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Macroeconomics deals not with individual quantities as such but wit aggregate of these quantities, not with individual incomes but with the national income, not with the individual prices but with the price level, not with the individual outputs but with the national outputs. Main issues in macro economics The main issues which are addressed in macroeconomics are in brief as under: It Helps In Understanding The Determination Of Income And Employment Late J.M Keynes laid great stress on macroeconomic analysis. He, in his revolutionary book, “general theory, employment interest and money” brought drastic changes in economic thinking. He explained the forces or factors which determine the level of aggregate employment and output in the economy. Determination Of General Level Of Prices Macroeconomics analysis answers question as to how the general price level is determined and what is the importance of various factors which influence general price level
Economic Growth The macroeconomics models help us to formulate economic polices for achieving long run economic growth with stability. The new developed growth theories explained the causes of poverty in under developed countries and suggest remedies to overcome Macroeconomics And Business Cycles
It is in terms of macroeconomics that causes of fluctuation I the national income or analyzed. It has also been possible now to formulate policies for controlling business cycles i.e. inflation and deflation
International Trade
Another important subject of macroeconomics is to analyze the various aspects of international trade in goods, services and balance of payments problems, the effect of exchange rates on balance of payment etc. Income Shares From The National Income Mr. M. Kalecki and Nicholas Kelder, by making the departure from Ricarde theory, have presented a macro theory of distribution of income. According t these economists, the relative shares of wages and profits depend upon the ratio of investment to national income.
Unemployment
Another macroeconomics issue is to explain the causes of unemployment in the economy. Stagflation is another important issue of modern economics. The Keynesian and post Keynesian economists are putting lot of efforts in explaining the causes cyclical unemployment and high unemployment coupled wit inflation and suggesting remedies to counteract them. Macroeconomics Polices Fiscal and monetary policies affect the performance of the economy. These two major types of macroeconomic policies are central in the macroeconomic analysis of the economy.
Global Economic System
In macroeconomic analysis, it is emphasized that a nation’s economy is a part of global economic system. A good or weak performance of a nation’s economy can affect the performance of the world economy as awhole.
MA ECONOMICS
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Macroeconomics and Microeconomics: Chit Chat
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Thursday, June 30, 2011
MICRO ECONOMICS
MA ECONOMICS EXTERNAL 2010 EXAMS KU..GUESS PAPERS ARE AVAILABLE
Microeconomics is a branch of economics that studies how individuals, households and firms and some states make decisions to allocate limited resources, typically in markets where goods or services are being bought and sold. Microeconomics examines how these decisions and behaviors affect the supply and demand for goods and services, which determines prices; and how prices, in turn, determine the supply and demand of goods and services. Following is the working of this branch in the economy In a nutshell, microeconomics has to do withSUPPLY andDEMAND, and with the way they interact in various markets. Labor economics, for example, is built largely on the analysis of the supply and demand for labor of different types. The field of industrial organization deals with the different mechanisms (MONOPOLY,CARTELS, and different types of competitive behavior) by which goods and services are sold. International economics worries about the demand and supply of individual traded commodities, as well as of a country’s exports and imports taken as a whole and the consequent demand for and supply of FOREIGN EXCHANGE. Agricultural economics deals with the demand and supply of agricultural products and of farmland, farm labor, and the other factors of production involved in agriculture. Public finance (see PUBLIC CHOICE) looks at how the government enters the scene. Traditionally, its focus was on taxes, which automatically introduce “wedges” (differences between the price the buyer pays and the price the seller receives) and cause inefficiency. More recently, public finance has reached into the expenditure side as well, attempting to analyze (and sometimes actually to measure) the costs and benefits of various government outlays and programs. Applied welfare economics is the fruition of microeconomics. It deals with the costs and benefits of just about anything—government projects, taxes on commodities, taxes on factors of production (corporation income taxes, payroll taxes), agricultural programs (like price supports and acreage controls), tariffs on imports, foreign exchange controls, various forms of industrial organization (like monopoly and oligopoly), and various aspects of labor market behavior (like MINIMUM WAGES, the monopoly power of LABOR UNIONS, and so on). At the root of everything is supply and demand. It is not at all farfetched to think of these as basically human characteristics. If human beings are not going to be totally self-sufficient, they will end up producing certain things that they trade in order to fulfill their demands for other things. The specialization of production and the institutions of trade, commerce, and markets long antedated the science of economics. Indeed, one can fairly say that from the very outset the science of economics entailed the study of the market forms that arose quite naturally (and without any help from economists) out of human behavior. People specialize in what they think they can do best—or more existentially, in what heredity, environment, fate, and their own volition have brought them to do. They trade their services and/or the products of their specialization for those produced by others. Markets evolve to organize this sort of trading, and money evolves to act as a generalized unit of account and to make barter unnecessary. In this market process, people try to get the most from what they have to sell, and to satisfy their desires as much as possible. In microeconomics this is translated into the notion of people maximizing their personal “utility,” or welfare. This process helps them to decide what they will supply and what they will demand. Nine times out of ten, the excess demand will end up being reflected in a gray or black market, whose existence is probably the clearest evidence that the official price is artificially low. In turn, economists are nearly always right when they predict that pushing prices down via price controls will end up reducing the amount supplied and generating black-market prices not only well above the official price, but also above the market price that would prevail in the absence of controls represents the artificial restriction of production by an entity having sufficient “market power” to do so. The economics of monopoly are most easily seen by thinking of a “monopoly markup” as a privately imposed, privately collected tax. This was, in fact, a reality a few centuries ago when feudal rulers sometimes endowed their favorites with monopoly rights over certain products. The recipients need not ever “produce” such products themselves. They could contract with other firms to produce the good at low prices and then charge consumers what the traffic would bear (so as to maximize monopoly profit). The difference between these two prices is the “monopoly markup,” which functions like a tax. In this example it is clear that the true beneficiary of monopoly power is the one who exercises it; both producers and consumers end up losing.
