National University’s Syllabus

Course Code: 510127 Course Title: Macro Economics

1. Fundamental Concepts of Macroeconomics: Income, Consumption, Savings, Investment,

Employment and Output.

2. National Income Accounting: GDP, GNP, NNP, Nominal and Real National Income,
Methods of National Income Accounting, Problems of Computing National Income, Usefulness
of National Income Accounting.

3. Theory of Income Determination: Classical Approach of Macro-Economics, the Demand for

and Supply of Labor, the Equilibrium Level of Employment and Output, Say's Law of Market,
Keynesian Approach.

4. Investment: Concepts of Investment, Marginal Efficiency of Investment and Capital.

5. Inflation: Inflation, Types, Causes, Effects and Control of Inflation. Inflation Vs. Deflation.
Demand Pull and Cost Push Inflation-Definition and Its Nature, Inflationary Gap,
Measurement of Inflationary Gap.

6. Consumption and Savings Function: Concepts of Consumption and Savings Function, MPC,
APC, MPS, APS, Short Run and Long Run Views, Keynesian Approach.

7. The Quantity Theory of Money Transaction: Fisher's Equation of Exchange, Cambridge Equation and
Friedman's Quantity Theory of Money.

Chapter 1
1. What is Macroeconomics? Describe the major objectives of Macroeconomics. 2016 2013
2. What are the objectives of macroeconomic policies? Name and define the two most important macroeconomic
policies.
3. What do you mean by macroeconomic accounts mention and define at least two macroeconomics accounts?
4. What s employment? 2014
5. What do you mean by unemployment in economics? Describe the different types of unemployment. 2013
6. What is consumption?
7. Which factors (determinants) influence the consumption?
8. What is investment? Define induced investment and autonomous investment. Or Differentiate between induced
investment and autonomous investment 2015
9. What is income?
10. What is output?
11. Describe different phases of a business cycle.
12. Discuss the types of various tools of fiscal policies.
13. What are the objectives of fiscal policies? 2013
14. What are the importance of fiscal policy? 2013
15. What is budget deficit? Describe potential benefits of a budget deficit?
16. What do you mean by Budget Surplus?
17. What are the types of monetary policy?
18. What are the objectives of monetary policy for developing a country? 2016 2014 2012
19. Mention the tools (instruments) of monetary policy. 2014 2012
20. What are the differences between fiscal policy and monetary policy?
21. What is exchange rate? How do you determine exchange rate under floating exchange rate regime? 2014
22. How exchange rare is determined in the foreign exchange market.
23. Determine exchange rate using diagram.

Chapter 2
24. Define GDP
25. Construct between GDP at market price and GDP at factor cost 2016 2014 2012
26. What is GNP?
27. Differentiate between GDP and GNP 2017
28. Difference between Real GDP and Nominal GDP with example. 2016
29. What is NNP?
30. What is National Income?
31. Define National Income Accounting 2017
32. Name at least three measures of accounting of national income. Describe with examples.
 33. Define Nominal and Real National Income. What are the differences between Nominal and Real National
Income?
34. What are the methods of NI Accounting? Describe with an example. 2016
35. What are the problems of computing national income?
36. Describe the various ways approaches of measuring National Income 2012
37. Adding up all transaction in an economy entails, ‘double counting’ in GDP estimation. Why? How do you avoid
it? 2015 2014 2012
Or, What are the problems of ‘double counting’ and ‘transfer payments’ involved in estimation of GNP and how
to get rid of it? 2016
38. Discuss the application (usefulness) of national income accounting.
39. What do you mean by intermediate goods? Why intermediate goods not counted in GDP? 2013
40. Describe the Circular Flow of National Income in two factor economy.
41. What would be the effect on current GDP if – 2016
a. Government reduces income tax?
b. The government builds a new highway?

Chapter 3
42. What is classical macroeconomic system?
43. Describe the circular flow of income in a two sector economy. What determinants the magnitude of circular
flow of income? 2015
44. Discuss the demand for labor and the factors determining demand for labor.
45. What is supply of labor? Discuss the factors determining supply for labor.
46. Discuss the employment output determination in classical economy.
47. What is Saw’s law of Markets?
48. What is Keynesian approach to macroeconomics?
49. What are the differences between Keynesian approach and Classical approach?
50. What is Autarky economy? 2017
51. Discuss the methods of income determination at Autarky economy without government. 2017
52. What do you mean by equilibrium wage rate? How equilibrium wage rate is determined in labor market? 2017

Chapter 4 Investment
53. What do you mean by propensity to investment?
54. Explain the determinants or factors of investment in an economy which determine the level of investment? 2016
55. Explain the income expansion process of investment multiplier 2017
56. What is multiplier? Give examples. 2017
57. Define Investment multiplier. 2017 2015
58. Derive the formula of investment multiplier in a two sector economy. 2017
59. Show the relationship between MPS and MPC with the multiplier. 2015
Or, If MPC increases what will be the impact on multiplayer? (Higher MPS generates higher multiplier) 2014
60. Discuss the concepts of marginal efficiency on investment.
61. Discuss the concept of marginal efficiency of capital (MEC).

