Students can go through AP Inter 1st Year Economics Notes 8th Lesson Macro Economic Aspects will help students in revising the entire concepts quickly.
AP Inter 1st Year Economics Notes 8th Lesson Macro Economic Aspects
→ The theory of output and employment developed by economists such as Adam Smith, David Ricardo Malthus is known as classical theory. It is based on the famous ‘Law of Markets’ advocated by J. B. Say.
→ Effective demand is the backbone of Keynesian theory of employment. Because the volume of employment depends upon the extent of effective demand in the economy.
→ Aggregate demand denotes the demand for the total output in the economy. The output consists both consumption goods and capital goods.
→ Aggregate supply denotes that total supply of all goods in the economy. It consists both the consumer goods and capital goods.
→ Effective demand is determined where aggregate supply is equal to aggregate demand.
→ Public Revenue includes the different sources of governments income. Sources of public revenue are
a) Taxes
b) Fines and Penalties
c) For features
d) Income from government property
e) Profits from public enterprises, fees etc.
→ Public expenditure is of two types
- Revenue expenditure
- Capital expenditure.
→ When the expenditure of the government exceeds its revenue. It resorts to public debt. It is two types
- Internal debt
- External debt.
→ Budget is the annual statement showing the estimated receipts and expenditure of the government for a financial year. It is three types.
- Surplus Budget
- Deficit Budget
- Balanced Budget
→ Budget deficit arises when the total expenditure in the budget exceeds total receipts.
→ Macro economics has assumed greater significance 1930s.
→ Knowledge of Macro economic theory is essential for understanding the functioning of the economy.
→ There are essentially three approaches to deal with Macro economic aspects. They are Classical, Keynesian and Post Keynesian approach.
→ The term “classical economics” refers to the body of economic doctrines which held their sway from the latter half of the 18th century to the early part of the 20th century.
→ The leading classical economists are Adam Smith, Malthus David Ricardo, J.S. Mill, Alfred Marshall and A.C. Pigou.
→ Full employment is a situation in which all those who are willing to work at the existing wage rate are engaged in work. However, even in the situation described as full employment, there may be some voluntary unemployment, seasonal unemployment and frictional or structural unemployment, but no involuntary unemployment.
→ The level of output is determined by the stock of natural resources, capital, the number of workers (labour) employed and the level of technology. This functional relationship may be symbolically expressed as follows:
Y = f (R, K, N, T)
→ The classical theory of employment is based on the Say’s law of markets.
→ The famous law of markets, propounded by the J.B. Say states that “Supply creates its own demand”.
→ The classical economists held the view that, in a capitalistic economy, there is always a stable equilibrium at the full employment level in the long run under conditions of perfect competition. They consider full employment a general feature and unemployment a rare phenomenon.
→ John Maynard Keynes, a famous British economist of the 20th century states his employment theory in his famous book entitled “The general theory of employment, interest and money” published in 1936. His theory is known as the Keynesian Theory of employment.
→ Keynes used the terms aggregate demand, aggregate supply and effective demand. “Aggregate” means total. The term effective demand is used to denote that level of aggregate demand which is equal to aggregate supply.
→ Aggregate supply price refers to the income the entrepreneurs in the economy expect that they must receive from the sale of the-total output.
→ Aggregate demand price refers to the amount that is expected to be spent on the total output.
→ Aggregate demand = Consumption expenditure + Investment.
→ Effective demand is that aggregate demand which becomes equal to the aggregate supply. This refers to the aggregate demand at equilibrium.
→ Wage- cut policy is advocated by A.C. Pigou (classical economist) to reduce unemployment in the economy. It suggests that the wages of the labour should be reduced so that the unemployed can be employed.
→ Budget is the annual statement of the estimated receipts (income) and the estimated expenditure of the government for the ensuing financial year (April 1 to March 31).
→ Vote on account is an interim budget presented for a few months pending presentation of the regular budget.
→ Surplus budget refers to the budget in which the total receipts exceed the total expenditure.
→ Deficit budget refers to the budget in which the total expenditure exceeds total receipts.
→ Balanced budget is that budget in which the total receipts and total expenditure are equal.
→ Budget deficit is the difference between the total receipts and the total expenditure in the budget.
→ Revenue deficit is the difference between the revenue receipts and the revenue expenditure.
→ Fiscal deficit is the budget deficit plus the market borrowings.
→ Primary deficit is the fiscal deficit minus the interest payments.
→ Redemption of public debt means repayment of public debt.
→ సాంప్రదాయ ఆర్థికవేత్తలయిన ఆడమ్ స్మిత్, రికార్డో మాల్టస్, J. B. సే మొదలగు ఆర్థికవేత్తలు రూపొందించిన ఉద్యోగితా సిద్ధాంతాన్నే సాంప్రదాయ సిద్ధాంతం అంటారు.
→ ఈ సిద్ధాంతంలో ప్రభుత్వ జోక్యం ఉండదు. సంపూర్ణ పోటీ ఉద్యోగిత, వేతనాల సరళత్వం మొదలగు ప్రమేయాలపై ఆధారపడింది.
→ సంపూర్ణ ఉద్యోగితా స్థాయిని పొందక ముందే సమిష్టి సప్లై, సమిష్టి డిమాండ్ సమానమైన సమతౌల్యాన్ని సాధించడం జరుగుతుందని కీన్స్ అభిప్రాయం. ఆర్థిక వ్యవస్థలో కొంత మంది నిరుద్యోగులు ఉంటారు. ఈ స్థితినే అల్ప ఉద్యోగితా సమతౌల్యం అని అంటారు.
→ ఆర్థిక వ్యవస్థలో మొత్తం వస్తురాశికుండే డిమాండ్ సమిష్టి డిమాండ్.
→ ఆర్థిక వ్యవస్థలో మొత్తం వస్తురాశి సప్లైని తెలియజేయునది సమిష్టి సప్లై, సమిష్టి డిమాండ్. సప్లై సమానమైన స్థితిని సార్థక డిమాండ్ అంటారు.
→ ప్రభుత్వం ఆదాయ, వ్యయాలను గురించి వీటి మధ్య సర్దుబాట్లకు సంబంధించిన విషయాలను అధ్యయనం చేసేదే ప్రభుత్వ విత్తశాస్త్రం.’
→ ప్రభుత్వ ఆదాయ – వ్యయాల పట్టికను బడ్జెట్ అంటారు. కొన్ని సందర్భాలలో ప్రభుత్వాలు పూర్తి బడ్జెట్ను సమర్పించే వీలు లేనప్పుడు ‘ఓట్ ఆన్ అకౌంట్’ బడ్జెట్ను తాత్కాలికంగా కొన్ని నెలల కోసం సమర్పిస్తుంది.