Modern monopolies are a bit less transparent, for two reasons. First, even though governments still grant monopolies, they usually grant them to the producers. Second, some monopolies just happen without government creating them, although these are usually short-lived. Either way, the proceeds of the monopoly markup (or tax) are commingled with the return to capital of the monopoly firms. Similarly, labor monopoly is usually exercised by unions, which are able to charge a monopoly markup (or tax), which then becomes commingled with the wages of their members. The true effect of labor monopoly on the competitive wage is seen by looking at the nonunion segment of the economy. Here, wages end up lower because the union wage causes fewer workers to be hired in the unionized firms, leaving a larger labor supply (and a consequent lower wage) in the nonunion segment. Artificially high urban wages attract migrants from rural areas. If the wage does not adjust downward to equate supply and demand, the rate of urbanUNEMPLOYMENT will rise until further migration is deterred. Still other examples are in banking and drugs. When the “margin” in banking is set too high, new banks enter and/or branches of old ones proliferate until further entry is deterred. Artificially maintained drug prices led, in several Latin American countries (Argentina, Chile, and Uruguay before their major liberalizations of recent decades), to a pharmacy on almost every block. The great unifying principles of microeconomics are, ever and always, supply and demand. The normative overtone of microeconomics comes from the fact that competitive supply price represents value as seen by suppliers, and competitive demand price represents value as seen by demanders. The motivating force is that of human Beings, always gravitating toward choices and arrangements that reflect their tastes. The miracle of it all is that on the basis of such simple and straightforward underpinnings, a rich tapestry of analysis, insights, and understanding can be woven. This brief article can only give its readers a glimpse—hopefully a tempting one—of the richness, beauty, and promise of that tapestry.
Microeconomics is a branch of economics that studies how individuals, households and firms and some states make decisions to allocate limited resources, typically in markets where goods or services are being bought and sold. Microeconomics examines how these decisions and behaviors affect the supply and demand for goods and services, which determines prices; and how prices, in turn, determine the supply and demand of goods and services. Following is the working of this branch in the economy In a nutshell, microeconomics has to do withSUPPLY andDEMAND, and with the way they interact in various markets. Labor economics, for example, is built largely on the analysis of the supply and demand for labor of different types. The field of industrial organization deals with the different mechanisms (MONOPOLY,CARTELS, and different types of competitive behavior) by which goods and services are sold. International economics worries about the demand and supply of individual traded commodities, as well as of a country’s exports and imports taken as a whole and the consequent demand for and supply of FOREIGN EXCHANGE. Agricultural economics deals with the demand and supply of agricultural products and of farmland, farm labor, and the other factors of production involved in agriculture. Public finance (see PUBLIC CHOICE) looks at how the government enters the scene. Traditionally, its focus was on taxes, which automatically introduce “wedges” (differences between the price the buyer pays and the price the seller receives) and cause inefficiency. More recently, public finance has reached into the expenditure side as well, attempting to analyze (and sometimes actually to measure) the costs and benefits of various government outlays and programs. Applied welfare economics is the fruition of microeconomics. It deals with the costs and benefits of just about anything—government projects, taxes on commodities, taxes on factors of production (corporation income taxes, payroll taxes), agricultural programs (like price supports and acreage controls), tariffs on imports, foreign exchange controls, various forms of industrial organization (like monopoly and oligopoly), and various aspects of labor market behavior (like MINIMUM WAGES, the monopoly power of LABOR UNIONS, and so on). At the root of everything is supply and demand. It is not at all farfetched to think of these as basically human characteristics. If human beings are not going to be totally self-sufficient, they will end up producing certain things that they trade in order to fulfill their demands for other things. The specialization of production and the institutions of trade, commerce, and markets long antedated the science of economics. Indeed, one can fairly say that from the very outset the science of economics entailed the study of the market forms that arose quite naturally (and without any help from economists) out of human behavior. People specialize in what they think they can do best—or more existentially, in what heredity, environment, fate, and their own volition have brought them to do. They trade their services and/or the products of their specialization for those produced by others. Markets evolve to organize this sort of trading, and money evolves to act as a generalized unit of account and to make barter unnecessary. In this market process, people try to get the most from what they have to sell, and to satisfy their desires as much as possible. In microeconomics this is translated into the notion of people maximizing their personal “utility,” or welfare. This process helps them to decide what they will supply and what they will demand. Nine times out of ten, the excess demand will end up being reflected in a gray or black market, whose existence is probably the clearest evidence that the official price is artificially low. In turn, economists are nearly always right when they predict that pushing prices down via price controls will end up reducing the amount supplied and generating black-market prices not only well above the official price, but also above the market price that would prevail in the absence of controls represents the artificial restriction of production by an entity having sufficient “market power” to do so. The economics of monopoly are most easily seen by thinking of a “monopoly markup” as a privately imposed, privately collected tax. This was, in fact, a reality a few centuries ago when feudal rulers sometimes endowed their favorites with monopoly rights over certain products. The recipients need not ever “produce” such products themselves. They could contract with other firms to produce the good at low prices and then charge consumers what the traffic would bear (so as to maximize monopoly profit). The difference between these two prices is the “monopoly markup,” which functions like a tax. In this example it is clear that the true beneficiary of monopoly power is the one who exercises it; both producers and consumers end up losing.
