Class 12 Macro Economics - Chapter Money and Banking NCERT Solutions | What is money multiplier? What determine

What is a barter system? What are its drawbacks?

What are the alternative definitions of money supply in India?

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

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

What is High Powered Money?

What are the instruments of monetary policy of RBI?

Explain the functions of a commercial bank.

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

What is a ‘legal tender’? What is ‘fiat money’?

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

What is marginal propensity to consume? How is it related to marginal propensity to save?

Explain why public goods must be provided by the government.

Differentiate between balance of trade and current account balance.

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

What is the difference between microeconomics and macroeconomics?

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

Distinguish between revenue expenditure and capital expenditure.

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

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

What are the important features of a capitalist economy?

How is the exchange rate determined under a flexible exchange rate regime?

The value of the nominal GNP of an economy was Rs 2,500 crores in a particular year. The value of GNP of that country during the same year, evaluated at the prices of same base year, was Rs 3,000 crores. Calculate the value of the GNP deflator of the year in percentage terms. Has the price level risen between the base year and the year under consideration?

What is the marginal propensity to import when M = 60 + 0.06Y? What is the relationship between the marginal propensity to import and the aggregate demand function?

Write down some of the limitations of using GDP as an index of welfare of a country.

If inflation is higher in country A than in Country B, and the exchange rate between the two countries is fixed, what is likely to happen to the trade balance between the two countries?

Suppose the exchange rate between the Rupee and the dollar was Rs. 30=1$ in the year 2010. Suppose the prices have doubled in India over 20 years while they have remained fixed in USA. What, according to the purchasing power parity theory will be the exchange rate between dollar and rupee in the year 2030.

Does public debt impose a burden? Explain.

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

Differentiate between devaluation and depreciation.

Explain the relation between government deficit and government debt.