Laxmi

Tamilnadu Samacheer Kalvi 12th Economics Notes Chapter 3 Theories of Employment and Income Notes

→ The first part of this chapter deals with economic development which gained importance during the 20th Century.

→ The concept of development and growth are used inter-changeably.

→ However, there are mild differences between the two.

→ The pace of economic development depends on several factors which are classified under economic and non-economic factors.

→ Economic development is retarded by several obstacles of which the Vicious Circle of Poverty is the prime one.

→ The second part is concerned with economic planning.

→ The failure of market mechanism brought the birth of planning.

→ Planning started in USSR and spread to countries like India and most of the mixed economies.

→ There are strong arguments in favour of planning and some arguments against planning.

→ There are various types of planning under different economic systems depending upon the extent of Government control.

→ It is totalitarian and highly centralized in socialist countries, democratic and indicative in countries like France.

→ The NITI Aayog is the new planning body replacing Planning Commission in India.

→ Capital accumulation : The process of addition to the existing stock of capital.

→ Centralized Planning : Centralized planning means the power of planning and
decision making are exclusively in the hands of top management.

→ Development : The systematic use of scientific and technical knowledge
to meet specific objectives and requirements.

→ Financial Planning : Techniques of planning in which resources are allocated in terms of money.

→ Growth : Economic growth refers to an increase in real GDP, which means an increase in the value of national output/national expenditure.

→ Human Capital : Education and training that make human beings more productive.

→ Perspective Planning : Long term planning i.e. for a period of 15 or more.

→ Physical Planning : Techniques of planning in which resources are allocated in terms of men, materials and machinery.

→ Planning : It is the process of thinking about the activities required to achieve directed goals.

→ Social Indicators : The basic needs for development such as health, education, sanitation, water, food etc.

→ Underdevelopment : Underdevelopment is low level of development characterized by low real per capita income, widespread poverty, lower level of literacy, low life expectancy, underutilization of resources etc.

→ Vicious Circle of Poverty : Circular relationships that tend to perpetuate the low level of development in Less Developed Countries.

Samacheer Kalvi 12th Economics Notes

Tamilnadu Samacheer Kalvi 11th Commerce Notes Chapter 18 Business Ethics and Corporate Governance Notes

→ ‘Businesses need to go beyond the interests of their companies to the communities they serve.’ – Ratan Tata, Former Chairman of the Tata group. ,

→ ‘A business that is in the making of only money is a poor kind of business.’ – Henry Ford, Founder of Ford Motor Corporation.

→ Ethics is derived from the Greek word ‘ethos.’which means a person’s fundamental orientation towards life.

→ Business ethics may be defined as a set of moral standards to be followed by owners, managers and business people.

→ All business units have realised that ethics is vitally important for the existence and progress of the business as well as the society.

→ Top management has a very important role to guide the entire organization towards ethical behaviour.

→ Code of ethics documents the generally accepted principles of ethical conduct.

→ ‘The proper governance of companies will become as crucial to the world economy as the proper governing of countries.’ Jeames Wolfenson, President of World Bank, 1999

→ “Corporate governance is about promoting fairness, transparency and accountability.” -World Bank

→ “Corporate governance is defined as the system by which companies are directed and controlled.” – Cadbury committee

→ MNC is defined to be an enterprise operating in several countries but managed from one country.

→ India ranks 10^th in the world in factory output.

→ India has become big employment generator especially amongst young graduates.

→ The 2012 Singapore corporate governance code recommends a majority of Independent Directors when the chairman of me Board is not independent.

→ The Council of Institutional Investors (CI1), Corporate Governance Policies state that at least 2/3rd of the directors should be independent.

→ European commission urges member states to have sufficient number of independent non-executive or supervisory directors on Board.

→ The European Commission has proposed legislation that would require non-executive directors to be 40% women by 2020, up from 16.6% in 2013.

→ UK businesses had voluntary targets first set in 2011 i.e. to have 25% women on FTSE100 (The Financial Times Stock Exchange) Boards by 2015.

→ A bill pending in the Brazilian Senate would impose a 40% female quota on the Boards of state owned enterprises by 2022.

→ In the global and highly interconnected world of business and finance where money and corporate operations constantly cross borders, creating trust is something that we need to do together.

