Explain the role of the following in correcting 'excess demand' in an economy:
Open market operations
Open Market operations as an Instrument to Correct Excess Demand:
Open Market Operations refer to the buying and selling of securities either to the public or to the commercial banks in an open market. To curtail excess demand the central bank sells securities in the open market. By selling the securities in the open market, the central bank withdraws excess money from the economy. This results in a lower Aggregate Demand in the economy and excess demand is controlled.
Giving reasons classify the following into intermediate products and final products:
Furniture purchased by a school.
Distinguish between collusive and non-collusive oligopoly. Explain how the oligopoly firms are interdependent in taking price and output decisions.
Explain the process of money creation by the commercial banks with the help of a numerical example.
Giving reasons classify the following into intermediate products and final products:
Chalks, dusters, etc. purchased by a school.
Explain the role of the following in correcting 'deficient demand' in an economy:
Bank rate
Explain the role of the following in correcting 'deficient demand' in an economy:
Open market operations.
From the following data about a Government budget, find out (a) Revenue deficit, (b) Fiscal deficit and (c) Primary deficit:
(Rs. Arab)
(i) Capital receipts net of borrowings 95
(ii) Revenue expenditure 100
(iii) Interest payments 10
(iv) Revenue receipts 80
(v) Capital expenditure 110
