Category: Economics
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Explain the concept of ‘deficit’ in balance of payments.
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The deficit in Balance of payments Balance Of Payments gives a systematic record of all economic transactions between the residents and the rest of the ...

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Explain the impact of rise in exchange rate on national income.
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ANSWER: Foreign exchange rate refers to the rate at which one currency is exchanged for the other. If  the exchange  rate  rises from  $1  =  Rs  45  to  ...

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Explain the meaning of Revenue deficit, Fiscal deficit, Primary deficit
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ANSWER: revenue deficit is the excess of government revenue expenditure over revenue receipts. Fiscal deficit is when total expenditure exceeds total ...

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What is meant by aggregate demand ? State its components.
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ANSWER: Aggregate demand refers to total expenditure on goods and services in an economy during a period of time. Components of aggregate demand are: • ...

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What is meant by inflationary gap ? State three measures to reduce this gap.
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ANSWER: Inflationary gap is the gap by which actual aggregate demand exceeds the level of aggregare demand required to establish full employment. It measures ...

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Explain the role of the Reserve Bank of India as the “lender of last resort”.
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ANSWER: central bank is an apex institution which controls entire banking system in an economy having sole authority in issuing notes. When commercial  ...

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.  Define multiplier. What is the relation between marginal propensity to consume and multiplier ? Calculate the marginal propensity to consume if the value of multiplier is 4.
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ANSWER: Multiplier is the ratio of increase in national income due to an increase in investment. MPC and the value of multiplier has direct relationship ...

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Define money supply.
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ANSWER: money supply refers to the total amount of money held by publc at a particular point of time in an economy.

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Why does consumption curve not start from the origin?
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ANSWER: consumption curve does not start from origin as even at zero level of income there exists some consumption known as autonomous consumption.

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Explain the conditions of consumer’s equilibrium using Indifference Curve Analysis.
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ANSWER: a consumer is said to be in equilibrium when he maximizes his satisfaction,given his income and prices of two goods. He attains equilibrium at that ...