Samacheer Kalvi 11th Commerce Notes

Tamilnadu Samacheer Kalvi 12th Economics Notes Chapter 10 Environmental Economics Notes

→ The introductory part of this chapter deals with human activity and natural environment.

→ The concept of environmental economics is the subset of economics that is concerned with the efficient allocation of environmental resources.

→ Further, it discusses the linkage between economy and environment with the help of material balance model developed by Alen Kneese and R.V. Ayres.

→ The second part is concerned with different type’s pollutions like air, water, noise and land pollution and its cause, effects and various reduction strategies.

→ Again, it dealt with the important aspects of global warming, climate change, acid rain, e-waste and solid waste which are responsible for environmental degradation.

→ Finally, it also reflects the importance of sustainable development and its goals which are striving to achieve through mass programs like green initiatives, organic farming, tree plantation, seed ball and alkali farming.

→ However, today the problems are mounting in the form of industrial pollution, atmospheric emission, soil erosion and land degradation, deforestation and irreversible loss of biodiversity due to increasing greed of the rich people.

→ The underlying cause of environmental degradation in countries like India is failure of market and institutions, a factor which has not been adequately focused on corrective actions.

→ Also, pollutions are cross-border problems.

→ Unless all the countries simultaneously attempt to overcome the problem, global warming cannot be stopped.

→ The rich countries which have been the cause for global warming, should be brought into pay for the damages caused by them.

→ Acid Rain : The result of sulphur dioxide (S02) and nitrogen oxides (NOx) reacting in the atmosphere with water and returning to earth as rain, fog or snow.

→ Air Pollution : The presence of contaminant or pollutant substances in the air
that do not disperse properly and interfere with human health or welfare or produce harmful environmental effects.

→ Climate Change : Climate change refers to any significant change in temperature,
precipitation, or wind patterns that occur over several decades or longer.

→ Eco System : The interacting system of a biological community and its
nonliving environmental surroundings.

→ Ecology : The relationship of liv ing things to one another and their environment, or the study of such relationship.

→ Environment : Surroundings in which an organization operates, including air,
water, land, natural resources, flora, fauna, humans, and their interrelations.

→ Externalities : A situation in which an individual or firm takes an action but
does not bear all the costs (negative externality) or receive all the benefits (positive externality) costs or benefits that fall on third parties.

→ Global warming : The increase in temperature of the Earth’s surface, due to
green house gases.

→ Land Pollution : Land pollution is the deposition of solid or liquid waste
materials on land or underground in a manner that can contaminate the soil and groundwater, threaten public health and cause unpleasant conditions and nuisances.

→ Organic Farming : System of farming which uses animal manure, organic waste
and legumes reducing, the use of chemical fertilizers and pesticides.

→ Pollution : Residual discharges of contaminants in to the natural
environment to the air or water.

→ Solid Wastes : Non-liquid, non-soluble materials, ranging from municipal
garbage to industrial wastes that contain complex, and hazardous, substances. Solid wastes include sewage sludge, agricultural refuse, demolition wastes, and mining residues.

→ Sustainable Development : Development that meets the needs of the present generation
without compromising the ability of future generations to meet their own needs.

→ Water Pollution : The presence of harmful or objectionable material to damage
water quality.

Samacheer Kalvi 12th Economics Notes

Tamilnadu Samacheer Kalvi 12th Economics Notes Chapter 9 Fiscal Economics Notes

→ The science of public finance deals with the revenue and expenditure of the Centre, state and local Government.

→ In modem times, this subject includes five major divisions: Public revenue, public expenditure, public debt, fiscal administration and Fiscal Policy.

→ Thus, public finance plays a vital role in both developed and underdeveloped economies.

→ In advanced or developed economies, this is a problem of economic instability due to either ‘lack of demand’ or ‘excess of demand’.

→ In under developed countries, fiscal policy is one of the instmments for achieving faster economic growth.

→ Fiscal Policy became popular after the Great Depression.

→ Governments intervention was emphasised by J.M. Keynes to get the economies out of the Depression.

→ There is close association between governments spending, private investment, interest rate, consumption and income growth.

→ Local Finance Progressive Tax Proportional Tax Quid pro quo Regressive Tax Tax

→ Budget: It is an annual financial statement which shows the income and expenditure of the Government

→ Deficit Budget:The gap between Government anticipated revenue and the targeted expenditure.

