Class 12 Macro Economics - Chapter Open Economy Macroeconomics NCERT Solutions | Are the concepts of demand for domestic

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?

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

Discuss the issue of deficit reduction.

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

Distinguish between revenue expenditure and capital expenditure.

Measure the level of ex-ante aggregate demand when autonomous investment and consumption expenditure (A) is Rs 50 crores, and MPS is 0.2 and level of income (Y) is Rs 4000 crores. State whether the economy is in equilibrium or not (cite reasons).

Write down the three identities of calculating the GDP of a country by the three methods. Also briefly explain why each of these should give us the same value of GDP.

Suppose the GDP at market price of a country in a particular year was Rs 1,100 crores. Net Factor Income from Abroad was Rs 100 crores. The value of Indirect taxes – Subsidies was Rs 150 crores and National Income was Rs 850 crores. Calculate the aggregate value of depreciation.

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

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

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