‘The fiscal deficit gives the borr | Class 12 Macro Economics Chapter Government Budget and Economy, Government Budget and Economy NCERT Solutions

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.

What is the difference between ex ante investment and ex post investment?

Explain ‘Paradox of Thrift’.

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

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

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

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

What is transaction demand for money? How is it related to the value of transactions over a specified period of time?

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?

What are the main functions of money? How does money overcome the shortcomings of a barter system?

Why should the aggregate final expenditure of an economy be equal to the aggregate factor payments? Explain.

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

Explain the functions of a commercial bank.