Chapter 5 Inflation
62. What is inflation. 2015
63. Discuss the types of inflation.
64. Differentiate between demand pull inflation and cost push inflation suing AD – AS model and graphical
presentation. 2013
65. Discuss the economic consequences of inflation
66. What is GDP deflator? 2016 2014
67. How do you calculate GDP deflator? 2017
68. Define consumer price index with example. 2017 2015
69. How can you construct consumer price index? 2015
70. Discuss the steps of controlling inflation
71. What is deflation? What are the differences between inflation and deflation?
72. What do you mean by inflationary gap and deflationary gap?
73. What do you mean by Inflation? How can government control inflation by using its fiscal tools? 2017

Chapter 6 Saving
74. What is consumption function or, define arbitrary consumption function? 2017 2016 2015 2012
75. Define Propensity to Consume (PC), Average Propensity to Consume (APC) and Marginal Propensity to
Consume (MPC)
76. Briefly discuss the relationship between APC and MPC in both short run and long run 2017 2016 2014
 77. What is short run and long run consumption function? Distinguish between short run consumption function and
long run consumption function 2017 2014
78. Define savings? Which factors (determinants) influence the saving habit of an economy?
79. What is Marginal Propensity to Save (MPS)?
80. What is Balanced Budget multiplier?
81. Prove that MPC + MPS =1 2016 2014 2012
82. Prove that APC + APS = 1 2015
83. Derive saving function from a consumption function in both mathematically (C = a + bY) and graphically. 2017
2015
84. What do you mean by breakeven point of consumption? Explain graphically. 2017

Chapter 7 Money
85. What is money? Point out the function of money.
86. What is velocity of money? 2017 2015 2012
87. Differentiate between broad money and narrow money.
88. Discuss different types of demand for money 2015 2013 2012
89. Discuss about the main motives of demand for money. 2017 2015
90. What do you mean by IS curve?
91. Why IS curve is downward slopping?
92. Derive an IS curve from commodity market equilibrium 2016
93. Define Liquidity-Money (LM) Curve. Why LM curve is upward slopping? 2015
94. How the LM curve is derived from money market equilibrium. 2015 2012
95. Determine equilibrium rate of interest and output by IS-LM model. 2016
96. Discuss the effectiveness of money policy and fiscal policy using IS-LM Model 2012
97. What is crowding out effect? 2016 2012
98. Explain in what situation there occurs a complete crowding out when economy does not face any crowding out
even after increase in government expenditure? 2016 2012
99. Show full and zero crowding out with IS-LM Model.
100.Discuss the Fisher’s equation of exchange with example
101.What is Cambridge equation of money? Discuss with detail
102.What is Friedman’s quantity theory of money?
103.Is credit card money? 2015
104.What do you understand by the term “Money Illusion”? Is wage price rigidity a consequences of money
illusion? 2015
105.The slope of LM and position depends on which factors?

Chapter 8 Demand and Supply

106.What do you mean by Aggregate Demand?
107.What do you mean by Aggregate Demand Curve?
108.What are the main reasons that Aggregate Demand Curve is downward slopping to the right?
109.What are the shifting factors of AD?
110.What is aggregate supply (AS)? 2016
111.Explain graphs how aggregate supply looks (shapes) in both short and long run? 2014 2013 2012
112.Differentiate between aggregate supply and aggregate demand
113.What are the determinants of aggregated supply? 2016 2014 2012
Or, State the shifting factors (or, main causes of shift) in AS
114.Briefly describe the Price (P)and real output (Y) determination in the short run
115.Determine the Price (P)and real output (Y) by AD and AS curve in the long run
116.Differentiate between cost push inflation and demand pull inflation 2015
117.Show the full employment, unemployment and over employment situations using AD-AS Model.
118.What is exchange rate stability? In economic development how monetary policy is effective? 2015

119.What are its determinants?

Short Notes
Foreign Debt
Commodity market
Business Cycle (with graph)** 2016 2014 2012
Philips Curve (with graph) 2014 2013
Labor Market 2015
Foreign exchange Market** 2015 2012
Circular Flow of National Income 2014
Balance of Payment (BOP)*** 2015 2012
Crowding Out Effect 2014
Monetary Policy 2015
Budget deficit and Budget Surplus (with graphs)*** 2014 2013 2012
Liquidity Trap 2017
CPI – Consumer Price Index*** 2017 2012
Okun’s Law 2017
Narrow Money and Broad Money 2017 2013
Inflation 2013
Multiplier 2013
Break Even Point 2013
Commodity Market 2013 2012
Real GDP 2013
Cost push Function 2012
The law of Walras. 2012

No. Name Questions

1 Introduction*** What is inflation? What is unemployment? Describe the types of unemployment.

What is double counting in GDP estimation? How to avoid that?

ME What is ME accounts?
2
Aggregates***

Define Investment multiplier. Show the relationship between (investment) multiplier and MPC.
Income How the multiplier changes with the increase and decrease of MPC
3
Determinants

What is Money? What are the functions of Money? Discuss the demand of Money by its types.
Money, Interest
4
and Income

Write different objectives of Money market policy. What are the tools (instruments) of
monetary policy?
Money Write different objectives of Fiscal policy. What are the importance of fiscal policy?
5
Market***

What are the main reasons that Aggregate Demand Curve is downward slopping?
6 Demand
What is aggregate supply? What are its determinants? Explain with 4 graphs how aggregate
7 Supply supply and aggregate demand looks in both short and long run?

8 Consumption

Differentiate Between
1. Demand Pull vs. Cost Push (with graph)***
2. Real GDP vs. Nominal GDP
3. GDP at market Price vs. GDP at factor cost
4. Long run and Short vs. Consumption function
5. MPC vs. MPS

10 Short Notes
1. Walra’s Law of (excess) demand** 2.