INSTITUTE OF MANAGEMENT NIRMA

UNIVERSITY
Integrated BBA-MBA
Session:2023-28
Semester-2

Macroeconomics Individual Assignment

Submitted By-
Ansh
Section/Group no.-FY04/D1
Roll no.-23BBA404
 ACKNOWLEDGEMENT

I extend my sincere gratitude to Professor Nirmal Soni for his invaluable guidance and
support in completing this macroeconomics report. His expertise and encouragement have
been instrumental in shaping the content and direction of this study.

Thank you

Ansh

23BBA404

104-D

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 INDEX

Pages Table of Content

2 Acknowledgement

4-6 Abstracts With References

6-11 Analysis And Learning Of Abstracts

12 Undertaking

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 ABSTRACTS

Abstract-1

“John Law and Richard Cantillon on the circular flow of income”

Author-Antoin E. Murphy

(https://www.tandfonline.com/doi/abs/10.1080/10427719300000062)

Abstract-2

“The Study on Circular Flow of Income in the Barangay Micro Business Enterprises”

Author-Francisco Sepino and Florinda Garcia-Vigonte

(https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4123101)

Abstract-3

“Circular Flow Models in the Flow of Funds”

Author-Jacob Cohen

(https://www.jstor.org/stable/2525485)

Abstract-4

“The Road to Debt Deflation, Debt Peonage, and Neofeudalism”

Author-Michael Hudson

(https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2007284)

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 Abstract-5

“The Impact of Artificial Intelligence on the Circular Flow of Income”

Authors- Fearl Ellaine Cruz, Marmelo V. Abante, Florinda Vigonte

(https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4439761)

Abstract-6

“The Impact of COVID-19 on the Circular Flow of Income”

Author- Fearl Ellaine Cruz, Florinda Vigonte & Marmelo V. Abante

(https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4435806)

Abstract-7

“Nexus Among Bio-plastic, Circularity, Circular Value Chain & Circular Economy”

Author- Shaharia Pavel, Amina Khatun & Md Mominul Haque

(https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3509954)

Abstract-8

“Circular Flow: A Simple Model of the Economy”

Author- Peter Debaere

(https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1583767)

Abstract-9

“Comparing Pension Systems in the Circular Flow of Income”

Author- Andrew B. Trigg, Jonquil T. Lowe

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 (https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1536-7150.2011.00811.x)

Abstract-10

“Finance and the Macroeconomic Process in a Classical Growth and Cycles Model”

Author-Jamee K. Moudud (https://papers.ssrn.com/sol3/papers.cfm?

Sites to refer: -

 https://www.ssrn.com/index.cfm/en/
 https://onlinelibrary.wiley.com/
 https://www.jstor.org/
 https://www.tandfonline.com/

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 ANALYSIS AND LEARNINGS OF ABSTRACTS

The study "Finance and the Macroeconomic Process in a Classical Growth and Cycles
Model" seeks to create an endogenous growth and cycles model that includes sectoral
incomes, expenditures, and finance requirements in a social accounting matrix (SAM).

Integrating Finance and Economics: The study combines financial and macroeconomic
dynamics within a traditional growth and cycle paradigm.

The Social Accounting Matrix (SAM) The model uses an ex-ante SAM with families, firms,
a banking sector with non-zero net worth, and the government. It also considers sectoral
earnings, expenditures, and finance requirements.

Cyclical Dynamics: Investment in circulating capital and endogenous bank credit is critical to
short-run cyclical dynamics, which are impacted by debt's negative feedback effect on
investment.

Dual Disequilibrium: The business cycle dynamics are represented by a connection between
monetary and goods market disequilibrium.

Endogenous Growth: In the medium to long term, the route of accumulation is internally
financed and governed by the profit rate, which is consistent with classical economics'
endogenous growth theory.

Synthesis of Economic Thought: The model combines the Physiocrats' "circular flow"
approach with the endogenous growth perspective of classical economists von Neumann and
Harrod.

The model's cyclical dynamics are inspired by Kalecki and Minsky, highlighting the volatile
character of market economies. This study advances knowledge of the ways in which
financial variables might impact business cycles and economic growth by offering a thorough
model that unites traditional economic theories with contemporary macroeconomic
procedures.

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 Circular Flow of Income

John Law established the foundation for our knowledge of the cyclical flow of wealth, as did
his contemporaries Richard Cantillon and Francois Quesnay. Particularly noteworthy as an
early example of the interchange of income and expenditure across different social and
economic categories is Law's model. Cantillon advanced the concept of figuring out the ideal
money supply required for an economy's full utilization and the consequences of having too
much money, influenced by Law during his tenure in the Parisian banking industry. Law and
Cantillon both emphasized the critical role that currency played in the transition from old
bartering to modern market-based monetary economies, despite their different methods. Their
observations laid the groundwork for a thorough investigation of Law's influence on
Cantillon and the development of economic theory, their findings paved the way for a
detailed examination of Law's impact on Cantillon and the advancement of economic theory,
which resulted in the notion of the cyclical flow of revenue between various sectors. The
circulation model of law is considered an early depiction of the movement of income and
expenditure between different socio-economic groups.