→ External public debt: A loan is taken from abroad or from an international organisation.

→ Federal Finance: The system of assigning the source of revenue to the Central as well as State Governments.

→ Fiscal Policy: Policy related with the revenue and expenditure process of the Government.

→ Internal public debt: A loan taken by the Government from the citizens or from different institutions with in the country.

→ Local Finance: Local finance refers to the finance of local bodies in India.

→ Progressive Tax: The rate of tax increases with the increase in tax base (income).

→ Proportional Tax: Tax is imposed at the same rate irrespective of tax base.

→ Quid pro quo: A favour or advantage granted in return for something.

→ Regressive Tax: High rate of tax is levied on the poor and low rate is levied to the rich

→ Tax: Compulsory payment paid by the citizens to the Government without any quid pro quo.

Samacheer Kalvi 12th Economics Notes

Tamilnadu Samacheer Kalvi 12th Economics Notes Chapter 8 International Economic Organisations Notes

→ The present chapter on International Economic Organisations discusses the role played by the IMF in solving the problem of trade related issues and credit facilities.

→ The financial, regulatory and consultative functions of IMF and its benefits to India have been dealt with.

→ Further, the objectives, functions and achievements of the World Bank and WTO have been covered.

→ Also, the various agreements implemented by the WTO such as TRIPS, TRIMS, GATS, AoA, MFA have been discussed.

→ The final part of the chapter deals with the regional economic integration among the trade blocks such as SAARC (South Asian nations), ASEAN (South East Asia) and BRICS and their achievements.

→ Common Market: A group formed by countries within a geographical area to promote duty free trade and free movement of labour and capital among its members.

→ Customs Union: Free trade area (zero tariffs among members) with a common external tariff.

→ Economic Union: It is composed of a common market with a customs union. The participant countries have both common policies on product regulation, freedom of movement of goods, services and the factors of production and a common external trade policy.

→ Free Trade Area: A region encompassing a trade bloc whose member countries have signed a free-trade agreement (FTA). Such agreements involve cooperation between at least two countries to reduce trade barriers.

→ Multilateral trade agreement: It is a multi national legal or trade agreements between countries. It is an agreement between more than two countries but not many.

→ Special Drawing Rights: International monetary reserve currency created by the International Monetary Fund (IMF) that operates as a supplement to the existing money reserves of member countries.

→ Structural Adjustment Facility: Providing additional balance of payments assistance on concessional terms to the poorer member nations to undertake strong macroeconomic and structural programmes.

→ Trade blocks: They are a set of countries which engage in international trade together and are usually related through a free trade agreement or other associations.

→ Trade Related Intellectual Property Rights (TRIPs): TRIPs include copy right, trade mark, patents, geographical indications, industrial designs and invention of microbial plants.

→ Trade Related Investment Rights (TRIMs): TRIMs are related to conditions or restrictions imposed in respect of foreign investment in the country.

Samacheer Kalvi 12th Economics Notes

Tamilnadu Samacheer Kalvi 11th Commerce Notes Chapter 19 Sources of Business Finance Notes

→ “Finance is the lifeblood of.any business.’” ‘

→ The term business finance denotes the economic resources employed in business enterprises.

→ “The finance function is the process of acquiring and utilizing funds by a business.”- R.C. Osborn

→ “Finance is that business activity which is concerned with the acquisition and conservation of capital fund in meeting the financial needs and overall objectives of business enterprises.”- B.O. Wheeler

→ Business finance is classified into three types with reference to time period.

→ Commercial paper (CP) is an unsecured money market instrument in the form of a promissory note.

→ Small scale firms can acquire industrial machinery, office equipments, vehicles, etc., without making full payment through hire purchase.

→ Factoring is a one of the methods of raising business finance through sale or mortgage of book debts,

→ When the bank lends for a period ranging from more than one year to less than five years, it is called medium term loan. ‘

→ Commercial banks are important sources of raising business finance for various purposes as well as for different time periods.

→ Owner’s funds mean funds which are provided by the owner of the enterprises who may be an individual, or partners or shareholders of a company.

→ The term ‘borrowed funds’ denotes the funds raised through loans or borrowings. .

