[Principles of Economics]

Course Principles of Economics

Course Code BSAA 11032
Credit Value 02
Status Core
Level Level 01
Semester Semester 01

Overall Learning Outcomes :

At the end of the course unit students should be able to;
1. discuss the microeconomics concepts and theories leading to independent analysis and
judgment on economic issues
2. describe and explain the rationale for economic decisions made by individuals
3. explain how the market forces of supply and demand cause prices to be what they are.
4. recognize macroeconomic concepts, topics and theories of how to address
macroeconomic problems
5. identify the applicable tools of macroeconomic analysis to critically question, analyze
and discuss economic problems and issues and describe how economic thought has
evolved
6. discuss alternative models explaining the role of fiscal and monetary policy in the
domestic and international macro economies.
7. explain contemporary theories of economic growth and development, evaluate these
theories in light of economic performance
8. identify the impact of unemployment and inflation to an economy

Main Topics & Weights:

# Topic Weight
1 Introduction to economics 5%
2 Demand and supply 10%
3 Elasticity concepts and its applications 10%
4 Individual consumer behaviour and utility maximization 10%
5 Indifference curve analysis 10%
6 Introduction to macroeconomics 5%
7 National Income, Economic Growth & Development 10%
8 Aggregate Expenditure, Demand & Supply 10%
9 The Government & Fiscal Policy 10%
10 IS – LM Model 10%
11 Unemployment and Inflation 10%
Course Content :
Teaching Metho
and d of
# Learning Outcomes Specific Knowledge
Topic Learning Assess
Area
method ment

1 Introducti At the end of the session 1. Fundamental Lectures Mid

on to students should be able to; concepts in Class term
economic 1. demonstrate economics room Quiz,
s fundamental economic 2. Economic systems discussio End
concepts such as Scarcity, 3. Difference between ns Semest
choice, opportunity cost, microeconomics and er
production possibilities macroeconomics Exami
frontier, positive vs. nation
normative analysis and
economic systems
2. explain the difference
between microeconomics
and macroeconomics and
evolution of the
economics referring
different schools of
thoughts
2 Demand At the end of the session 1. The law of demand Lectures Mid
and students should be able to; and supply Class term
supply 1. define the concepts of 2. Determinants of room Quiz,
demand and supply, the discussio End
demand and supply
demand schedule, the ns Semest
3. Demand and supply er
demand curve, ceteris curve movements Exami
paribus, market demand and shifters nation
2. identify the 4. Market equilibrium,
determinants of demand Consequences of
and supply price fixing by
3. explain the factors shifts government and tax
in the demand and effects
supply curves vs. 5. Role of price
movement along the mechanism
demand and supply
curves. Excess demand
and supply
 4. describe market
equilibrium and
consequences of price
fixing by government
and tax effects
5. discuss the role of price
mechanism
3 ElasticityAt the end of the session 1. Practical importance Lectures End
concepts students should be able to; of elasticity and Class semest
and its 1. identify the different Calculation of room er
applicatio types of elasticity supply and demand discussio exami
ns 2. describe the importance elasticity ns nation
of elasticity concepts 2. Determinants of
3. list the determinants of demand and supply
price, cross and income elasticity
elasticity of demand and 3. Price elasticity and
supply elasticity total revenue,
4. demonstrate the income elasticity of
relationship between demand, normal and
elasticity and total inferior goods,
revenue 4. Consumer and
5. describe and calculate producer surplus
consumer surplus and
producer surplus
4 Individua At the end of the session 1. The Law of Lectures End
l students should be able to; diminishing Class semest
consumer 1. explain the cardinal marginal utility room er
behaviour utility 2. Summarize the law discussio exami
and 2. describe Law of of diminishing ns nation
utility diminishing marginal marginal utility and
maximiza utility and the basic describe the process
tion assumptions of the law of utility
3. identify equilibrium for maximization
single and two products 3. Equilibrium for two
(equi marginal theory) products
4. construct individual 4. Derivation of
demand curve from individual demand
marginal utility theory curve
5 Indifferen At the end of the session 1. Properties of Lectures End
ce curve students should be able to; indifference curves Class semest
analysis 1. identify the 2. Budget line and room er
characteristics of the consumer discussio exami
indifference curve equilibrium ns nation
2. identify how consumer 3. Effects of changes in
equilibrium is achieved money income and
3. explain the effects of prices of goods
changes in money 4. Price consumption
income and prices of curve and derivation
goods in consumer of consumer demand
decisions curve
4. explain how to derive 5. The income and
consumer demand curve substitution effects
with substitution and
income effects
6 Introducti At the end of the session 1. Historical evolution Lectures, End
on to students should be able to; of macroeconomics group semest
Macroeco 1. discuss the historical 2. Main discussio er
nomics evolution of Macroeconomic ns exami
macroeconomics variables in an nation
2. discuss key benefits of economy
learning 3. Macroeconomic
macroeconomics. theories
3. identify key 4. Macroeconomic
macroeconomic variables policies and
and macroeconomic macroeconomic
policies in an economy issues
5. Real and monetary
flows in the economy
7 National At the end of the session 1. Circular flow of Lecture s, Indivi
Income , students should be able to; income group dual
Economic 1. apply different 2. Main approaches for discussio assign
growth & approaches of calculating national ns ment,
developm calculating the national income End
ent income 3. Adjustments for semest
2. discuss double counting national accounts er
error with recognizing 4. Benefits of exami
different concepts of calculation national nation
national output accounts
3. identify key benefits of 5. Economic Growth,
national income Reasons for growth
accounting
 4. differentiate economic and impact of
Growth and Economic growth
development 6. Economic
5. identify the dimensions Development
of economic growth and 7. Human
development Development and
6. discuss the advantages Human
and opportunity cost of Development Index
economic growth 8. Sustainability
7. identify the dimensions Development
of human development 9. Poverty, National
8. discuss the poverty and Poverty Line and
human development in Multi-dimensional
Sri Lanka Poverty Index
Sustainable
development goals
of United Nations
8 Aggregat At the end of the session 1. Deriving Savings (S) Lecture End
e students should be able to; and Consumption Group semest
Expendit 1. recognize the differences (C) functions. discussio er
ure, between equilibrium in a 2. Interpreting ns exami
Demand market and equilibrium Propensity to nation
& Supply in an economy Consumption and
2. discuss the phenomenon Propensity to
of multiplying the Savings with
national income when marginal impact
independent expenditure (MPS and MPC).
increases. 3. Determination of
3. define AS and AD macro-economic
4. identify the factors that equilibrium based
cause and change AS on Income-
&AD Expenditure Model
5. Use the AS-AD model to graphically and by
explain inflation, formulae.
unemployment & 4. Multiplier effects
economic growth 5. Definitions of AS &
AD
6. Shifting of AS- AD
curves
7. Reasons for changes
in AS –AD
Equilibrium
 8. Long term and short
term equilibrium
9. Applications of AS –
AD model (inflation,
unemployment and
economic growth)