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We see that the homes, or customers, are where the money journey starts in the model that is
shown. These customers provide resources including labour, capital, land, and entrepreneurial
abilities in exchange for pay. The next step is known as Private Consumption, when they use
their money to pay for different products and services including clothing, food, and
entertainment. The production sector businesses get this money, and they use it to produce
the goods and services that customers buy. The companies use this revenue to pay for labour,
rent, and raw supplies, among other operating expenses.

These companies then pay taxes to the government, which is a part of their revenue. These
monies are used by the government to finance public investments in healthcare, education,
and infrastructure. Furthermore, a portion of the financial flow transcends national
boundaries when we bring in overseas investments or import commodities. Money is always
moving, creating a cycle where companies reinvest their profits to pay workers and buy more
supplies for their operations. The cycle is continued when the workers spend their earnings
on consumer products. This procedure highlights the dynamic character of economic activity
by illuminating the connections between the flow of money across different economic
sectors.

It is crucial to comprehend this cyclical flow of revenue as it enables us to gauge a nation's

This leads to the premise that growth is necessary in a capitalist economy. It is based on the
circular flow model of a pure credit economy, in which time is needed for production.
According to the concept, businesses need positive growth rates in order to turn a profit over
the long term. The economy experiences a downturn when the growth rate drops below a
predetermined positive level, leading to losses for the enterprises and their eventual closure.
According to the paradigm, capitalist economies have to expand enough or contract when
their growth rate falls below a certain level of positive growth. Therefore, under this
perspective, a zero-growth economy is not a long-term feasible alternative. Capitalist
economies depend on growth to sustain profitability and general economic well-being. This is
predicated on the circulation model, which highlights how vital growth is to a capitalist
economy's healthy operation.

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National Income: -
The authors discuss two main ways of representing the business cycle: in equation and matrix
forms, which include the government and the external sector within the business cycle. The
authors concentrate on a fundamental supply science model that uses six institutional sectors
to characterize the US economy. The primary elements of the total outcomes that comprise
the national accounting system are these sectors. The six sectors are:

Households: This sector consists of all individuals and families that consume goods and
services and provide labour for production

Enterprises: This sector includes all firms, organizations and businesses that produce goods
and services, using labour, capital and technology.

Government: This sector represents the public sector, including all government units,
departments and agencies that provide public goods and services and collect taxes.

Non-profit institutions serving households: this sector includes domestic organizations

Financial corporations: This sector includes all financial institutions, such as banks,
insurance companies and investment firms, that provide financial services and intermediary
activities.

Rest of the World: This sector represents the foreign economy, including all foreign entities,
organizations and countries that interact with the domestic economy through trade,
investment and cash flows.

By integrating these six institutional sectors, the national accounting system offers a thorough
picture of the economy of the nation, enabling analysts and policymakers to assess data and
comprehend the intricate connections among various sectors. The authors stress the
significance of this method for researching the financial cycle and how it affects the
distribution of resources and supply in the contemporary economy.

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Abstract 6 is about economic disparity in India encompassing income inequality and other
such as child malnutrition. It explains how Covid-19 crisis has exacerbated the gap between
rich and poor in India. The utilization of information from the Indian Human Development
Survey (IHDS) and the National Family Health Survey (NFHS) to determine and equate
disparities among different social groups, together with states forms part of this paper.
Moreover, it explores some of the techniques and problems that arise when measuring
inequality through various sources of data. To sum up, this abstract intends to give a
comprehensive and rigorous study on inequality in India.
Abstract 5 talks about evolving technology and the development of Artificial Intelligence. It
delves into the impact of artificial intelligence (AI) on economic growth, business
transformation and the circular flow of income. The writers acknowledge how artificial
intelligence affects business, how people live and work, and how it might spur innovation and
creativity. It also demonstrates how governments everywhere are putting policies in place to
encourage the development of AI and realizing its significance. The authors point out that AI
has a big impact on employment, output, and company growth in the cyclic flow of revenue.
Through a survey of current articles on the subject, the research seeks to investigate how
artificial intelligence affects corporate transformation and economic growth. The research
looks at how AI has impacted business models, processes, and value chains in addition to
employment patterns, productivity, and innovation. Although AI has certain benefits as well,
the study also looks at potential drawbacks including employment losses, displacement,
increased income inequality, and potential threats to privacy and security. In order to ensure
that society can continue to produce money with technological improvements, the authors
investigate solutions to avert these detrimental impacts. The research also looks at the
policies and tactics used by governments to maximize AI's benefits and minimize its
drawbacks. This might include measures to reduce the wealth gap, as well as security and
privacy-protecting legislation and programs to train workers for new professions. To enhance
economic growth and corporate change for the benefit of everybody, the authors stress the
need of becoming ready for how AI will affect the circular flow of revenue.

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 UNDERTAKING

I, Ansh solemnly declare that the analysis work presented in this assignment is solely my
work.

Ansh
Roll no. 23BBA404
FY04 D1 batch

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