SYBCom - Sem III B. Economics
Introduction to Macroeconomics
Difference between micro and macro Economics
- Micro Economics deals with the behaviour of an individuals. i.e. an individual person, a firm, a industry, or a individual entity.
- Macro Economics deals with the behaviour of aggregates. i.e. national income, employment level, general price level, investment level and balance of payment.
- Aggregate activities implies the activities in different sectors of the econom
- } In the term Macroeconomics, Macro means large, a big picture scenario of the economy} Macroeconomics is a branch of economics that studies how an overall economy behaves. i.e. the market system that operate on a large scale.} Macroeconomics deals with the performance, structure, and behavior of the entire economy.} Macro economics is that part of economics which studies the overall averages and aggregates of the economic system. It does not deals with individual income but with national income, not with individual price but with the general price level, not with the individual out but with national output.------- K.E. Boulding
Classical
Economists
•
Adam smith, David Ricardo, Thomas Malthus, Anne Robert
Jacques Turgot, John Stuart Mill, J.B. Say, E.B. Von Bawerk
•
Price, Wages, rate of
interest are flexible
•
Free trade, Laissez – faire economic policy, division of
labour, full employment level, efficient and self adjusting market mechanism,
Supply creates its own demand (long run)
Keynesian
Economists –
Jon Maynard
Keynes - a base for modern Macro economy
•
The General Theory of Employment, Interest and Money 1936
•
Focus on the role of government
•
Aggregate Demand, Aggregate Supply, consumption function,
investment function (Marginal Efficiency of Capital) (Short run)
Post - Keynesian Economists post 1950
•
Paul Samuelson, James Tobin, Robert Solow, Franco Modigliani,
Milton Friedman
•
Theories of consumption, Investment, Money, Monetarism, Role
of Money Supply, Central Bank
Scope of Macroeconomics
1. Determination of national income
- Y= C(consumption)+I(Investment)+G(Govt
exp.)
- Concepts – GDP, GNP, NNP,
Per capita income
- Helps to analyse the performance
of an economy
- To compare relative
performance of the different countries
- To understand the
distribution of the income among the people
2. Economic Fluctuations
- In income & Employment
with recession & prosperity
- Inflation, deflation
- Stabilization policies
through fiscal and monetary policy
3. Aggregate Demand & Aggregate Supply
- Level of employment and
national income is determined by aggregate demand – J. B. Keynes
- Aggregate Supply increases by improving productivity, investment, technological changes and policies
- Macroeconomics studies the level of and nature of employment in the economy.
- Involuntary unemployment- in depression (due to corona), Cyclical unemployment – developed economy, disguised unemployment- agriculture (due to corona), underemployment, educated unemployment these types and causes
- Macro economics studies the role of money, its demand and supply.
- Inflation, deflation, stagflation.
- Harrod-Domar model –higher level of saving leads to higher investment and lower the capital output ratio higher the growth rate. Rate of economic growth = level of saving/capital output ratio
- Arthur Lewis Model of development – transfer of the surplus labour from agricultural sector to industrial sector (Dual Economy)
- W.W. Rostow – the stages of economic growth,
- Robert Solow- same saving of different countries will have same steady growth rate and need Solow convergence.
- Amartya Sen – Rural development and welfare economics, Paul Romer
- Export to other nation and import from other nation impacts on national income. Macroeconomics explains deficits in BOP, and suggests policy measures to correct BOP.
- Convergence of a nations currency in other nations currency is exchange rate
- Role of the government in BOP and exchange rate
Recovery :-
ReplyDeleteVarious exogenous and /endagenous factors are responsible for receiving the economy when the economy enters the phase of recovery, it registered an upward trend in out put, income, employment, etc. But the growth rate may stil remain below the steady growth rate
Prosperity :-
ReplyDeleteIncrese in output, employment, investment,demand profit, bank loans price standers of living are main feature of the phase of prosperity we can observe the following important feature buring this phase
1)bank credit grow rapidly even though rate of interest is higher
2)idle funds are channelisd into productive areas .since stock price are higher due to high profitably
3)money supply increase it's continue To flow in all kinds of economic activity in this way
1. Green Gross Domestic Product:
ReplyDeleteGreen Gross Domestic Product is measured as Green national income. It is an index of economic growth that measures the environmental effects on the growth of the conventional G.D.P.
