Topics
National Income and Related Aggregates
- Macroeconomics Vs Microeconomics
- Representative Goods and Sectors
- Macroeconomic Agents and Government Role
- Emergence of Macroeconomics
- Context of the Present Book of Macroeconomics
- Meaning of Economic Wealth and Final Goods
- Stocks, Flows, and Depreciation
- Capital Formation, Trade-off & Circular Flow of Income
- Circular Flow of Income and Methods of Calculating National Income
- Output Method/Product Method
- Expenditure Method
- Income Method
- Factor Cost, Basic Prices and Market Prices
- Some Macroeconomic Identities
- National Disposable Income
- Private Income
- National Income Aggregates
- Real GDP and Nominal GDP
- GDP and Welfare
Introductory Macroeconomics
Introduction
- A Simple Economy
- Central Problems of an Economy
- Concepts of Production Possibility Frontier
- Organisation of Economic Activities
- Positive and Normative Economics
- Macroeconomics Vs Microeconomics
Development Experience (1947-90) and Economic Reforms since 1991
- India's Economy Before Independence
- Low Level of Economic Development Under the Colonial Rule
- Agricultural Sector in India
- Industrial Sector
- Foreign Trade of India
- Demographic Condition
- Occupational Structure
- Infrastructure
- Post-Independence Economic Systems and Planning
- Five Year Plans (FYP)
- Agriculture
- Industry and Trade
- Trade Policy: Import Substitution
- The 1991 Economic Crisis and Reforms
- Background of the New Economic Policy
- Liberalisation
- Privatisation
- Globalisation
- World Trade Organisation (WTO)
- Impact of the Economic Reforms
Theory of Consumer Behaviour
- Consumer Behaviour: The Problem of Choice
- Basic Concepts of Microeconomics > Utility
- Cardinal Approach (Utility Analysis)
- Derivation of Demand Curve in the Case of a Single Commodity
- Ordinal Utility Analysis/Indifference Curve Analysis
Indian Economic Development
Current Challenges Facing Indian Economy
- Concept of Human Capital
- Sources of Human Capital
- Human Capital and Economic Growth
- Human Capital and Human Development
- State of Human Capital Formation in India
- Growth of Education Sector in India
- Challenges and Future Prospects in Education
- Rural Development in India
- Credit and Marketing in Rural Areas
- Agricultural Market System
- Diversification into Productive Activities
- Sustainable Development and Organic Farming
- The Nature and Importance of Work in Society
- Workers and Employment
- Participation of People in Employment
- Self-employed and Hired Workers
- Employment in Firms, Factories and Offices
- Growth and Changing Structure of Employment
- Informalisation of Indian Workforce
- Concept of Unemployment
- Government and Employment Generation
- Environment and Sustainable Development in India
- State of India’s Environment
- Concept of Sustainable Development
- Strategies for Sustainable Development
Money and Banking
- Concept of Money
- Functions of Money
- Demand for Money and Supply of Money
- Money Creation by Banking System
- Limits to Credit Creation and Money Multiplier
- Policy Tools To Control Money Supply
- Demand and Supply for Money : A Detailed Discussion
- The Transaction Motive
- The Speculative Motive
- Various Measures of Supply of Money
- Narrow and Broad Money
- Demonetisation
Development Experience of India – a Comparison with Neighbours
Introductory Microeconomics
Production and Costs
- Production Function
- Basics of Production Theory
- Variation of Output in the Short-Run Returns to a Factor
- Relation Between Total, Average and Marginal Product
- Law of Variable Proportions
- Average and Marginal Physical Products
- Changes in Production
- Cost - Fixed Cost
- Cost -variable Cost
- Behaviour of Cost in the Short - Run
- Relationship Between Average Variable Cost and Average Total Cost and Marginal Cost
- Concept of Opportunity Cost
- Marginal Revenue
- Producer's Equilibrium
- Law of Supply
- Market Supply Schedule
- Distinguish between Stock and Supply
- Determinants of Supply
- Movements Along and Shifts in Supply Curve
- Measurement of Elasticity of Supply > Percentage Method
- Methods of Measurement of National Income
- Cost Concepts > Marginal Cost
- The Law of Diminishing Marginal Product
- Shapes of Product Curves
- Costs in Long Run Period
- Returns to Scale
Determination of Income and Employment
- Aggregate Demand and Its Components
- Consumption
- Investment
- Determination of Income in Two-sector Model
- Determination of Equilibrium Income in the Short Run
- Macroeconomic Equilibrium with Price Level Fixed
- Effect of an Autonomous Change in Aggregate Demand on Income and Output
- The Multiplier Mechanism
- Paradox of Thrift
- Equilibrium Output and Employment
The Theory of the Firm Under Perfect Competition
- Concept of Market
- Market Equilibrium
- Determination of Market Equilibrium
- Effects of Changes (Shifts) in Demand on Equilibrium Price and Equilibrium Quantity
- Perfect Competition
- Imperfect Competition
- Classification of Market Structure
- Oligopoly
- Market Forms - Perfect Oligopoly
- Market Forms - Imperfect Oligopoly
- Equilibrium Price
- Applications of Tools of Demand and Supply Price Control
- Price Ceiling
- Price Floor
- Revenue Concepts
- Profit Maximisation Objective
- Determinants of a Firm’s Supply Curve
- Market Supply Schedule
- Price Elasticity of Supply
Government Budget and the Economy
Market Equilibrium
- Simple Monopoly in the Commodity Market
- Other Non - Perfectly Competitive Markets
Balance of Payments
- Open Economy and Its Linkages
- Concept of Balance of Payments
- Current Account
- Capital Account
- Balance of Payments Surplus and Deficit
- Foreign Exchange Market
- Foreign Exchange Rate
- Determination of the Exchange Rate
- Merits and Demerits of Flexible and Fixed Exchange Rate Systems
- Managed Floating Exchange Rate System
Estimated time: 20 minutes
CBSE: Class 12
Balance of Payments Identity
- Balance of Payments (BoP): A systematic record of all economic transactions between the residents of a country and the rest of the world during a given period.
