2. THE DATA OF
Why do we study the national income accounts?
1. National income accounting provides structure for
our macroeconomic theory models.
2. Introduces statistics that characterize the economy
9. Open Economy
Most economies are open economies and trade
with each other significantly.
National economies are becoming more closely
interrelated, and thus macroeconomic changes in
one economy per
7. Fiscal And
In 1970s monetarists emerged under Friedman.
Their belief was that inflation is caused by too much money
chasing too few goods.
They blamed Keynesian policy of too much money to be cre
DEMAND AND SUPPLY
The AS/AD model is the basic
macroeconomic tool for studying output
fluctuations and the determination of the
price level and the inflation rate.
Can be used to explore the consequenc
Three Approaches in
Mary spends a final good $10, the
market value is $10, the income to
the factors is $10
National Expenditure =National
Output = National Income
1. Expenditure approach
2. Output approach
3. Income appro
5 : MONEY DEMAND
AND MONEY SUPPLY
Components of the Money Stock In India
RBI latest interest rate changes (Repo rate)
March 17, 2011
May 03, 2011
June 16, 2011
July 26, 2011
September 16, 2011
Links the present to the future
Links the goods and money markets
Drives much of the business cycle.
We wish to study how investment depends on
interest rates and income.
3. Keynesian Theory
Economic survey 2013-14
Eco survey, 2013-14 : key indicators
Figures show percentage of GDP (For 2012)
What Is Macroeconomics?
Macroeconomics is the study of the behavior of the economy
as a whole and the policy measures that the government uses
to influence it.
Utilizes measures including total output, rates of
10. Aggregate Supply :
Wages, Prices, Unemployment
Develop the AS side of the economy and examine the dynamic
adjustment process that carries us from the short run to the long
Aggregate supply (A