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 economic
study?
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.
2. Describe the great recession of 1929.
3. What are the 4 factors of production and what are the remunerations to each of
these 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 subsidies was Rs. 150 Cr. and national income was Rs. 850/- cr. Calculate the
aggregate 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
Misc receipts of Govt.
Direct taxes paid by household
Saving of private corporate sector
Net of retained earnings of foreign companies
Private income
15. Find out private income from the following
i) Corporation tax
ii) Direct taxes paid by households
iii) Personal disposable income
iv) Misc. receipts of govt. administrative
v) Saving of private corporate sector net of
retained earnings of foreign companies.
3 cr.
1 cr.
4 cr.
1cr
218 cr.
4cr.
6cr
317 cr.
02 cr.
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
i) Sales by firm x to households
ii) Sales by firm y
iii) Purchases by households from firm y
iv) Exports by firms y
v) Change in stock of firm x
vi) Change in stock of firm y
vii) Imports by firm x
viii) Sales by firm Z to firm y
ix) Purchases by firm y from firm x
100
500
300
50
20
10
70
250
200
18. Calculate gross value added of factor cost.
Sales
180
Rent
05
Subsidies
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 –
resident.
3. Explain the problem of double counting in estimation of national income by
giving 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
700
3)
Employers contribution to social security
100
4)
Gross business fixed
60
5)
Gross residential construction investment
60
6)
Gross Public investment
40
7)
Inventory investment
20
8)
Profit.
100
9)
Govt. Purchases of goods and services
200
10)
11)
12)
13)
14)
15)
16)
17)
18
Rent
Exports
Imports
Interest
Mixed income of self employed
Net factor income from abroad
Depreciation
Indirect Tax
subsidies
50
40
20
40
20
(-)10
0
20
10
6. Calculate (a) Personal Disposable income (b) National Income
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
13)
Private income
Mixed Income
NFIFA
Compensation of employees
Net retained earnings of private enterprises
Profit
Rent
Corporation Tax
Interest
Net Indirect Taxes
Net exports
Direct Taxes paid by households
Consumption of fixed capital
4000
1200
-50
1300
200
800
600
400
700
500
-100
150
180
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
consumption 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 inflationary
05.
Complete the following.
Income
consumption
MPC
APC
1
12
20
26
gap?
40
60
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
40
54
An increase in investment by Rs. 400 cr. leads to increase in national income
by Rs. 1600 cr. Calculate MPC
In an economy, the marginal propensity to consume is 0.75 Investment is
increased by Rs. 200 cr. Calculate the total increase in income and
consumption expenditure.
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.
Explain any 3 measures by which excess demand in an economy can be
corrected.
Explain the concept of deflationary gap. Explain any two measures by which a
central bank can attempt to reduce this gap.
What is monetary policy? Explain the role of i) Bank rate and ii) Margin
requirements in influencing the availability of credit in an economy.
What is inflationary gat? What is its impact on output and prices?
What is meant by ‘investment multiplier’? Explain the relationship between
marginal propensity to consume and investment multiplier.
Explain the working of investment multiplier with the help of a numerical
example.
What is the difference between planned investment and realized (actual)
investment?
(06 marks questions)
01.
Measure the level of ex-ante aggregate demand when autonomous investment and
consummation exp. (a) is Rs. 50 cr and MPS is 0.2 and level of income (y) is Rs. 4000/state whether the economy is in equilibrium. or not. Give
reasons.
02.
Given below is the consumption function in an economy
c = 100+.05 y
With the help of a numerical example show that in this economy, as income
increases, APC will decrease.
3.
4.
5.
6.
Calculate i) its equilibrium. Level of national income ii) saving at equilibrium.
Level of national income when following information about an economy is
given :
Consumption function
c= 200 + 0.9 y
Investment expenditure
= 3000
Give the meaning of excess demand in macro economics. Explain any 4
measure in monetary policy to correct it.
Explain the concept of under employment equilibrium. With the help of a
diagram, show the additional investment exp. required to reach full
employment equilibrium.
Explain the working of investment multiplier with the help of a numerical
7.
8.
9.
10.
example.
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.
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 ?
Explain the theory of determination of income and employment with the help
of AD and AS curves and saving and investment approach.
Differentiate between full employment and under employment equilibrium.
with the help of a diagram.