Notes>> Mains >> Economics >> Macro Economics

Page |1

Amit Abhyankar

(Macro Economics)

) GDP ( / / / / Gross Domestic
Product = / /
.
) GNP ( / /Gross National Product: GNP = GDP (XM). GDP / /
add /
GNP .
) NDP ( / / Net Domestic Product NDP = GDP
depreciation (
) NNP ( / Net National Product NNP = GNP
depreciation (

(Income Method) A. C. Pigou
= (Wages) + (Rent) + (Interest) + (Profit) +
(Depreciation) + (Indirect taxes) /
(Transferred income)
(, , , , factors of
production .
factors of production
. add . factors
of production . add . /
(transferred income) , .
/ . .

(Expenditure Method) Irving Fisher

= C + I + G + (X-M)
(C , G , , ,
, I / / / (X-M)

/ (Product Method) Alfred Marshall
=
(GVA Gross Value Added.
. stage (value-addition)
.

) (Medium of exchange)
) (Measurement of value)
) / / (Standard of deferred payment)
) (Store of value)
Money Supply
(Milton Friedman): +
(demand deposits). money supply
. money supply
:

Notes>> Mains >> Economics >> Macro Economics

Concept

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Old Concept

M0 (Reserve

Amit Abhyankar

New Concept (As per Y. V. Reddy recommendations)

Currency in circulation + Bankers deposits with the RBI + Other deposits with the RBI

Money)

M1 (

Currency with the public + Demand deposits with the banks

Same (No change)

M2

M1 + Saving deposits in Post Office

M1 + Time deposit part of the Demand deposits in the banks +

+ Other deposits with the RBI

Certificates of Deposits (CDs) sold by banks + Time deposits of

less than one year

M3 (

M1 + Time deposits with the banks

M2 + Time deposits of more than one year

M4

M3+ All deposits with Post Office

M4 is cancelled

(liquidity) L1, L2 L3

L1= M3 + National Savings Certificate

L2= L1 + Financial Institutions / CDs
L3= L2 + Non-banking Financial Institutions
(Base Money/High Powered Money)
: -

. .

/

+ + (Vault Money

RBI total liabilities (Claims of general public, banks and governments

on RBI)

) ( , ,
.
.

Notes>> Mains >> Economics >> Macro Economics

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) ,

Amit Abhyankar

(Sellers market

/ ; .

/ (

.
)
assets , , .
asset . /
.

(Creeping inflation / / <% =>
(Walking inflation % => (Galloping
inflation % => (Hyperinflation %

Money Multiplier

: /
. (H)
.
. RBI . -
(c), / (t) (r) .

- /, . (food
inflation) .

(MM) = f(c, t, r)

WPI / ( / ,
,

.
MM = 1/r

(administered
prices) ,

- .

-

?

a. (: -

b. (deficit financing) ( /

c. (/.
d.

Notes>> Mains >> Economics >> Macro Economics

e.
f.
g.
h. RBI
)
a. / -
b. / (
c. (, /
d.

Page |4

Amit Abhyankar

c.
.
) -/ (Cost-push inflation)
a. / .
b. /
-/ .
c. / , ,
, .
d. imperfect competition , /.

e. (/. , , / .

/ , /

f. (hoarding)

/ .

(Theories of Inflation)
/ (Monetary theory of Inflation)
, ,
.
Monetary theory of money . MV=PQ
M P ; .
Non-monetary theories of Inflation
) - (Demand-pull inflation)
a. .
.
b.
.

cost-push inflation .
Perfect competition .
Cost-push inflation
- (administered
price theory of inflation) .
) - -/ (Mixed Demand-pull cost-push
inflation)
a. / sides
.
:
) (Monetary measures)
) (Fiscal Measures)/
)

Notes>> Mains >> Economics >> Macro Economics

Page |5

) :

i.
ii.

a. RBI .

iii. (

b. (

iv. / (

i. / (

v. ,

ii. ;
. CRR,
SLR, Repo .
iii. RBI
(government bonds)
; .
/
.
c. (

i. RBI .
ii.
.
iii.
RBI / / . RBI
.
iv. RBI /
.
)
a. RBI .
b.

Amit Abhyankar

)
a. (
.
b. /
c. /
d.
e.
f.

) (Disinflation) / ;

) (Stagflation) = Stagnation + Inflation. / /
/ . Generally
. stagflation
.
) (Reflation) / /
.

Notes>> Mains >> Economics >> Macro Economics

) (Giffen goods) Generally

. Giffen
. . Inferior
. /. ;
/ / . .
.
/ / .
.
) . (Supply
creates its own demand).
. .
) (Phillips Curve) /
/.
) (Engels law) /
.

?
) ( / .
)
)
)
) , /
) /
) (
) .

Page |6

?
) (
)
)
)

Amit Abhyankar