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.
C = 100 + 0.75 YD
I = 500
G = 750
X = 150
M = 100 + 0.2 Y
Equilibrium income (Y) = C + c (Y - T) + I + G + X - M – mY
Since NX is negative, it implies trade deficit.
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.
Give the relationship between the revenue deficit and the fiscal deficit.
Discuss the issue of deficit reduction.
Are fiscal deficits inflationary?
What is the difference between ex ante investment and ex post investment?
Explain why the tax multiplier is smaller in absolute value than the government expenditure multiplier.
Does public debt impose a burden? Explain.
Are the concepts of demand for domestic goods and domestic demand for goods the same?
What are the important features of a capitalist economy?
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’?
Write down some of the limitations of using GDP as an index of welfare of a country.
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.
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.