Question Answers: NCERT Class 12 Macro Economics

Differentiate between devaluation and depreciation.

What is a barter system? What are its drawbacks?

Write down some of the limitations of using GDP as an index of welfare of a country.

Explain the relation between government deficit and government debt.

From the following data, calculate Personal Income and Personal Disposable Income.
                                                                               Rs (crore)
(a) Net Domestic Product at factor cost                    8,000
(b) Net Factor Income from abroad                              200
(c) Undisbursed Profit                                                1,000
(d) Corporate Tax                                                         500
(e) Interest Received by Households                         1,500
(f) Interest Paid by Households                                  1,200
(g) Transfer Income                                                       300
(h) Personal Tax                                                            500

Why should the aggregate final expenditure of an economy be equal to the aggregate factor payments? Explain.

Give the relationship between the revenue deficit and the fiscal deficit.

Explain ‘Paradox of Thrift’.

Discuss the issue of deficit reduction.

What is the difference between ex ante investment and ex post investment?

Calculate the open economy multiplier with proportional taxes, T = tY, instead of lump-sum taxes as assumed in the text.

Why is the open economy autonomous expenditure multiplier smaller than the closed economy one?

Distinguish between the nominal exchange rate and the real exchange rate. If you were to decide whether to buy domestic goods or foreign goods, which rate would be more relevant? Explain.

Describe the four major sectors in an economy according to the macroeconomic point of view.

Differentiate between balance of trade and current account balance.

What is money multiplier? What determines the value of this multiplier?

What is the difference between planned and unplanned inventory accumulation? Write down the relation between change in inventories and value added of a firm.

What are the important features of a capitalist economy?

What is the marginal propensity to import when M = 60 + 0.06Y? What is the relationship between the marginal propensity to import and the aggregate demand function?

What is marginal propensity to consume? How is it related to marginal propensity to save?