This document summarizes a training session on macroeconomics. It begins with an introduction and overview of the session structure. It then covers key macroeconomic concepts including aggregate supply and demand, the business cycle, inflation and its measurement, monetary and fiscal policy responses. Sections also discuss the current state of the Indian economy, including GDP growth, trade trends, and recent fiscal measures. The session concludes with an interview question section and open discussion.

1. SESSION-I
Domain
Training or
Placement
- BY DR. SHIKTA SINGH
- KSOM,KIIT UNIVERSITY

2. JAB WE MET- 1st Phase-

3. THE PHASE-II TO AN ONLINE MODE

4. STRUCTURE OF THE SESSION
A FLASH BACK TO WHAT WE HAVE LEARNT
SECTION 1
SECTION 2
ISSUES GOING AROUND- ALL OVER VIS-À-VIS INDIA
SECTION 3
SECTION 4
OPEN FOR DISCUSSION
SECTION 5
MAKING A REALITY CHECK OF WHAT IS GOING
PLAUSIBLE QUESTIONS BY INTERVIEWER

5. KEY TERMS
Microeconomics: That field that deals with the small-scale activities such as
that of the individual or company.
Macroeconomics: The study of the entire economy in terms of the total amount
of goods and services produced, total income earned, the level of employment
of productive resources, and the general behavior of prices

6. Macroeconomists study aggregated indicators such as GDP,
unemployment rates, and price indices to understand how the
whole economy functions.
Macroeconomists develop models that explain the
relationship between such factors as national income, output,
consumption, unemployment, inflation, savings, investment,
government spending and international trade.
Though macroeconomics encompasses a variety of concepts
and variables, but there are three central topics for
macroeconomic research on the national level: output,
unemployment, and inflation.
Macroeconomics is a branch of economics that focuses on the behavior and decision-
making of an economy as a whole.

7. And the mismatch
creating problems
Aggregate supply: The
total demand for final
goods and services in the
economy at a given time
and price level
Aggregate demand:
The total demand for
final goods and services
in the economy at a
given time and price
level.
Circular flow mechanisms

8. Role of market
& financial
system
An economy which relies primarily on interactions between
buyers and sellers to allocate resources is known as a market
economy.
Markets work by placing many interested buyers and
sellers, including households, firms, and government
agencies, in one “place,” thus making it easier for them to
find each other
Healthy financial systems are associated with the
accelerated development of an economy.
Role of Central bank,
Commercial bank, NBFCs.

9. KEY TERMS
M0,M1,M2,M3,M4 Money Multiplier Credit Multiplier

10. The Business Cycle
The term “business cycle” (or economic cycle or boom-bust cycle) refers
to economy-wide fluctuations in production, trade, and general
economic activity. From a conceptual perspective, the business cycle is
the upward and downward movements of levels of GDP (gross domestic
product) and refers to the period of expansions and contractions in the
level of economic activities (business fluctuations) around a long-term
growth trend.

12. Business cycles are
identified as having four
distinct phases: expansion,
peak, contraction, and
trough.
Business cycle fluctuations
occur around a long-term
growth trend and are usually
measured by considering the
growth rate of real gross
domestic product.
In the United States, it is
generally accepted that the
National Bureau of
Economic Research (NBER)
is the final arbiter of the
dates of the peaks and
troughs of the business
cycle.
 Different phases of business cycle-
KEY TERMS
Expansion: The act or
process of expanding.
Trough: The lowest turning
point of a business cycle
Peak: The highest value
reached by some quantity in a
time period.
Contraction: A period of economic
decline or negative growth.

13. Macroeconomic indicators such as GDP (Gross Domestic Product), employment, investment spending, capacity
utilization, household income, business profits, and inflation fall, while bankruptcies and the unemployment rate
rise.
Most mainstream economists believe that recessions are caused by inadequate aggregate demand in the
economy, and favor the use of expansionary macroeconomic policy during recessions.
Strategies favored for moving an economy out of a recession vary depending on which economic school the
policymakers follow.
KEY POINTS
Recession: A period of
reduced economic
activity
Inflation: A period of
increased economic
activity

14. INFLATION AND ITS MEASURES

15. HEADLINE INFLATION CORE INFLATION
ITS A MEASURE OF TOTAL INFLATION WITHIN
AN ECONOMY INCLUDING COMMODITY SUCH
AS FOOD AND ENERGY PRICES (e.g, OIL AND
GAS ) WHICH TENDS TO BE MORE VOLATILE
AND PRONE TO INFLATIONARY SPIKES.
IT CONSIDERS THE PRICE OF ALL GOODS AND
SERVICES EXCEPT COMMODITY PRICES ( LIKE
PRICE OF FRUITS AND VEGETABLES,FRUITS
ETC) AND OIL PRICES.
GOODS SERVICES
HEADLINE
INFLATION
ALL
ITEMS
OF CPI
FOOD
AND
EMERGY
CORE
INFLATION

17. CPI
FOOD,
BEVERAGES AND
TOBACCO
Cereals and Products
Pulses and products
Oils and fats
Milk, egg, fish and meat
Fuel and light
Housing
Clothing, bedding and
software
Misc.
Education , stationery
Med and personal care
Amusement , transport and
communication
Sugar and species

18. MFG Chemical Metal food
PRIMARY Food Non-food Mineral
FUEL Oil Electricity Coal
WPI Components WEIGHT
TOP 3 SUB-WEIGHT (Decreasing)
WPI
And its
Component

21. POLICY RESPONSES
If the economy needs to be slowed, enacted policies are referred to as being contractionary
and if the economy needs to be stimulated the policy prescription is expansionary.
Central banks use monetary policy measures to facilitate consistent economic
growth, while the government uses fiscal policy.
The government policy measures are referred to as fiscal policy.
When to go for expansionary and contractionary policy mechanism.

