Course Outline
Course title: Macro Economics Course No: BS (A/F): ECO 150
Class: BS (A&F), BS (Commerce) Course No: BS (Commerce): ECO 150
B.Com (Annual System) B.Com (Annual System): Part I, Paper VI
Course Objectives:
1. To develop in students a clear understanding of Macro Economic concepts and indicators.
2. To equip them with adequate knowledge so that they have an informed and comprehensive understanding of the building blocks and drivers of National Economy
Lecture / Topic / Source / Section04 / (1). National Income Accounting
Concept of measuring GNP,
GDP via income and expenditure approach, Nominal and Real GDP,
GDP deflator, valuation of output of industry. / Book1 Ch.6
Book2 Ch.5
Book4 Ch.2
Book5 Ch.21
Book6 Ch.2 / Section A
04 / (2.1). Money
What is Money, Financial Intermediaries, Financial
Regulation, deregulation, and innovation, how banks create money, Quantity theory of money, Functions of money. Money demand / Book1 Ch.13
Book2 Ch.9
Book4 Ch.7
Book5 Ch.25-26
Book6 Ch.14&17 / Section A
04 / (3). Determinants of National Income
Consumption, Saving and Investment / Book2 Ch.6
Book4 Ch.4
Book5 Ch.22
Book6 Ch.21 / Section A
03 / (4). Monetary Policy
The federal reserve system, controlling money supply, demand for money, interest rate determination, effect of monetary policy on output and prices / Book1 Ch.14
Book2 Ch.10
Book4 Ch.14 part2
Book5 Ch.26
Book6 Ch.18 / Section A
03 / (5). Fiscal Policy
The federal budget, fiscal policy multipliers, fiscal policy multipliers and the price level, fiscal policy multipliers and aggregate supply / Book1 Ch.12
Book2 Ch.8
Book5 Ch.20&24
Book6 Ch.4&6 / Section A
03 / (6). IS/LM framework / Book3 Ch.24
Book4 Ch.9&11 part3
Book6 Ch.7&8 / Section B
03 / (7). Inflation.
Significances, inflationary and anti inflationary measures. Demand pull and cost push inflation, effects of inflation,
Phillip curve, interest rate and inflation, / Book1 Ch.15
Book3 Ch26
Book4 Ch12
Book5 Ch32 / Section B
03 / (8). Aggregate Supply and Aggregate Demand Model
Components of AD, AD and national output, AS/AD and adjustment to equilibrium, / Book1 Ch.7
Book3 Ch.20/25
Book3 Ch.4
Book4 Ch9
Book5 Ch20&23
Book6 Ch9 / Section B
04 / (9). Balance of Payment
Importance, details of accounts, equilibrium and disequilibrium / Book1 Ch.19(part A&B)
Book2 Ch.13
Book4 Ch 5
Book5 Ch29
Book6 Ch15 / Section B
02 / (10). Exchange Rate.
Types of Exchange Rates / Book1 Ch.19( part A &B)
Book2 Ch.13
Book4 Ch13
Book5 Ch29
Book6 Ch15 / Section B
03 / (10.1)
Determination of exchange rate. Demand and supply of foreign exchange. Market equilibrium / Book1 Ch.19 (part A&B)
Book2 Ch.13
Book4 Ch13
Book5 Ch29
Book6 Ch15 / Section B
03 / (11). Business Cycles
Features, theories and forecasting, cycles, patterns, aggregate demand theories of business cycles, real business cycle theory. / Book1 Ch.16
Book2 Ch.7
Book4 Ch8
Book5 Ch23 / Section C
03 / (12).Employment and Unemployment
Measuring unemployment, impact of unemployment, economic interpretation of unemployment, labor market issues. / Book1 Ch.8
Book2 Ch.15(B)
Book4 Ch4&12
Book5 Ch31
Book6 Ch1 / Section C
03 / Pakistan’s Macro Economic Indicators
Current status of economy, economic survey review, SBP latest/fresh quarterly report review. / Internet Access / Section C
Recommended Text:
1. Parkin Michael (1997) Macro Economics 4th edition Addison Wesley New York.
2. Nordhaus D William, Samuelson A Paul (2005) Macro Economics 18th edition McGraw-Hill Irwin
3. Begg David, Fischer Stanley, Dornbusch Rudiger (2003) Economics 7th edition McGraw Hill
4. Abel B Andrew Bernanke S. Ben (2007) Macro Economics 6th edition Addison Wesley New York.
5. Nordhaus D William, Samuelson A Paul (2004 ) Economics 18th Edition MacGraw Hill
6. Froyen T Richards (2008) Macro Economics Theories and policies 8th edition Pearson.
Further Readings:
1. Frank Robert. H, Bernanke S. Ben (2004) Principles of Macro Economics 2nd edition McGraw Hill
2. Bamford Colin (2002) Economics for AS and A Level Cambridge University Press
3. H. Craig Peterson W. Cris Lewis (2004) Managerial Economics 4th edition Pearson
4. Evans K. Michael (2004) Macro Economics for Managers Black Well.
5. Internet Material
Economic Advisor’s Wing Ministry of Finance www.finance.org.pk
State Bank of Pakistan www.sbp.org.pk
Model Paper for B.Com Part I
Annual Examination System 2009 & Onwards
Macro Economics
Subjective Part Time Allowed = 90 Minutes Max Marks = 45
INSTRUCTIONS TO CANDIDATES:
· This paper comprises of 3 Sections.
