Course Outline
Course title: Macro Economics
Class: BS (A&F), BS (Commerce)
B.Com (Annual System)
Course No: BS (A/F): ECO 150
Course No: BS (Commerce): ECO 150
B.Com (Annual System): Part I, Paper VI
Course Objectives:
1. To develop in students a clear understanding of Macro Economic concepts and indicators.
2. To equip them with adequate knowledge so that they have an informed and comprehensive
understanding of the building blocks and drivers of National Economy
Lecture Topic
04
(1). National Income Accounting
Concept of measuring GNP,
GDP via income and expenditure approach,
Nominal and Real GDP,
GDP deflator, valuation of output of industry.
04
(2.1). Money
What is Money, Financial Intermediaries,
Financial
Regulation, deregulation, and innovation, how
banks create money, Quantity theory of money,
Functions of money. Money demand
04
(3). Determinants of National Income
Consumption, Saving and Investment
03
03
03
03
03
04
Source
Book1 Ch.6
Book2 Ch.5
Book4 Ch.2
Book5 Ch.21
Book6 Ch.2
Book1 Ch.13
Book2 Ch.9
Book4 Ch.7
Book5 Ch.25-26
Book6 Ch.14&17
Book2 Ch.6
Book4 Ch.4
Book5 Ch.22
Book6 Ch.21
Book1 Ch.14
(4). Monetary Policy
The federal reserve system, controlling money Book2 Ch.10
supply, demand for money, interest rate Book4 Ch.14 part2
determination, effect of monetary policy on Book5 Ch.26
output and prices
Book6 Ch.18
Section
Section A
Section A
Section A
Section A
Book1 Ch.12
Section A
Book2 Ch.8
Book5 Ch.20&24
Book6 Ch.4&6
Book3 Ch.24
Section B
Book4 Ch.9&11 part3
Book6 Ch.7&8
(7). Inflation.
Book1 Ch.15
Section B
Significances, inflationary and anti inflationary Book3 Ch26
measures. Demand pull and cost push inflation, Book4 Ch12
effects of inflation,
Book5 Ch32
Phillip curve, interest rate and inflation,
Section B
(8). Aggregate Supply and Aggregate Demand Book1 Ch.7
Book3
Ch.20/25
Model
Components of AD, AD and national output, Book3 Ch.4
AS/AD and adjustment to equilibrium,
Book4 Ch9
Book5 Ch20&23
Book6 Ch9
(5). Fiscal Policy
The federal budget, fiscal policy multipliers,
fiscal policy multipliers and the price level, fiscal
policy multipliers and aggregate supply
(6). IS/LM framework
Book1 Ch.19(part A&B)
Section B
(9). Balance of Payment
Importance, details of accounts, equilibrium and Book2 Ch.13
disequilibrium
02
(10). Exchange Rate.
Types of Exchange Rates
03
(10.1)
Determination of exchange rate. Demand and
supply of foreign exchange. Market equilibrium
03
(11). Business Cycles
Features, theories and forecasting, cycles,
patterns, aggregate demand theories of business
cycles, real business cycle theory.
(12).Employment and Unemployment
Measuring
unemployment,
impact
of
unemployment, economic interpretation of
unemployment, labor market issues.
03
03
Pakistan’s Macro Economic Indicators
Current status of economy, economic survey
review, SBP latest/fresh quarterly report review.
Book4 Ch 5
Book5 Ch29
Book6 Ch15
Book1 Ch.19( part A &B)
Section B
Book2 Ch.13
Book4 Ch13
Book5 Ch29
Book6 Ch15
Book1 Ch.19 (part A&B)
Section B
Book2 Ch.13
Book4 Ch13
Book5 Ch29
Book6 Ch15
Book1 Ch.16
Section C
Book2 Ch.7
Book4 Ch8
Book5 Ch23
Book1 Ch.8
Section C
Book2 Ch.15(B)
Book4 Ch4&12
Book5 Ch31
Book6 Ch1
Internet Access
Section C
Recommended Text:
1. Parkin Michael (1997) Macro Economics 4th edition Addison Wesley New York.
2. Nordhaus D William, Samuelson A Paul (2005) Macro Economics 18th edition McGraw-Hill Irwin
3. Begg David, Fischer Stanley, Dornbusch Rudiger (2003) Economics 7th edition McGraw Hill
4. Abel B Andrew Bernanke S. Ben (2007) Macro Economics 6th edition Addison Wesley New York.
5. Nordhaus D William, Samuelson A Paul (2004 ) Economics 18th Edition MacGraw Hill
6. Froyen T Richards (2008) Macro Economics Theories and policies 8th edition Pearson.
Further Readings:
1. Frank Robert. H, Bernanke S. Ben (2004) Principles of Macro Economics 2nd edition McGraw Hill
2. Bamford Colin (2002) Economics for AS and A Level Cambridge University Press
3. H. Craig Peterson W. Cris Lewis (2004) Managerial Economics 4th edition Pearson
4. Evans K. Michael (2004) Macro Economics for Managers Black Well.
5. Internet Material
Economic Advisor’s Wing Ministry of Finance www.finance.org.pk
State Bank of Pakistan www.sbp.org.pk
Model Paper for B.Com Part I
Annual Examination System 2009 & Onwards
Macro Economics
Subjective Part
Time Allowed = 90 Minutes
Max Marks = 45
INSTRUCTIONS TO CANDIDATES:



This paper comprises of 3 Sections.
