Fourth Semester

: I S-LM framework is a versatile tool used in understanding the working of modern economies. Hence it is widely used in policy formulation too. Phillips curve also was used widely for policy formulation, until it collapsed following the stagflation of 1970s. New concepts like NAIRU developed afterwards. Market economies have always experienced cyclical fluctuations in economic activity. Fiscal and monetary policies have been effectively employed by governments to fight such fluctuations. The objective of this course is to give a rigorous overview of macroeconomics to the undergraduate students. The course is designed to give the necessary ideas and tools to understand the working of an economy at the aggregate level. The course is also expected to give an idea about the need for and way in which government intervention is required in a modern economy. After completing this course a student should be able to derive IS-LM curves and use the framework to explain the working of an economy. A student should also be able to explain the way fiscal and monetary policy works, using the ISLM framework. Student should also be able to explain the concept and measurement of inflation and unemployment. Similarly, a student should also be able to explain the trade-off between inflation and unemployment as predicted by the Phillips curve and its collapse after the stagflation of 1970s. Module I :ISLM Model Goods market equilibrium using IS curve