A good concise

addition to the
knowledge of
Economics

Lakshmi Kumar

Meant for students of management, the book Business Economics by Nilesh N.
Sarawate is an admirable elucidation of the application of Modern MacroEconomics.
With the exponential increase in management schools year after year in India, this book is
timely and well-conceived. Management students need to learn economics in a practical
way, so that they may apply the concepts in studying other subjects as well as relate them
to real life. It is also important that they retain these concepts to understand the daily
newspaper. Most importantly, these students need to understand world macroeconomic
events in an analytical manner so that they are effective managers. This book will provide a
good grounding to such students. It supplements Gregory Mankiws books and dicusses
many economic problems with examples in a lucid style. The small boxes about different
famous economists, in each chapter, tie up their contribution to the evolution of
economics and the various topics.
Module one builds a good foundation in economics. The rudiments of mathematics
pertaining to or necessary for economics are well explained. The section dealing with
derivatives, though, can be explained further with the help of functions for better
understanding. The basic concepts of demand and supply are explained well. Hence, there
is no need for a reader to have knowledge of microeconomics to follow this book. Trade
theory too is treated in a simple manner so that the readers understand the difference
between comparative and absolute advantage.
In module two, the treatment of the age-old circular flow of income in the form of a
Global Economic and Finance Cycle is rather unique. It relates the mundane circular flow
of income to business and its applications. This makes for interesting reading and
application. Consumption, savings and investment functions are explained in a practical
manner but an addition of theory will enhance the books content. The basic concepts,
namely, GDP and its components, interest rate, exchange rate or inflation are explained in
a practical manner without going into their theories. As a teacher, therefore, one might
find this inadequate. Its true that management students need only a practical knowledge
but they can read about it easily. As an instructor, I feel that the need to explain theory to
the student is equally important.
I find the explanation of the key macroeconomic theories in module three adequate. Both
the IS-LM and aggregate demand and supply have received their fair share in the book.
More interesting is the Economic Thought Process approach. This chapter describes the
relationship between several macroeconomic variables. This is the major value-addition of
the book and will help students and the layman connect the several macroeconomic
variables that they encounter in life.
The historical and in-depth treatment of the case studies, particularly the one relating to
Japan and Asias meltdown is very interesting and simple. The cases explain some
important macro events in the recent past in detail. This helps us connect the several
macro economic relationships to practical policy. Very often, such cases are not discussed
by other authors. Hence, this is a useful addition in a macroeconomics book.
Finally, a chapter on analysing economic statements is useful. This section could have been
given a longer treatment, given the fact that understanding the budget or current account
is so important. Students are always curious to read more on practical events and in
understanding the same. Hence, this section could have been more elaborate.
This book is surely a good concise addition to the knowledge of Economics. It is useful for
both, the students and the general public because it demystifies macroeconomics. However,
a longer discussion in some chapters would add greater value.

The writer is a Faculty Associate at the Institute for Financial Management and Research, Chennai.