· Attempt ONLY ONE question from each section
· Each question carries 15 marks.
Section-A
Q. 1) Can we justify the dominance of money over the barter system by the functions it performs? How can financial intermediaries play their role in this regard?
Q. 2) Fiscal and Monetary policies are the two different approaches to achieve the same goal i.e. of controlling imbalances. Discuss. Also explain the possible courses of action followed in both policies to create balance in the economy?
Section-B
Q. 3) Why is it difficult to justify whether inflation has been due to demand-pull-side or cost-push-side? Why and how does labor market suffer from it?
Q. 4) Why is it important to keep a record of country’s external trade? Explain the importance of current account, capital and financial account in this respect?
Section-C
Q. 5) Why is it mandatory for an economy to be equipped with well functioning labor market? How do rates of unemployment, labor force participation and employment to population help showing performance of labor market?
Q. 6) Explain the highlights of State Bank of Pakistan’s 1st quarterly report for the year 2008.
MODEL PAPER FOR B.COM PART 1
ANNUAL EXAMINATION SYSTEM 2009 & ONWARDS
MACRO ECONOMICS
OBJECTIVE PART TIME ALLOWED = 30 MINUTES MAX MARKS = 30
INSTRUCTIONS TO CANDIDATES:
· This paper comprises 30 MCQs.
· Each MCQ carries 1 mark.
· Encircle the correct option only.
· Cutting, overwriting and use of ink remover is not allowed.
Q 1) In GNP, we never measure
a) Amount of Goods and Services produced in particular period of time.
b) The value in money terms of total output of Goods.
c) Both (a&b) are wrong.
d) Both (a&b) are right.
Q 2) We say that deposits are money because
a) They meet liquidity requirement.
b) They contain money.
c) Both (a&b) are wrong.
d) Both (a&b) are right.
Q 3) Consumption function shows
a) Relation ship between consumption and income.
b) Relation ship between personal consumption expenditure and personal disposable income.
c) Both (a&b) are correct.
d) Both (a&b) are wrong.
Q 4) Monetary Policy is an exercise of
a) Ministry of Finance, to control the interest rate.
b) Central bank, over money supply.
c) Central bank, over interest rate.
d) All (a,b&c)are wrong.
Q 5) When govt. expenditure exceeds tax revenue
a) It leads aggregate expenditure curve to shift upward.
b) It makes the govt. to experience deficit.
c) It increases the prices as aggregate demand rises with aggregate supply curve positive in slope.
d) All (a,b&c) are right.
Q 6) IS and LM schedules
a) Former represents equilibrium in money market.
b) Later represents equilibrium in money market.
c) Former represents equilibrium in capital market.
d) All (a,b&c) are wrong.
Q 7) Demand pull inflation never results from
a) Decrease in money supply.
b) Decrease in exports and increase in money supply.
c) Increase in exports and in quantity of money.
d) All (a,b&c) are wrong
Q 8) Money wage and resource prices effects short run aggregate supply because
a) They alter firm’s cost of production.
b) Higher the money wage, lower would be the firm’s cost of production and higher would be the supply.
c) Lower the money wage, how would be the firm’s cost of production and higher would be the supply.
d) Option (a) and (c) are correct.
Q 9) Capital account helps keeping a record of
a) Private investment in an economy.
b) Official settlements of accounts.
c) Change in foreign official assets.
d) All (a,b&c) are correct
Q 10) People demand foreign exchange
a) For using it against payments necessary to be made for imports.
b) So that in future they get additional foreign currency if current exchange rate falls.
c) As exchange rate rises.
d) All (a,b&c) are correct.
Q 11) Business Cycle never reject
a) Unprecedented up and down movement in economic activity.
b) Irregular and non repeating movement of business activity.
c) Both (a&b) are correct.
d) Both (a&b) are wrong.
Q 12) According to Keynesian school of thought
a) Recession is brought by fall in animal spirit that brings right ward shift in aggregate demand curve.
b) Recession is brought by fall in animal spirit that bring left ward shift in aggregate demand curve.
c) Recession is brought by fall in animal spirit that bring right ward shift in aggregate supply curve.
d) All (a,b&c) are wrong.
Q 13) Labor force represents
a) Labor that is employed.
b) Labor that is unemployed.
c) Both (a&b) are wrong.
d) Both (a&b) are right.
Q 14) When demand for labor falls
a) Real wage fall, but actual real wage never changes immediately.
b) Actual real wage never change immediately hence unemployment is temporarily high.
c) Actual real wage never change immediately hence unemployment is temporarily low.
d) There would then be a surplus of labor.
Q 15) According to 1st quarterly report of SBP, Large Scale Manufacturing Sector, recorded growth of
a) 6.9%.
b) 6.4%.
c) 6.2%.
d) 8.7%.