→ Micro finance or financing small business enterprises today has to be viewed from the ‘ethical’ sources than the ‘informal’ sources that are totally unscrupulous in their financing practices.

→ Business enterprises have to analyse the cost of mobilising and utilizing the funds.

→ Financially sound enterprises have capacity to pay interest promptly and return the capital at the stipulated time.

→ Some investments can be easily and readily encashed in the market without any loss. Such investments are called liquid investments.

→ Real estate is one of the fastest growing sectors in India.

→ Public deposits are more beneficial than the fixed deposit in the bank, in the matter of yielding good return.

→ Bonds are one of the ideal investment options for those investors who would like to invest their hard earned money safely.

→ Recurring deposit (RD) account is another investment option for those people who earn regular income.

Samacheer Kalvi 11th Commerce Notes

Tamilnadu Samacheer Kalvi 12th Economics Notes Chapter 7 International Economics Notes

→ International Economics is a valuable branch of Economics dealing with how trade benefits nations Several theories have been propounded on causes of international trade starting from Adam Smith.

→ The controversy over the need for a separate theory has been resolved by the Modem Theory of International Trade.

→ The gains from trade, Terms of Trade, Balance of Payments constitute the major areas of discussion.

→ The Exchange rate, either fixed or flexible is a major factor determining the economic strength of the nation.

→ In the line of foreign trade and foreign capital, foreign investment (especially FDI) plays a major role in determining economic development of Less Developed Countries and developing countries.

→ International trade has helped the economically developed countries largely and disappointed many african and asian countries.

→ The international economic organizations such as IMF. IBRD and WTO and the trade blocs SAARC, ASEAN and BRICS which play a vital role in international trade are covered in the next chapter.

→ Absolute Cost Differences : The difference in the actual costs of production of a commodity between two nations.

→ Balance of Payments : The balance between the values of goods and services exchanged between two countries. It is a trade in both visible and non-visible items.

→ Balance of Trade : The balance between the values of goods exchanged between two countries. It is a trade in merchandise items or visible items only.

→ Comparative Cost Differences : The difference in the absolute costs of production of two commodities between two countries.

→ Devaluation: It means official reduction in the value of a currency in terms of gold or other currencies.

→ Exchange Rate: The rate at which one currency is exchanged for another currency.

→ Factor Endowment: Abundance in the availability of a factor in a country.

→ Fixed Exchange Rates: An exchange rate that is held within a narrow band by the monetary authorities.

→ Flexible Exchange Rates: Flexible exchange rates are freely determined in an open market primarily by private dealings, and they, like other market prices, vary from day by day.

→ Foreign Direct Investment: The investment made by a multinational enterprise in a foreign country and an investment in a foreign country that involves some degree of control and participation in management.

→ Foreign Exchange: The currency of another country.

→ Internal Trade: A trade within the geographical boundary of a particular nation.

→ International Economics : A special branch of Economics which primarily deals with the basics of international trade.

→ International Trade : A trade between two or more countries and it is a trade beyond the geographical and political boundaries.

→ Terms of Trade : The rate at which goods of one country are exchanged for that of another country ie ratio of export price and import price.

Samacheer Kalvi 12th Economics Notes

Tamilnadu Samacheer Kalvi 11th Commerce Notes Chapter 20 International Finance Notes

→ International finance is a section of financial economics that deals with the monetary interactions that occur between two or more countries.

→ International finance plays a pivotal role in the international trade and in the sphere of exchange of goods and services among the nations.

→ Foreign Direct Investment occurs when an investor based on one-’s native country (the home country) acquires an asset or a company in another country (in host country) with the intention to manage the asset or the company.

→ “Foreign direct investment (FDI) is an investment made by a company or an individual in one country with business interests in another country, in the form of either establishing Business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign company”

→ FDI generates a lot of employment opportunities in developing countries, especially in high skill areas.

→ Foreign companies take away huge funds in the form of dividend, royalty fees etc..This causes a huge outflow of capital from the host country.

→ FII can be defined as investment made by a Non-resident in equity of domestic company without intension of acquiring management control.

→ A depository’ receipt is a negotiable financial instrument issued by a bank to represent a foreign company’s publicly traded securities.

→ GDR is an instrument issued abroad by a company to raise funds in some foreign currencies and is listed and traded on a foreign stock exchange.

