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NCERT Class 12 Economics Part 2
NCERT Class 12 Economics Part 2
Introduction
nt oduction
ntrod
uct ion
s
t
t
t t
Introductory Macroeconomics
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P t
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3
Introduction
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t t
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Introductory Macroeconomics
The General
Theory of Employment, Interest and Money
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r
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Introduction
S ummary
Introductory Macroeconomics
ttss
Keyy C
Concepts
Exercises
es
Macroeconomics
7
Introduction
National
c oounti
Nation al Income
I nco me Accounting
un ti g
s
s
s
s
s
s
s
s
s
s
s
9
National Income Accounting
Introductory Macroeconomics
1100
t
t
tt
t
t
t
t
t
t
t
t These are not final goodst
t
common measuring rodt
t t
the sum total of the monetary value of
these diverse commodities gives us a measure of final outputt
t
t double
countingt
t
s t
t
t
t
t
t
t
t
t
t
t
t t
t
t
t
11
National Income Accounting
t
t
t change in stock t
t
t
t
t t t
t t
t
t
Introductory Macroeconomics
1122
s
t
t
t t
t t
t
t
t t
t
t
t
t
t
t t t t
t
s
t t
t t t
t t
t
t
t t
t
t
13
Introductory Macroeconomics
1144
15
National Income Accounting
t t t t
t t t t t t
t t t
t t t t t t
t t t
t t t t t t tt t t t
t tt t t t t
t t t t t t t
t t t
t t t t t t
t t t
t t t t t t t
t
t t t t t
t t t t t t
t t t t
t t t t t t
t t t
t t t t t t t t t
t
t t
t
t t
t t t
t t
t
t t t
t tt
t t t
t
t t t
t
t t t Circular Flow of Income in a Simple Economy
tt
t t
t t t t t t t t t
t t t t t
t t t t
t t t tt t t t
t t t t t
t t t t t t t t
t t t t tt
t t t t t t t
t t t t t tt
t t t t t
t t tt t t
t
t t t tt t t
t t t t t t
t t t t t
Introductory Macroeconomics
1166
t t
t
s t
t
t
t
t
t
s
t
t t
t
t
t
t
17
National Income Accounting
t
t
t
t t
t
t t
t
t t
t
t t t
t
t t
value of
production of the firm value of intermediate goods used by the firm
r r q s
Farmer
Baker
Introductory Macroeconomics
1188
t
t
t
t t t
t t t t
value of production
change of inventories
of a firm during a year production of the firm during the year sale of the
firm during the year
x x
x x x
t t
19
National Income Accounting
t t t t
t t t t
t t t t t
t t tt t t t t t t
t tt t t
t t
t tt t t t t t t
t t tt
tt t t tt t t
t t tt
tt t t t t
tt t tt t t
t t t t t
t t tt t t tt t
t t t
t t
t t t t tt
t t t
t t t t
tt t t t
t t t tt t t t t
t t t t t t
t t t t t t t
t t t t t t t
t t tt t t t
t t t t
t t
t t t t t
t t t
t t t t t
t t t t t t t
t t t t
t t
t t
t t t t t t
t t t t t t
t t t t
t t t t t
t t t t
t t r t t
t t t t t t t t
t t t
t t t t t t tt t tt t t t
t t t t t t
t t t t t t t
t t t t
t t tt t
t t t
i GV Ai
i Qi Zi
GV Ai Vi Ai
Zi
i GVAi i Di
N
N
GVA GVA GVA
Introductory Macroeconomics
2200
X X X
N
i NV Ai
NVAi GVAi Di
GVAi NVAi Di
i
N
N
GDP
NDP
PPP
Ci
Ii
Gi
RVi
Xi
Ci Ii Gi Xi
Cm
Cm
Im
Gm
Im
Gm
Cm
Im
21
National Income Accounting
N N
G Gm
C C I I G G
C I G C I G
Introductory Macroeconomics
2222
C IGXM
X
M C I G
X G X M
s
M Wi
i Pi Ini Ri
i
s GDP
P W P I R
C I G X M W + P + In + R
t
t
qrt
qrt
qrt
s
Diagramtic Representation of GDP by the Three Methods
The foreigner is to have a share in your domestic economy.
Discuss this in the classroom.
