RECORDING

PRN- 20200212060057
NAME- Harsh Jain
SUBJECT- Managerial Economics
REFLECTION
TOPIC- Macro-Economic Concepts

REPORT

DATE- 27/11/2020 REFLECTION NO: 5

Faculty Name- Prof. Veena Sharma

Designation- Professor

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 Topic- Macro-Economic Concepts

National Income

Individuals in a country income is earning. Aggregate value of goods and services in a given year or
one year in a country and also the final output of an activities.

Example: Farmers, Agriculture sector, goods and services by government intermediaries, education
institutes, etc.

Approaches to calculate National income

1) i) Gross concept: When anybody buy a goods, produce a goods, etc, so in calculation of
national income the allowances of national income are not made and depreciation is deducted
later on.

ii) Net concept: In this concept depreciation is already deducted and allowances for the
national income are made separately.

2) i) National concept: Whether he is in India or a citizen of a country then the income depend
on citizenship even he works outside the nation.

ii) Domestic concept: Calculation of geographical areas income and then any income earn in
that area to calculate national income. So basically in this concept it calculates a particular
area national income.

3) Gross National Product: Calculates income of a county not at net but at gross value.

4) Net National Product: It calculates the net product of a country with allowances in a nation by
an Indian citizen.

5) Gross Domestic Product: Anyone who is at national or at across the geographical boundaries
earning income.

6) Net Domestic Product: Who is residing in the geographical boundaries earning income by an
Indian or a foreigner.

Inflation

It means by the purchasing power of all the people of a country decreases over a period time because
all the goods prices rise and bank rate gets lowered and this situation is called inflation. Overall, it
means when government has less money in hand and by this all the prices of goods and services rises
to high level and tax rate also rises, this situation is called inflation.
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Example: When suddenly government gets in lack of cash in their hands and this results in rising price
of goods and services, tax rate also rises and rate of return bank gets decline.

Business Cycle

It Is a fluctuation in economic activity of a country and it consist of four elements which define the
whole business cycle and which is occur every year on a regular basis and in a chronological order and
it effects the business. So, they have to be prepared in advance for this effect and get ride off it.]

Example:

 Prosperity: When a company gets started, he knows all this effect, so when he get started his
business he first face prosperity in his business and lots of profit at current time.

 Recession: After a period of time the company start facing loss and get recessed slowly slowly
and came down to a level.

 Depression: In a period of time after facing recission then company or business come to face
where he come to lowest level.

 Recovery: After all this, then company came up with idea and start rising and recovered
slowly and so on.

Monetary Policy

It is a type of demand side of product economy. In this, they take different actions and are taken by
central bank to control the supply of money and achieve goals of macro-economic that promote
growth.

Example:

Tools of expandinary

 Interest rate declines

 Reserve requirements reduces

 Open market operation are expanding

Tools of contractionary

 Rate of interest rises

 Reserve requirements also raise

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  Open Market Operations are expanding

Repo Rate

It is a rate at which reserve bank of india lends money to commercial banks for government sector
which become more expensive to the banks.

Cash Reserve Ratio

Banks had to keep a certain percentage of reserve with them for future use like if any bankruptcy
happened in the business they can use it and save their business.

Statutory Liquidity Ratio

It is also a certain percentage of funds maintain by banks in liquid assets form at any time period we
can use it.

Exchange Rate
When a country changes his currency to other country currency that required a rate to exchange that
currency.

Balance of Payment
When a country buys goods from other countries in a year and after that year completion they pay
whole amount in balance.
Example: A country buys 400kg goods in a year , so the whole payment done at the end.

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