned off or put it in silent mode) during the exam will be considered as “cheating”. Moreover, during the exam, anything written on hand palms (or anywhere else) and carrying paper materials (whatever is written) will be considered as “cheating”. Any sorts of “cheating” will result in an “F” grade with no exception. During the exam, students are only allowed to carry pen, pencil, eraser, sharpener, ruler, highlighter and calculator in a clear plastic bag.
Type of Evaluation Nos. Weight
Class Attendance and Participation 100% 5
Quiz (Best two will be counted) 5 30
Project and Presentation 01 5
Midterm Exam 01 30
Final Exam 01 30
Total   100%

The following chart will be followed for grading. This has customized form the guideline provided by the school of Business.

A A- B+ B B- C+ C C- D+ D F
90-100 85-89 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 0-44

* Numbers are inclusive

The course will be based mostly on the following books [some other books and journals may be referred time to time]:

  • Gregory Mankiw, Principles of Macroeconomics, Sixth Edition, The Dryden Press.


Link to virtual learning system: (School of Business – Faculty name- Login as a guest- password is 1234).

Sl. Topics Text/ Reference Link
1 Ten Principles of Economics Mankiw; Chapter 1
2 Measuring a Nation’s Income: Circular Flow; GDP & GNP; Three approaches to measure GDP Mankiw; Chapter 10 & Stiglitz
3 Real vs. Nominal GDP; GDP Deflator; GDP and Economic Well Being Mankiw; Chapter 10
4 Measuring the Cost of Living: CPI and Its calculation; problems of measuring C of L Mankiw; Chapter 11
5 GDP Deflator vs. CPI; Indexation; Real vs. Nominal Interest Rate Mankiw; Chapter 11
6 Class Test # 1
7 Unemployment and it’s Natural Rate: Identifying Unemployment; Measurement; Types of Unemployment Mankiw; Chapter 15 & Stiglitz
8 Minimum Wage Laws; Unions & Collective Bargaining; Theory of Efficiency wages Mankiw; Chapter 15
9 Saving, Investment and Financial System: Financial Market; Measuring S & I; Market for Loanable Funds (three policies) Mankiw; Chapter 13
10 Class Test # 2
11 The Short-Run Tradeoff between Inflation and Unemployment: The Philips Curve, AD, AS & Philips Curve; Shifts in P Curve Mankiw; Chapter 22
12 The Monetary System: The Functions & Kinds of Money, Money creation (FRB) Mankiw; Chapter 16
13 Money Multiplier; Tools of Monetary Control; Problems in Executing Policy Tools Mankiw; Chapter 16
14 Mid-term Exam
15 Money Growth and Inflation: Classical Theory; Quantity Theory of Money; MS, MD & Equilibrium; Monetary Injection Mankiw; Chapter 17
16 Monetary Neutrality; Velocity & Quantity Equation; Inflation Tax; The Fisher Effect; Costs of Inflation (shoe leather cost & menu cost) Mankiw; Chapter 17
17 Open-Economy Macroeconomics: Open vs. Closed economy; Flow of Goods & Capital Mankiw; Chapter 18
18 Equality NCO & NX; Nominal vs. Real Exchange Rate; Types of exchange rate; Flexible, Fixed and managed Mankiw; Chapter 18
19 Class Test # 3
20 Aggregate Demand and Aggregate Supply: Consumption Function and savings function, Aggregate expenditure model (Four Sector Model), How to derive the equilibrium in the model (graphically), Economic Fluctuations; Mankiw; Chapter 20
21 Shape of AD & AS curves and their Shifts Mankiw; Chapter 20
22 The influence of Monetary and Fiscal Policy on Aggregate Demand: Fiscal & Monetary policies, Budget & it’s Types (Revenue vs. ADP); MP & FP influences AD; Automatic Stabilization Policy Mankiw; Chapter 21
23 Multiplier & Crowding Out Effect; Active Stabilization Policy Mankiw; Chapter 21
24 Review
25 Final  Exam

Students who are willing to audit the course are welcome during the first two classes and are advised to contact the instructor after that.

Plagiarism- that is the presentation of another person’s thoughts or words as though they were the students’ own – must be strictly avoided. Cheating and plagiarism on exam and assignment are unacceptable.

Please see the green book for further information about academic regulation and policies, including withdrawal and grading, apples and penalties for pilgrims and academic misconduct.

Students with disabilities are required to inform the School of Business/ Department of Economics of any specific requirement for classes or examination as soon as possible.