Class 12 Macro Economics - Chapter Government Budget and Economy NCERT Solutions | Explain why the tax multiplier is smalle

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?

‘The fiscal deficit gives the borrowing requirement of the government’. Elucidate.

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.

Does public debt impose a burden? Explain.

Explain why public goods must be provided by the government.

What do you understand by G.S.T? How good is the system of G.S.T as compared to the old tax system? State its categories.

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 money multiplier? What determines the value of this multiplier?

What is a ‘legal tender’? What is ‘fiat money’?

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

What is transaction demand for money? How is it related to the value of transactions over a specified period of time?

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?

What are the alternative definitions of money supply in India?

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

Explain the functions of a commercial bank.

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?