Class 12 Macro Economics - Chapter Government Budget and Economy NCERT Solutions | Explain the relation between government

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.

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?

Suppose C = 100 + 0.75Y D, I = 500, G = 750, taxes are 20 per cent of income, X = 150, M = 100 + 0.2Y . Calculate equilibrium income, the budget deficit or surplus and the trade deficit or surplus.

How is the exchange rate determined under a flexible exchange rate regime?

Differentiate between balance of trade and current account balance.

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

What are the important features of a capitalist economy?

Should a current account deficit be a cause for alarm? Explain.

Differentiate between devaluation and depreciation.

Are the concepts of demand for domestic goods and domestic demand for goods the same?

Explain ‘Paradox of Thrift’.

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