Of course for the above question there are other ways to do it.
This is one simple method
Start two emulators and call each other, but the problem is it will be time consuming and memory will be consumed.
1. First start your emulator and make sure it’s running.
2. Then go to command prompt in windows by hitting CTRL+r and typing the cmd command in
the run window.
3. Type telnet and press enter
(If it is not working in Windows 7 then see this article to how to enable telnet in Windows7)
4. Type o localhost 5554 and press enter.(if your emulator serial number is 5554)
7. To cancel the call use this
gsm cancel phone_number
Now how to send SMS to the emulator
8. sms send emulator_serial_number
However you can type help on the prompt for checking out more options
Or type help gsm etc, you will get help regarding gsm
To exit the android console type exit.
To exit telnet type quit.
Please leave comments if you found this tutorial useful or if you have any doubt.