Explain bankers bank, function of Central bank.
The central bank being the apex bank of a country, serve as a banker to all the commercial banks in the country. The reserves of the commercial banks are held by the central bank. These reserves serve as a pool from which the central bank advances money to the commercial banks in times of financial crisis. The central bank supervises, regulates the commercial banks and helps them in case of any financial exigencies.
Giving reason, explain how the following should be treated in estimating national income:
Purchase of tractor by a farmer
Explain the concept of ‘deficient demand’ in macroeconomics. Also explain the role of Bank Rate in correcting it.
| S.No. | Items | (Rs crores) |
| (i) | Factor income from abroad | 15 |
| (ii) | Private final consumption expenditure | 600 |
| (iii) | Consumption of fixed captial | 50 |
| (iv) | Government final consumption expenditure | 200 |
| (v) | Net current transfers to abroad | (-)5 |
| (vi) | Net domestic fixed capital formation | 110 |
| (vii) | Net factor income to abroad | 10 |
| (viii) | Net imports | (-)20 |
| (ix) | Net indirect tax | 70 |
| (x) | Change in stocks | (-)10 |
Explain the concept of ‘excess demand’ in macroeconomics. Also explain the role of ‘open market operation’ in correcting it.
Explain the distinction between autonomous and accommodating transactions in balance of payments. Also explain the concept of balance of payments deficit in this context.
Giving reason, explain how the following should be treated in estimating national income:
Expenditure on fertilizers by a farmer.
