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    UNIT-2 Money & Banking

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    UNIT-2 Money & Banking

    Uploaded by

    dtara0685
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    1 views15 pages

    UNIT-2 Money & Banking

    Uploaded by

    dtara0685

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 15

    Part A: Introductory Macroeconomics

    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
    -Value Added or Product method, Expenditure method, Income method. Aggregates related to National Income:
    Gross National Product (GNP), Net National Product (NNP), Gross Domestic Product (GDP) and Net Domestic Product
    (NDP)- at market price, at factor cost Real and Nominal GDP. GDP and Welfare

    Unit-2 Money and Banking


    Money meaning and functions, 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 changes 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. Balanced, Surplus and Deficit Budget measures
    of Government Budget deficit.

    Unit-5: Balance of Payments


    Balance of payments account meaning and components; Balance of payments Surplus and Deficit
    Foreign exchange rate meaning of fixed and flexible rates and managed floating. Determination of exchange rate in a free
    market, Merits and demerits of flexible and fixed exchange rate.
    Managed Floating exchange rate system.

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