22. FISCAL
POLICY
• : Government policy that attempts to influence the
direction of the economy through changes in
government spending or taxes.
MONETARY
POLICY
• The process by which the central bank, or
monetary authority manages the supply of
money, or trading in foreign exchange markets.
Key Terms
https://economictimes.indiatimes.com/wealth/personal-finance-news/rbi-monetary-policy-what-the-rate-cut-means-for-your-mon
https://economictimes.indiatimes.com/markets/stocks/news/rbi-press-conference-another-2-bn-sell-buy-swap-1-lk-cr-ltro-announ

23. MONETARY POLICY
QUANTITATIVE QUALITATIVE
CRR/SLR= 3%/18.25%
LTRO/TLTRO-
1/TLTRO-2
REPO=
4.00%
REVERSE
REPO= 3.35%
MSF=
4.25%
MARGIN
REQUIREMENT
CREDIT
RATIONING
MORAL
SUASION
DIRECT ACTION
Bank rate=

24. Fiscal Policy
Discretionary
Non Discretionary
Expansionary
Contractionary
Raise Govt.
Expenditure
Lower taxes
Lower govt
expenditures
Raise Taxes
Government
expenditure
Taxes
Transfer payments
Progressive taxes

25. Measuring Fiscal Deficit
Economics- Deficit calculated .xlsx

26. BUDGETARY DEFICIT
– Revenue Deficit = Rev Exp – Rev Receipts
– Capital Deficit = Capital Exp – Capital Receipts
– Budgetary Deficit = Total Expenditure – Total Revenue
– Gross Fiscal Deficit = Total Expenditure – Total Receipts excluding Borrowings
(this implies the overall borrowing requirement of the Govt.
– Primary Deficit = Gross Fiscal Deficit – Interest
– Twin Deficit

27. EXCHANGE RATE
MECHANISM
ATTRIBUTES
DRIVERS
DYNAMIC
SPECULATIVE ARBRITAGE
HEDGING
FIXED
FLEXIBLE
MANAGED
SPOT
FORWARD
DUAL
INTEREST
RATES
ECONOMIC
CONDITION
TRADE
EFFECTS
BUSINESS
CYCLE
MARKET

28. SECTION-II
CHECKING INTO THE REALITIES

37. THE INDIAN ECONOMY OUTLOOK

43. Higher inflation unlikely to
deter MPC action
– Even though CPI inflation remains above the MPC’s upper limit of 6%, much of
the increase has been led by higher fuel and gold prices. Food inflation has
started to normalize with the easing of supply disruptions. With inflation
expected to moderate below 4% in 2HFY21, we continue to expect additional
25-35 bps of repo rate cuts given the sharp deceleration in growth. Further
action remains contingent on the evolution of the growth-inflation mix.

44. CPI inflation moderates to a
three-month low (recent report)
June CPI inflation moderated to 6.09% as against 6.27% in May amid favorable base effects
despite increasing momentum .
The softening was led by lower food inflation of 7.9% (9.2% in May) owing to moderation
observed across vegetables (1.9% from 5.5% in May), fruits ((-)0.7% from 2% in May), and sugar
and confectionary (4.4% from 6% in May) . Price of pulses, milk and eggs remain firm, even
though the pace somewhat moderated. Meanwhile, fuel and light inflation rose to 2.7% (1.6% in
May).
Sequentially, CPI inflation went up by 0.5% MOM led by a 1.8% rise in fuel and light prices,
reflecting the surge in LPG prices. Food inflation also went up by 0.3% MOM led by a sequential
rise of 1.7% in vegetable prices. Price of fruits, pulses and cereals, however, fell by 2.4%, 1% and
0.5%, respectively.
We note that the government used a different methodology to arrive at the inflation estimates of
April and May due to the non-availability of data due to the nationwide lockdown.

45. Core inflation at a 16-month
high
Even though economic activity remains weak, core inflation rose to 5.2% (4.8% in May) owing to
higher inflation in the personal care segment (12.4%) and in the transport and communication
segment (7.1%). Higher gold prices along with the pass-through of the excise duty hikes on petrol and
diesel were the major contributors to core inflation.
Inflation across education, recreation and amusement, and health came in at 5.5%, 3%, and 4.2%,
respectively.
On a sequential basis, core inflation grew by 0.3%, owing to a 2.2% increase in the personal care
segment and 0.8% increase in the transport and communication segment. Expectedly, owing to
concerns about the spread of Covid-19 and the lockdowns, inflation across recreation and
amusement, and household goods and services witnessed sequential declines of 2% and 1.4%,
respectively. Meanwhile, rural and urban CPI inflation are broadly moving in tandem .
Rural core inflation was at 5%, and urban core inflation was at 5.1%

50. SECTION-III

55. Real GDP
Growth

59. TRADE HAS BEEN LOSING STEAM FOR A LONG TIME
SOURCE: WTO

63. FISCAL MEASURES

66. SECTION IV- INTERVIEW
BASED QUESTIONS

67. SECTION-V
OPEN FOR DISCUSSION

68. KEEP
READING
THANK YOU.. WISH YOU A GREAT CAREER AHEAD