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h Differences between Micro and Macro Economic concepts - National
Income concepts - National Income and Business cycles - Keynisian
Theory of employment - Marginal efficiency of the capital - Multiplier and
Accelerator concepts.

h Inflation, Type of inflation - Fiscal and Monetary policies - Function of


Central Bank and Commercial Banks - Credit creation by the Commercial
Banks - Recent reforms in banking function.
h Planning in India - Economic Globalisation - India¶s Foreign trade - Trade
Regulation and promotion - Intellectual Property Rights.

h Balance of payment - Foreign Exchange Market - FEMA - Convertibility of


Rupee - WTO.
h International Financial Institution - Euro Market and developments.
|R|

Text/Reference Books:

1. Dewat. K.K., Modem Economic Theory, S. Chand & Co, New Delhi, 2005.
2. Ahuja.H.L., Economic Environment of Business, S. Chand & Co, New
Delhi, 2005.
3. Franchis Chernilam., Business Environment, Himalaya Publishing, New
Delhi, 2005.
4. Franchis Chernilam., International Economics, Tata McGraw Hill, New
Delhi, 2008.

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Increase in the general level of price in the economy that is sustained over a
period of time.
Economic condition where there is a rise in prices resulting fall in the
purchasing power of money.

a) Unmanageable demand - beyond the output capacity due to


Increase in money supply
Increase in disposable income,
Increase in salary and wages
Increase in population

b) No corresponding increase in output


Scarcity of factors of production, Infrastructure, Increase in exports,
deficiency of capital equipment, natural calamities, industrial sickness.
Agricultural products.. Due to monsoon failure
Oil imports (Imported inflation)., Black money,

h Cost push inflation


h Demand pull inflation

Effect of inflation on economic growth


a) Low rate of inflation ± High rate of growth (West Germany)
b) High rate of inflation - High rate of growth ( Japan)
c) High rate of inflation ± Low rate of growth (UK)
d) Low rate of inflation ± low rate of growth (India)

Stagflation: Inflation and stagnation.



ïndex of the average price of all commodities produced and transacted in
the economy at the wholesale price level.

Base : 1970-71 = 100, 1993-94 .. 435 items


Manufactured products ± 63.74 %
Primary products ± 22.02 %
Fuel and energy ± 14.22 %
Computational ease and availability of data.

O NSUMER PRïOE ïNDEX (OPï


(Base : 1960 = 100
Industrial workers. Urban non-manual employees. Agricultural labourers.
   

h Monetary policy
h Fiscal policy
|  
Operates thro availability of credit.
Modern economy - credit economy

Measures taken by RBI


1. Open Market operations (OMO)
RBI sells and buys bonds.

2. Cash Reserve Ratio (CRR)


Percentage of deposits that every bank has to keep with RBI.

3. Statutory Liquidity Ratio (SLR)


Percentage of deposits that banks have to deploy in government securities.

4. Repo Rate
Rate at which RBI releases funds into the system.

  
Government policy which is concerned with raising revenue thro taxation and
deciding on the level and pattern of expenditure.

bjectives:
h Economic Growth
h Promotion of employment
h Stabilisation of economy
h Economic equity

Objectives vary from country to country.. E,P,S conditions vary

Fiscal policy operates thro the budget (Budgetary Policy)

Revenue««.Investment
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On July 24, 1991, union Government - New Industrial Policy -
liberalize Indian Economy.

BJEOïES

To attain technological dynamism and international


competitiveness.

To maintain a sustained growth in productivity and gainful


employment.

To accelerate the Industrial growth, by removing administrative


controls.
%
  
L - Liberalization - Trade barriers
Removing license raj
Freeing Economy From Government Control

350 %.............20%

Liberalisation aided competition in the market, by increasing the basket of


goods and services with better quality and lower prices.

WTO.... LIC, FDI....CAR


 
% 

D  D'C $'
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# 'C

Competition
Indian economy/Market

³One world ± One Market´



 

š Globalisation - Integrating the economy of a country with the


world economy.
š Increased mobility of persons, goods, capital, data and ideas but
also infections, diseases and pollution.

š "let's stay home, let's copy or imitate, and let's compete on price".
š Single Market - Borderless World.
Chinese technology major Huawei has filed for over 200 patents from its
India R&D centre and continues to expand its operations with an accent on
localisation. The India R&D centre, its largest outside China, is part of the
$16-billion Huawei Technologies¶ - 12 globally-dispersed research centres,
seven of them located in China.
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?B
álobalisation and HRM

š Human resources as a function have undergone dramatic changes in the


last decade.
š Today we have a new employment arrangement, a new relationship
between employers and employees, a new meaning to work, all
designed and influenced by market forces.
š Globalisation opened the talent Search
š Demand and Supply
š Employee Turn over Rate
š Reverse Brain Drain.