Macro Economics Weak Stu Patiala

7/29/2019 Macro Economics Weak Stu Patiala

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FOR AVERAGE STUDENTS

Part B

MACRO ECONOMICS

UNIT VI: NATIONAL INCOEM AND RELATED AGGREGATES ( 15 MARKS)

(one mark question)

1. Is the study of cotton textile industry a macro economic study or micro economicstudy?

2. Two main problems studied in Macroeconomics.

3. Define Macroeconomics.

4. Two examples of macro economic variables.

5. Define consumer goods.6. What are producer goods?

7. What are capital goods?8. Basic difference between final and intermediate goods.

9. Define stock and flow.

10. What is consumption of fixed capital or deprecation.11. state, which of the following is a stock or a flow

a. wealth b. cement production

12. What is investment?13. If an economy investment is greater than saving, what is the effect on the national

income.14. What are transfer payments?15. Define forced transfer.

16. what is real national income

17. if domestic income is Rs. 500 cr and net factor income from abroad is Rs. (-5) cr.How much will be national income.

18. when will be domestic factor income greater than national income

19. Meaning of non-market activities.20. Which of the following is not included in national income?

i) Old age pension. ii) Purchase of a new car.

21. What is a GNP deflator?

22. Define the concept of value added.23. Define nominal GDP

24. Define real GDP

25. Is net of exports (x-m) a part of net factor income from abroad ?

(3/4 marks questions)

1. Describe the important features of a capitalist economy.


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2. Describe the great recession of 1929.

3. What are the 4 factors of production and what are the remunerations to each of the

se called ?4. Differentiate between planned and unplanned inventory accumulation.

5. What is difference between budget deficit and trade deficit ?

6. Suppose the GDP at market price of a counting in a particular year was Rs. 100 Cr., Net factor income from abroad was Rs. 100 cr ,the value of indirect taxes - sub

sidies was Rs. 150 Cr. and national income was Rs. 850/- cr. Calculate the aggreg

ate value of depreciation.7. Differentiate between monetary flow and real flow.

8. What is meant by circular flow of income? Name its 3 related phases.

9. Explain the concept of leakages and injections in the circular flow of income.

10. Differentiate between private income and personal income.11. What is difference between factor inputs and non- factor inputs ?

12. Show as how the sum of value added is equal to sum of factor income ?

13. State any 4 precautions while measuring national income by income method.

14. Find out personal disposable income.

Corporation tax 3 cr.Misc receipts of Govt. 1 cr.

Direct taxes paid by household 4 cr.

Saving of private corporate sector 1cr Net of retained earnings of foreign companies

Private income 218 cr.

15. Find out private income from the followingi) Corporation tax 4cr.

ii) Direct taxes paid by households 6cr

iii) Personal disposable income 317 cr.iv) Misc. receipts of govt. administrative 02 cr.

v) Saving of private corporate sector net of

retained earnings of foreign companies. 02 cr.

16. Calculate NDP at MP from the following.

i) Net indirect taxes 38 cr.

ii) Consumption. Of fixed cap. 34 cr.iii) Net factor income from aboard (-)3 cr.

iv) Rent 10 cr

v) Profit 25 cr.vi) Interest 20 cr.

vii) Royalty 5 cr.

viii) Wages and salaries 170 cr.ix) Employers contribution to social security schemes 30cr

17. Calculate value added by firm x and firm y


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i) Sales by firm x to households 100

ii) Sales by firm y 500

iii) Purchases by households from firm y 300iv) Exports by firms y 50

v) Change in stock of firm x 20

vi) Change in stock of firm y 10vii) Imports by firm x 70

viii) Sales by firm Z to firm y 250

ix) Purchases by firm y from firm x 200

18. Calculate gross value added of factor cost.

Sales 180

Rent 05Subsidies 10

Change in stock 15

Purchase of raw materials 100

Profits 25

19. State the circular flow of monetary and real flow among 3 sector models of the economy.

( 06 Marks questions)

1. Explain the circular flow with 4 sector economy.

2. Will the following be a part of domestic factor income of India? Give reasons for

your answer.i) Old age pension given by govt.

ii) Factor income from abroad.iii) Salaries to Indian residents working in Russian embassy in India.iv) Profit earned by a company in India, which is owned by a non reside

nt.

3. Explain the problem of double counting in estimation of national income by givin

g suitable examples and 2 ways of avoiding this problem.

4. GDP may not be an appropriate index of welfare of the people. How?5. From the following data, calculate NNP at Market price by i) Expenditure method

ii) Income method.

