Macroeconomics & Business Environment

Program : MBA Course Code : SL EC 502

:
Semester II Sessions : 33
Class of : 2010 Credit :3

Objective

To help students understand the economic environment and to draw meaningful conclusions
from economic analysis and events. This would help in the decision-making and strategy
formulation in the present economic scenario.

REFERENCE BOOKS AUTHOR / PUBLICATION

Macroeconomics ICFAI
Business Environment ICMR
Macroeconomics Rudiger Dorrnbusch, Stanley
Fischer, and Richard Stantz,
Published by TMH
Macroeconomics Roger E.A. Farmer, Published
byThomson
Macroeconomic Analysis Edward Shapiro, Published by
Harcourt Brace Jovanovich Inc.
Macroeconomics Paul A. Samuelson and William D.
Nordhous Published by Mc Graw
Hills
Macroeconomics J. Bradford Delong, Published by Mc
Graw Hills
Economic Survey Government of India

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 Aggregate Supply-
Meaning of AD and AS curves
Determination of Equilibrium Income-
Components 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
Aggregate Supply -Demand function for labour, supply function of labour, Labour market
equilibrium under classical and Keynesian models
General equilibrium using AD curve and AS curve Economic Instability and Fluctuations:
Business Cycles: Features of business cycle, Business cycle theories
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,
Monetary policy and the role of banking systems-Deposit 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: International Vs. domestic trade, Theories of International Trade,
Protectionism and WTO, 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, Recent policy measures-
monetary fiscal, foreign trade and technology.
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)

Suggested Schedule of Sessions

No. of
Topic
Sessions
Overview of
1
Macroeconomics
Measuring National
4
Income/output
AD and AS curves – an 12
introduction Aggregate
Demand and multiplier
Product market
2
equilibrium
Money market
2
equilibrium
Aggregate supply 2
General equilibrium 1
using AD and AS curves
Economic instability and 1
fluctuations – Business
cycles
Unemployment and
2
price instability
Case on The Indian 1
Economy: Dealing with
Inflation
Monetary policy and the 3
role banking system
Fiscal policy and 3
instruments
Open economic 3
framework
Case on The US-China 14
Exchange Rate Stand-
Off Economic
environment in Indian
context
33
Total