KIIT School of Rural Management

KIIT University
Bhubaneswar-24

MBA (Rural Management)

MACRO ECONOMIC ANALYSIS

Credit: 2.0 Semester: II Faculty: Dr. Damodar Jena

Macroeconomics is the study of the behaviour of the economy as a whole. It is concerned with
issues, objectives and policies that affect the whole economy. Macro economy has definite
linkage with economic phenomena at micro level. With or without our knowledge, all of us do
experience the benefit or consequence of different macroeconomic phenomena, e.g. domestic
product, national income, economic growth (rate), inflation, interest rate, unemployment, fiscal
deficit, revenue deficit, budget deficit, primary deficit, balance of payment, balance of trade,
share market, etc. Moreover, in the arena of globalised economy, the behaviour of the aggregate
economy is becoming more complex. Moreover, the importance of Macroeconomics particularly
the role of macroeconomic issues and policies in determining the ways of life of people at large
has been increasing. It has been observed that the macroeconomic policies, instruments and
strategies impact disproportionately to different sections of population. On the one hand, the
economy like India has been growing very fast, but on the other hand the gap between rich and
poor has been increasing. The benefit of economic growth at macro level does not percolate to
the poor at micro level. Therefore, to enable people especially poor in meeting the challenges or
availing the benefits of contemporary macroeconomic issues and policies, professionals in
development sector need to know different macroeconomic concepts, problems, principles and
policies, analysis of macro issues and debates.

Course Objectives

Based on the above background, this course is designed to enhance the students’ knowledge on
macro economic analysis with special focus on Indian economic scenario. Moreover, it would
provide skill orientation on the measurement of different macroeconomic variable and its
contextual interpretation. The following are the specific course objectives:

1. To improve the ability of the students to differentiate and establish linkages between
microeconomic and macroeconomic issues;

Page 1 of 7
 2. To familiarise with important macroeconomic concepts, problems, principles and
policies;

3. To improve the ability of the students to measure and interpret different

macroeconomic variables, and relate to development sector; and

4. To familiarise with important determinants of consumption, saving, interest rate,

inflation, and investment.

Course Content

This course is broadly divided into the following four modules and focused on Indian
economic scenario. Moreover, the prescribed text book refers extensively to the Indian
economic database.

Module-1: Introduction to macroeconomics and current macroeconomic scenario

This module will start with the introduction to macro economics and give an exposure to
the overall macroeconomic scenario of India. At the end of this module, the students will
able to appreciate the need of macroeconomic analysis for rural management

Module 2: Macroeconomic variables: Measurement and interpretations

This module will cover the important macroeconomic variables with their measurement
and interpretations. It includes the variables related to national income accounting,
inflation, unemployment, interest rates, and union budget. One of the important features
of this module is that it attempts to answer the question ‘why is this measure important’.
Moreover, it will also cover the different dimensions of fiscal policy.

Module 3: Behavioural and technological functions

This module answers the following important questions.

What drives business investment decisions?
What drives household consumption?
What is the link between consumption and savings?
What role can the govt. play in shaping spending?
What does affect supply of and demand for money?
Equilibrium in the money market.

Module 4: Economic fluctuations and stabilisation: Principles, institutions and instrumentsThis

module covers the goods market (IS curve), money market (LM curve) and IS- LM

Page 2 of 7
equilibrium. It also covers AD-AS equilibrium (both short-run and long-run). It also includes
business cycles, banking and monetary policy.

Pedagogy and Course Materials

Lecture, case analysis, class discussion and problem solving will be followed as pedagogy to
teach the subject. The basic material for this course is Macroeconomics (2nd Edition) by Errol
D’Souza. Besides, the additional reading materials, problems and cases will be provided as and
when required. The students are advised to refer the books mentioned under bibliography
especially Principles of Macroeconomics by N G Mankiw and Macroeconomics: Theory and
Applications by G S Gupta (the chapter numbers mentioned under reading materials is from this
book).

Course Evaluation

Components Weights (%)

Class participation 10
Quizzes 15
Assignment 15
Mid Term examination 20
End Term examination 40

Class Participation and Assignment

1. Students have to come to class with preparation along with the preparatory note. It is expected that the
students need to prepare two to three hours before each class. They are expected to have active
participation during discussion in classes.

2. Quiz may be asked in any of the classes. Each quiz will carry equal weight.

3. The marks for class participation (not simply attendance) will include quality of participation in the
classes and written preparation made for attending the classes.

3.  The students are expected to start preparing the assignment at the earliest. Delay submits of assignment
will be awarded with lower grade. Copying and plagiarising will be strictly awarded with an ‘F’ grade.

