1. Introduction to International Economics

2. Theories of International Trade

3. Commercial Policy

4. Foreign Exchange Market

5. Balance of Payment

This course introduces you to basic concepts and theories related to international finance and foreign exchange.

1. Foreign Exchange markets- 

  • participants and functions

Module III: Classical Macro Economic Model 

Classical macroeconomics – Say‘s Law of Markets – Wage-price flexibility – Classical model of 

output and employment – Classical theory of price level detrminaiton – Quantity theory of Money – 

Fisher‘s Equation of Exchange – Cash Balance Approach - Neutrality of Money – Money illusion – Pigou effect – Real Balance effect – Classical dichotomy – Concept of full employment – voluntary 

unemployment. 

 

 

Module IV: Keynesian Theory and Income Determination 

The background of Keynesian revolution – Principle of effective demand – Aggregate demand and 

its components – The consumption function – Fundamental Psychological Law – APC and MPC – 

Saving function – APS and MPS – The Investment function – Determinants of investment – Saving 

and Investment equality – MEC – MEI and roel of expectations – The multiplier – Income 

determination in two and three sectors (Keynesian croas diagram and algebra) – Role of 

government – fiscal policy – Objectives of fiscal policy - Instruments of fiscal policy – Fiscal 

multipliers – tax multiplier, government expenditure multiplier, and balanced budget multiplier – 

Inflationary and deflationary gaps – The concept of underemployment equilibrium – wage-price 

rigidity – Keyne‘s theory of employment. 

 

Module V: Theories of consumption fucnction 

The absolute income hypothesis - the Relative income hypotheses - The permanent income and 

life cycle hypothesis – random walk hypotheses - The Ratchet effect