Intermediate Macroeconomics II

Supply Side of the Economy: Derivation of Aggregate Supply

Full employment” and “Underemployment” equilibrium in terms of the AD-AS model and adjustment process.   


  1. Job loss and Natural Rate of Unemployment; Job search, Seasonal and Frictional unemployment.

  2. Wage rigidity and structural unemployment: minimum wage, union and collective bargaining, efficiency wage. 

Aggregate Supply Curve and Phillips Curve  

  1. Analysis of short run and long-run effects of shocks under Adaptive Expectation.

  2. Expectation Augmented Phillips curve, short-run trade-off and long-run relation between inflation and unemployment. 

Theories of Inflation 

  1. Budget Deficit and Inflation

  2. Hyperinflation

  3. Costs of inflation

  4. Inflation uncertainty

  5. NAIRU

  6. Anti-inflationary Policies

Interest Rate Targeting or Money Supply Targeting 

Selective instruments of monetary control, Growth rate of money supply and rate of inflation.  

Public Debt and Deficit: Traditional View of Government Debt  

Real Business Cycle Theory: Technology shock, Fiscal shock, and Propagation mechanism.  

New Keynesian Macroeconomics

Staggering of Wage and Price, Overlapping Wage Contract and co-ordination failure.   


  1. Mankiw N.G: Macroeconomics (Worth Publishers), 5th Edition.

  2. Frisch, H: Theories of Inflation (Cambridge University Press)

  3. Robert J. Gordon:Macroeconomics, Prentice-Hall India Limited, 2011.

  4. Barro Robert: Macroeconomics

  5. Richard T. Froyen, T. Richard: Macroeconomics: Theories and Policies,9th ed. (Prentice Hall), (2009)