Macroeconomics: Theory and Policy

The course starts with the understanding of the basic accounts and indicators of the economy. Then the course proceeds with the theories of consumption, savings and investment. Then we understand how shifts in aggregate demand and aggregate supply affect the overall economic outcomes such as growth and inflation. Then the focus shifts on the government and its fiscal policies, taxation and the sort of impact it has on economy. We touch upon indicators like fiscal deficit, revenue deficit, primary deficit and look at issues like fiscal sustainability and public debt and how they impact the economy. We also touch upon the role of Central banks and how it affects the monetary policy of the economy. We discuss the various monetary tools and policies and contextualise the interest rates and liquidity available in the economy. The last module deals with a country’s engagement with the world through trade and capital flows where we discuss external sector accounts, imbalances that a country may have, exchange rates and capital flows. This will help to look at an economy and its integration with the rest of the world. 3b

• Understand the various theories of economics with regards to Keynesian and Classical.
• Interpret how the various components of economics like Inflation play a major role in the growth of an economy.
• Understand the circular flow of income and and the determinants of its various components like savings, consumption and investment.
• Deduce the importance of monetary and fiscal policies and how it affects the developed and developing countries.

• Basic understanding of micro and macroeconomics