Class 12 Macro Economics - Chapter Open Economy Macroeconomics NCERT Solutions | Suppose C = 100 + 0.75Y D, I = 500, G =

Differentiate between devaluation and depreciation.

Suppose C = 40 + 0.8Y D, T = 50, I = 60, G = 40, X = 90, M = 50 + 0.05Y

(a) Find equilibrium income. (b) Find the net export balance at equilibrium income (c) What happens to equilibrium income and the net export balance when the government purchases increase from 40 and 50?

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.

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

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

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.

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

Differentiate between balance of trade and current account balance.

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

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?

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.

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?

Distinguish between revenue expenditure and capital expenditure.

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?

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

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?

Are fiscal deficits inflationary?

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

What is the difference between microeconomics and macroeconomics?

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

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

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

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