Attempt ONLY ONE question from each section
Each question carries 15 marks.
Section-A
Q. 1) Can we justify the dominance of money over the barter system by the functions it performs? How
can financial intermediaries play their role in this regard?
Q. 2) Fiscal and Monetary policies are the two different approaches to achieve the same goal i.e. of
controlling imbalances. Discuss. Also explain the possible courses of action followed in both policies
to create balance in the economy?
Section-B
Q. 3) Why is it difficult to justify whether inflation has been due to demand-pull-side or cost-push-side?
Why and how does labor market suffer from it?
Q. 4) Why is it important to keep a record of country’s external trade? Explain the importance of current
account, capital and financial account in this respect?
Section-C
Q. 5) Why is it mandatory for an economy to be equipped with well functioning labor market? How do
rates of unemployment, labor force participation and employment to population help showing
performance of labor market?
Q. 6) Explain the highlights of State Bank of Pakistan’s 1st quarterly report for the year 2008.
MODEL PAPER FOR B.COM PART 1
ANNUAL EXAMINATION SYSTEM 2009 & ONWARDS
MACRO ECONOMICS
OBJECTIVE PART
TIME ALLOWED = 30 MINUTES
MAX MARKS = 30
INSTRUCTIONS TO CANDIDATES:
 This paper comprises 30 MCQs.
 Each MCQ carries 1 mark.
 Encircle the correct option only.
 Cutting, overwriting and use of ink remover is not allowed.
Q 1)
a)
In GNP, we never measure
Amount of Goods and Services produced in
particular period of time.
b) The value in money terms of total output of Goods.
c) Both (a&b) are wrong.
d) Both (a&b) are right.
Q 2)
We say that deposits are money because
a) They meet liquidity requirement.
b) They contain money.
c)
Bot
h (a&b) are wrong.
d) Both (a&b) are right.
Q 3)
Consumption function shows
a) Relation ship between consumption and income.
b) Relation ship between personal consumption
expenditure and personal disposable income.
c) Both (a&b) are correct.
d) Both (a&b) are wrong.
Q 4)
Monetary Policy is an exercise of
a) Ministry of Finance, to control the interest rate.
b) Central bank, over money supply.
c) Central bank, over interest rate.
d) All (a,b&c)are wrong.
Q 5)
When govt. expenditure exceeds tax revenue
a) It leads aggregate expenditure curve to shift
upward.
b) It makes the govt. to experience deficit.
c) It increases the prices as aggregate demand rises
with aggregate supply curve positive in slope.
d) All (a,b&c) are right.
Q 6)
IS and LM schedules
a) Former represents equilibrium in money market.
b) Later represents equilibrium in money market.
c) Former represents equilibrium in capital market.
d) All (a,b&c) are wrong.
Q 7)
Demand pull inflation never results from
a) Decrease in money supply.
b) Decrease in exports and increase in money supply.
c) Increase in exports and in quantity of money.
d) All (a,b&c) are wrong
Q 8)
Money wage and resource prices effects short run
aggregate supply because
a) They alter firm’s cost of production.
b) Higher the money wage, lower would be the firm’s
cost of production and higher would be the supply.
c) Lower the money wage, how would be the firm’s
cost of production and higher would be the supply.
d) Option (a) and (c) are correct.
Q 9)
a)
b)
c)
d)
Q 10)
a)
Capital account helps keeping a record of
Private investment in an economy.
Official settlements of accounts.
Change in foreign official assets.
All (a,b&c) are correct
People demand foreign exchange
For using it against payments necessary to be made
for imports.
b) So that in future they get additional foreign
currency if current exchange rate falls.
c) As exchange rate rises.
d) All (a,b&c) are correct.
Q 11) Business Cycle never reject
a) Unprecedented up and down movement in
economic activity.
b) Irregular and non repeating movement of business
activity.
c) Both (a&b) are correct.
d) Both (a&b) are wrong.
Q 12) According to Keynesian school of thought
a) Recession is brought by fall in animal spirit that
brings right ward shift in aggregate demand curve.
b) Recession is brought by fall in animal spirit that
bring left ward shift in aggregate demand curve.
c) Recession is brought by fall in animal spirit that
bring right ward shift in aggregate supply curve.
d) All (a,b&c) are wrong.
Q 13) Labor force represents
a) Labor that is employed.
b) Labor that is unemployed.
c) Both (a&b) are wrong.
d) Both (a&b) are right.
Q 14) When demand for labor falls
a) Real wage fall, but actual real wage never changes
immediately.
b) Actual real wage never change immediately hence
unemployment is temporarily high.
c) Actual real wage never change immediately hence
unemployment is temporarily low.
d) There would then be a surplus of labor.
Q 15) According to 1st quarterly report of SBP, Large
Scale Manufacturing Sector, recorded growth of
a) 6.9%.
b) 6.4%.
c) 6.2%.
d) 8.7%.
NOTE: Only 15 MCQs (5 MCQs from each section) are provided for specimen purposes. Actual paper will comprise 30
MCQs (10 MCQs from each section)