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UNIT I Short-run and
medium-run equilibrium The labour
market, Wage determination; wages, prices, and unemployment; natural rate of
unemployment; from employment to output, Derivation of aggregate supply
curve, Interaction of aggregate demand and supply to determine equilibrium
output, price level and employment. |
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UNIT II Philips Curve
and Theory of Expectations Inflation,
unemployment and expectations, Phillips Curve; adaptive and rational
expectations; policy ineffectiveness debate. |
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UNIT III Microeconomic foundations of
macroeconomic behaviours Consumption:
Keynesian consumption function; Fisher’s theory of optimal intertemporal
choice; life-cycle and permanent income hypotheses; other theories of
consumption expenditure. Investment:
determinants of business fixed investment; residential investment and
inventory investment. |