2. Depression:
It is a sustained, long-term downturn in economic activities in one or more economies. It is more severe economic downturn than a recession, which slowdown in economic activity over course of normal trade cycle.
1) Disposable Income (DI) :- Its the income which is actually to the individuals to spend on consumption and to save. The whole of personal income is not available to the imdividuals to meet their expenditures. A part of it is paid to the government in the form of direct taxes. Thus, in order to obtain disposable income we have to deduct direct taxes paid by the individuals from the personal income. Thus, Disposable Income= personal income - direct taxes paid by individuals
ReplyDelete2) Green Gross National Income :- Green Gross National Income measured as Green Gross Domestic Product or GGDP is an index of economic growth that measures the environmental effects on the growth of conventional GDP. It takes into account the environmemtal impact on a country's economic growth. GGDP is conventional gross domestic product figures adjusted for the environmental costs of economic activities. It is a measures of how much a country is prepared for sustainable economic development.
Sangami R sable
1.Recession- It is a period of contraction or slowing down economic activity. This phase begins when downward process in growth rate becomes rapid and output, employment, price ,etc register a decline. Growth rate may still remain above steady growth line. It is generally of short duration.
ReplyDelete2. Peak= Peak is upper turning point where level of economic activity is at it's highest.
1.Recession- It is a period of contraction or slowing down economic activity. This phase begins when downward process in growth rate becomes rapid and output, employment, price ,etc register a decline. Growth rate may still remain above steady growth line. It is generally of short duration.
ReplyDelete2. Peak= Peak is upper turning point where level of economic activity is at it's highest.
DARPAN PATIL
ROLL NO. - 9
Macroeconomic
ReplyDeleteHousehold
Firms
National income
Gross Domestic product
Macroeconomic- macroeconomic studies the economy as a whole and anhlyses it's function ing .it deals with aggregate such as national income , employment level general price level
DeleteHOUSEHOLD:- household are the owner of factors of priducprod land ,labour,capital,and employment
FIRMS:- firms are the business concern or enterpreuse who decide what,where,how,and,for the firm in goods and services..
Roll No.1
ReplyDelete1] Marginal Efficiency of Capital: The marginal efficiency of capital (MEC) refers to the expected rate of profit from an investment in a new capital asset
ReplyDeleteC=R/r
Where, C= supply price of capital
R=Expected yield of returns
r=Rate of discount/MEC.
Through: the recession begin at a peak and ends at a through this is follow by expansion which begins at a through and ends at a peak the expansion in which the level of economic activity is rising
ReplyDeletePrarthana salvi
Roll no. 17
Depression: depression is a period of low economic activity. Growth rates goes below the steay growth . There is considerable reduction in production , employment , income , investment, demand and price during this phase
ReplyDeletePrarthana salvi
Roll no . 17
Aggregate demand : Agreegate demand price is the amount of money which the entrepreneur expect to receive from the sale of output produced at the particular level of employment.
ReplyDeleteAbhishek more
Roll no 18
Aggregate supply : Aggregate supply price is the total amount of money which all the entrepreneur in the economy must receive from the sale of the output produced by any given level of employment.
ReplyDeleteAbhishek more
Roll no 18
This comment has been removed by the author.
ReplyDeleteThis comment has been removed by the author.
ReplyDelete
ReplyDelete1)Average propensity to consume:
The average propensity to consume is the ratio of aggregate consumption to aggregate income. It is calculated by dividing consumption expenditure by income.
2)Marginal Propensity to consume:
The concept of margin is important in economics. It measures the response of one variable to a small change in another variable. The marginal propensity to consume measures the change inco consumption due to change in income. Thus, the marginalc propensity to consume is defined as the ratio of a change inre Dia to In in consumption to a change in income
Name.Hrishikesh More
Roll No.13
Div.A
1) Effective Demand : effective demand is identified with total demand . total employment depends on effective demand & therefore unemployment results from the deficiency of effective demand .
ReplyDelete2) Consumption Function Expression : The consumption shows relationship between income and consumption . The consumption function shows functional relationship between aggregate total consumption & gross national income .
Name : sagar Fatkare
Roll no : 19
Div : A
This comment has been removed by the author.
ReplyDelete1) Employment Multiplier :-
ReplyDeleteIt means the effect of an increase in investment on employment.
2) i) Investment multiplier :-
The investment multiplier is the rate of the final change in income to the initial change in investment.
ii) Income multiplier :-
It is the ratio of final change in income to the initial change in investment.
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