Economics Lecture Notes

Introduction

• Good morning everyone.
• Today’s lecture will cover key concepts in economics.

Micro vs. Macro Economics

• Microeconomics: Focuses on individual units (e.g., a person, company).
• Macroeconomics: Looks at the economy as a whole (e.g., national income).

Key Figures

• Father of Microeconomics: Adam Smith
  • Main Work: "Wealth of Nations"
• Father of Macroeconomics: John Maynard Keynes
  • Main Work: "General Theory of Employment"

Economic Sectors

• Primary Sector: Extractive industries (e.g., agriculture, fishing).
• Secondary Sector: Manufacturing industries (e.g., furniture from wood).
• Tertiary Sector: Services (e.g., teaching, transportation).

Employment Contributions (2011 Census)

• Primary: 24.3% employed, lowest GDP contribution.
• Secondary: 26.5%.
• Tertiary: Highest GDP contribution.

National Income

• Definition: Measures total income of a nation.
• Calculated through three methods:
  1. Value Added Method: Sum of added value at each production stage.
  2. Income Method: Total earnings from wages, rent, interest, and profits.
  3. Expenditure Method: C + I + G + (X - M).

Key Concepts in National Income

• GDP: Gross Domestic Product (value of goods/services within a country).
• GNP: Gross National Product (value of goods/services produced by nationals).
• NDP: Net Domestic Product (GDP minus depreciation).
• NNP: Net National Product (GNP minus depreciation).

Monetary Aggregates

• M1: Currency in circulation + Demand deposits.
• M2: M1 + Savings deposits.
• M3: M2 + Time deposits.

Inflation

• Definition: Increase in prices of goods/services.
• Types:
  • Demand Pull: High demand increases prices.
  • Cost Push: Increased production costs lead to higher prices.
• Measures: CPI (Consumer Price Index) and WPI (Wholesale Price Index).

Unemployment Types

1. Structural: Skills mismatch.
2. Frictional: Transition between jobs.
3. Disguised: Underemployment in agriculture.
4. Cyclical: Economic downturns.
5. Educated: Unemployment despite having degrees.

Economic Policies

• Fiscal Policy: Government spending and tax policies.
• Monetary Policy: Central bank policies managing money supply.

Five-Year Plans

1. First Plan: 1951-1956, agriculture focus, target 2.1, achieved 3.6.
2. Second Plan: 1956-1961, rapid industrialization, target 4.5, achieved 4.27.
3. Third Plan: 1961-1966, self-reliance, target 5.6, achieved 2.8 due to wars and famine.
4. Fourth Plan: 1969-1974, growth with stability, target 5.6, achieved 6.5.
5. Fifth Plan: 1974-1979, poverty alleviation focus.

Conclusion

• Lecture summarized key concepts in economics, sectors, national income, inflation, unemployment, and five-year plans.
• Encouraged further study and note-taking for better understanding.