• Summary
  • Contents
  • Subject index

Macroeconomics Simplified explains the intuition behind Keynesian and neoclassical macroeconomics using graphs and simple algebra.

It provides students with a strong conceptual basis for understanding the tension between Keynesian and neoclassical systems that has once again came to the forefront since the 2007–08 financial crisis.

The book shows how theoretical perspectives affect macroeconomic policy choices and proposes a pragmatic approach to policy that is sensitive to prevailing economic conditions. Students of economics and business alike will enjoy its concise and engaging analysis and find the applications and references to the Indian economy helpful.

Introducing the Open Economy
Introducing the open economy

So far, our theoretical discussion has been confined to a closed economy. This chapter extends the Keynesian IS-LM framework to include the international sector and concludes with a discussion of the role of prices.

Exchange Rate Determination and Balance of Payments Concepts

The balance of payments (BOP) reflects a country's international transactions. It is the systematic record of all economic transactions between residents of a country and the residents of rest of the world. Table 9.1 describes the key components of India's BOP in 2011–12.

Table 9.1 India's BOP (₹in Billion) in 2011–12
1a. Merchandise exports (f.o.b.)14,825
1b. Merchandise imports (c.i.f.)23,946
1. Current account (trade balance) (1a − 1b)−9,121
2. Invisibles, net5,362
3. Current account (1 + 2)−3,760
4. Capital account (A to F)3,074
A. Foreign investment2,418
B. External ...
  • Loading...
locked icon

Sign in to access this content

Get a 30 day FREE TRIAL

  • Watch videos from a variety of sources bringing classroom topics to life
  • Read modern, diverse business cases
  • Explore hundreds of books and reference titles