23
National Income Accounting
S
T
C S T
C IG XMCST
C
IGXMST
I G T M X
G T
M X t
M
X
G T M X
IS
Introductory Macroeconomics
2244
s
s
t
s
s s s P P
P
s
s
s s
r
s
Factor Income from Abroad, D: Depreciation, ID: Indirect Taxes, Sub: Subsidies, UP: Undistributed
Profits, NIH: Net Interest Payments by Households, CT: Corporate Taxes, TrH: Transfers recived
by Households, PTP: Personal Tax Payments, NP: Non-Tax Payments.
s
P
q t
s
s s
25
National Income Accounting
Introductory Macroeconomics
2266
t t
t t
t
t
t
t
t t t r
r r t
t
t
t t t tt t
t t t
t t
t t
t
t r t
t
t
t r
t
t
t t t
t t t
t t t
t t
t
r r t
t
t t
t
t
t t
t
t t
t tt
t t
t
t t
t t t
t
t
P
t
t
t
27
National Income Accounting
t
t
t t
t t
t
How uniform is the distribution of GDP? It still
seems that a majority of the people are poor
and only some have benefited.
t
r
Introductory Macroeconomics
2288
s s
s s
s
s
s
t
ummary
Summary
s s
s s
s
Key Concepts
Co ce
s
s
29
E xe s s
Exercises
Introductory Macroeconomics
3300
e d ix 2.1
.1
Appendix
31
National Income Accounting
r r r
rr Pr
Handbook
of Indian Economy
r
P r
r
Pr
r r r
rr Pr
Handbook
of Indian Economy
Pr
Introductory Macroeconomics
3322
r
r
r
r
Money
M ney and
and Banking
Ba nk in g
barterdouble
exchanges
coincidence of wants
of
medium
exchange
unit of account
Introductory Macroeconomics
3344
t
t
M T kPY
d
35
Money and Banking
M Td
d
M T kT
T
k
d
d
M T T vM T T
v k
T
d
M T
v
d
vM T
t
t
t
t
Y P
t
X
Introductory Macroeconomics
3366
X
Y
PV X Y
t
approx.
MS
r r
r r
r r
r
d
r r
r M S
r
t
37
Money and Banking
r r
r r
Md M T M S
Md kPY
r r
r r
t
t
Introductory Macroeconomics
3388
t
t
P
t t t
q rs r s
39
Money and Banking
P P
t
P P
Assets Rs
Liability Rs
Introductory Macroeconomics
4400
Assets (sources) Rs
Liability (uses) Rs
qs
t
t
t
ad infinitum
PP P PP P P P P P qP P
r sP P P P P P P P P
P P
41
Money and Banking
Currency
Introductory Macroeconomics
4422
Deposits
Money Supply
t t t
t
t
t
t
H P
t H t
t t
t t t
t
H R
qr s s q
r
r rr
t
P
43
s
s
s
s
P
Assets (sources) Rs
Introductory Macroeconomics
4444
qrt
Liability (uses) Rs
q q qtt
q q q
H
s
umm a ry
Summary
45
Money and Banking
s
s t
s s
t
s
s st t s
s
s
t t t s s s
t t
s s s
t s
s
t s t s
t t t
s
t
P
s
t
s t
s t
t
s
t t s
s t
n cep
Key Concepts
rci e
Exercises
Introductory Macroeconomics
4466
r
P
r
r r r r Macroeconomics
P r
r r r Macroeconomic Theory and Policy
P Pr r r
r r Principles of Macroeconomics
P r
p en d x 3.1
.1
Appendix
S a a.r a.r a.r a.r
a r r
r
r.S a.r a.r a.r a.r n
S r.S a
or rS a
r
p en d x 3.2
.2
Appendix
Year
PP
P
P
P
M3
P
PPP
P
47
Money and Banking
PPP
PPP
PPP
PPP
PPP
PPP
PPP
PPP
PPP
PPPP
PPP
M1
p en d x 3.3
.3
Appendix
Introductory Macroeconomics
4488
Percentage Changes in
Year
Loan to GOI
Loan to Banks
Foreign Assets
Principles of Macroeconomics P
Income
Inco
Determin
In
co e Determination
Deter min tion
ceteris
paribus
x y
x y
Introductory Macroeconomics
5500
s s s s s s s
s s
s s s s s s
s s s s s
s s s s s
ss
s s s
s s
s s
s s s s
s s s
s
s s
s s s s s
ss s s s
s s s ss
s ss
s s s
s
s s
s
s s s
s s ss
s s
ss s ss
s s s s
s s
s s s
s c c
ss Y s s
C c Y c.Y
s s s s
s s s
s s s s s
s s s ss
s s s s
sss s
s
C c.Y
s s s
s s s s
s s s ss
ss c s s s s
s s s s s
s s s s s s
s
s s s s sP s s
s s s s
r r r r r
r r r r r r r
rr r
r r r r r r
r r r r
r
I
r rr r
r
r r r
r r
AD C I C I r
r r r
AD c.Y
r r r
Y c.Y
51
Income Determination
r Y r
rr r
Y c.Y
r
r
r r r
rr r r r
r r r r r
r rr r Y
rr r r
r r r r
r
r
r rr
r
r r
rr r
r r
r unintended accumulation of inventories
r r r r
r r r r r
Y r r C I
Y C I r
r I r
r r r
r r r
r r r T
r r G r r
r r G r r
t
Yd Y T
t t
G c Y T
G c.T
t t
t t
t t
t
t
Y t
Introductory Macroeconomics
5522
t t
t
a b
t
q
t
b ma m
b t a
along the graph
m A Positively Sloping Straight Line Swings Upwards
m m as its Slope is Doubled
t
m t m
t
t
t t
t t
P t
t
rs
t A Positively Sloping Straight Line Shifts Upwards in
t
Parallel as its Intercept is Increased
t
s
y z x y x
s s s
s s s
s
s t
s t
s s
s s s
How will the producer try to update his
s production plans in order to avoid excess supply
s or demand? Discuss this in the classroom.