Page 3 of 7
References

Able, A. B. et. al. (2013). Macroeconomics. Seventh edition. New Delhi: Pearson.

Case, K. E. & Fair, R. C. (2002). Principles of economics. New Jersey: Prentice Hall.

D’Souza, E. (2013). Macroeconomics. Delhi: Pearson.

Dasgupta, P. (2007). Economics: A very short introduction. New Delhi: Oxford University Press.

Dornbusch, R. et al. (2002). Macroeconomics. New Delhi: Tata-MaGrawHill Publishing Company Limited.

Evans-Pritchard, J. (1985). Macroeconomics: An introductory text. London: Macmilan.

Goodwin, N., Nelson, J.A. & Harris, J. (2009): Macroeconomics in context. New Delhi: PHI Learning
Private Limited.

Gupta, G. S. (2007), Macroeconomics: Theory and applications. Second edition. New Delhi: Tata-McGraw-
Hill Publishing Company Limited.

Keynes, J. M. (1964). The general theory of employment, interest, and money. London: Harcourt, Inc.

Mankiw, N. G. (2009). Macroeconomics. New York: Worth Publishers.

Mankiw, N. G. (2012). Principles of macroeconomics. New Delhi: Cengage Learning.

McEACHERN, W.A. (2012). Macroeconomics: A contemporary introduction. Manson: Cengage.

Mishra, S. K. & Puri, V. K. (2008). Principles of macro economics. Mumbai: Himalaya Publishing House.

Moser, R. (). Macroeconomics.

Openstax (2016). Principles of macroeconomics. Houston: Rice University.

Rangarajan, C. & Dholakia, B. H. (1996). Principles of macroeconomics. New Delhi: Tata-MaGraw-Hill

Publishing Company Limited.

Rangarajan, C. (2002). Macroeconomics and monetary policy issues. New Delhi: Oxford University Press.

Samuelson and Nordhouse (). Principles of economics.

Page 4 of 7
Shapiro, E. (2007). Macroeconomic analysis. Harcourt Brace Jovanovich.

The Economist. (2004). Guide to economic indicators. London: The Economist.

Page 5 of 7
 Session-wise Schedule

Session Number Topic Reading Materials Pedagogy

Module–I: Introduction to Macroeconomics and current macroeconomic scenario

Introduction to Macroeconomics

Relationship between macroeconomics

and microeconomics

Scope and coverage of macroeconomics

Exposure to Macroeconomic (Indian Chapter 1 (Gupta)

Economy) data:
Lecture and
1
Economic Survey Discussion
Additional material will
Alternative Economic Survey be provided

India data portal

Compendium of Statistics
(Environment, national & state
income, labour, money and interest,
etc.)

Macroeconomic Scenario in India: Material will be Lecture and

2
Issues and challenges provided Discussion

Module–II: Macroeconomic Variables: Measurement and interpretations

Chapter 2 (Gupta) Lecture, Discussion

Circular flow of income
National Income: Chapter 10 (Mankiw) and problem
concepts, measurement and solving
3-6 Additional material will
interpretation
GDP and standard of living (with special be provided
reference to India) Case Analysis
R. Moser

Banking – RBI and commercial banks Chapter 8 (Gupta)

Lecture, Discussion
7-9 (money supply) and Problem
Inflation (with special reference to India) Solving
Chapter 3 (Gupta)

10-11 Union Budget (India) Gupta (Chapter 4 ) Budget Analysis

Page 6 of 7
Session Number Topic Reading Materials Pedagogy

Budget Manual
(ministry of Finance,
Fiscal policy (with special reference to Govt. If India)
India)
Chapter 12

R. Moser

Module–III: Aggregate Markets: Behavioural and Technological Functions

12 Consumption Chapter 5 (Gupta) Lecture, Discussion

Goods Market
13 Investment Chapter 6 (Gupta) Lecture, Discussion
(with special
Trade Balance & Chapter 4 (Gupta)
reference to India)
14 Lecture, Discussion
Exchange Rate Chapter 18 (Mankiw)

Financial Market Money (demand

15 for money) Chapter 8 (Gupta) Lecture, Discussion
(with special
reference to India) Interest Rates

Labour Market
Unemployment Chapter 7
16 (with special
Lecture, Discussion
(Misery Index) Chapter 10
reference to India)

Module–IV: Economic Fluctuations and Stabilisation: Principles, Institutions and Instruments

Chapters 8 & 9
17-20 IS-LM Lecture, Discussion
(D’Souza)
AD-AS

Business cycles and instruments Chapter 19 (Misra &

21-24 Puri) Lecture, Discussion
Monetary policy
Chapter 13
Consolidation

****

Page 7 of 7