In the above example, if exports change to X = 100, find the change in equilibrium income and the net export balance.
C = 40 + 0.8 YD
T = 50
I = 60
G = 40
X = 100
M = 50 + 0.05Y
Equilibrium income (Y)
Net export balance NX = X - M - 0.05Y
= 100 - 50 - 0.05 × 600
= 50 - 0.05 × 60
= 50 - 30 = 20
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.
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Discuss the issue of deficit reduction.
Are fiscal deficits inflationary?
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How is the exchange rate determined under a flexible exchange rate regime?
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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.
Does public debt impose a burden? Explain.
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Define budget deficit and trade deficit. The excess of private investment over saving of a country in a particular year was Rs 2,000 crores. The amount of budget deficit was ( – ) Rs 1,500 crores. What was the volume of trade deficit of that country?
Differentiate between balance of trade and current account balance.
What role of RBI is known as ‘lender of last resort’?