Short Answer TypePrimary deficit equals: (Choose the correct alternative)
(1) (a) Borrowings (b) Interest payments (c) Borrowings less interest payments (d) Borrowings and interest payments both
Foreign exchange transactions which are independent of other transactions in the Balance of Payments Account are called:(Choose the correct alternative)
(a) Current transactions
(b) Capital transactions
(c) Autonomous transactions
(d) Accommodating transactions
What is aggregate demand? State its components.
Aggregate demand means the total demand for goods and services in an economy during the year. Components of aggregate demand:
i. Private consumption expenditure (C) is the total expenditure of households on final goods and services to satisfy their wants. It includes autonomous consumption expenditure and induced consumption expenditure.
ii. Private investment expenditure (I) is ex-ante investment by private investors corresponding to different income levels in the economy. It includes autonomous investment expenditure and induced investment expenditure.
iii. Government expenditure (G) is the planned expenditure by the government on consumption and investment expenditure for the welfare of the economy. iv. Net export (X–M) is the difference between the goods and services produced domestically by the rest of the world and abroad by the residents of a country.
An economy is in equilibrium. Calculate Marginal Propensity to Consume:
National income = 1000
Autonomous consumption expenditure = 200
Investment expenditure = 100
Sale of petrol and diesel cars is rising particularly in big cities. Analyse its impact on gross domestic product and welfare.
Explain the 'medium of exchange' function of money. How has it solved the related problem created by barter?
Long Answer TypeWhat is the difference between revenue expenditure and capital expenditure? Explain how taxes and government expenditure can be used to influence.
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