Class 12 Macro Economics - Chapter Open Economy Macroeconomics NCERT Solutions | Suppose it takes 1.25 yen to buy a rupee

Differentiate between devaluation and depreciation.

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?

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.

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

Would the central bank need to intervene in a managed floating system? Explain why.

Distinguish between the nominal exchange rate and the real exchange rate. If you were to decide whether to buy domestic goods or foreign goods, which rate would be more relevant? Explain.

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.

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

Differentiate between balance of trade and current account balance.

Should a current account deficit be a cause for alarm? Explain.

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.

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

What is a barter system? What are its drawbacks?

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.

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

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

What are the important features of a capitalist economy?

Describe the four major sectors in an economy according to the macroeconomic point of view.

Explain the functions of a commercial bank.

‘The fiscal deficit gives the borrowing requirement of the government’. Elucidate.

Describe the Great Depression of 1929.

Give the relationship between the revenue deficit and the fiscal deficit.

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

Define budget deficit and trade deficit. The excess of private investment over saving of a country in a particular year was Rs 2,000 crores. The amount of budget deficit was ( – ) Rs 1,500 crores. What was the volume of trade deficit of that country?

What are the important features of a capitalist economy?

Distinguish between revenue expenditure and capital expenditure.

Explain ‘Paradox of Thrift’.