BA LLB 2 semester

nd
Suhail wani
 Fuse gia gaya, kon lagayay ga Suppose your village
transformer blasted. Why we wait for govt

Public Goods Vs
• Role of community
private Goods.
• Role of institutions/ Govt
• Role of market
 Inflation vs Shrinkflation
• Example: let us go on a picnic ride, and each student taking as many bags of
money as possible and there is one tea shop with limited stock of tea. What will
happen?

• Inflation may be defined as a persistent increase in the general price level in a

country?
• Inflation= P2-P1/P1

Suppose, you have 100 rupees and price of ice-cream is 10 rupees, how many will
you buy? Ans. 10
what if the price doubles, Ans. 5
So our purchasing POWER HAS DECLINED
Trade off
• Suppose a bank pays you nominal interest rate of 10% per year. And you
have 100 rupees now. Inflation rate is 20%. What will happen to your
purchasing power?

• Consumption now= 100/10=10

• Real interest rate = Nominal interest rate – inflation rate.

• Here it is 10-20=10% .

• So after 1 year, you will be able to buy how many ice-creams=

110/12=9.16
• Example: prices are rising in India, and govt pays dearness allowances
to govt employees, so how the poor sections are effected ?
• Example: Your mother has 1lac rupees to save, would you suggest her
to fixed deposit it, if the interest rate is 5%? And inflation rate is 8%?
• Good answer.
What causes inflation: Theory
• 1. demand side factors: people having lot of money, real estate
construction in India as more people get employment and due to
more population
2. Supply side shock: Iran attacks Israel.
3. Built in inflation : wage price spiral

Policy: theory says if heart beat exceeds 72 bpm, it is a chance of heart

attack, policy says give him some tablet.
Theory explains ulceration of stomach, and h pylori kit is the policy
Why we study economics
• Someone has to control inflation otherwise our poor people will
never be able to send their children to school or get education.
• For the time being, Govt.

• Reservation policy, Industrial policy, trade policy , FDI policy,

education policy.
• Seventh schedule of constitution.
inequality
• Equity vs inequLITY
Land acquisition and development
• Link between law and economics
Do you see lot of youngsters committing
crimes. Why?
• Recently, the Institute for Human Development (IHD) and
International Labour Organisation (ILO) have released a report titled-
‘India Employment Report 2024’, which highlights that India’s
youth continue to grapple with soaring Unemployment rates.

• India’s youth account for almost 83% of the unemployed

workforce and the share of youngsters with secondary or higher
education in the total unemployed has almost doubled from 35.2% in
2000 to 65.7% in 2022
Why jobs are missing in India
• So we need a policy / road map to create jobs.
You suddenly wake up and come to know
JandK bank is closed
• Financial stability needed.
Covid and migration.
• Lockdown in India has impacted 40 million internal migrants: World
Bank

Read more at:

https://economictimes.indiatimes.com/news/politics-and-nation/lock
down-in-india-has-impacted-40-million-internal-migrants-world-bank/
articleshow/75311966.cms?utm_source=contentofinterest&utm_me
dium=text&utm_campaign=cppst
• A good plan was needed
Why Govt gives scholarships
• Why govt builds roads, mgnrega, SBM, Anganwads<
• In short fiscal and monetary policy.
Poverty.
• Low level equilibrium trap.

• Inequality: How inequity worsens equality.

Foreign exchange market