The present book Business Economics has been prepared for students of Third Year B.Com., Sixth Semester, University of Mumbai. The discussion is divided into four modules. The coverage, organisation and contents of these modules are as follows:
Module I on `International Trade` discusses the theory of comparative costs of international trade (both the Ricardian version and the opportunity cost approach), the Heckscher-Ohlin trade theory, and terms of trade and gains from trade (including a discussion on the law of reciprocal demand and Marshall-Edgeworth offer curves).
Module II on `Balance of Payments and WTO` discusses the concept and structure of balance of payments, causes of disequilibrium in balance of payments, measures to correct disequilibrium in balance of payments, India`s balance of payments position since 1991, functions and organisation of WTO, TRIPs, TRIMs, GATS and a critical review of the working of WTO, Singapore issues and Doha Development Agenda etc.
Module III on `Foreign Exchange Market` discusses the concept and functions of foreign exchange market, spot and forward rates of exchange, foreign exchange brokers and dealers, arbitrage, hedging, speculation etc. and the fixed and flexible exchange rate system (including a discussion on adjustable peg system, crawling peg system, and the system of managed floating).
Module IV on `Exchange Rate Management` discusses the concept of equilibrium rate of exchange, mint parity theory, purchasing power parity theory, balance of payments theory, causes of fluctuation in the rate of exchange etc., and Reserve Bank`s intervention in foreign exchange market and its approach to reserve management.
It has been our endeavour to ensure that the coverage of all topics listed in the syllabus is comprehensive and exhaustive. The style adopted in direct and presentation simple so that the students do not have any problem in understanding the arguments. Important definitions and statements have been highlighted in bold letters for the convenience of students. Each chapter is followed by a summary of main points contained in the chapter. At the end of each chapter, a list of questions has been given for the practice of students.
MODULE I : INTERNATIONAL TRADE
1. The Theory of Comparative Costs
2. The Heckscher-Ohlin Trade Theory
3. Terms of Trade and Gains from Trade
MODULE II : BALANCE OF PAYMENTS AND WTO
4. Balance of Payments
5. India`s Balance of Payments Position Since 1991
6. WTO and India
MODULE III : FOREIGN EXCHANGE MARKET
7. Foreign Exchange Market − Concept and Functions
8. Exchange Rate Systems
MODULE IV : EXCHANGE RATE MANAGEMENT
9. Determination of Exchange Rate
10. Reserve Bank`s Intervention in Foreign Exchange Market