Short Answer TypeDefine externalities. Give an example of negative externality. What is its impact on welfare?
Explain the significance of 'store of value' function of money.
A store of value is the function of an asset that can be saved, retrieved and exchanged at a later time, and be predictably useful when retrieved. It is an important function of money. This implies that wealth in the form of money can be stored easily as a medium of exchange for future use. For example, money can be stored in banks for meeting emergency and future needs. The importance of the money as store of value is explained in the following points.
1) Money is not perishable and its storage costs are also considerably lower.
2) It is also acceptable to anyone at any point of time.
3) Wealth can be stored in the form of money for future use.
4) In the barter system, it was very difficult to store goods, especially perishable goods for the purpose of value storage. This limitation of barter system is overcome by the money due to its potential to store value.
5) The contractual or future payments were very difficult to be made in barter system. Money helps people to demand and forward loans and to make future and deferred payments along with interests.
Is the following, revenue expenditure or capital expenditure in the context of government budget? Give reason.
(i) Expenditure on collection of taxes.
(ii) Expenditure on purchasing computers.
Recently Government of India has doubled the import duty on gold. What impact is it likely to have on foreign exchange rate and how?
Switch
