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Giving reason, state whether the following is a revenue expenditure or a capital expenditure in a government budget:
Expenditure of building a bridge.
Concept: Classification of Expenditure
What is meant by price ceiling? Explain its implications.
Concept: Price Ceiling
Answer the following question.
In the given diagram, OP is the market-determined price, and OP1 is the price fixed by the government.
Concept: Price Floor
Suppose the demand and supply equations of a commodity X in a perfectly competitive market are given by :
Qd = 1700 – 2P
Qs = 1300 + 3P
Calculate the value of equilibrium price and equilibrium quantity of the commodity X.
Concept: Equilibrium Price
Answer the following question.
In the given figure, what does the gap 'KT' represent? State any two fiscal measures to correct the situation.
Concept: Measures of Government Deficit
Answer the following question.
Define "Trade surplus". How is it different from "Current account surplus"?
Concept: Concept of Balance of Payments >> Balance of Payments Surplus and Deficit
"Under the flexible exchange rate system, the Central Bank does not intervene in the foreign exchange market."
Justify the statement, giving valid arguments.
Concept: Determination of the Exchange Rate
Explain the impact of home currency depreciation on the exports of a nation.
Concept: Determination of the Exchange Rate
Giving valid reason, state whether the following statement is true or false:
Dividend received from investment abroad is recorded on the credit side of the capital account.
Concept: Concept of Balance of Payments >> Current Account
Giving valid reason, state whether the following statement is true or false:
Depreciation of the Indian Currency will lead to promotion of Indian exports.
Concept: Determination of the Exchange Rate
Distinguish between Autonomous transactions and Accommodating transactions.
Concept: Concept of Balance of Payments >> Balance of Payments Surplus and Deficit
Find net value added at factor cost:
(Rs lakh)
(i) Durable use producer goods with a life span of 10 years 10
(ii) Single use producer goods 5
iii) Sale 20
(iv) Unsold output produced during the year 2
(v) Taxes on production 1
Concept: Circular Flow of Income and Methods of Calculating National Income
Find national income and private income:
| (Rs crore) | ||
| (i) | Rent | 200 |
| (ii) | Net current transfer to abroad | 10 |
| (iii) | National debt interest | 60 |
| (iv) | Corporate tax | 100 |
| (v) | Composition of employees | 900 |
| (vi) | Current transfers from government | 150 |
| (vii) | Interest | 400 |
| (viii) | Interest | 50 |
| (ix) | Undistributed profits | 250 |
| (x) | Net factor income to abroad | (-)10 |
| (xi) | Income accruing to government | 120 |
Concept: Private Income
Explain the precautions that are taken while estimating additional income by the value-added method.
Concept: Circular Flow of Income and Methods of Calculating National Income
Giving reason comment on the shape of production possibilities curve based on the following schedule:
| Good X (units) | Good Y (units) |
| 0 | 8 |
| 1 | 6 |
| 2 | 4 |
| 3 | 2 |
| 4 | 0 |
Concept: Concepts of Production Possibility Frontier
If the Real GDP is Rs400 and Nominal GDP is Rs450, calculate the Price Index (base = 100).
Concept: GDP and Welfare
Giving reason, comment on the shape of Production Possibilities Curve based on the following table :
| Good X (units) | Good Y (units) |
| 0 | 20 |
| 1 | 18 |
| 2 | 14 |
| 3 | 8 |
| 4 | 0 |
Concept: Concepts of Production Possibility Frontier
Calculate National Income and Private Income :
| (Rs crores) | ||
| (i) | Net imports | 5 |
| (ii) | Net domestic capital formation | 15 |
| (iii) | Personal income | 90 |
| (iv) | National debt interest | 10 |
| (v) | Corporate tax | 25 |
| (vi) | Government final consumption expenditure | 20 |
| (vii) | Net factor income to abroad | (−) 5 |
| (viii) | Net indirect tax | 10 |
| (ix) | Undistributed profits | 0 |
| (x) | Private final consumption expenditure | 100 |
Concept: Private Income
Giving reason, comment on the shape of Production Possibilities Curve based on the following table :
| Good X (units) | Good Y (units) |
| 0 | 4 |
| 1 | 3 |
| 2 | 2 |
| 3 | 1 |
| 4 | 0 |
Concept: Concepts of Production Possibility Frontier
From the data given below about an economy, calculate (a) investment expenditure and (b) consumption expenditure.
|
(i) |
Equilibrium level of income |
5,000 |
|
(ii) |
Autonomous consumption |
500 |
|
(iii) |
Marginal propensity to consume |
0.4 |
Concept: Methods of Measurement of National Income >> Expenditure Method
