﻿ C = 100 + 0.4 Y is the Consumption Function of an economy where

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## CBSE Class 12 Economics Solved Question Paper 2013

31.

Explain the effect of appreciation of domestic currency on imports.

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32.

Distinguish between balance of trade and balance on current account.

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33.

Calculate “sales” from the following data:

 S.No Particulars (Rs in lakhs) (i) Net Value added at factor cost 560 (ii) Depreciation 60 (iii) Change in stock (-) 30 (iv) Intermediate cost 1000 (v) Exports 200 (vi) Indirect taxes 60
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34.

Giving reasons categorize the following into stock and flow:
(i) Capital
(ii) Saving
(iii) Gross domestic product
(iv) Wealth

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35.

Explain the circular flow of income.

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36.

Explain “Banker to the Government” function of the Central Bank.

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# 37.C = 100 + 0.4 Y is the Consumption Function of an economy where C is Consumption Expenditure and Y is National Income. Investment expenditure is 1,100. Calculate(i) Equilibrium level of National Income.(ii) Consumption expenditure at equilibrium level of national income.

(1) Calculation of equilibrium level of national income:
Given, Consumption Function (C) =100+0.4Y
Investment expenditure (I) = 1,100
At equilibrium level AD= AS OR y= C+I
By substituting values
Y=100+0.4Y + 1100
Y – 0.4Y = 1200
0.6Y=1200
OR Y =2000
Hence equilibrium level of national income = 2000

(2) Calculation of Consumption expenditure at equilibrium level of national income:
C= 100+0.4Y (Given)
Equilibrium level of national income = 2000
C= 100+0.4 *2000
C = 100+ 800
Therefore Consumption expenditure (C) at equilibrium level of national income (2000) = 900

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38.

Complete the following table:

 Income (Rs) Consumption expenditure (Rs) Marginal Propensity to Save Average Propensity to Save 0 80 100 140 0.4 - 200 - - 0 - 240 - 0.20 - 260 0.8 0.35
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39.

Calculate National Income from the following data:

 S.No. Particulars (Rs in crores) (i) Private final consumption expenditure 900 (ii) Profit 100 (iii) Government final consumption expenditure 400 (iv) Net indirect taxes 100 (v) Gross domestic capital formation 250 (vi) Change in stock 50 (vii) Net factor income from abroad (-) 40 (viii) Consumption of fixed capital 20 (ix) Net imports 30
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40.
 S.NO. Particulars (Rs in Crores) 1   2   3   4   5   6   7 Gross domestic product at Market price   Net current transfers to the rest of the world Net indirect tax   Net factor income to abroad   National debt interest   Consumption of fixed capital   Current transfers from government 2,000   (-)200   150   60   70   200   150
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