Macroeconomics for Business

Macroeconomics: concepts, scope, uses and limitations; and Macroeconomic concepts: stock and flow variables; equilibrium and disequilibrium; static and dynamic equilibrium analysis.

Circular flow of income and expenditure in two sector, three sector and four sector economy; Different concepts of national income: GDP, NDP, GNP and NNP at market price and factor cost, personal income (PI), disposable personal income (DI), per capita income (PCI); Real GDP, nominal GDP and GDP deflator; Computation of national income: product method, income method and expenditure method; and Difficulties in the measurement of national income. Numerical Exercise

Unemployment: concept and types; Say’s law of market: concept, assumptions and implications; and Classical theory of employment: assumptions, components and criticisms.

Principle of effective demand; Consumption function: concepts, psychological law of consumption, technical attributes and determinants; Saving function: concepts, technical attributes and determinants; Paradox of thrift; Investment function: concept and types of investment, marginal efficiency of capital, investment demand curve and determinants of investment; Income and output determination in the two-sector economy; Investment multiplier: concept, income generation process and leakages; Income and output determination in three sector and four sector economy; and Derivation of government expenditure multiplier; tax multiplier and foreign trade multiplier. Numerical Exercise

Derivation of IS curve and product market equilibrium; Derivation of LM curve and money market equilibrium; General equilibrium in the product market and the money market; and Shifts in IS and LM curves (change in monetary and fiscal policies) and effects on equilibrium. Numerical Exercise

Inflation: concepts and types; Measurement of inflation through consumer’s price index (CPI) and GDP deflator; Demand-pull inflation and cost-push inflation; Concept of core inflation; Effects of inflation; Anti-inflationary measures; Inflation and unemployment: Phillips curve and stagflation; Deflation: concept and causes; Nature, causes and effect of inflation in Nepal; Business cycles: concepts, characteristics and phases; and Measures to control business cycles. Numerical Exercise

Money supply: concepts and determinants; Money market and capital market: concepts and functions; Structure of financial market in Nepal; Monetary Policy: concepts, types, objectives and instruments; and Features of current monetary policy of Nepal.

Government budget: Concepts and components; Deficit financing: concept, objectives and methods; Sources of government revenue in Nepal, Government expenditure of Nepal; Features of current government budget of Nepal; Fiscal policy: concepts, types, instruments and objectives; and Fiscal federalism: concepts, components and Nepalese practice.

Global economy: concept and current trends; Globalization: concepts, drivers, benefits and defects; Regional integration and trading blocs: concepts and role; Issues of Nepali foreign trade; Exchange rate: concept and types; Determination of equilibrium exchange rate under fixed and flexible exchange rate system; Balance of payments: concept and BOP accounts; Foreign direct investment: concepts, benefits, defects and current status of Nepal; and Foreign employment: benefits, defects and current status of Nepal.

Macroeconomic indicators of Nepal; Privatization and liberalization: concepts, benefits and defects; Economic growth and development: concepts and components; Sources of economic growth; Poverty: concepts, types, causes and remedies; Economic inequality: concepts, causes and remedies; Public private partnership: concepts, importance and Nepalese practice; and Financial inclusion: concepts, determinants and current Nepalese status.