AMERICAN INTERNATIONAL UNIVERSITY-BANGLADESH

Dhaka, Bangladesh

Department of Economics

Faculty of Arts and Social Sciences (FASS)

Undergraduate Program
1. Course Outline:

Academic Term : Spring 2016-17

Course Code No : BBA 00765

Course Title : Macroeconomics

Credit Point value :3

Pre-requisites : Microeconomics, Business Math 2

Instructor : Rubayyat Hashmi

E-mail: rubayyat@aiub.edu

Office: Campus 7 (level 8)

1. Mission: AMERICAN INTERNATIONAL UNIVERSITY (AIUB) envisions to promote and create a learning
environment through state-of-the-art facilities and tools; highly competent faculties and stuff; expand
frontier of research based knowledge; and international standards supportive of the new horizons in the
diverse fields of disciplines and the enunciated development perspectives of the country.

2. Vision: AMERICAN INTERNATIONAL UNIVERSITY (AIUB) is committed to provide quality and excellent
computer-based academic programs responsive to the emerging challenges of the rapid technological
advancements. The AIUB is dedicated to nurture and develop world class professionals imbued with
strong sense of ethical values and competence ready to face the competitive world of business, service
and employment

3. Course Description: This course focuses on macroeconomics, the field of economics that examines
the aggregate economy. Coverage includes national economic performance; aggregate demand and
supply the problems of recession, unemployment, and inflation; money creation, government spending,
and taxation; economic policies for full employment and price stability; and monetary and fiscal policies.

4. Course Objective: This course is designed to equip students with basic principles, concepts, and
techniques in doing economic analysis. My goal is to help you understand the way economists approach
problems and at the end of this course, you will own a set of skills that will never become obsolete. The
analysis to be covered in this course is applicable to various decision-making problems in economics,
business, engineering and many other areas.

5. Grading Policy:

Weights

Midterm Final

Exams 50% 50%

Quizzes/Assignments/Group Work 40% 40%

Attendance & Class Performance 10% 10%

Total 100% 100%

Final Grading 40% (Mid-term) + 60% (Final) = 100%

6. Schedule of Topics to be covered:

 Time Topics Objective Teaching strategy/ Suggested Activities
Frame

Week 1 Overview of the Identify the goals of Each class lecture will be of 90 minutes duration, totaling 24
course macroeconomic policies. lectures
contents, Understanding the
requirements, economic activities through Introducing students with the macroeconomic concepts with
grading system Circular Flow diagram. real examples and case studies.
and other Learn about the
1. Numerical examples of computing real and nominal GDP,
policies. measurement of GDP is and
GDP deflator.
its components. What are
the differences among Real Case 1: What is the GDP composition of Bangladesh? Which
GDP, Nominal GDP and GDP sector contributes more to GDP? (Source: Bangladesh
Measuring a
Nation’s deflator? Identifying Economic Review ,2014)
Income whether GDP is a good
measure of economic well- Case 2: Difference between GDP & Quality of Life. Comparing
being? the data of nominal GDP, per capita GDP, literacy rate and
life expectancy of the different countries in the world.
. (Source: World Development Indicators, 2015).

Week 2 Measuring the How the Consumer Price
Cost of Living Index (CPI) is constructed.
Calculating Consumer Price
Index and the Inflation
Rate. Problems in
measuring the cost of living.
Correcting economic
variables for the effects of
inflation.
Inflation and its implications. Students will learn about the
cost of living and how an index measure consumer’s cost.
They will also learn to measure value of goods based on
inflation and the differences between nominal and real
interest rates.
1. Numerical method of constructing CPI, measuring inflation
from CPI and comparing the inflation rates (hyper-inflation,
deflation).

Case 1: What are the items in a typical CPI’s basket of

Bangladesh? (Source: Bangladesh Economic Review, 2014)

Case 2: What is the CPI and inflation rate of Bangladesh for

the last 10 years (Source: Bangladesh Economic Review, 2014
& Bangladesh Bank, 2015)

Case 3: If a government employee earned 5000 Tk in 1990,

what is the value of that salary in current period?

Case 4: Relationship between real and nominal interest rate

with purchasing power.
Week 3 Production and Identify the determinants of Students will learn about productivity and its determinants.
Growth productivity. How Public The production function, savings and investment in national
Policies affect economic accounts and how productivity is determined through
growth. equilibrium in financial market and the implication of fiscal
policy.

1. Numerical method of constructing a production function

and exercises on the changes of the four determinants of
productivity.

Week 4 Saving, Expose students to type of Case Study 1.What is the saving and investment data of
Investment and Financial Systems and their Bangladesh from FY 2014-2015? Student’s Interpretation on
the Financial functions public & private savings. (Source: Bangladesh Economic
System Review, 2014)

Week 5 Fiscal Policy Explore the impact of the Why the Government spends, what are the major
and and Fiscal policy and components of government spending? What is Budget? Why
Government
Week 6 government debt and there we need to pay tax? Discussion with real example.
Debt
(one implication in the economy.
class) Case Study 1: The Budget of Bangladesh for FY 2015, what
are the sectors with higher expenditure? (Source: Budget in
Brief, 2015, Ministry of Finance)

Case Study 2: The pattern of Tax/revenue earning of

Bangladesh for FY 2015. Source: Budget in Brief, 2015,
Ministry of Finance)

Case Study 3: What is fiscal policy? Showing the effect of

fiscal policy of Bangladesh Government from the Budget
document diagram and then using a graph.(Source: Ministry
of Finance, Budget in Brief, 2015)

Week Overall review Summary of all the topics Group work regarding the topics covered, combined exercise
6(2nd of the topics covered from week 1 to on concepts learned so far.
Class) week 6.
Suggestions regarding the preparation of mid-term exam,
talking about the exam rules and discussion about question
type, total marks and showing quiz/assignment marks.