53
Income Determination
t z
s s
s z
s
t
s s
Parametric Shift of z and Changing Equilibrium
s Values of x
z t x s
x x z x s s
x z
s s
x y z
x z z
z s
x y s
t y
x
t
x z
st
Relationship between x and z
s
s
t
t
t
t
t
t t
t
t
t t
Y c.Y
Introductory Macroeconomics
5544
t
t t
t t
c t
Y t
C
t I
C I t Y t
Y t
t Y t
t
cY cY
Y t
Y AD t
t Y
Y
P
t
s t
t
t t
55
Income Determination
t t Y AD t t Y
t t t
Y
Y t t t t t
t c t t t
t t t t
t t t t t
t t t t t AD cY t t
t t t t t b ma
t t tt t c t t t
t c t t t t t t
t t t
t t t t t
t t t t t t t
t t AD t t
t tt t
t t
tt AD AD
t t t
t
t t t t
tt t AD
c t tt
t t
t t t t AD
tt t t
t t tt
t t
t t t
t tt Equilibrium Output and Aggregate Demand in the
t Fixed Price Model
t t
t A t AD tt t t E t
t t tt t
Y AD t
t tt t AD t
t t AD t t
tt Y Y F t t t tt Y Y E
t EF E F t t t t t
t t t t E
t t t t
t t t t t t
AD tt t t t t E t
t t tt
t Y AD t
t t t t tt t
t EG EG t t t t t
t t EF E J t t t
Introductory Macroeconomics
5566
r
s
s
P
Consumption
Aggregate Demand
Output/Income
57
Income Determination
t
t
Y c
c c
t
t t t
Y
P
t
Y
AD Y
s AD cY
s s s
s r r
s s rs s s s s
s s ss
s s Y s rss s
ts ss s
r s
s r s
ss s s
s s r
ss s
rss s r s
ss
s r s
ss s s
s sss s ss s s
s
ss
s
Introductory Macroeconomics
5588
s s Y
P s S Y C Y cY
s s s
S Y C Y cY s
c ss s
s
s
s s
AD s
ss s
s c
s ss
s s
A
s
s AD ss
s
s
s c
Paradox of Thrift Downward Swing of AD Line
s
ummary
Summary
Ex
s s
Exercises
s
P
P
s
s
s s
s
P
s
P
Macroeconomics
P
59
Income Determination
s
s
s
s s s
s s
s
n ts
Keyy Concepts
Th e Governmen
Go vernment :
Government
The
ctio s and
nd Scope
Sco
Fun
unctions
stabilisation
t t
t t
s
s t s
t s s t
t s t t s s s t
t t
t s t s t s t t s
s s
tt t t
t s s t
s t t t s
s
t
P
s t t t s
s s s
s
t
t t
t t
t
t s
t
s t
t
t
t t s
t
t t s
t
s
t
t
t
The Government:
Function and Scope
t
t t
t s t s t
t
t t
t
61
t
t
622
Introductory Macroeconomics
P P P
qr s The Components of the Government Budget
s
s
s s
s
s s
633
The Government:
Functions and Scope
s
r
s
s s s s
t s
s
s
s s
P r
s r
s
s
s
s
s
s s
s
s s ts
t
s
s s
Introductory Macroeconomics
644
t
t
t PPP PPP
q rs rrr
qr r qr r r qsssr
s qsssr rq r s s
s r rqr q s sq q
qr s s rs
s r qrr q
qr q s qq r
q r rq
r r
t
(As per cent of GDP)
1990
-91
2001
-02
2002
-03
2003
-04
r t
r r
r r
r r
The General Theory of Employment, Interest
and Money r
r r
r
surplus
deficit budget
655
The Government:
Functions and Scope
s P
P
P
P
P
P q
P
P
PP
P
P
PP
P
Economic Survey
2000
-01
r r
r balanced budget
r r
s
t r
rrs r
t s r
t
rs t r
r t G r
How does the Fiscal Policy try to achieve its
rr r r r r
three basic objectives?
