We suppose that C = 70 + 0.70Y D, I = 90 | 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 official reserve transactions? Explain their importance in the balance of payments.

What is the difference between planned and unplanned inventory accumulation? Write down the relation between change in inventories and value added of a firm.

Distinguish between revenue expenditure and capital expenditure.

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.

Are fiscal deficits inflationary?

Does public debt impose a burden? Explain.

Consider an economy described by the following functions: C = 20 + 0.80Y, I = 30, G = 50, TR = 100 (a) Find the equilibrium level of income and the autonomous expenditure multiplier in the model. (b) If government expenditure increases by 30, what is the impact on equilibrium income? (c) If a lump-sum tax of 30 is added to pay for the increase in government purchases, how will equilibrium income change?

Explain the relation between government deficit and government debt.

Explain why the tax multiplier is smaller in absolute value than the government expenditure multiplier.

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.