Contents

• Introductory Microeconomics

  and Macroeconomics

  (Part-A)

  Introductory Microeconomics

  Unit 1: National Income and Related Aggregates

  What is Macroeconomics?

  Basic concepts in Macroeconomics: consumption goods, capital goods, final goods, intermediate goods; stocks and flows; gross

  investment and depreciation.

  Circular flow of income (Two sector model); Methods of calculating National Income - ValueAdded or Product method, Expenditure

  method, Income method.

  Aggregates related to National Income: Gross National Product (GNP), Net National Product (NNP), Gross and Net Domestic

  Product (GDP and NDP) - at market price, at factor cost; Real and Nominal GDP.

  GDP and Welfare.

   

   

  Unit 2: Money and Banking

  Money - its meaning and Supply of money - Currency held by the public and net demand deposits held by commercial banks.

  Money creation by the commercial banking system.

  Central bank and its functions (example of the Reserve Bank of India): Bank of issue, Govt. bank, Banker's bank, Control of Credit

  through Bank Rate, CRR, SLR, Repo Rate and Reverse Repo Rate, Open market operations, Margin requirement.

   

   

  Unit 3: Determination of Income and Employment

  Aggregate demand and its components.

  Propensity to consume and propensity to save (average and marginal).

  Short-run equilibrium output; investment multiplier and its mechanism.

  Meaning of full employment and involuntary unemployment.

  Problems of excess demand and deficient demand; measures to correct them - change in government spending, taxes and money

  supply.

   

  Unit 4: Government Budget and the Economy

  Government budget - meaning, objectives and components.

  Classification of receipts - revenue receipts and capital receipts; classification of expenditure - revenue expenditure and capital

  expenditure.

  Measures of government deficit - revenue deficit, fiscal deficit, primary deficit: their meaning.

   

  Unit 5: Balance of Payments

  Balance of payments account - meaning and components; balance of payments deficit-meaning.

  Foreign exchange rate - meaning of fixed and flexible rates and managed floating.

  Determination of exchange rate in a free market.