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CBSE Class 12 Commerce Economics Part B Introductory Macroeconomics Complete Details

CBSE Class 12 Commerce Economics Part B Introductory Macroeconomics Complete Details

CBSE Class 12 Commerce Economics Part B Introductory Macroeconomics : The CBSE first education board to be set up in India was the Uttar Pradesh Board of High School and Intermediate Education in 1921, which was under jurisdiction of Rajputana, Central India and Gwalior. In 1929, the government of India set up a joint Board named “Board of High School and Intermediate Education, Rajputana”. This included Ajmer, Merwara, Central India and Gwalior. Later it was confined to Ajmer, Bhopal and Vindhya Pradesh. In 1952, it became the “Central Board of Secondary Education”.

CBSE Class 12 Commerce Economics Part B Introductory Macroeconomics Complete Details

CBSE Class 12 Commerce Economics Part B Introductory Macroeconomics : Here our team members Provides CBSE Class 12 Commerce Economics Part B Introductory Macroeconomics Complete Details. CBSE Class 12 Commerce Economics Part B Introductory Macroeconomics Complete Details Included 5 units. These CBSE Class 12 Commerce Economics Part B Introductory Macroeconomics Complete Details Five units included some topics those are under given following  :

Part B: Introductory Macroeconomics

Unit 5: National Income and related aggregates

Some basic concepts: consumption goods, capital goods, final goods, intermediate goods; stocks and flows; gross investment and depreciation.
Circular flow of income; 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 and Net Domestic Product (GDP and NDP) – at market price, at factor cost; National Disposable Income (gross and net), Private Income, Personal Income and Personal Disposable Income; Real and Nominal GDP.
GDP and Welfare

Unit 6: Money and Banking

Money – its 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, Controller of Credit through Bank Rate, CRR, SLR, Repo Rate and Reverse Repo Rate, Open Market Operations, Margin requirement.

Unit 7: 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 8: 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 9: 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.

CBSE Class 12 Commerce Economics Part B Introductory Macroeconomics Complete Details

CBSE Class 12 Commerce Economics Part B Introductory Macroeconomics :  Economics (UK English: /kəˈnɒmɪks/, /ɛkəˈnɒmɪks/; US English: /ɛkəˈnɑːmɪks/, /ikəˈnɑːmɪks/ is “a social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services”.

Economics focuses on the behavior and interactions of economic agents and how economies work. Consistent with this focus, textbooks often distinguish between microeconomics and macroeconomics. Microeconomics examines the behavior of basic elements in the economy, including individual agents and markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyzes the entire economy (meaning aggregated production, consumption, savings, and investment) and issues affecting it, including unemployment of resources (labor, capital, and land), inflation, economic growth, and the public policies that address these issues (monetary, fiscal, and other policies).

Other broad distinctions within economics include those between positive economics, describing “what is”, and normative economics, advocating “what ought to be”; between economic theory and applied economics; between rational and behavioral economics; and between mainstream economics and heterodox economics.

CBSE Class 12 Commerce Economics National Income And Related Aggregates Complete Notes

CBSE Class 12 Commerce Economics Part B Introductory Macroeconomics :  The modern concept of National Income is more dynamic in the content than earlier concepts. The National Income Committee of India defined national income as: “ A National Income estimate measures the volume of commodities and services turns out during a given period, counted without duplication.” We can think of the aggregate income of an economy in three different ways. In an economy, there are three flows, flowing at the same time: income, output and expenditure. When something is produced factors of production is paid which is their income, which they (income receiver) spend on consumption or investment. Actually, expenditure is just another name for income. Three types of flows: income, output and expenditure are always equal to each other for a particular period of time giving rise to what we call triple identity: output = income = expenditure.

GROSS NATIONAL PRODUCT (GNP)

Gross National Product is the total amount of final goods and services which the labour and capital of a country working on its natural resources produced in a year. When we express the value of this aggregates output in money, it is called Gross National Income. Gross National Product at market price is the market value of the aggregate goods and services produced in the country in a year

There are two things we should be careful about GNP

  • It is a monetary measure of the total goods and services produced during the period, because there is no other method of adding up the heterogeneous types of goods and services. GNP thus obtained is what economists would call Nominal GNP. But nominal GNP can not be considered to compare one year with the other. We may find nominal GNP for a particular year may be greater than previous year only because the price is raised, there being no change in actual production. For comparison over a time we need real GNP – obtained when any change in price of goods and services which enter into output have been removed and taken care of.
  • In calculating the value of production, we must take care to avoid firms are further processed by the other firms. Only the value added must be taken into account, that is, the value of intermediate goods has to be deducted.
  • There comes a problem of distinction between final goods and intermediate products. Final products are those once produced and/or purchased but not resold during the current accounting period and goods purchased for resale with or without further processing in the physical sense are termed as intermediate goods. Coal purchased by the household for direct consumption is final product but by a steel mill is an intermediate product. GNP figure represents the gross value of final product turned out by the whole economy in a specific period.

Download here CBSE Class 12 Commerce Economics National Income And Related Aggregates Complete Notes in PDF Format 

CBSE Class 12 Commerce Economics Money And Banking Complete Notes

CBSE Class 12 Commerce Economics Part B Introductory Macroeconomics : Money can be thought of as any good that is widely used or accepted in the transfer of goods and services. Today, there are three common forms of money in use. Commodity money is a good whose inherent value serves as the value of money – gold or silver being one good example. Fiat money is a good whose value is less than the value of money it represents – paper money, for instance. Bank money consists of accounting credits that can be drawn on by the depositor – checking accounts, for instance. (For more, see What Is Money?)

