21.

Define cash reserve ratio.

Define money supply.

Define foreign exchange rate. 

State the components of capital account of balance of payments. 

Explain how 'distribution of gross domestic product' is a limitation in taking gross domestic product as an index of welfare. 

Given that national income is Rs.80 crore and consumption expenditure Rs.64 crore, find out average propensity to save. When income rises to Rs.100 crore and consumption expenditure to Rs.78 crore, what will be the average propensity to consume and the marginal propensity to consume? 

Explain the relationship between investment multiplier and marginal propensity to consume. 

When price of a foreign currency rises, its demand falls. Explain why.

Explain the 'allocation of resources' objective of Government budget. 

When price of a foreign currency rises, its supply also rises. Explain why.