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AcademicYear:2021L2022
Program#A.,LL.B.(HONS.)/B.B.A.,LL.B.(HONS.)
Year: I
Semester: II
Subject: Economics 11
Batch: 2021-2026
Date : 08 July 2022
Time:11:00 am to 01:00 pin 2 (hrs)
Marks : 50
No. of pages:
02LJ
FINAL EXANINATION
Instructions: Candidates should read carefully the instructions printed on the question paper and on the cover
of the Answer Book, which is provided for their inse.
1) In all questions to be attempted.
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4) Crisp, Precise and to the point answers written in good handwriting will be appreciated
Section A
Q1. Why cost-push inflation is less amenable to macroeconomic policy changes? (5 marks)
Q2. A. What is the difference between GDp deflator and the wholesale price index?
(2 Marks)
8. Only one Product X is produced in the country. Its output during the year 2012 and 2013 was
100 units and 110 units respectively. The market price of the product during the year was Rs 50 and
Rs 55 per unit respectively. Calculate the percentage change in real GDP and nominal GDP in year
2013 using 2012 as the base year.
(3 marks)
\
Section 8
im
Q3.
In Government of India's budget for the year 2013-14, finance minister prc)posed to raise the
excise duty on cigarettes. He also proposed to increase income tax on individual earning more
than Rs. one crore per armum. Identify and explain the types of taxes proposed by the finance
minister. Was the objective only to earn revenue for the Government? What possible welfare
objectives could the Govemlnent be considering?
(2+1+2= 5 marks)
Q4.
Consider the consumption function: C = 600 +.9YD where c represents consumption and YD
represents disposable income. To begin, assume there is no government, investment, or foreign
spending. Further, assume taxes are originally set to zero so YD and Y are equal.
a. Write a mathematical equation expressing savings as a function of income.
(1 mark)
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b. What is the equllibriun level of income and consumption in this economy?
(1 mark)
c. How much savings occurs in this equilibrium?
-(1 mark)
d. Imagine that the citizens of this country impose an income tax of 10% on themselves. h
other words, for each Rupee of income earned, the citizens must pay 10 paise of it to the
govemmentbeforetheycanspendtheremainderoftheirmoney.Afterimposingthistax,what
is the new value of equilibriuni income and consumption in this economy? (2 marks)
Section C (Attempt any 2 out of 3)
Q5.Moreliberalmonetarypolicyhasinitiatedtheconceptof`Today`scredit&tomorrowcash',
whichisofferingthefinancialproducts®ersonalloans,homeloans,carloans....etc.)without
takingintoaccount,theuseofmoneyforproductiveandunproductiveuses'.
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_ 1e ___ ____ I 1__Inthisreferencediscusstheeffectiv6ness-ofiustrunentsofmonetarypolicyusedby
(10 marks)
Reserve bank of India in controlling inflation.
Q6.Describethecircularflowofincomeinatwo-sectoreconomyexplainingtheirm?rand
outer loops? What is the significance of injections and leakages in macroeconomic
(10 marks)
system?
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Q7.ExplainusingtheAD/ASfianeworkthesholtruntrade-offbetweentheinflationrateandthe
unemploymentrate.Alsoexplainwhysuchatrade-offdoesn'texistinthelongrun.
(10 Marks)
Section D
Q8.A.Ifyouweretodecidewhethertobuydomesticgoodsorforeigngoods,whichexchangeratewould
be more relevant -Nominal exchange rate oR Real exchange rate? Elucidate
(2 marks)
I
8.Wiuyoualwaysappreciateariseinexchangerateasameanstoboostourexports?Justify
(2 marks)
C.Howwiuyoucommentonthestatementthatincreaseindomesticinterestrateleadstoan
appreciation of domestic curency?
(2 marks)
D.Isimprovementinexchangerateofthecountry`scurrencyalwaysbeneficialforBalanceof
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(2 marks)
Payment? Comment
E.Isrisingreserveoflndia`sforeignexchangeasignofrisingproductionactivityintheeconomy?
(2 marks)
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