Commerce (English Medium) Class 12 - CBSE Question Bank Solutions for Economics

State one example of positive economics.

Which one of these is a revenue expenditure?

Is the following revenue expenditure or capital expenditure in the context of government budget? Give reason.

Expenditure on purchasing computers

Calculate investment expenditure from the following date about an economy which is in equilibrium :
National Income = 1000
Marginal propensity to save = 0.20
Autonomous consumption expenditure = 100

Calculate Autonomous Consumption Expenditure from the following data about an economy which is in equilibrium: 
National income = 500
Marginal propensity to save = 0.30
Investment expenditure = 100

Giving reason, state whether the following is a revenue expenditure or a capital expenditure in a government budget:

Expenditure on scholarships

Giving reason, state whether the following is a revenue expenditure or a capital expenditure in a government budget:

Expenditure of building a bridge.

The government has started spending more on providing free services like education and health to the poor. Explain the economic value it reflects.

What is the difference between revenue expenditure and capital expenditure? Explain how taxes and government expenditure can be used to influence.

Distinguish between revenue receipts and capital receipts. Give an example of each. 

What is a market economy?

What is the difference between microeconomics and macroeconomics?

What do you understand by positive economic analysis? 

What do you understand by normative economic analysis?

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

Why is the open economy autonomous expenditure multiplier smaller than the closed economy one?

Calculate the open economy multiplier with proportional taxes, T = tY, instead of lump−sum taxes as assumed in the text.

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 to 50?

In the above example, if exports change to X = 100, find the change in equilibrium income and the net export balance.

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.