UNIT 1: NATIONAL INCOME AND RELATED AGGREGATES 4
This Unit can be Categorize in Four Sections such as: Chapter 1: Circular Flow of Income, Chapter 2: Basic Concepts of Macroeconomics, Chapter 3: National Income and Related Aggregates, Chapter 4: Measurement of National Income. Topics Under Chapter 1: Circular Flow of Income are 1.1: INTRODUCTION, 1.2: MEANING OF CIRCULAR FLOW, 1.3: CIRCULAR FLOW IN A TWO SECTOR ECONOMY (SIMPLE ECONOMY), 1.4: TYPES OF CIRCULAR FLOW, 1.5: STOCK AND FLOW;; Topics Under Chapter 2: Basic Concepts of Macroeconomics are 2.1: DOMESTIC TERRITORY or ECONOMIC TERRITORY, 2.2: NORMAL RESIDENTS, 2.3: FACTOR INCOME AND TRANSFER INCOME, 2.4: FINAL GOODS AND INTERMEDIATE GOODS, 2.5: CONSUMPTION GOODS AND CAPITAL GOODS, 2.6: DEPRECIATION AND INVESTMENT, 2.7: NET INDIRECT TAXES, 2.8: NET FACTOR INCOME;; Topics Under Chapter 3: National Income and Related Aggregates are: 3.1: INTRODUCTION, 3.2: BASIC AGGREGATES OF NATIONAL INCOME;; Topics Under Chapter 4: Measurement of National Income are: 4.1: INTRODUCTION, 4.2: VALUE ADDED METHOD, 4.3: INCOME METHOD, 4.4: EXPENDITURE METHOD, 4.5: RECONCILIATION OF THREE METHODS, 4.6: TREATMENT OF DIFFERENT ITEMS IN NATIONAL INCOME, 4.7: TREATMENT OF DIFFERENT ITEMS IN DOMESTICS INCOME, 4.8: NATIONAL INCOME AT CURRENT PRICE AND CONSTANT PRICE, 4.9: NATIONAL GDP AND REAL GDP.
UNIT 2: MONEY AND BANKING 1
This Unit can be Categorize in Two Sections such as: Chapter 5: Money and Chapter 6: Banking: Commercial Banks and The Central Bank.Topics Under Chapter 5: MONEY are: 5.1: DEFINITION OF MONEY, 5.2: MONEY SUPPLY AND ITS MEASURES, 5.3: FUNCTIONS OF MONEY;; Topics Under Chapter 6: Banking:Commercial Banks and The Central Bank are: 6.1: COMMERCIAL BANK, 6.2: FUNCTIONS OF COMMERCIAL BANKS, 6.3: MONEY CREATION OR CREDIT CREATION, 6.4: CENTRAL BANK, 6.5: FUNCTIONS OF CENTRAL BANK, 6.6: CENTRAL BANKS VS COMMERCIAL BANKS.
UNIT 3: DETERMINATION OF INCOME AND EMPLOYMENT 0
This Unit can be Categorize in Three Sections such as: Chapter 7: Aggregate Demand and Related Concepts, Chapter 8: Income Determination and Multiplier, Chapter 9: Excess Demand and Deficit Demand:;; Topics Under Chapter 7: Aggregate Demand and Related Concepts are: 7.1: MEANING AND COMPONENTS OF AGGREGATE DEMAND, 7.2: AGGREGATE SUPPLY, 7.3: CONSUMPTION FUNCTION (PROPENSITY TO CONSUME), 7.4: TYPES OF PROPENSITIES TO CONSUME, 7.5: SAVING FUNCTION (PROPENSITY TO SAVE), 7.6: TYPES OF PROPENSITIES TO SAVE, 7.7: INVESTMENT FUNCTION, 7.8: DETERMINANTS OF INVESTMENT, 7.9: EX-ANTE AND EX-POST SAVING AND INVESTMENT, 7.10: FULL EMPLOYMENT AND INVOLUNTARY UNEMPLOYMENT;; Topics Under Chapter 8:INCOME DETERMINATION AND MULTIPLIER are: 8.1: DETERMINATION OF EQUILIBRIUM LEVEL, 8.2: EQUILIBRIUM LEVEL, 8.3: SHORT-RUN FIXED PRICE ANALYSIS OF PRODUCT MARKET, 8.4: CONCEPT OF INVEST MULTIPLIER;; Topics Under Chapter 9: EXCESS DEMAND AND DEFICIENT DEMAND are: 9.1: INTRODUCTION, 9.2: EXCESS DEMAND, 9.3: DEFICIENT DEMAND, 9.4: EXCESS DEMAND vs DEFICIENT DEMAND, 9.5: MEASURES TO CONTROL EXCESS AND DEFICIENT DEMAND, 9.6: MEASURES TO CORRECT EXCESS DEMAND, 9.7: MEASURES TO CORRECT DEFICIENT DEMAND, 9.8: EXCESS AND DEFICIENT DEMAND IN THREE SECTOR ECONOMY.No items in this section
UNIT 4: GOVERNMENT BUDGET AND THE ECONOMY 0
Topics under this unit are: 10.1: INTRODUCTION, 10.2: MEANING OF GOVERNMENT BUDGET, 10.3: OBJECTIVES OF GOVERNMENT BUDGET, 10.4: COMPONENTS OF BUDGET, 10.5: BUDGET RECEIPTS, 10.6: REVENUE RECEIPTS, 10.7: CAPITAL RECEIPTS, 10.8: BUDGET EXPENDITURE, 10.9: MEASURES OF GOVERNMENT DEFICIT.No items in this section
UNIT 5: BALANCE OF PAYMENTS 0