→ GDR is denominated in any foreign currency but the underlying shares would be denominated in local currency of the issuer.

→ ADR is a dollar denominated negotiable certificate representing a non-US company in US market which allows the US citizens to invest in overseas securities.

→ Then DCB requests the American Depository Bank (ADB) to issue the shares in the form of ADRs.

→ The approval of Securities and Exchange Commission (SEC) of US needs to be obtained for issuing ADR.

→ Foreign currency convertible bond is a special type of bond issued in the currency other than the home currency.

→ The amount received from the issue of FCCB should be utilised as per the guidelines of External Commercial Borrowing (ECB).

Samacheer Kalvi 11th Commerce Notes

Tamilnadu Samacheer Kalvi 11th Commerce Notes Chapter 21 Micro, Small and Medium Enterprises (MSME) and Self Help Groups (SHGs) Notes

→ Entrepreneurship is a key for economic development of any country.

→ In accordance with the provisions of Micro, Small and Medium Enterprises Development Act 2006, the micro, small and medium enterprises are classified into two classes.

→ MSMEs play a complementary role to serve as a feeder to large scale industries.

→ MSME sector contributes towards the establishment of socialistic pattern of society by reducing the concentration of income and wealth.

→ MSMEs contribute 45% to the total manufacturing output and 40% to the exports from the country.

→ In Tamil Nadu MSMEs sector produces a wide variety of products in almost all fields.
→ Government of Tamil Nadu launched “New Entrepreneur-cum-Enterprise Development Scheme (NEEDS)” with a view to encouraging the educated youth to become the first generation entrepreneurs.

→ There are many Banks and Financial institutions which provide financial assistance to Micro Small and Medium Enterprises and start-ups.

→ MUDRA Bank will refinance to Micro-Finance Institutions through a Pradhan Mantri Mudra Yojana (PMMY).

→ Rural development is one of the main pillars of progress of India.

→ National Bank for Agricultural & Rural Development (NABARD) has defined Self Help Group as “a homogenous group of rural poor voluntarily formed to save whatever amount they can conveniently save out of their earnings and mutually agree to contribute to a common fund of the group to be lent to the members for meeting their productive and emergent credit needs”

→ The motto of every group members should be “saving first – credit latter”

→ Self Help Group holds weekly meetings mostly during non-working hours, and full attendance is made mandatory for better participation.

→ The five year plans of the government of India has given due recognition on the importance and the relevance of the Self-help group method to implement developmental schemes at the grassroots level.

Samacheer Kalvi 11th Commerce Notes

Tamilnadu Samacheer Kalvi 12th Economics Notes Chapter 6 Banking Notes

→ It is well-recognized that the financial sector plays a critical role in the development process of a country.

→ Financial institutions, instruments and markets that constitute the financial sector that act as a conduit for the transfer of resources from net savers to net borrowers, that is, from those who spend less than they earn to those who spend more than they earn.

→ The outcome of the various reform measures so far has been impressive and banks have responded to the deregulation and the increasingly competitive environment by restructuring their operation and upgrading performance standards.

→ However, in the 2010s the volumes of NPAs have increased sharply.

→ Bank Rate : It is the rate at which the Central Bank of a country is prepared to re-discount the first class securities.

→ Capital Market : It is a financial market in which long-term debt or equity backed securities are bought and sold.

→ Cash Reserve Ratio (CRR) : Banks are required to hold a certain proportion of their deposits in the Form of cash with RBI. This is known as CRR.

→ Central Bank : It is an institution that manages a state’s currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system.

→ Commercial Banks : These are the institutions that make short term loans to business and in the process create money.

→ Credit Creation : It means the multiplication of loans and advances. Commercial banks receive deposits from the public and use these deposits to give loans.

→ Demonetisation : It is the act of stripping a currency unit of its status as legal tender. It occurs whenever there is a change of national currency.

→ Monetary Policy : It is the macro-economic policy laid down by the Central Bank towards the management of money supply and interest rate.

→ Non-Bank Financial Institution (NBFI) : It is a financial institution that does not have a full banking license or is not supervised by the central bank:

→ Statutory Liquidity Ratio (SLR): It is the amount which a bank has to maintain in the form of cash, gold or approved securities.

Samacheer Kalvi 12th Economics Notes