Download here CBSE Class 12 Commerce Economics Money And Banking Notes In PDF Format

Money serves multiple functions in an economy. Money is first and foremost a medium of exchange. When all parties in an economy will accept money, it eliminates the need for a double coincidence of wants that goes with barter – that is, both parties have to want what the other is offering. Accordingly, money as a medium of exchange is much faster and more convenient in commerce. Money also is supposed to hold value over time. A dollar bill or gold coin will still be valuable tomorrow or a year from now, but a fish has very little value after a couple of days because of decomposition

Functions of Money

  • Medium of exchange:Money can be used for buying and selling goods and services.
  • Unit of account:Prices are quoted in dollars and cents.
  • Store of value:Money allows us to transfer purchasing power from present to future. It is the most liquid (spendable) of all assets, a convenient way to store wealth

CBSE Class 12 Commerce Economics Determination Of Income And Employment Complete Notes

CBSE Class 12 Commerce Economics Part B Introductory Macroeconomics : The complete classical model of income and employment determination in an economy in Fig. 3.7. In panel (a) of this figure labour market equilibrium is shown wherein it will be seen that the intersection of demand for and supply of labour determines the real wage rate (W0/P0 ).

At this equilibrium real wage rate the amount of labour employed is N1; and, as explained above, this is full employment level. As depicted in panel (b) of the figure this full employment level of labour N1 produces Y1 level of output (or income).

In panel (c) of Figure 3.7 we have drawn 45° line that is used to transfer the level of output on the vertical axis in panel (b) to the horizontal axis of panel (c). In panel (d) we have shown the determination of price level through intersection of the curves of aggregate demand for and aggregate supply of output, as explained by the quantity theory of money. In the classical theory, aggregate supply curve AS is a vertical straight line at full-employment level of output YF.

Determination of Income and Employement: Complete Classial Model

 Thus, given constant velocity of money V, the quantity of money M0 will determine the expenditure or aggregate demand equal to M0V according to which aggregate demand curve (with flexible prices) is AD0. It will be seen from panel (d) of Fig. 3.7 that intersection of vertical aggregate supply curve AS at fully-employment level output YF and aggregate demand curve AD0 determines the price level P0. With price level at P0, the money wage rate is W0 so that W0/P0 is the real wage rate as determined by the intersection of demand for and supply of labour [see panel (a) of Fig. 3.7].

Download Here CBSE Class 12 Commerce Economics Determination Of Income And Employment Complete Notes In PDF Format 

CBSE Class 12 Commerce Economics Government Budget And The Economy Complete Notes

CBSE Class 12 Commerce Economics Part B Introductory Macroeconomics : The Budget impacts the economy, the interest rate and the stock markets. How the finance minister spends and invests money affects the fiscal deficit. The extent of the deficit and the means of financing it influence the money supply and the interest rate in the economy. High interest rates mean higher cost of capital for the industry, lower profits and hence lower stock prices.

The fiscal measures undertaken by the government affect public expenditure. For instance, an increase in direct taxes would decrease disposable income, thus reducing demand for goods. This decrease in demand will translate into a decrease in production, therefore affecting economic growth.

Similarly, an increase in indirect taxes would also decrease demand. This is because indirect taxes are often partially or completely passed on to consumers in the form of higher prices. Higher prices imply a reduction in demand and this in turn would reduce profit margins of companies, thus slowing down production and growth.

Download here CBSE Class 12 Commerce Economics Government Budget And The Economy Complete Notes In PDF 

CBSE Class 12 Commerce Economics Balance Of Payments Complete Notes

CBSE Class 12 Commerce Economics Part B Introductory Macroeconomics : The balance of payments, also known as balance of international payments and abbreviated B.O.P., of a country is the record of all economic transactions between the residents of the country and the rest of the world in a particular period (over a quarter of a year or more commonly over a year). These transactions are made by individuals, firms and government bodies. Thus the balance of payments includes all external visible and non-visible transactions of a country. It is an important issue to be studied, especially in international financial management field, for a few reasons. First, the balance of payments provides detailed information concerning the demand and supply of a country’s currency. For example, if Mauritius imports more than it exports, then this means that the supply of rupees is likely to exceed the demand in the foreign exchanging market, ceteris paribus. One can thus infer that the Mauritius rupee would be under pressure to depreciate against other currencies. On the other hand, if Mauritius exports more than it imports, then the rupee would be likely to appreciate. Second, a country’s balance-of-payment data may signal its potential as a business partner for the rest of the world.

If a country is grappling with a major balance-of-payment difficulty, it may not be able to expand imports from the outside world. Instead, the country may be tempted to impose measures to restrict imports and discourage capital outflows in order to improve the balance-of-payment situation. On the other hand, a country experiencing a significant balance-of payment surplus would be more likely to expand imports, offering marketing opportunities for foreign enterprises, and less likely to impose foreign exchange restrictions. Third, balance-of-payments data can be used to evaluate the performance of the country in international economic competition. Suppose a country is experiencing trade deficits year after year. This trade data may then signal that the country’s domestic industries lack international competitiveness. To interpret balance-of-payments data properly, it is necessary to understand how the balance of payments account is constructed.[1][2] These transactions include payments for the country’s exports and imports of goods, services, financial capital, and financial transfers. It is prepared in a single currency, typically the domestic currency for the country concerned. Sources of funds for a nation, such as exports or the receipts of loans and investments, are recorded as positive or surplus items. Uses of funds, such as for imports or to invest in foreign countries, are recorded as negative or deficit items.

Download here CBSE Class 12 Commerce Economics Balance Of Payments Complete Notes in PDF Format 

CBSE Class 12 Commerce Economics Part B Introductory Macroeconomics Complete Details

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