General Note: The nature of several of the courses is such that only selected readings can be laid down in advance. The reading lists will be supplemented/updated in regular annual meetings of all college teachers of the University teaching B.A.(Hons.) Economics courses that the Department of Economics organises.
Course 01: PRINCIPLES OF ECONOMICS
1: Exploring the subject matter of Economics
Why study Economics? Scope and Method of Economics; The Economic Problem: Scarcity and
Choice; the question of What to Produce, How to Produce and How to Distribute Output;
Science of Economics; The Basic Competitive Model; Prices, Property Rights and Profits:
Incentives and Information, Rationing; Opportunity Sets; Economic Systems; Reading and
Working with Graphs.
2: Supply and Demand: How markets work, Markets and Welfare
Markets and Competition; Determinants of individual demand/supply, Demand/Supply schedule
and demand/supply curve, Market versus individual demand/supply, Shifts in the demand/supply
curve, Demand and Supply together, How Prices allocate resources.
Elasticity and its application; Controls on Prices; Taxes and the Costs of Taxation; Consumer,
Producers and the Efficiency of the Markets.
3: The Households
The consumption decisions -- budget constraints, consumption and income/price changes,
demand for all other goods and price changes, Description of preferences [Representing
preferences with indifference curves. Properties of Indifference curves], Consumers’ optimum
choice, income and substitution effects.
The investment decision -- investment alternatives for a household, Desirable attributes of
investments
Labor Supply and Savings decision -- Choice between leisure and consumption, labour force
participation, tax policy and labour supply, Human capital and education, Budget constraints and
Savings, Savings and interest rate, Other factors affecting savings.
4: The Firm and Perfect Market Structure
Financing, controlling and managing firms -- The firm's legal form, Corporate Finance, why
corporations care about financial structure, takeover and the market for managers, making
decisions, centralization and decentralization, the boundaries of the firm.
Behaviour of profit maximizing firms and the production process, Short run costs and output
decisions, costs and output in the long run.
5: Imperfect Market Structure
Monopoly and antitrust policy, government policies towards competition.
Imperfect information in the product market--The information problem, The market for lemons
and adverse selection, the incentive problem, the search problem, advertising, the importance of
imperfect information, government and information.
6: Input Markets
Labour and Land Markets--Basic concepts [derived demand, productivity of an input, marginal
product of labour, marginal revenue product]; demand for labour; input demand curves; shifts in
input demand curves; elasticity of demand in input markets; competitive labour markets; labour
markets and public policy; Land markets and pure rent.
7: Exploring International Economics
The International Economy--Trade surpluses and deficits, the economic basis for trade--absolute
advantage versus comparative advantage, terms of trade, exchange rates; Sources of comparative
advantage -- Heckscher-Ohlin Theorem and other explanations. Trade Barriers--tariffs, subsidies
and quotas; free trade or protection--case for free trade, case for protection.
8: Introduction to Macroeconomics
The roots of macroeconomics, macroeconomic concerns, the role of government in the
macroeconomy, the components of the macroeconomy, the methodology of macroeconomics.
9: Introduction to National Income Accounting
Concepts of GDP and national income, approaches to calculating GDP, GDP and personal
income, Nominal and real GDP, Limitations of the GDP concept, GDP and the black economy.
10: The Classical System: The Full-Employment Model
Macroeconomic Equilibrium, the labour market, the product market, the capital market;
extending the full employment model
11: The Simple Keynesian Model
Aggregate expenditure and equilibrium output--aggregate output and aggregate income,
equilibrium aggregate output; Government participation in the economy; Fiscal policy at work--
The Multiplier effect.
12: Money in the Modern Economy
Characteristics of a monetary economy; The demand for money; The supply of money and
overall liquidity position; credit creation.
13: Inflation
The causes of inflation, level of prices and the value of money, The Fisher effect, The cost of
inflation.
14: Exploring the Macroeconomics of an Open Economy
Balance of Payments--The current and capital account; Determining equilibrium output in an
open economy; Open economy with flexible exchange rates--Markets for foreign exchange,
Factors affecting exchange rates, effects of exchange rates on the economy.
Readings
1. Karl E. Case and Ray C. Fair (2002), Principles of Economics, 6th Edition, Pearson
Education Asia Low Price Edition.
2. N. Gregory Mankiw, (2002), Principles of Economics, Thomson.
3. J.E. Stiglitz, and C.E. Walsh (2002), Principles of Economics, 3rd Edition, W.W. Norton &
Company, New York.
4. R. Stone and G. Stone (1962), National Income and Expenditure, Bowes and Bowes London.
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