B. Com Sem. III Economics of Government Finance Reading Material

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Govt. Fin. Eco. Sem 3 Material Final 1

The material includes the following:

             S. Y. B. COM. SEMESTER – III

CC – 201 ECONOMICS OF GOVERNMENT FINANCE

 

Unit : 1: INTRODUCTION TO PUBLIC FINANCE

Economic systems – concepts – Capitalism, Socialism and Mixed Economy – characteristics. Public and Private Finances: meaning, difference and similarities. Indian Federal Finance: concepts of three layers of government. Market failure and role of government. Characteristics of public and private goods, merits goods. Government budget, its importance. Various concepts of deficit: revenue deficit, budgetary deficit, fiscal deficit, primary deficit, their uses and effects.

 

Unit : 2 :TAXATION

Direct and indirect taxes : meaning and its characteristics – concepts of progressive, proportional and regressive taxes. Present Indian tax structure: its characteristics and defects. Role of taxation in economic development. Meaning of tax avoidance and tax evasion.

 

UNIT: 3: INCOME AND PUBLIC EXPENDITURE

Sources of income of local government, state government and central government. Public expenditure: purpose, importance and causes of increase in public expenditure. Meaning of Fiscal Responsibility and Budget Management Act (FRBM Act). Privatization and disinvestment : concept and importance.

 

UNIT: 4: PUBLIC DEBT

Public debt – meaning and types of public debt. Economic effects of public debt. Difference between taxation and debt. Burden of public debt – Learner’s and Buchanan’s view point.

B. Com. Sem II Fundamentals of Business Economics Final Material

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Eco Sem 2 Material Final

The material includes the following:

Unit : 1 National Income Accounts

Concepts of GDP and NDP- Sectoral Composition of National Income – GDP at Factor Price and Constant Prices- Concept of GNP and NNP, Factor Cost and National Income-Per Capita income, Disposable Income and Personal Disposable Income- Measurement of National Income – Difficulties in measuring National Income- Trends in India’s GDP and Per capita GDP since Independence- Concept of GDP Deflator (Basic concept only).

 

Unit :2 Money and Credit.

Meaning and Evolution of Money- Commodity to Fiat Money – Definition of Money- Functions of Money – Demand for Money – Quantity Theory of Money- Fisher’s Equation of Exchange- Cambridge Theory. Supply of Money – Determinants of Money Supply-Components of Money Supply- RBI’s Approach-M1, M2, M3, M4. High Powered Money – Concepts of Credit- Types of Credit–Instruments of Credit Control-Bank Rate, Repo Rate, Reverse Repo Rate, CRR and SLR(Meaning and their importance).

 

Unit : 3 Keynesian Economic Theory

Say’s Law of Market and its criticism by Keynes. Simple Keynes Model of Income Determination. Concepts of Consumption Function, Saving Function and Investment Function. Investment Multiplier–Marginal Efficiency of Capital and factors affecting MEC.

 

Unit : 4 Business Cycle and Inflation

Concepts of Business cycle – Four phases of Business Cycle – Interest rate –Loan able fund Theory and Liquidity preference theory- Motives for liquidity preference–Transaction Motive, Precaution Motive, Speculative Motive. Factors affecting interest Rate. Inflation–Meaning, Types, Causes, Effects-Inflation and Investment.

Assignment eco sem 2

Eco Sem – I Complete Material

For B. Com Sem Fundamentals of Business Economics – I complete and final reading material click the following link.

Eco Sem 1 Material Final

Imp question answer part 1

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Important Question eco

Marshall’s Definition of Economics

Important Question-Answers:

Q-1 Explain the definition of economics given by Prof. Marshall. (6 Marks – December 2012)

Ans:

Introduction:

Though the definition given by Adam Smith prove to be a guiding star in development of the economics the definition was not sufficient  to define subject matter  of economics. Wealth is there but more importance  was given to man. Emphasis  was shifted from wealth to man after Alfred Marshall’s views  about economics.

Definition:

According to Alfred Marshall, “Economics is a study of man in the ordinary business of life. It inquires how he gets his income and how he uses it. Thus, it is on one side the study of wealth and on the other and more important side a part of the study of man.”

Important points of Marshall’s Definition:

1. Man is at the center: Marshall gave primary importance to man and wealth was given secondary importance. He says economics is concerned mainly with how wealth is used by man. It is the study of men’s ordinary business of life which means his wealth getting and wealth using activities.
2. Study of economic aspect : An individual has several aspects of his life viz. (namely) social , religious , political and economic. Economics studies only economic activities related with earning and spending income and leaves other activities.
3. Deals with social actions: Economics studies economic behavior of people living in society. But actions of isolated individuals are outside its scope.
4. Material Welfare : Only those activities which are related with well-being of individual form part of study in economics. In other words, economic studies only material welfare. Hence, his definition is known as ‘welfare definition’.

Criticism: Prof. Lionel Robbins of the London School of Economics criticized the definition given by Prof. Marshall on the following basis:

1. Human science: Marshall considered economics as a social science rather than as human science. A social science studies individual as a member of society, so activities of isolated person are not counted. A human science, on the other hand, will include every human being of the society whether living in society or away from society.
2. Only material goods: Marshall emphasized on material welfare which means only physical goods he excluded services. Prof. Robbins criticized Marshall saying that services of doctors, lawyers, teachers etc. are also economic activities because they are scarce and they satisfy human wants.
3. Activities not conducive (Anuku5) to human welfare: Alfred Marshall included only those goods which give rise to human welfare. Robbins criticized him by saying that activities like production and sale of alcohol and tobacco products does not give rise to human welfare but are part of economic study which was ignored by Marshall.
4. Difficult to measure welfare: Robbins said that it is very difficult to measure welfare because two persons purchasing the same article many not necessarily derive the same level of utility and satisfaction. A poor person generally derives more satisfaction from the same article than a rich person. Thus, Robbins rejected the idea of considering money as a satisfactory measure of welfare.
5. Economics has nothing to do with welfare: Robbins was of the opinion that economics has nothing to do with material welfare. He said that economics is only concerned with means, the study of ends is not part of study of economics. Robbins suggested that economics is purely a positive science and its function is to explain and explore, not to recommend and condemned.
6. Classificatory rather than analytical: The definition classifies human activities in economic and non-economic activities. According to Robbins this classification is unscientific and illogical. The definition does not analyse and suggest how welfare can be promoted.

Conclusion : Despite of above criticism against Marshall’s definition, we must not forget that Marshall has broadened the scope of economics by establishing a link among wealth and man and his welfare. Marshall’s definition formed the basis for new definitions of economics.