Lecture-1; Economics for QS2

Assalamu-alaikum Wrht. Wbkth.

PRESENTATION OUTLINE
Macro-Economics
Key ME Variables.
Key ME issues.
ME & Built Environment

AQS2241 Econ for QS2

Prof. Dr. Mohd A Mohit

Lecture-1; Economics for QS2

Several braches in Economics Microeconomics

& Macroeconomics
What is Macro-Economics (ME)?
ME - concerned with economy as a whole
large-scale analysis.
Study behaviour of aggregates rather than parts.
Aggregates total output, income, & growth
rates; unemployment, price levels & money
supply.
If you are unemployed, a microeconomic
problem, If 10 ml people are unemployed, it is a
ME problem.
Price of bricks rises, it is a microecon issue, but if
the average price of construction material rises,
it is a ME problem.
ME - concerned not price of brick, but with prices
in general; not with output of cars, but level of
total output; not individual firm or industry, but
AQS2241 Econ for QS2
2
Prof. Dr. Mohd A Mohit
whole economic
system.

Lecture-1; Economics for QS2

Differences between Micro & Macro-Economics

Microeconomics

Macroeconomics

Studies individual income

Studies National income

Analyzes demand / supply of

labour

Analyzes national employment

Deals with H/Hs or firms

decision

Deals with aggregate decision

Studies individual prices

Studies overall price level

Analyzes demand / supply of

Key ME Variables.
goods

Analyzes aggregate demand /

supply

Domestic variables - total output, employment

& unemployment of a nation, & its money
growth & inflation rates.
International variables - trade balance &
exchange rates of a nation. Put together all
the above variables business cycle,
recession, stabilization policy, stagflation.

AQS2241 Econ for QS2

Prof. Dr. Mohd A Mohit

Lecture-1; Economics for QS2

Macroeconomic Goals. (Four)

1. Full employment
2. Price stability
3. Economic growth
4. Equitable distribution of income
Government Policies
1. Fiscal policies. (related to taxes &
expenditures)
2. Monetary policies. (to control supply of
money)
3. Growth policies. (stimulating aggregate
supply; also known as supply side policies)

AQS2241 Econ for QS2

Prof. Dr. Mohd A Mohit

Lecture-1; Economics for QS2

Key Issues in ME.

Determining factors that influence a nations
long-term growth in output & employment.
Identifying the reasons that output &
employment growth fluctuate in the short-run.
Determining what influence the quantity of
money has on a nations output, employment &
prices.
Identifying the appropriate goals of ME policies &
determining how they should be implemented.
ME seeks to understand how factors such as
exchange rates & international trade affect a
countrys economic performance.
Components of ME.
Circular Flow Diagram (transfer payments)&
Three Markets Goods & Services market,
Labour Market, Money market. International
Trade

AQS2241 Econ for QS2

Prof. Dr. Mohd A Mohit

Lecture-1; Economics for QS2

Why ME is a controversial Subject?

Two features of ME in particular engender
conflicting views:
Macroeconomists may disagree about how much
aggregation is optimal.
Macroeconomists observe & analyze artificially
constructed data on economic activity, which
they cannot manipulate via controlled
experiments.
These features of ME naturally produce different
interpretations & foster controversies.
Relation of macro-economics with built
environment.
Components of BE building & construction,
roads & bridges, physical dev. all their
performances depend on the national economy.
Table-1.doc
Principles of Islamic macroeconomics.
AQS2241
Econ for QS2
6
Dr. Mohd A Mohit
ME
variables &Prof.
their
performance in the
light of

Lecture-1; Economics for QS2

Components of ME.
1. Households; 2. Firms; 3. Govt. 4. Rest of the
World.

AQS2241 Econ for QS2

Prof. Dr. Mohd A Mohit

Lecture-1; Economics for QS2

Aggregate Demand (AD)& Aggregate Supply

(AS)
AD refers to total quantity of output demanded
at alternative price levels during a given period
of time, ceteris paribus.
AS - refers to total quantity of output demanded
at alternative price levels during a given period
of time, ceteris paribus.

AQS2241 Econ for QS2

Prof. Dr. Mohd A Mohit

Lecture-1; Economics for QS2

TUTORIAL-1: What these numbers represent in the

flow chart?

AQS2241 Econ for QS2

Prof. Dr. Mohd A Mohit

Thank You
&
Wassalam

AQS2241 Econ for QS2

Prof. Dr. Mohd A Mohit

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