Economics, Macroeconomics, GDP is, Foreign direct investment, Fiscal policy, Monetary expenditure policy, foreign exchange.

1. What is economics?
There’s no one universally accepted answer to the question “What is economics?” Various definitions are:
“Economics is the science studying the production, distribution and consumption of goods and services.”
“Economics is a science, which study’s causes and determents of wealth of a nation.”
“Economics is a social science that studies human behavior.”
“Economics study of the production, distribution and consumption of wealth in human society.”
“Economics is what economist do”
2. Importance and scope of economicsa) To understand global market challengesb) To understand role of the government
c) To learn a way of thinking, understand society; to understand global affairs, and to be an informed voter
d) To know the economic growth, labor and organization production
e) To utilize the wealth and distribution
f) To understand the supply and demand
g) To understand the economic systems, business practices and investing
h) To proper use of limited resources of the world
i) To establish human behavior and welfare as a relationship.
Macroeconomics is the study of behavior of the economy as a whole. It examines the forces that affect many firms, consumers and workers at the same time. It contrasts with microeconomics, which studies individual prices, quantities and markets.
Macro economy’s performance depends on the performance of the government. Limitation of the macro economy:
1) Cetris peribus (Other thing reaming constant)
2) In macro economy, there is some can happen in past or May not be happened. For example- In 1930, there was a great depression in America and many people unemployed but before great depression there ware not a single symptom in America.
3) Macro economy’s variables do not necessarily represent micro economy’s variables. For example- we can say these both are good but all students are not good.
* Objective and tools of macro economy: There are basically three objectives in macro economy.
1) To increase out put
2) TO increase employment and reduce unemployment
3) To maintain domestic product
* GDP- Gross domestic product
Definition of GDP: GDP is defines as the money value of all final goods and services produced in a country during a fiscal year.
There are three types of GDP:-
1) Nominal GDP: When GDP is calculated in terms of existing market prices, it is known as nominal GDP.
2) Real GDP: When GDP is calculated in terms of the market prices of a base year (Nominal Year) or standard year, it is known as real GDP.
3) Potential GDP: When an economy utilizes its maximum level of potential to produce output, it is known as potential GDP.
* For increase employment we have to increase investment. There are two types of investment.
1) Local investment
2) Foreign direct investment
There are three policies of microeconomics/microeconomics tools/ macroeconomics instrument:
1) Fiscal policy: With in a fiscal year budget is the mirror image of the fiscal policy. Fiscal policy is reflected through budget.
A budget is nothing but the documents that spell out how much a government will earn and how much a government will spend during a fiscal year.
Fiscal policy has two components:
1) Government’s income through taxation.
2) Government’s expenditure on goods and services.
Tax ate two type- 1) Direct taxes. 2) Indirect Tax.
Government expenditure is two types: - 1) Revenue expenditure. 2) Capital expenditure.
Monetary expenditure policy has two types of policy:-
1) Monetary expansion policy: Under monetary expansion policy the government increases money supply by reducing interest rate in order to motivate investment.
2) Monetary contraction: Under monetary contraction policy the government decreases money supply by increasing interest rate in under to control inflationary pressure.
3) Foreign trade policy: It has two responsibilities: - 1) to look after exports (increase) and imports (decrease).
2) To take care of foreign exchange rate.
* Theory of consumption/ definition of a consumption function: Consumption function is defined as functional relationship between income and consumption. There exists a positive relationship between income and consumption which means that when income increases, consumption also increases and vice versa.
* What is MPC?
Slope of the function is defined as the ratio of change in the independent variable with respect to change in the independent variable. In other words, slope is defined as the change in the dependent variable due to one unites change in the independent variable.
MPC is defined as the changes in consumption due to one unite change in income.
MPC value: Minimum ——0, Maximum —– 1.
Relatively poor people have higher MPC then relatively rich people.
* Different consumption hypothesis:
1) Absolute income hypothesis (Keynes psychological law of consumption)
It has there proposition.
a)When income increases, consumption also increase but by less than the amount of increase in come,
b) Because of increase income both consumption and savings increase.
c) Increase in income causes dynamics in consumption and savings.
If we summarize all the proposition of keys philological law, we can say that a consumer behaves consistently over a long period if time which means that a consumer treads to responds to change in income in a proportionate manner.
2) Relative income hypothesis: ( Jems dussenbery’s hypothesis)
It has two propositions.
a) Consumption behavior is not independent rather it is interdependent.
b) Consumption function is irreversible and therefore it is not reversible with the passage of time.
3) Life cycle hypothesis (A. ando. F Modigicre hypothesis)
It has three steps:-
a) Beginning of the carrier (income is less than consumption)
b) Peak of the carrier
c) End of the carrier.
* Determinacy of consumption:
a) Change in wage level
b) Change in expectations
c) Wind fall gains/loss
d) Change in fisical policy
e) Re-distribution of income
f) Holding of liquid assets
g) Duzenbery hypothesis
Land labor, capital, and organization- full of resources 100% resources are not utilized possible. Human resources are most powerful resource. Micro economics shown general equilibrium point.
Macro economy performers depends on the performance of the government”
Limitation of micro economics:
1) Ceteris peribus,( other things remaining constant) post hoc- Ergo propeter hoc( Latin expression): Due to this and therefore.
2) In macro economy, there is some can happen in post or may not be happen. In 1930s American great depression and many people unemployed but before great depression there ware not a single symptom in America.
3) Macro variables do not necessary represent micro variables. We can say this batch is good but all student is not good. In the developed economy controls politics in the undeveloped – polices controls economy.
* Objectives and tools of macro economics: Objectives of macroeconomics.
1) To increase out put.
2) TO increase employment and reduce unemployment.
3) To maintain price stability.
Those three are most difficult to achieve.
GDP- Gross domestic product
* GDP is defined as the money value of all final goods and services produces in a country during a physical year.
There are three types of GDP:
1) Nominal GDP:
2) Real GDP
3) Potential GDP
Nominal GDP: When GDP is calculated in terms of existing market price, it us known as nominal GDP.
Real GDP: When GDP is calculated in terms of the market prices of a term of the market prices of a base year or standard year, it is known as real GDP.
Potential GDP: When an economy utilizes its maximum level of potential to produce out put, it is known as potential GDP.
In 1999 GDP is refers to the real GDP. It is real GDP because here production is higher then before year.
* For increase employment we have to increase investment. There are two types of investment.
1) Local investment
2) Foreign direct investment
* It is government’s duty to create a favorable situation for investing foreign investment government’s responsibility to stable the policies also.
*Some foreign companies invest 15 billion dollar.
*Investment is the nucleolus for a country but for Bangladesh policies is the main obstacle to invest.
* India is the fast growing in GDP 8.5 GDP.
# What are the main obstacle to develop in Bangladesh GDP- politics.
Price stability:
If price 20 taka to increase 22 then it is acceptable but 20 to increase 30 when it is not acceptable
* Price should be increase within the tolerance of he consumer.
# How can the economy help you for objectives?
There are three policies of macroeconomics/macroeconomics tools/macroeconomics instrument.
1) Fiscal policy
2) Monetary policy
3) Foreign trade policy
* Macro-economics means the performances of the government
1) Fiscal policy: (??????? ?? ?????? ?????? ???????) Government’s budget policy within one fiscal year.