1) Personal consumption exp. 700

2) Wages and salaries 7003) Employers contribution to social security 100

4) Gross business fixed 60

5) Gross residential construction investment 606) Gross Public investment 40

7) Inventory investment 20

8) Profit. 1009) Govt. Purchases of goods and services 200


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10) Rent 50

11) Exports 40

12) Imports 2013) Interest 40

14) Mixed income of self employed 20

15) Net factor income from abroad (-)1016) Depreciation 0

17) Indirect Tax 20

18 subsidies 10

6. Calculate (a) Personal Disposable income (b) National Income

1) Private income 40002) Mixed Income 1200

3) NFIFA -50

4) Compensation of employees 1300

5) Net retained earnings of private enterprises 2006) Profit 800

7) Rent 6008) Corporation Tax 400

9) Interest 700

10) Net Indirect Taxes 50011) Net exports -100

12) Direct Taxes paid by households 150

13) Consumption of fixed capital 180


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FOR AVERAGE STUDENTS

Part B

MACRO ECONOMICS

UNIT 08

DETERMINATION OF INCOME AND EMPLOPMENT ( 12 Marks)

One mark questions

1. Define aggregate demand.

2. What do you mean by aggregate supply?3. What is effective demand?

4. What is paradox of thrift?

5. What do you mean by marginal propensity to consume?

6. What is marginal propensity to save?7. If MPS is .5, what will be the value of multiplier?

8. If MPC is .8, what is the value of MPS?9. Can the value of MPC be equal of one?

10. Define Marginal efficiency of capital.

11. What is consumption function?12. What is the saving function?

13. What is autonomous consumption?

14. What can be the maximum value of marginal propensity to save?

15. Define multiplier.16. What is excess demand?

17. What is deficient demand?

18. When does a situation of deficient demand arise in an economy?19. Find out the value of multiplier when MPS = 0

20. What does MPC refer to in a diagram showing consumption function or consumpt

ion line?21. What happens to an economy, if AD>AS.

(3 / 4 marks question)

01. Find saving function when consumption function is given

c = 1000 + .6y

02. Show diagrammatically, the effect on equilibrium. Level of output of govt.spending.

03. What happens if AD>AS prior to full equilibrium. Level of output.

04. Does an excess of AD over AS always imply a situation of inflationarygap?

05. Complete the following.Income consumption MPC APC

1 12


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20 26

40 40

60 54

2. An increase in investment by Rs. 400 cr. leads to increase in national income

by Rs. 1600 cr. Calculate MPC3. In an economy, the marginal propensity to consume is 0.75 Investment is incr

eased by Rs. 200 cr. Calculate the total increase in income and consumption e

xpenditure.4. i) If the value of multiplier is 4, what will be MPC and MPS ?

i) What increase in investment is needed to raise income to Rs 2000 cr. if

MPS = 0.5.

5. Explain any 3 measures by which excess demand in an economy can be corrected.

6. Explain the concept of deflationary gap. Explain any two measures by which a

central bank can attempt to reduce this gap.

7. What is monetary policy? Explain the role of i) Bank rate and ii) Margin requirements in influencing the availability of credit in an economy.

8. What is inflationary gat? What is its impact on output and prices?9. What is meant by investment multiplier? Explain the relationship between m

arginal propensity to consume and investment multiplier.

10. Explain the working of investment multiplier with the help of a numerical example.

11. What is the difference between planned investment and realized (actual) inves

tment?

(06 marks questions)

01. Measure the level of ex-ante aggregate demand when autonomous investment andconsummation exp. (a) is Rs. 50 cr and MPS is 0.2 and level of income (y) is Rs. 4000/- s

tate whether the economy is in equilibrium. or not. Give reasons.

02. Given below is the consumption function in an economyc = 100+.05 y

With the help of a numerical example show that in this economy, as income incre

ases, APC will decrease.

3. Calculate i) its equilibrium. Level of national income ii) saving at equilibrium.

Level of national income when following information about an economy is gi

ven :Consumption function c= 200 + 0.9 y

Investment expenditure = 3000

4. Give the meaning of excess demand in macro economics. Explain any 4 measure in monetary policy to correct it.

5. Explain the concept of under employment equilibrium. With the help of a diag

ram, show the additional investment exp. required to reach full employment e

quilibrium.


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6. Explain the working of investment multiplier with the help of a numerical exa

mple.

7. Draw a diagram a straight line saving curve for an economy. From it, derive the consumption curve explaining the method of derivation. Show a point on the

consumption curve at which APS is equal to one.

8. Explain the equilibrium level of income with the help of saving and investment curves. If savings exceeds planned investment what changes will bring about

equality between them ?

9. Explain the theory of determination of income and employment with the helpof AD and AS curves and saving and investment approach.

10. Differentiate between full employment and under employment equilibrium. wi

th the help of a diagram.

Macro Economics Weak Stu Patiala

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