Class 12 Macro Economics - Chapter Government Budget and Economy NCERT Solutions | ‘The fiscal deficit gives the borr

Explain the relation between government deficit and government debt.

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

Discuss the issue of deficit reduction.

Are fiscal deficits inflationary?

We suppose that C = 70 + 0.70Y D, I = 90, G = 100, T = 0.10Y (a) Find the equilibrium income. (b) What are tax revenues at equilibrium income? Does the government have a balanced budget?

In the above question, calculate the effect on output of a 10 per cent increase in transfers, and a 10 per cent increase in lump-sum taxes. Compare the effects of the two.

Explain why the tax multiplier is smaller in absolute value than the government expenditure multiplier.

Does public debt impose a burden? Explain.

Explain why public goods must be provided by the government.

Suppose marginal propensity to consume is 0.75 and there is a 20 per cent proportional income tax. Find the change in equilibrium income for the following (a) Government purchases increase by 20 (b) Transfers decrease by 20.

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

Differentiate between balance of trade and current account balance.

What are the four factors of production and what are the remunerations to each of these called?

What is a barter system? What are its drawbacks?

What is the difference between microeconomics and macroeconomics?

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

What are official reserve transactions? Explain their importance in the balance of payments.

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

What are the main functions of money? How does money overcome the shortcomings of a barter system?

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?

If inflation is higher in country A than in Country B, and the exchange rate between the two countries is fixed, what is likely to happen to the trade balance between the two countries?

What are the main functions of money? How does money overcome the shortcomings of a barter system?

What are official reserve transactions? Explain their importance in the balance of payments.

What do you understand by ‘parametric shift of a line’? How does a line shift when its (i) slope decreases, and (ii) its intercept increases?

What role of RBI is known as ‘lender of last resort’?

Discuss some of the exchange rate arrangements that countries have entered into to bring about stability in their external accounts.

What is a barter system? What are its drawbacks?

Differentiate between balance of trade and current account balance.

Would the central bank need to intervene in a managed floating system? Explain why.