SEMESTER III CORE COURSE III PRINCIPLES OF MICRO ECONOMICS (EC3B03U) Module I – Introduction to Micro Economics Micro Economics - positive and normative – Short run and long run, equilibrium and disequilibrium analysis - Micro economic policy: Goals - efficiency and equity - micro economic models – assumptions and reality – maximization hypothesis - ceteris paribus assumption – market mechanism – need for governmental intervention – production possibility frontier. 10 hrs Module II - Demand and Supply Analysis Demand Determinants – individual and market demand schedules – changes and shifts in demand – Market demand and elasticity – types and degrees of price elasticity – determinants – Arc and point elasticity (geometric and arithmetic) Income elasticity of demand – cross elasticity. Supply – supply schedule and supply curve – changes and shifts in supply - elasticity of supply - measurement and application. Seller’s view – Revenues – total, average and marginal – revenue and price elasticity - market equilibrium and impact of changes in demand and supply - dynamic demand and supply model: Cobweb 25 hrs Module III - Theory of Consumer Behaviour Consumer preference and choice - utility – total and marginal utility – cardinal and ordinal utility. Analysis of consumer behaviour - law of diminishing marginal utility – law of equi-marginal utility – consumer equilibrium under cardinal utility. Application: water – diamond paradox and consumers surplus. Ordinal utility analysis – indifference analysis – properties – consumer’s income and price constraints: budget line - (response to changes in price and income) under ordinal utility analysis. Income effect and Engel curve, case of Giffen goods – price effect and demand curve – substitution effect – splitting (decomposition) price effect into income and substitution effects: Hicksian and Slutsky approaches – measurement of consumers surplus in Hicksian approach – criticisms of ordinal utility approach. Behaviourist approach - Revealed preference theorem of Samuelson – derivation of demand curve – distinction between weak and strong hrs
Module IV - Theory of Production Production – production function – total, marginal and average product – (geometric & arithmetical) – short run analysis of production function – returns to a factor - law of variable proportions – three stages. Production function with two variable inputs – Isoquants – properties – Isocost line - production decision - optimal input combination – producers equilibrium – expansion path – long run production function – returns to scale - economies and diseconomies of scale – internal and external economies - empirical production function: Cobb-Douglas production function - its properties. 25 hrs SEMESTER III CORE COURSE IV MODERN BANKING (EC3B04U) Module I - Banking: Structure and Theories Evolution of Banking - Italy and England - Brief history of commercial banking in India – Structure of commercial banks – Functions – Credit creation – Branch banking – Unit banking – Mixed banking – Chain banking – Theories of Banking, Real Bills Doctrine – Shiftability theory – Anticipated Income theory – Theories of portfolio management – liquidity, safety and profitability – prime lending and sub-prime lending – NPA – Development banks – , , SIDBI – Co-operative Banks in India – their role in the field of rural credit. (22 hrs) Module II - Central Bank Central Bank – meaning – Central Banking in Sweden, England, USA and India. Functions of Central Bank with reference to RBI – Monetary policy of RBI – Repo rate and Reverse Repo rate – Call rate – SLR & NLR. (15 Hrs) Module III – Banking Sector Reforms and Emerging Trends Banking sector reforms – Narasimham Committee Reports – New generation banks and emerging trends in banking – e-banking, ATM, Debit and Credit cards – Internet banking – Core banking – Mobile banking, RTGS, NEFT, SWIFT, MICR cheques / drafts. (15 Hrs) Module IV – Practical Banking Practical Banking – Banker-customer relationship – General and special relations – Garnishee order – Negotiable instruments – Credit instruments – Cheques, drafts, promissory notes, bills of exchange. Types of credit – loans and advances – cash credit – overdraft – discounting of bills of exchange. Modes of creating charges – lien, pledge, mortgage & hypothecation. (20 Hrs)