COM 2501 Macroeconomics

This course unit is prepared to provide the students a theoretical framework of understanding and analyzing major macroeconomic problems, economic policies and issues of an economy. Further this course is focused to analyze the behaviour of aggregate economic variables such as; employment, output, interest rate and inflation.

  • To introduce basic macroeconomic principles
  • To critically analyze macroeconomic problems
  • To emphasize the role of macroeconomic policies that affect internal and external deficits, inflation and growth of per capita income
  • To understand and evaluate the workings of real and money markets and the nature of equilibrium in each market.

Upon completion of this course, the students will be able to:

  • Explain macroeconomic issues in a significant way and apply the knowledge on decision making process
  • Understand and compare the features of the main macroeconomic models
  • Understand the determinants of macroeconomic fluctuations and the impact of fiscal and monetary policy and the economy
  • Establish relationships among relevant concepts such as income determination and employment theory, economic growth, and inflation.

1. Measurement of Economic Activities
1.1 Introduction to Macroeconomics
1.2 Microeconomics vs. Macroeconomics
1.3 Macroeconomics Issues
1.4 Determination of National Income
1.5 Key Concepts of National Income Accounts
1.6 Key Macroeconomic Variables.

2. Classical Macroeconomics
2.1 Production
2.2 Labour demand and labour supply
2.3 Aggregate demand and aggregate supply
2.4 Equilibrium output and employment in Classical model
2.5 Classical theory of Interest rate
2.6 Policy implications in Classical model

3. Keynesian Macroeconomics
3.1 The Components of Aggregate Demand
3.2 Determining Equilibrium National Income
3.3 Changes in Equilibrium National Income
3.4 Multipliers in the Keynesian Model
3.5 Policy Implications of the Keynesian Equilibrium Model.

4. The IS-LM Model
4.1 Derivation of the IS and LM Curves
4.2 Equilibrium in the IS-LM Curve Model
4.3 Multipliers in the IS-LM Model
4.4 Factors Affecting Equilibrium National Income and the Interest Rate
4.5 Factors Influencing the Relative Effectiveness of Economic Policies.

5. Open Economy Macroeconomics
5.1 Derivative of BP Curves
5.2 Equilibrium in the IS-LM Curve Model
5.3 Economic Policies with Fixed Exchange Rate
5.4 Economic Policies with Flexible Exchange Rate
5.5 Policy Effectiveness of an Open Economy

6. Inflation
6.1 Measurement of Inflation
6.2 Causes of Inflation
6.3 Sources of Inflation
6.4 Cost of Inflation
6.5 Effects of Inflation

7. Unemployment
7.1 Measuring Unemployment
7.2 Sources of Unemployment
7.3 Main Approaches of the Unemployment
7.3.1 The Classical Approach
7.3.2 The Keynesian Approach
7.3.4 The Monetarist Approach

Lectures, seminars, course manuals, workshops, assignments, self study.

මහාචාර්ය ඊ. දයාරත්න, සාර්ව ආර්ථික විද්‍යාව.

මහාචාර්ය ඊ. දයාරත්න, ජාතික ආදායම න්‍යාය හා ගැටළු විසදුම්.

Dornbusch, R. (1997)Macroeconomics, 6th Edition, McGraw – Hill Book Company, New York.

Froyen, R.T. (2008) Macroeconomics, 9th Edition, Macmillan Publishing Company, New York.

Samuelson, P.A. and Nordhous, W.D. (2009) Economics, McGraw – Hill Book Company, New York.

මහාචාර්ය ඊ. දයාරත්න, ආර්ථික වර්ධනය, සංවර්ධනය සහ ආර්ථික ප‍්‍රතිපත්ති, කතෘ ප‍්‍රකාශනයකි