(i) Common market is established through trade pacts.
(ii)  A group formed by countries within a geographical area to promote duty free trade and free movement of labour and capital among its members.

The rate at which goods of one country are exchanged for that of another country i.e. ratio of export price and import price.

(i) International trade refers to the trade or exchange of goods and services between two or more countries.
(ii) It is a trade among different countries or trade across political boundaries.

A Commercial bank is a financial institution that accepts deposits and advances loans and are profit motivated.

Muliplier is the ratio of the change in national income to change in Investment.
K = \(\frac{ΔY}{ΔI}\)

1. No single buyer or seller can affect the price.
2. Full employment
3. People are motivated by self interest Market forces determine everything right.
4. Perfect competition exists in labour and product market.
5. There is wage price flexibility.
6. Money acts as medium of exchange.
7. Long run analysis.
8. No overproduction or unemployment.

(i) Inflation refers to steady increase in general price level.
(ii) The General price level is based on Wholesale Price Index, Consumer Price Index.

(i) Trade blocks cover different kinds of arrangements between or among countries for mutual benefit.
(ii) Free Trade Area, Customs Union, Common Market and Economic Union.

(i) Money supply means the total amount of money in an economy.
(ii) It refers to the amount of money which is in circulation in an economy at any given time.
(iii) Money supply determines the price level and interest rates.
(iv) Money supply viewed at a given point of time is a stock and over a period of time it is a flow.

S. No	Autonomous Investment	Induced Investment
2.	Independent	Planned
3.	Income inelastic	Income elastic
4.	Welfare motive	Profit motive

S. No:	Keynesianism	Classicism
1.	Short-run equilibrium	Long-run equilibrium
2.	Saving is a vice	Saving is a social virtue.
3.	Money functions as medium of exchange and store of value	Money acts as a medium of exchange
4.	Macro approach to national problems	Micro approach to macro problems
5.	State intervention is advocated	Favoured laissez-faire policy

(i) National income is of great importance for the economy of a country.
(ii) National income helps us to know the relative importance and contribution of each sector. We could find how income is produced, how it is distributed, how much is spent, saved or taxed.
(iii) National income data is used to build economic models in short run and long run.
(iv) Data regarding gross income, output, saving & consumption is used in economic planning.
(v) National income data is used to build economic models in short run and long run.
(vi) It is used to make international comparison, inter - regional comparison and inter - temporal comparison of growth of the economy during different periods.
(vii) If income is equally distributed, the per capita income will reflect the economic welfare of the country.

S.No.	Capitalism	Globalism
1	Also called free economy or laissez faire or market economy where the role of the government is minimum	Also called extended capitalism. It connects nations together through international trade
2	Market determines economic activities within a nation	It aims at global development Manfred
3	Adam Smith is the father of the capitalism	D. Steger (2002) coined the term

S.No	Internal Trade	International Trade
1	Trade takes place between different individual and firms within the same nation.	Trade takes place between different individual and firms in different countries.
2	Labour and capital move freely from one region to another.	Labour and capital do not move easily from one nation to another.
3	Free flow of goods and services since there are no restrictions.	Goods and services do not easily move from one country to another because of tariff and quota.
4	There is only one common currency.	There are different currencies.
5	Physical and geographical conditions of a country are similar.	There are differences in physical and geographical conditions of the two countries.
6	Trade and financial regulations are same.	Trade and financial regulations, interest rate, trade laws differ between countries.
7	No difference in political affiliations, customs and habits of the people and government policies.	There are lot of differences in political affiliation, habits, customs of the people and government policies.

(i) Primary Functions:
Medium of exchange:
(i) Money has general acceptability and all exchanges take place in terms of money.
(ii) First, money is got through sale of goods or services.
(iii) Later, money is used to buy goods and services.
(iv) Thus, in the modern exchange system money acts as the intermediary in sales and purchases.
Measure of value
(i) Money measures the value of goods and services.
(ii) Prices of all goods and services are expressed in terms of money.
(iii) Since all the values are expressed in terms of money, it is easier to determine the rate of exchange between various types of goods in the community.
(ii) Secondary Functions:
Store of value:
(i) Savings is done in terms of money.
(ii) Money is a store of wealth, as it can be easily converted into other marketable assets such as land, machinery, plant.
Standard of Deferred Payments:
(i) Borrowing and lending is done in money.
Means of Transferring Purchasing Power:
(i) The field of exchange went on extending with growing economic development.
(ii) The exchange of goods is now. extended to distant lands.
(iii)  So it is necessary to transfer purchasing power from one place to another.
(iii) Contingent Functions:
Basis of the Credit System:
(i) Business transactions are either in cash or on credit.
(ii) A depositor uses cheques only when there are sufficient funds in his account.
(iii) The commercial banks create credit on the basis of adequate cash reserves.
(iv) Money is at the back of all credit.
Money facilitates distribution of National Income:
(i) Money is used in the distribution of income as rent, wage, interest and profit.
Equalize Marginal Utilities and Marginal Productivities:
(i) Consumer gets maximum utility only if he incurs expenditure on various commodities in such a  manner as to equalize marginal utilities accruing from them.
(ii) Here, money plays an important role, because the prices of all commodities are expressed in money.
(iii) Money helps to equalize marginal productivities of various factors of production.
Increases Productivity of Capital:
(i) Money is the most liquid form of capital.
(ii) It can be put to any use.
(iii) So it can be transferred from the less productive to the more productive uses.
(iv) Other Functions:
Maintains Repayment Capacity:
(i) Money has general acceptability.
(ii) To maintain its repayment capacity, every firm has to keep assets in the form of money.
(iii) Firms, banks, insurance companies and governments have to keep some liquid money (i.e., cash) to maintain their repayment capacity.
Represents Generalized
Purchasing Power:
(i) Purchasing power kept in terms of money can be put to any use.
Gives liquidity to Capital:
(i) Money is the most liquid form of capital & so can be put to any use.

Introduction
According to J. B. Say "Supply creates its own demand"
Explanation
A person receives his income from production which is spent on the purchase of goods and services produced by others. For the economy as a whole, therefore, total production equals total income.
Criticisms
(i) According to Keynes, supply does not. create its demand. It is not applicable where demand does not increase as much as production increases.
(ii) Automatic adjustment process will not remove unemployment. Unemployment can be removed by increase in the rate of investment.
(iii) Money is not neutral. Individuals hold money for unforeseen contingencies, businessmen keep cash reserve for future activities.
(iv) Say's law is supply creates its own demand and there is no over production. Keynes said that over production is possible
(v) Keynes regards full employment as a special case because there is underemployment in capitalist economies.
(vi) State intervention is needed when there is over production and mass unemployment.