Part-II macro economics Chapt:-3 consumption function 1. Assumptions of psychological law of consumption a. No change intuitional factors b. Normal situation c. Government intervention 2. Importance of psychological law of consumption a. Invalidates say’s law of market b. Need of government intervention c. Equilibrium of under employment d. Importance of investment e. Expansion of trade cycle f. Expansion of depression g. Expansion of induced investment 3. Determinants of consumption function a. Subjective motive - Individual motives 1. Motive of fore foresightedness 2. Motive of precaution 3. Motive of improvement 4. Motive of independence 5. Motive of pride 6. Motive of enterprise 7. Motive of calculation - Business motives 1. Motive of enterprises 2. Motive of liquidity 3. Motive of income improvement 4. Motive of financial prudence b. Objective factors - Fiscal policy - Wind fall gains or losses - Future expectation - Rate of interest - Distributin of income - Demonstration effects - Holding of liquid assets 4. Measures to increase in the propensity to consume a. Redistribution of income b. Wages policy c. Increase in the social security d. Credit facility e. Advertising and publicity f. Development of means Chapt:-4 multiplier 1. Assumptions of multiplier a. Continuous investment b. No change in price level c. Closed economy d. Existence of less than full employment e. Industrial economy f. Avaibility of other factors of production g. Consumption is the function of current income 2. Leakages of multiplier a. Saving b. debt cancellation c. net imports d. Inflation d)purchase of old stock and secur e. Undistributed profit f. Various types of taxes g. Excess stock of consumption goods 3. Importance of multiplier a. Importance on investment b. Analysis of trade cycle c. To formulation of economic policies d. Public investment e. Equality between saving and investment f. Deficit financing Chapt:-5 saving 1. Determinants of saving a. Level of income b)Rate of interest b. Distribution of wealth and income c. Foresightedness d) Precaution d. Liquid assets e. Developing of banking and financial intuitions f. Structure of population g)Fiscal policy g. Price level h) Social security h. Demonstration effects Chapt:-6 investment 1. Types of investment a. Gross and net investment b. Private and public investment c. Induced and autonomous investment 2. Factors influencing/determining investment a. Short run factors - Consumer demand--expected demand-- Level of income - Propensity to consume - Cost – price & return—uncertainty - Government policy--- business stability---political stability b. Long run factors - Population growth rate - Development of new territioies - Utilization of capital equipment - Technological progress - New products---liquid assets - Current rate of investment 3. Determinants of investment a. Marginal efficiency of capital b. Rate of interest Chapt:-7 trade cycle 1. Characterstics of trade cycle a. Cyclical nature b. Regularity c. Wave like movement d. Cumulative nature e. International f. Synchronism g. Unequal influence or effect h. Features of capitalistic economy i. Effect on monetary factors Continue………… 2. Phases and effects of trade cycle a. Depression or contraction phase - Decrease in production and trade - Low income - Low employment - Decrease in demand and decrease in price - Decrease in prices of raw material - Decrease in demand of credit - Decrease in interest - Shut down of industries b. Recovery - Opposite of depression phase c. Prosperty phase - Same as recovery phase Chapt:-8 inflation 1. Causes of inflation a. Increase in money income - Monetary and credit policy of gov. - Deficit financing - Credit policy of commercial banks - Increase in the velocity of circulation of money - Financial mismanagement - Export promotion policy b. Decrease in production - Natural causes - Law of diminishing return - Lack of raw materials - Techniques of production - Trade and taxation policy - Industrial disputation - Increase in population 2. Cost push inflation (causes) a. Wage induced inflation b. Profit induced inflation c. International causes 3. Demand pull inflation ( causes) a. Increase in quantity of money b. Redistribution of income c. Expections d. Lag between income and expenditure e. Rate of interest 4. Effects of inflation a. Economic effect of inflation I. Effect on production - Disrupt in price system - Discourage to foreign capital - Reduce in capital accumulation - Encourage to hording - Encouragement to speculation - Reduction in the volume of production - Effect on the pattern of production - Fall in quality II. Effect on distribution of wealth - debtor & creditor - wage and salary earners - fixed income earner group - business community - investors - farmers b. non-economic effects - social effects - moral effects - political effects 5. control or remedies a. monetary measures - increase in bank rate - open market operation - increase in the minimum CRR - decrease in credit facilities - changes in margin requirement of securities b. fiscal measure - increase in the rate of taxation - balanced budget - decrease in the government expenditure - encouragement to saving - overvaluation of money c. direct measure - control to the wage rate - increase in production - changes in investment pattern - direct control chapt:-9 fiscal policy 1. objectives of fiscal policy a. capital formation b. full employment c. mobilization of the resources d. economic stability e. economic development f. control of inflation 2. importance of fiscal policy in developing countries a. appropriate income and expenditure system b. maintaining regional balance c. increase in foreign trade d. equal distribution of national income e. maximum social welfare f. increase in per capita income g. expansion of industries chapt:-10 monetary policy 1. objectives of monetary policy a. exchange stability b. price stability c. full employment d. neutrality of money e. economic growth 2. importance of monetary policy in developing countries a. development of banking and financial ins. b. Monetization of the rural sector c. Development of organized money market d. Price stability e. Increase in investment f. Capital formation g. Appropriate balance of payment
Posted on: Tue, 24 Sep 2013 17:54:54 +0000
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