Modern monopolies are a bit less transparent, for two reasons. First, even though governments still grant monopolies, they usually grant them to the producers. Second, some monopolies just happen without government creating them, although these are usually short-lived. Either way, the proceeds of the monopoly markup (or tax) are commingled with the return to capital of the monopoly firms. Similarly, labor monopoly is usually exercised by unions, which are able to charge a monopoly markup (or tax), which then becomes commingled with the wages of their members. The true effect of labor monopoly on the competitive wage is seen by looking at the nonunion segment of the economy. Here, wages end up lower because the union wage causes fewer workers to be hired in the unionized firms, leaving a larger labor supply (and a consequent lower wage) in the nonunion segment. Artificially high urban wages attract migrants from rural areas. If the wage does not adjust downward to equate supply and demand, the rate of urbanUNEMPLOYMENT will rise until further migration is deterred. Still other examples are in banking and drugs. When the “margin” in banking is set too high, new banks enter and/or branches of old ones proliferate until further entry is deterred. Artificially maintained drug prices led, in several Latin American countries (Argentina, Chile, and Uruguay before their major liberalizations of recent decades), to a pharmacy on almost every block. The great unifying principles of microeconomics are, ever and always, supply and demand. The normative overtone of microeconomics comes from the fact that competitive supply price represents value as seen by suppliers, and competitive demand price represents value as seen by demanders. The motivating force is that of human Beings, always gravitating toward choices and arrangements that reflect their tastes. The miracle of it all is that on the basis of such simple and straightforward underpinnings, a rich tapestry of analysis, insights, and understanding can be woven. This brief article can only give its readers a glimpse—hopefully a tempting one—of the richness, beauty, and promise of that tapestry.
Saturday, June 25, 2011
Monday, June 13, 2011
Friday, June 10, 2011
Friday, June 3, 2011
salient features of the national budget for Fiscal Year 2011-12
Following are salient features of the national budget for Fiscal Year 2011-12:
- The total outlay of budget 2011-12 is Rs.2767 billion. The size is 14.2 per higher than the size of budget estimates of 2010-11.
- The resource availability during 2011-12 has been estimated at Rs. 2463 billion against Rs. 2256 billion in the budget estimates of the outgoing fiscal year.
- Net revenue receipts for 2011-12 have been estimated at Rs. 1529 billion indicating an increase of 11 percent over the budget estimates of fiscal year 2010-11.
- The provincial share in federal revenue receipts is estimated at Rs. 1203 billion during 2011-12 which is 16.4 per cent higher than the budget estimates for 2010-11.
- The capital receipts (net) for 2011-12 have been estimated at Rs. 396 billion against the budget estimates of Rs. 325 billion in 2010-11 indicating an increase of 11 per cent.
- The external receipts in 2011-12 are estimated at Rs. 414 billion. This shows an increase of 7.1 per cent over the budget estimates for 2010-11.
- The overall expenditure during 2011-12 has been estimated at Rs. 2767 billion of which the current expenditure is Rs. 2315 billion and development expenditure at Rs. 452 billion. Current expenditure shows increase of less than one per cent over the revised estimates of 2010-11, while development expenditure will increase by 64.4 per cent in 2011-12 over the revised estimates of 2010-11.
- The share of current expenditure in total budgetary outlay for 2011-12 is 83.7 per cent as compared to 89 per cent in revised estimates for 2010-11.
- The expenditure on General Public Services (inclusive of debt servicing transfer payments and superannuation allowance) is estimated at Rs. 1660 billion which is 71.1 per cent of the current expenditure.
- The size of Public Sector Development Programme (PSDP) for
2011-12 is Rs. 730 billion. While for Other Development Expenditure an amount of Rs. 97 billion has been allocated. The PSDP shows an increase of 58 per cent over the revised estimates of 2010-11.
- The provinces have been allocated an amount of Rs. 430 billion for budget estimates 2011-12 in their PSDP as against Rs. 373 billion in 2010-11.
- An amount of Rs.10 billion has been allocated to Earthquake Reconstruction and Rehabilitation Authority (ERA) in the PSDP 2011-12.
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