r r r
Y r r YD rtrr
r rt
r r r r t r r
r r T r
rrs r t r r r r r
C cYD cY T
YD r
r r r r r
r r r r rs r r r r
r r rs r
rr r r t
AD cY T I G
Introductory Macroeconomics
666
rrs r r
r r rr rs r rr r t r
r r r r
Y AD r r
Y c Y T I G
t t
Y*
cT c I G
r t r G r
r G T t r r G r
rr r rr r
rr r AD r t
r s r r
r E r r r
t t s
Y
G
G
G
Y Y
Y T
s c
s
s
Y * cT
P P
P P
s
G
T s
677
The Government:
Functions and Scope
s Effect of a Reduction in Taxes
s s
s T
cT s s
s s
T
G
t
t
t
s
s
t
t s
t
t G
t
t
Y G cG cG G c c
Introductory Macroeconomics
688
t
c t
t
Y cT cT T c c
G T
Y G
Y c Y T I
s
t t
T tY t
C c Y tY c t Y c
t
c t AD
AD c tY c I
G c tY
c
I G
Y AD
Y c t Y
Y *
Government and Aggregate Demand (proportional
taxes make the AD schedule flatter)
s
Y c tY
Y * Y
s
AD
AD
Y
qrt
qrt
Increase in Government Expenditure (with
proportional taxes)
Effects of a Reduction in the Proportional Tax Rate
699
The Government:
Functions and Scope
s
c
s
c ct c t
G
s
Introductory Macroeconomics
700
c t
s s
s
s
I I G G
C I G C I G
rPr
Y TR
Y
Y
Y
711
The Government:
Functions and Scope
flow stock
P
t t
t
t t
Introductory Macroeconomics
722
t t t
r
P PP P P PP
PP P
P
P
q
r
sr
r
733
The Government:
Functions and Scope
ey Concepts
n cept
Key
S ummary
t
t
t t
t t
t t
t t
t
t
t
t t
tt
t
t t
t t t t
t
t t
t t
t t
t
t
t
Ex
s s
Exercises
Introductory Macroeconomics
744
t t t
t
t
t
t C Y t
t
t
t
t t C
I G TR t
C Y D I G T Y
Macroeconomics
Macroeconomics
Economic Survey
755
The Government:
Functions and Scope
Op en Economy
Ec
Open
Ecoo om
Macr oecon omics
Macroeconomics
t
t
77
Openeconomy
Macroeconomics
t
t
t
t
t
r
t
Introductory Macroeconomics
788
P
where
Your currency in exchange for the dollar?
exchange rates between two currencies
Should
continue like this? Discuss.
foreign exchange
foreign exchange market
t
P
P
79
Open Economy
Macroeconomics
P Pf e
t
ePf
s
s
s
s
s
s
s
t
s
s
s t
s r s s r
s s
s
s s s s s
s s t s s s
s s
s s
s
t s s
s s
s
s s
s
s
s s s s
Introductory Macroeconomics
800
s s s
s
s s s
s
s
s
ss
s s
s
s
t s s
s
r r rrr rr
P
r r r
t t
rr r t
t s
r r rr r
t sr r
ss r t r
t r
ss r t r t r
t ss r r
t rr t
P
r r
r rr
t s sr Effect of an Increase in Demand for Imports in the
t r e tr Foreign Exchange Market
r r t s r t r t t r
r t sr s e1 t t r t
r r ss t r ss t
r r r r t t t r s t
r ss r t r t t r r
s rr t sr t e t s
r r t s
t tr r tr r
t r r t r t
t r r r r tr
r t s s rr st
s tt r t rs rt t tt r
r t r r r r
r tr ss r s r t r
r r s r r r r ss r t
tt r r r ss t rr r ss
tr rr t r r ss s
tr r r r ss trr s
81
Open Economy
Macroeconomics
t r t r s t
s r r s
r t s tr r t r t
s r r t rr r
s t t rt r s
rs t r t ss ts r t rr
t r r s t t
r t t t ss rt r
t t t t t
t t s s t t r t
r t s r t r
t r t r r t r
t s ssss
t s t r r r r
r t t t ss t t s
r r r t
r
s
r
Introductory Macroeconomics
822
If one country
has higher inflation than another, its exchange rate should be depreciating.
r
t
t
r
r
r
t
Open Economy
Macroeconomics
e1 r
83
r
r
t
t
t
rt
t
r r r r r
r s
r r
r r r r s
rr r r r r
rr r s r r r
r r
rrs
r s r r r
r r s
r r r r s rr
r r r tr
s rr
rtr r rr s
r r r
r r s r
rr r
r r r s
r r r r
r r s
r r r r
rs r r
r r rr r
r r r rr s
rr r r rr t rs
Introductory Macroeconomics
844
r r r r r
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866
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944
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966
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99
Glossary
Introductory Macroeconomics
1100 0
101
Glossary
Introductory Macroeconomics
1100 2
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Glossary