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General Economics For CA-CPT (Common Proficiency Test) PDF

519 Pages·2015·16.78 MB·English
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GENERAL ECONOMICS FOR CA-Cpt (Common Proficiency Test) Second Edition Sripal Jain Venkatesh R. Delhi • Chennai Initial Pages.indd 1 6/16/2014 5:54:49 PM Copyright © 2015 Dorling Kindersley (India) Pvt. Ltd. Copyright © 2013 Dorling Kindersley (India )Pv.t Ltd Licensees of Pearson Education in South Asia No part of this eBook may be used or reproduced in any manner whatsoever without the publisher’s prior written consent. This eBook may or may not include all assets that were part of the print version. The publisher reserves the right to remove any material in this eBook at any time. ISBN 9789332537941 eISBN 9 789332540590 (cid:3) Head Office: 7th Floor, Knowledge Boulevard, A-8(A), Sector 62, Noida 201 309, UP, India Registered Office: 11 Community Centre, Panchsheel Park, New Delhi 110 017, India Prelim pages.indd 2 29-04-2013 23:41:48 Contents Preface v About the Authors vi Chapter I: Introduction to Microeconomics Unit 1.1 Introduction to Microeconomics 3 Chapter II: theory of Demand and Supply Unit 2.1 Law of Demand and Elasticity of Demand 43 Unit 2.2 Theory of Consumer Behaviour 82 Unit 2.3 Supply 118 Chapter III: theory of production and Cost Unit 3.1 Theory of Production 139 Unit 3.2 Theory of Cost 176 Chapter IV: price Determination in Different Markets Unit 4.1 Price Determination in Different Markets 205 Unit 4.2 Determination of Prices 216 Unit 4.3 Price-output Determination Under Different Market Forms 229 Chapter V: Indian Economy-a profile Unit 5.1 Nature of Indian Economy 269 Unit 5.2 Role of Different Sectors in India 281 Unit 5.3 National Income in India 308 Unit 5.4 Basic Understanding of Tax System in India 322 Initial Pages.indd 3 6/16/2014 5:54:49 PM Chapter VI: Select Aspects of Indian Economy Unit 6.1 Population 345 Unit 6.2 Poverty 362 Unit 6.3 Unemployment 373 Unit 6.4 Infrastructural Challenges 384 Unit 6.5 Inflation 405 Unit 6.6 Budget and Fiscal Deficits in India 417 Unit 6.7 Balance of Payments 425 Unit 6.8 External Debt 434 Chapter VII: Economic Reforms in India Unit 7.1 Economic Reforms in India 441 Unit 7.2 Liberalization, Privatization and Disinvestment 458 Unit 7.3 Globalization 466 Chapter VIII: Money and Banking Unit 8.1 Money 483 Unit 8.2 Commercial Banks 490 Unit 8.3 The Reserve Bank of India (RBI) 500 Initial Pages.indd 4 6/16/2014 5:54:49 PM Preface General Economics for CA-CPT is a comprehensive study material prepared for CPT students, in accordance to the most recent syllabus of ICAI, after taking into consideration all the changes in the statistical data, relevant laws, and amendments. General Economics for CA-CPT deals with economic concepts and theories in the most simple manner. The subject matter has been dealt exhaustively in an articulate and descriptive language. Care has been taken to explain the concepts with the help of diagrams, examples and illustrations. The focus of this book has been learner-centric. At the end of each unit, students can find exhaustive multiple-choice questions to help them test their understanding of the subject and their skills in applying economic theory to real world situations. This book is written taking into consideration the present need of the student community and, thus, includes explanation of the concepts with a lot of examples and illustrations and as many as 1,500 questions to help the students to understand the subject. Special notes to emphasise the importance of an information and tabular representation of the data to further enhance the utility of the book. The book is the result of inspiration, dedication and expertise of a committed team to whom we owe a debt of gratitude. We appreciate the depth of research undertaken by the team in making this book comprehensive and learner-centric. We wish you the best and hope that you make complete use of this book. Sripal Jain Venkatesh R. Initial Pages.indd 5 6/16/2014 5:54:49 PM About the Authors Sripal Jain is a Chartered Accountant by profession and has been teaching accountancy at CA-CPT and IPCC level for over 10 years and has coached around 8,000+ students. He is also an author and has been a mentor to many success projects like 100 Pages to Success, Shortcut to IPCC, and Career after +2. His latest masterpiece titled, “Is CA My Cup of Tea?” is most awaited by the CA aspirants. The author is also a well-known motivational speaker who combines the present and future, helping the students to focus on their career. He is a profound entrepreneur heading a commerce training institute as its CEO. Venkatesh.R has completed his Masters in Economics in 2002. He also holds a Masters in Business Administration (MBA). The author further went on and completed his Post- Graduation Diploma in Business Administration (PGDBA). He is a UGC recognized NET and SLET qualified faculty in Economics. Currently he is pursuing his Ph.D. He started his career as a lecturer and is been teaching Economics for a decade now, for various levels like Pre-University, Bachelor of Commerce, Master of Business Administration, Master of Commerce, etc. He is a visiting faculty at various premier colleges in Bangalore. He is well-known for teaching economics in a most simple ways with a lot of examples correlating economic theories and concepts with practical life. Initial Pages.indd 6 6/16/2014 5:54:49 PM Introduction to Chapter-01 Micro Economics Eco_01.indd 1 6/16/2014 3:58:13 PM This page is intentionally left blank. Eco_01.indd 2 6/16/2014 3:58:13 PM Unit Introduction to Microeconomics 1.1 After studying this unit, you will be able to: ) Know the meaning and various definitions ) Understand the central economics prob- of economics lems and their solutions ) Understand the methodology of studying ) Appreciate the concept of Production economics Possibilities Curve ) Understand the nature and scope of ) Know the different methodologies of economics economics Introduction Economics is an important branch of social science, which deals with the behaviour of human beings in relation to economic activities. Economics is derived from two Greek words viz. “Oikos” (means household) and “Nomia” (means management). Therefore, economics was understood as a “Science of Household Management” – managing a household with the limited resources available, in an economical manner. But later, the scope of economics has expanded from mere household management to the nation’s management. Infact, out of social sciences, it is economics which has more practical applicability, hence regarded as ‘Queen of Social Sciences’. The science of economics was born with the publication of Adam Smith’s classical work “An Inquiry into Nature and Causes of Wealth of Nations” in the year 1776. Before Adam Smith, there were many people who expressed ideas on economics. In the 17th century, Adam Smith was the first person who put all the economic ideas in a systematic way. Hence, he is considered to be the “father of economics”. Basic premise of economics ƒ Human wants are unlimited ƒ Means of satisfying these wants are relatively scarce Eco_01.indd 3 6/16/2014 3:58:13 PM

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