- 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.
Chapter 9: 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, net||5,362|
|3. Current account (1 + 2)||−3,760|
|4. Capital account (A to F)||3,074|
|A. Foreign investment||2,418|
|B. External ...|