9 The 1. identify sources of 1. Government Lectures Group

Governm government revenue revenue ,Class Assign
ent & 2. discuss different 2. Government room ment,
Fiscal classifications of expenditure and discussio End
policy government expenditure different ns semest
3. discuss consequences of classifications er
different budgets 3. Types of budget and exami
4. Interpret the government their consequences nation
spending multiplier and 4. Government
the tax multiplier spending multiplier
and tax multiplier
10 IS-LM At the end of the session 1. Introducing the Lectures, End
Model students should be able to; Goods and services Class semest
(Goods 1. differentiate goods and market (IS) Room er
and money markets 2. Derivation of IS discussio exami
Money 2. identify the curve ns nation
Market) interdependency 3. Determinants of IS
between the markets curve
3. examine the applicability 4. Introducing the
of the IS-LM model Money market (LM)
4. assess the impact of the 5. Demand for money
monetary and fiscal 6. Supply of money
policies 7. Derivation of LM
curve
8. IS-LM equilibrium
9. Shift of the IS-LM
curve
10. Implications of the
Fiscal policy
11. Determinants and
implications of the
monetary policies
12. Crowding out effect
11 Unemplo At the end of the session 1. Different types of Lectures, Group
yment & students should be able to; unemployment Group Assign
inflation 1. discuss Different types of 2. Personal and social Discussio ment,
unemployment cost ns End
2. examine Unemployment 3. Philips curve semest
experience in Sri Lanka 4. Unemployment in er
3. identify Remedies for sector, age and exami
unemployment educational wise nation
4. define the Inflation and 5. Remedial actions to
Inflation types reduce
5. examine current unemployment
inflationary situations in 6. Inflation & types of
Sri Lankan economy inflation
6. recognize the 7. Inflation
instruments in the measurements and
monetary policy for its impact
manipulating the 8. Inflation on money
inflation in the economy. quantity approach
7. explain the term 9. Deflation &
deflation & its consequences
consequences

Assessments:

1. During the semester there will be one (01) group assignment and that consists with a report
and a presentation, The particular task will be informed in week 10 th of the
semester**Students are required to participate to the presentations of all groups. Marks
will be allocated for the participation
2. One individual assignment where deliverable is a report
3. One Mid-term test: Mid-term test will be consisted with multiple choice questions and
short answer questions. This is class room test and students are required to attend the test
at the Institute. The date and time will be announced in week 4 of the semester. Students
are allowed to bring only a non-programmable calculator
4. One end-semester final Examination will be conducted
Student should obtain at least 25% for the final exam marks to obtain a pass grade for the
module.
The final grade will be computed in the following manner:
• Group Report = 10%
• Group Presentation = 10%
• Individual Report = 10%
 • Mid-term quiz = 20%
• Final Exam = 50%
(The Lecturer may revise the weightages for the above continuous assessment components
without changing the number of components.)

Learning Time:
Being a 02-credit course unit, the notional learning time for the course unit totals 100 hours,
consisting of:
*Face to face contact time = 15 classes ≈ 30 contact hours
* Directed self-study through Assignments ≈ 20 hours
* Assessment, review and revision ≈ 20 hours
* Self-directed learning expected ≈ 30 hours

Contribution of the course unit to achieve the SLQF learning outcomes:

7. Information Usage

10. Attitudes, Values

and Professionalism
9. Adaptability and

12. Updating Self /

8. Networking and
3. Communication

6. Managerial and

Lifelong Learning
11. Vision for Life
Entrepreneurship

and Management
4. Teamwork and

5. Creativity and
Problem Solving
Knowledge and
Application

Social Skills
Knowledge
1. Subject /

Leadership
Theoretical
2. Practical

Flexibility
Topic

1 * * * *

2 * * * *

3 * * * * *

4 * * * * *

5 * * * * *

6 * * * * *

7 * * * * * * *
8 * * * * * * *
9 * * * * * * * * * * * *
10 * * * * * * *
11 * * * * * * * * * * * *
Recommended Readings:
1. Karl, E.C. Ray, C.F. and Sharon E.O. (2017), “Principels of Economics”, 12th Edition,
Pearson Education
2. Arnold, R. A. (2016). “Macroeconomics”12th Edition. Stanford, USA: Cengage
Learning.
3. Mankiw, N. (2015). “Principles of Macroeconomics”,7th edition. Stanford, USA:
Cengage Learning.
4. World Bank Group. (2018). “The Poverty Puzzle”. Washingon, USA: International
Bank for Reconstruction and Development / The World Bank.