Class 12 Macro Economics - Chapter Money and Banking NCERT Solutions | What is High Powered Money?

What is a barter system? What are its drawbacks?

What are the alternative definitions of money supply in India?

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

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

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

What are the instruments of monetary policy of RBI?

Explain the functions of a commercial bank.

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

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

Do you consider a commercial bank ‘creator of money’ in the economy?

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

Explain why public goods must be provided by the government.

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 the difference between microeconomics and macroeconomics?

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

Distinguish between revenue expenditure and capital expenditure.

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 important features of a capitalist economy?

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

Suppose the exchange rate between the Rupee and the dollar was Rs. 30=1$ in the year 2010. Suppose the prices have doubled in India over 20 years while they have remained fixed in USA. What, according to the purchasing power parity theory will be the exchange rate between dollar and rupee in the year 2030.

In a single day Raju, the barber, collects Rs 500 from haircuts; over this day, his equipment depreciates in value by Rs 50. Of the remaining Rs 450, Raju pays sales tax worth Rs 30, takes home Rs 200 and retains Rs 220 for improvement and buying of new equipment. He further pays Rs 20 as income tax from his income. Based on this information, complete Raju’s contribution to the following measures of income (a) Gross Domestic Product (b) NNP at market price (c) NNP at factor cost (d) Personal income (e) Personal disposable income.

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.

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

Differentiate between balance of trade and current account balance.

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

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?

Write down the three identities of calculating the GDP of a country by the three methods. Also briefly explain why each of these should give us the same value of GDP.

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