Week 7 Mid-Term
Exam
Week 8 Unemployment Familiarize students to the Unemployment from the perspective of Bangladesh. How
and Its Natural different kinds of unemployment rate, labour force participation rate etc. are
Rate. unemployment and how it measured. The theories of unemployment: job search,
is measured. minimum wage, union and collective bargaining and
efficiency wage.

Case 1: Labour Force Participation of men and women in

Bangladesh Economy. How the unemployment rate of
Bangladesh has changed over the years?(Source: Bangladesh
Labour Force Survey, 2010)

Case 2: The Source of employment in Bangladesh economy.

What are the major industry and sectors.(Source: Bangladesh
Economic Review, 2014)

Case 3: What is the impact of minimum wage set by

Government for the garments workers in Bangladesh?

Week 9 Open-economy Basic Concepts of a open
Macroeconomi macroeconomic
cs country .Identify the
determinants of exchange
rates, international capital
flows and trade balance.
Differences between open and close economy. The flow of
goods, Export, Import, Trade balance, Net Foreign
Investment, The equality of Net Exports & Net Capital
Outflow, Nominal and Real Exchange rate, Purchasing Power
Parity and Capital Mobility in an open economy.
1 .Numerical method of calculating real exchange rate,
comparing the price of a good in different countries of the
world.

Case 1: Is Bangladesh a Trade deficit country? Analyze the

Export, Import and Trade balance data of Bangladesh during
2010 to 2015, students will interpret about the trade
situation of Bangladesh. .(Source: Bangladesh Bank,
Economic Data, 2015)

Case 2: The exchange rate of Bangladesh compared to US $

for last couple of years. If Tk appreciates/depreciates what
will be the effect on trade volume for Bangladesh. .(Source:
Bangladesh Bank, Economic Data, 2015)
Week 10 The Monetary Learn the types and
System functions of money.
Understand how central
bank controls the Money
Supply in an economy.
Transmission Mechanism.
Week 11 Money Growth Introduce to students the
and Inflation Classical Theory of Inflation
and the Costs of Inflation.
Week 12 Aggregate Learn about economic
Demand and fluctuations and how
Aggregate income is determined.
Supply
Money and the importance of the central bank’s role in the
economy. Students will learn about what is money, its
functions, types of money, money supply, measure of
money, money multiplier, and tools to control money supply
and how Bangladesh Bank operates the monetary policy.
Case 1: A study about the money supply scenario. What will
happen in the economy if Money supply
increases/decreases?
Case2: Review of the monetary activity of Bangladesh Bank
briefly, Monetary Policy Review 2011. (Source: The Monetary
Policy and Operations, Bangladesh Bank, 2015)
Based on the previous topics continuation of velocity and the
quantity equation, monetary neutrality, money demand,
money supply and equilibrium in the money market.
Furthermore, definition of inflation, money and prices during
hyperinflation, inflation tax, fisher effect and costs of
inflation.
Case 1: The effect of monetary injection explained through
graph.(Source: N. Gregory Mankiw)
Case 2: The monthly food and non-food inflation data for FY
2015. Students will identify in which periods inflation rises,
try to explain it from newspaper articles and interpret the
cost from the theory. For example: The inflation rate during
Ramadan 2015, compared to other periods.(Source:
Bangladesh Bank, Economic Data, 2015)
How short-run economic fluctuations can be adjusted, what
are the key facts, the model of aggregate demand(AD) and
aggregate supply(AS), why the AD curve slopes downward,
why the AD curve shifts, Why the AS is vertical in the long
run, why LRAS shifts, Why the AS slopes upward in the short-
run and Why short-run AS shifts.
Case Study 1: Explaining the economic fluctuations
(increase/decrease of output) of an economy through AD-AS
model.
Case study 2: How the RMG sector contributed in the AD-AS
Model for Bangladesh.
Week 13 Five debates Learn in detail about two Debate 1: The trade-off between unemployment and
(Class 1) over debates regarding the inflation? Related topics: a brief explanation of Philip’s Curve,
macroeconomic
monetary and fiscal policy. Okun’s Law and stagflation.
policy
Macro-economic policies Debate 2: How the Government should balance its budget?
and different views about Budget Deficit or Surplus, which is good for economy?
them.
Case Study
Overall review Summary of all the topics
(Class 2) Group work regarding the topics covered, combined exercise
of the topics for covered from week 1 to
final term week 6. on concepts learned so far.

Suggestions regarding the preparation of final-term exam,

talking about the exam rules and discussion about question
type, total marks and showing quiz/assignment marks.

Week 14 Final
Examination
P.S: All the course materials can be changed by the course instructors any time with discussions
among other teachers depending on situations.

7. Course Requirements: Students will be required to participate in class, to sit for declared quizzes,
participate in the group work in class and to submit and present the assignment on due dates of mid-
term and final exams.

8. Textbook / Reference:

i. G. Mankiw, Principles of Macroeconomics, 5rd Ed., Thomson publications

ii. C. R. McConnel & S. L. Brue, Macroeconomic, 17 th Ed, McGraw-Hill.

iii. P. A Samuelson & W.D. Nordhaus, Economics, 18 th Ed, McGraw-Hill.