` ACHIEVERS UNIVERSITY, OWO

COLLEGE OF SOCIAL AND MANAGEMENT SCIENCES

DEPARTMENT OF ECONOMICS

COURSE OUTLINE: SECOND SEMESTER 2022/2023 ACADEMICS

SESSIONS
COURSE TITLE: PRINCIPLES OF ECONOMICS II
COURSE CODE: ECO 110 Units: 3
COURSE LECTURERS: MR O.M OLUJOBI

LECTURERS CONTACTS:

DESCRIPTION
This course provides economics students with further understanding of economics and it sub-
divisions, more of a buildup on the first branch of economics microeconomics which is
concerned with the behavior of individual consumers, in this branch of economics
macroeconomics that deals with the analysis of the behavior of economics system in totality,
that is how the large aggregates such as total employment, national products or national
income of an economy and the general price level are determined

 Module 1: Nature and Scope of Macroeconomics

What is Macroeconomics—The Origin and Roots of Macroeconomics—The Major Issues and
Concerns of Macroeconomics: Determination of National Income and Employment; General Price
Level and Inflation; Business Cycles; Economic Growth— The Role of Government in the Macro
economy—Post- Keynesian Developments in Macroeconomics: Monetarism; Supply-Side
Economics; New Classical Macroeconomics; Rational Expectations Theory; and New Keynesian
Economics —Why a Separate Study of Macroeconomics?
— Importance of Macroeconomics — Questions for Review.

 MODULE 2: Circular Flow of Income and National Income Accounting

Meaning of National Income —Circular Flow of Income—National Income and National Product
— Concepts of National Income: GDP, GNP, NNP, NNPFC, Personal Income and Personal
Disposable Income—Measurement of National Income — Value Added Method—Expenditure
Method—Income Method—Difficulties in the Measurement of National Income —Difficulties of
Measuring National Income in Developing Countries — Nominal GNP and Real GNP —The
Concept of Green GDP–Limitations of GNP as a Measure of Social Welfare—Some Numerical
Problems of Calculation of National Income —Questions for Review.

 MODULE 3: The Classical Full-Employment Model

Economy in the Long Run : The Full-Employment Model—Classical Theory of Income and
Employment : Introductory Analysis—Say’s Law and Classical Theory—Wage-Price Flexibility
and Full-Employment—The Classical Theory of Employment and Output(Income) : A Formal
Full-employment Classical Model—Determination of Income and Employment without Saving and
Investment: Labour Market Equilibrium – Self -correction by a Free Market Economy—Classical
Model: Determination of Income and Employment with Saving and Investment—Capital Market
Equilibrium : Determination of Interest—Classical Theory of Income and Employment : Aggregate
Demand, Money and Prices — Classical Aggregate Supply Curve—Classical Theory of Output
and Employment : Complete Model — Neutrality of Money and Classical Dichotomy—Keynes’s
Critique of Classical Theory— Price Flexibility and Unemployment—Sticky Wages and
Unemployment—Questions for Review
  MODULE 4: Consumption Function
The Concept of Consumption Function: Average and Marginal Propensity to Consume Saving
Function: Average Propensity to Save and Marginal Propensity to Save — Keynes’s Theory of
Consumption and Keynes’s Psychological Law of Consumption — Important Features of Keynes’s
Consumption Function — Determinants of Propensity to Consume: Objective and Subjective
Factors — Life Cycle Theory and Permanent Consumption Theories – Consumption Function
Puzzle: Keynes’ Consumption Function and Kuznets’ Findings—Importance of Consumption
Function.
 MODULE 5: IS-LM MODEL AND IT’S ALGEBRAIC ANALYSIS
The Goods Market and Money Market: Links between them—Goods Market Equilibrium: The
Derivation of the IS Curve : Shift in the IS Curve—Money Market Equilibrium: The LM Curve:
The Essential Features — Shift in LM Curve—Intersection of the IS and LM Curves: The
Simultaneous Equilibrium of the Goods Market and Money Market — The Critique of IS-LM
Curves Model—Deriving Aggregate Demand Curve with IS-LM Model — Factors Causing a Shift
in Aggregate Demand Curve—IS-LM Curve Model: Explaining Role of Fiscal and Monetary
Policies—The Three Ranges of LM Curve—The Elasticity of LM Curve and the Relative
Effectiveness of Monetary and Fiscal Policies — The Classical Case of Zero Interest —
Responsiveness of Demand for Money : Full Crowding-Out of Fiscal Stimulus — The Importance
of Crowding-Out Effect of Expansionary Fiscal Policy.
 MODULE 6: THEORIES OF ECONOMIC GROWTH
Economic Growth and its Determinants
Meaning of Economic Growth — Meaning of Economic Development: Traditional View — the
Concept of Economic Development: The Modern View — Factors Determining Economic Growth:
Capital Formation; Foreign; Capital; Foreign Aid and Foreign Investment—Human Capital:
Education and Health; — Technological Progress and Economic Growth — Human Capital
Education and Economic Growth —the Growth of Population — Capital-Output Ratio
 MONETARY DEMAND AND SUPPLY, OBJECTIVES AND INSTRUMENTS OF MONETARY
POLICY
Introduction — Objectives of Monetary Policy: Price Stability or Control of Inflation; Economic
Growth; Exchange Rate Stability — Instruments of Monetary Policy: Bank Rate Policy,
Limitations of Bank Rate and Rate Policy — Open Market Operations; Limitations of Open
Market Operations – Changes in Cash Reserve Ratio — Selective Credit Controls – Questions for
Review.