Addis Ababa University

College Of Business and Economics

Department Of Economics
Course outline
Course title: Macroeconomics (5 ECTS)
Course code: Econ 2031
Program: Management Extension program
Instructor: Demilie B. (Ass. Prof)

Short description: The aim of this learning task is to provide students with the basic concepts
and theories of macroeconomics, national income accounting, macroeconomic problems like
unemployment and inflation, and macroeconomic policies. The learning task´s ultimate target is
to enable students to analyse aggregate economic variables, understand macroeconomic
problems and the functioning of the national economic policies.
Execution: The steps in executing the current learning task are supply of learning materials,
independent reading and analysis of the materials, brainstorming activities to check students’
levels of understanding and conceptual gaps, discussion of brainstormed ideas and lecturing
basic contents of the task. These are to be followed by consolidating students’ understanding
through giving relevant assignments and problem-based learning activities and creating
situations for students to analyse real world problems in light of the concepts and theories they
have learned. The task ends by summarizing key elements in the contents delivered.
Chapter 1: Concepts and Views of Macroeconomics
1.1. Defining Macroeconomics
1.2. Goal of Macroeconomics
1.3. School of thought
Chapter 2: National Income Accounting
2.1. Basic Terminologies and Concepts
2.2. The Income-Expenditure Approach
2.3. Some Important Identities
2.4. Price Indexes
2.5. GDP and Economic Welfare
2.6. Macroeconomic Problems
2.6.1. Business Cycle
2.6.2. Inflation
2.6.3. Unemployment
2.7. Macroeconomic policies
2.7.1. Monetary Policy and Instruments
2.7.2. Fiscal Policy and Instruments
Chapter 3: Aggregate Demand In closed Economy
3.1.Foundations of Theory of Aggregate Demand
3.2.The Goods Market and the IS curve
3.3.The Money market and the LM curve
1
Page

3.4.The Short Run Equilibrium

3.5.From the IS-LM to Aggregate demand
Chapter 4 Open macroeconomics
4.1. Extensions of the Basic Model
4.1.1. Exchange Rates & Exchange Rate Regimes
 4.1.2. The Balance of Payments (BoP)
4.1.3. Some Open Economy Identities
4.1.4. Open Economy Multipliers
4.1.5. The Marshall–Lerner Condition & the J-Curve Effect
4.2. Macroeconomic Policy in Open Economy
4.2.1. The IS-LM-BP Model
4.2.2. A Small Open Economy with Perfect Capital Mobility
Chapter 5: Consumption Saving and Investment
5.1.consumptio
5.2. Saving
5.3. Relationships between consumption and saving
5.4. Investment
Problem based learning tasks: Students analyse the causes, consequences and solutions of
inflation and unemployment in the economy by taking into consideration the national realities.
Practical activities: Students analyse bulletins and publications reporting the recent trends of
macroeconomic issues and challenges (e.g. inflation, unemployment, exchange rates, terms of
trade, balance of payment and other related macroeconomic variables) in light of the
macroeconomic concepts, theories and frameworks they have learned.
Demonstrations: Students demonstrate how to analyse macroeconomic problems, dilemmas or
uncertainties in their classroom by taking practical issues.
Training of general skills: Students are given practice or experience-based training by guest
instructor(s) working in appropriate institutions, organizations or agencies.
Assessment Scheme
S/N Type Weight
1 Quiz 10
2 Test 20
3 Assignment 10
4 Attendance 10
5 Assessment 50%
6 Final Exam 50%
Reading Materials: In order to expand their knowledge and understanding regarding this
learning task, students are referred to the following books on macroeconomics.
1. N. G. Mankiw, 2002. Macroeconomics. 5th edition, Worth Publishers.
2. N.G. Mankiw, 2008. Principles of Macroeconomics. 5th edition, Cengage Learning.
3. R.A. Arnold, 2008. Macroeconomics. 9th edition, Cengage Learning.
4. Dornbusch R. and Fischer S, Macroeconomics, 6th edition, Tata McGraw-Hill
Publishing Company Limited.