This Unit can be Categorize in Two Sections such as: Chapter 11: Foreign Exchange Rate, Chapter 12: Balance of Payments (BOP);; Topics under Chapter 11: FOREIGN EXCHANGE RATE are: 11.1: MEANING OF FOREIGN EXCHANGE RATE, 11.2: CURRENCY DEPRECIATION vs CURRENCY APPRECIATION,11.3: TYPES OF FOREIGN EXCHANGE RATES, 11.4: DEMAND FOR FOREIGN EXCHANGE, 11.5: SUPPLY FOREIGN EXCHANGE, 11.6: DETERMINATION OF EXCHANGE RATE, 11.7: CHANGES IN EXCHANGE RATE, FOREIGN EXCHANGE MARKET;; Topics under Chapter 12: BALANCE OF PAYMENTS are: 12.1: MEANING OF BALANCE OF PAYMENTS, 12.2: MEANING OF BALANCE OF TRADE, 12.3: COMPONENTS OF BALANCE OF PAYMENTS, 12.4: AUTONOMOUS AND ACCOMMODATING ITEMS, 12.5: DEFICIT / DISEQUILIBRIUM IN THE BOP.No items in this section
1.1 INTRODUCTION, 1.2: MEANING OF CIRCULAR FLOW, 1.3: CIRCULAR FLOW IN A TWO SECTOR ECONOMY (SIMPLE ECONOMY), 1.4: TYPES OF CIRCULAR FLOW, 1.5: STOCK AND FLOW
1.1: INTRODUCTION: Every country in the world have a maximum number of 4 sectors in its economy. Those are:
- Government, and
- Foreign Sector.
But in our syllabus, we have to study the flow of income between firms and households.
Firms pay money to the householders in the form of a salary, wages, profit sharing, and other forms. after receiving money householders purchase some products from firms. In this process Money firstly generated from firms then distributed among householders then again this money from householders comes a return to firms.
Such a flow of money in the form of income between householders and firms is known as a circular flow of money/Income.
Note: Some important terms which you must know:
- Households: These are the persons who provide factor services to firms and consume final goods/products & services.
- Firms: These are the units that produce final goods and services and sell to households and in return to receive money.
- Factor Services: These are the services provided by households to firms. With these factor services, firms produce goods. These are 4:
- Land: For work firms require land, this is acquired by firms from households.
- Labor: For production or provide service, firms hire laborers or employees within households.
- Capital: It’s the money that is received by the firm from householders by offering shares, stocks, or other activity.
- Entrepreneurship: It’s kind of risk taken by the household to open a firm and to achieve profit.
- Factor Payments: This is the amount paid by firms to households in return of factor services. These are Salary, Rent, Profit, Interest, etc.
- Consumption Expenditure: This is the amount paid by households to firms when they purchase goods or services.
1.2: MEANING OF CIRCULAR FLOW OF INCOME: It refers to the cycle of the flow of income between different sectors of the economy. If we talk about the two-sector economy with householders and firms. In this kind of economy, the circulation flow of income refers to the cycle of income between households and firms in different phases.
1.2.1: Phases of Circulation flow of Income: There are three phases.
- Generation/Production Phase: By using Factor Services, Firms produce goods and services.
- Distribution Phase: In this phase, Firms do factor payments to households in the form of Salary, Rent, Profit, Interest, etc.
- Disposition Phase: In this phase, households spend their income to purchase goods and services from firms.
1.3: CIRCULAR FLOW IN TWO SECTOR ECONOMY: A two-sector economy means a simple economy in which we study the income flow in between two sectors of the economy, named as households, and firms.
- We neglect the other two sectors, named Government & Foreign. So it’s like a closed economy.
- Households provide Factor services(Land, Labour, Capital, Enterprise) to firms only and firms receive factor services from households only.
- Firms pay factor payments (Rent, Salary, Profit, Interest) to households only and households receive income from firms only.
- Households spend their entire income to purchase goods and services produced by firms. and firms sell entire products to households only.
- Neither firms nor households save money in the economy.
1.4: TYPES OF CIRCULAR FLOW: These are two types:
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