- The BoP always balances.
- Under a fixed exchange rate system, official reserve transactions are used to maintain this balance.
CBSE: Class 12
Formula: Balance of Payment
Current Account + Capital Account = 0
CBSE: Class 12
National Testing Agency: Class 12
National Testing Agency: Class 12
Autonomous vs. Accommodating Transactions
| Feature | Autonomous | Accommodating |
|---|---|---|
| Motive | Independent / Profit or Need-based | To finance the BoP gap |
| Position in BoP | "Above the line" | "Below the line" |
| Recorded In | Current and Capital Accounts | Official reserve transactions (Capital Account in the old classification) |
Autonomous items include:
- Exports and imports of goods
- Exports and imports of services
- Unilateral transfers
- Capital transactions (FDI, Portfolio Investment)
Accommodating items include:
- Borrowings from IMF or other international institutions
- Changes in foreign exchange reserves
CBSE: Class 12
National Testing Agency: Class 12
National Testing Agency: Class 12
BoP Surplus and Deficit
- BoP Surplus: Autonomous receipts > Autonomous payments.
- BoP Deficit: Autonomous payments > Autonomous receipts.
- Accommodating transactions are used to finance the surplus or deficit.
Errors and Omissions
- Errors and Omissions is a separate third element of the BoP that accounts for statistical discrepancies in recording international transactions.
CBSE: Class 12
IMF Classification (BPM6)
The IMF's BPM6 framework classifies the BoP into three accounts:
- Current Account
- Financial Account
- Capital Account
India has adopted the BPM6 classification.
However, the RBI continues to publish the Balance of Payments according to the old classification as well.
National Testing Agency: Class 12
Balance of Trade (BoT)
BoT = Vx - Vm
Where,
Vx = Value of goods exported
Vm = Value of goods imported
BoT Surplus:
\[V_x>V_m\]
BoT Deficit:
\[V_m>V_x\]
CBSE: Class 12
India's BoP — Sample Structure
| Item | Category |
|---|---|
| Exports, Imports | Current Account – Trade |
| Trade Balance | Current Account |
| Invisibles (Net) | Current Account |
| Current Account Balance | Current Account |
| FDI, Portfolio Investment, Debt, Banking Capital | Capital Account |
| Errors and Omissions | Separate Item |
| Overall Balance | Summary |
| Change in Reserves | Accommodating Item |
CBSE: Class 12
National Testing Agency: Class 12
National Testing Agency: Class 12
BoP vs. BoT
| Basis | Balance of Trade (BoT) | Balance of Payments (BoP) |
|---|---|---|
| Coverage | Goods only | Goods, services, transfers, and capital transactions |
| Scope | Narrow | Broad |
| Part of | Current Account | Entire external account |
CBSE: Class 12
National Testing Agency: Class 12
National Testing Agency: Class 12
Key Points: Balance of Payments Surplus and Deficit
- BoP always balances: Current Account + Capital Account ≡ 0.
- Autonomous transactions are independent ("above the line"); accommodating transactions finance the BoP imbalance ("below the line").
- Accommodating items include IMF borrowings and changes in foreign exchange reserves.
- BoP surplus = Autonomous receipts > Autonomous payments; BoP deficit = Autonomous payments > Autonomous receipts.
- Errors and Omissions is a separate third element of the BoP.
- BoT covers goods only; BoP covers goods, services, transfers, and capital transactions.
- IMF's BPM6 classifies the BoP into Current, Financial, and Capital Accounts; the RBI continues to publish data according to the old classification as well.
