What is the difference between direct tax and indirect tax? Explain the role of government budget in influencing allocation of resources.
Given saving curve, derive consumption curve and state the steps in doing so. Use diagram.
In the diagram, the supply curve is given as the SS curve and –C represents negative savings. At the breakeven Point B, we find that Y = C and S = O.
Derivation of the consumption curve from the saving curve: Given the SS curve, let us consider OS = OC. At Point B, draw a perpendicular 45° line towards Point A. Points C and A are joined to produce a straight line upward sloping consumption curve CC.
Indian investors lend abroad. Answer the following questions:
(a) In which sub-account and on which side of the Balance of Payments Account such lending is recorded? Give reasons.
(b) Explain the impact of the lending on market exchange rate.