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by Vanita Agarwal
Macroeconomics: Theory and Policy
Cover
Title Page
Contents
Dedication
List of Figures
Preface
Unit I: Introduction
1. An Introduction to Macroeconomics
Macroeconomics and Microeconomics
Background of Macroeconomics
Need to Study Macroeconomics
Concepts in Macroeconomics
Summary
Review Questions
2. The Circular Flow of Income and Expenditure
Introduction
The Circular Flow of Income in a Two Sector Economy
The Circular Flow in a Three Sector Economy
The Circular Flow of Income in a Four Sector Economy
Summary
Review Questions
Unit II: National Income and its Determination
3. National Income
Introduction
National Income Aggregates
Measurement of National Income
Summary
Review Questions
4. The Classical Model of Income Determination
Introduction
Say's Law
Output and Employment in the Classical Model
A Criticism of the Classical Model
Summary
Review Questions
5. The Keynesian Model of Income Determination in a Two Sector Economy
Introduction
Aggregate Demand in a Two Sector Economy
Consumption
Saving as a Counterpart of the Consumption Function
Determination of Equilibrium Income or Output in a Two Sector Economy
Summary
Review Questions
6. Shifts in the Aggregate Demand and the Multiplier
Introduction
Shifts in Aggregate Demand and the Multiplier
Uses and Limitations of the Multiplier
Applicability of the Multiplier to Less Developed Countries
The Multiplier and the Paradox of Thrift
Summary
Review Questions
7. The Keynesian Model of Income Determination in a Three Sector Economy: Introduction of the Government Sector
Introduction
Determination of Equilibrium Income or Output in a Three Sector Economy
Multipliers in a Three Sector Economy-The Fiscal Multipliers
Summary
Review Questions
8. The Keynesian Model of Income Determination in a Four Sector Economy: Introduction of the Foreign Sector
Introduction
Determination of Equilibrium Income or Output in a Four Sector Economy
Equilibrium Income and Output
Introduction of Government Transfer Payments in a Four Sector Model
Multiplier in a Four Sector Economy-The Foreign Trade Multiplier
Summary
Review Questions
Unit III: Theories of Consumption and Investment Spending
9. Theories of Consumption
Introduction
Absolute Income Hypothesis
Relative Income Hypothesis
Permanent Income Hypothesis
Life Cycle Hypothesis
Other Factors Influencing Consumption
Summary
Review Questions
10. Theories of Investment Spending
Introduction
Basic Concepts
The Decision to Invest
Changes in the Rate of Interest, the MEC and Capital Accumulation
Theories of Investment
Summary
Review Questions
Unit IV: An Analysis of the Monetary Sector
11. Money
Introduction
Evolution and Forms of Money
Definition of Money
Money and Near Money
Functions of Money
Significance of Money
Summary
Review Questions
12. Supply of Money
Introduction
Measures of Money Supply in India
The Theory of Money Supply
The Process of Credit Creation and the Deposit Multiplier
Summary
Review Questions
13. Demand for Money and the Rate of Interest: The Classical Approach
Introduction
Fisher's Transactions Approach to the Quantity Theory of Money
The Cambridge Cash Balance Approach
The Classical Theory of Interest
The Loanable Funds Theory
Summary
Review Questions
14. Demand for Money: The Keynesian Approach
Introduction
The Keynesian Theory of the Demand for Money
The Keynesian Theory of Interest
Variations in the Interest Rate
A Criticism of the Keynesian Approach
Summary
Review Questions
15. Demand for Money: The Post-Keynesian Approach
Introduction
Portfolio Theories of Demand for Money: Tobin's Port Folio Balance Theory
Transactions Theories of Demand for Money: Baumol Tobin Model of Cash Management
Modern Quantity Theory of Money: Friedman's Model
Summary
Review Questions
Unit V: The IS-LM Framework: Equilibrium in the Goods and Money Markets
16. The IS-LM Model for a Two Sector Economy
Introduction
The IS-LM Model in a Two Sector Economy
The Goods Market Equilibrium in a Two Sector Economy: The IS Curve
The Money Market Equilibrium in a Two Sector Economy: The LM Curve
Equilibrium in the Two Markets: The Goods Market and Money Market
Disequilibrium to Equilibrium: The Process of Adjustment
A Shift in the IS–LM Curves
Summary
Review Questions
17. The IS-LM Framework for a Three Sector Model
Introduction
The IS-LM Model for a Three Sector Economy
The Goods Market Equilibrium in a Three Sector Economy: The IS Curve
The Money–Market Equilibrium in a Three Sector Economy: The LM Curve
Equilibrium in the Goods and the Money Market in Three Sector Economy
Shifts in the IS Curve Due to Changes in Fiscal Policy
Shifts in the LM Curve Due to Monetary Policy
The Elasticities of IS and LM Curves and the Effectiveness of Monetary and Fiscal Policies
Summary
Review Questions
18. Aggregate Demand and Aggregate Supply
Introduction
The Aggregate Demand Curve
The Aggregate Supply Curve
The Aggregate Demand and Aggregate Supply Model
The Effects of a Monetary Expansion
Effects of a Decrease in Government Budget Deficit
Effects of a Shift in Aggregate Supply: Supply Shocks
The Supply Side Economics
Summary
Review Questions
Unit VI: Inflation and Unemployment
19. Inflation
Introduction
Meaning of Inflation
Measurement of Inflation
The Economic and Social Effects of Inflation
Inflation in India
Summary
Review Questions
20. Theories of Inflation
Introduction
Monetarist Approach to Inflation
Keynesian Approach to Inflation
Modern Approach to Inflation
Control of Inflation
Summary
Review Questions
21. Unemployment
Introduction
Unemployment and Related Terms
Types of Unemployment
Costs of Unemployment
Relationship Between Inflation and Unemployment
Modern Phillips Curve
Sacrifice Ratio
Summary
Review Questions
Unit VII: The Open Economy Macroeconomics and the Framework of Macroeconomic Policies
22. Foreign Exchange
Introduction
Foreign Exchange Market
Exchange Rate Systems
Exchange Rate Determination
Fixed Versus Flexible Exchange Rate
Summary
Review Questions
23. Balance of Payments
Introduction
Meaning and Structure of Balance of Payments
Double Entry Book Keeping
A Disequilibrium in the Balance of Payments
Kinds of Disequilibria in the Balance of Payments
The Process of Adjustment in the Balance of Payments
Analysis of Performance of Indian Economy in the External Sector
Summary
Review Questions
24. Macroeconomic Policies
Introduction
Meaning and the Advent of Macroeconomic Policy
Objectives of Macroeconomic Policy
The Formulation of Macroeconomic Policy
Summary
Review Questions
25. Monetary Policy and Fiscal Policy
Introduction
Meaning of Monetar Policy
Instruments of Monetary Policy
Monetary Policy Developments in India
Limitations of Monetary Policy
Meaning of Fiscal Policy
Instruments of Fiscal Policy
Fiscal Policy and Stabilization in the Economy
Full Employment Budget Surplus
Limitations of Fiscal Policy
Crowding Out and its Importance
Summary
Review Questions
Appendix A
Appendix B
Appendix C
Glossary
Acknowledgements
Copyright
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