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🔴 BA/BSC 2nd Semester
🔴 Paper Code = (GE/CC-2)
🔴 Subject = Economics
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1.A) Write a short note on the types of family.
Answer = Gross national product (GNP) is the value of all goods and services made by a country's residents and businesses, regardless of production location. GNP counts the investments made by U.S. residents and businesses—both inside and outside the country—and computes the value of all products manufactured by domestic companies, regardless of where they are made.
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1.C) What do you mean by devaluation of currency?
Answer = Devaluation, the deliberate downward adjustment in the official exchange rate, reduces the currency's value; in contrast, a revaluation is an upward change in the currency's value. ... To devalue, it might announce that from now on 20 of its currency units will be equal to one dollar.
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1.D) Mention two methods of correcting the disequilibrium in the Balance of Payments.
Answer = Method 1# Trade Policy Measures: Expanding Exports and Restraining Imports:
Trade policy measures to improve the balance of payments refer to the measures adopted to promote exports and reduce imports.
Exports may be encouraged by reducing or abolishing export duties and lowering the interest rate on credit used for financing exports. Exports are also encouraged by granting subsidies to manufacturers and exporters.
Method 2# Expenditure-Reducing Policies: The important way to reduce imports and thereby reduce deficit in balance of payments is to adopt monetary and fiscal policies that aim at reducing aggregate expenditure in the economy. The fall in aggregate expenditure or aggregate demand in the economy works to reduce imports and help in solving the balance of payments problem.
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1.E) What is bank rate?
Answer = A bank rate is the interest rate at which a nation's central bank lends money to domestic banks, often in the form of very short-term loans. Managing the bank rate is a method by which central banks affect economic activity.
1.F) What is Broad Money?
Answer = Broad money is a category for measuring the amount of money circulating in an economy. It is defined as the most inclusive method of calculating a given country's money supply, and includes narrow money along with other assets that can be easily converted into cash to buy goods and services.
1.G) Define marginal propensity to consume.
Answer = In economics, the marginal propensity to consume is a metric that quantifies induced consumption, the concept that the increase in personal consumer spending occurs with an increase in disposable income. The proportion of disposable income which individuals spend on consumption is known as propensity to consume.
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1.H) What is balanced budget multiplier?
Answer = A situation in which a government increases spending and taxes at a rate that keeps its budget in balance. It is thought that some of the money collected in increased taxes comes from what people otherwise would have saved.
1.i) What is High Powered Money?
Answer = High powered money refers to the money produced by RBI and government of India. It can also be defined as the total liability of monetary authority of the country and RBI. It consists of –Currency in hands of public. -Cash reserve of commercial banks.
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1.J) What is transfer income?
🔴 BA/BSC 2nd Semester
🔴 Paper Code = (GE/CC-2)
🔴 Subject = Economics
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🔴 Group - A
1.A) Write a short note on the types of family.
Answer = Gross national product (GNP) is the value of all goods and services made by a country's residents and businesses, regardless of production location. GNP counts the investments made by U.S. residents and businesses—both inside and outside the country—and computes the value of all products manufactured by domestic companies, regardless of where they are made.
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1.C) What do you mean by devaluation of currency?
Answer = Devaluation, the deliberate downward adjustment in the official exchange rate, reduces the currency's value; in contrast, a revaluation is an upward change in the currency's value. ... To devalue, it might announce that from now on 20 of its currency units will be equal to one dollar.
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1.D) Mention two methods of correcting the disequilibrium in the Balance of Payments.
Answer = Method 1# Trade Policy Measures: Expanding Exports and Restraining Imports:
Trade policy measures to improve the balance of payments refer to the measures adopted to promote exports and reduce imports.
Exports may be encouraged by reducing or abolishing export duties and lowering the interest rate on credit used for financing exports. Exports are also encouraged by granting subsidies to manufacturers and exporters.
Method 2# Expenditure-Reducing Policies: The important way to reduce imports and thereby reduce deficit in balance of payments is to adopt monetary and fiscal policies that aim at reducing aggregate expenditure in the economy. The fall in aggregate expenditure or aggregate demand in the economy works to reduce imports and help in solving the balance of payments problem.
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1.E) What is bank rate?
Answer = A bank rate is the interest rate at which a nation's central bank lends money to domestic banks, often in the form of very short-term loans. Managing the bank rate is a method by which central banks affect economic activity.
1.F) What is Broad Money?
Answer = Broad money is a category for measuring the amount of money circulating in an economy. It is defined as the most inclusive method of calculating a given country's money supply, and includes narrow money along with other assets that can be easily converted into cash to buy goods and services.
1.G) Define marginal propensity to consume.
Answer = In economics, the marginal propensity to consume is a metric that quantifies induced consumption, the concept that the increase in personal consumer spending occurs with an increase in disposable income. The proportion of disposable income which individuals spend on consumption is known as propensity to consume.
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1.H) What is balanced budget multiplier?
Answer = A situation in which a government increases spending and taxes at a rate that keeps its budget in balance. It is thought that some of the money collected in increased taxes comes from what people otherwise would have saved.
1.i) What is High Powered Money?
Answer = High powered money refers to the money produced by RBI and government of India. It can also be defined as the total liability of monetary authority of the country and RBI. It consists of –Currency in hands of public. -Cash reserve of commercial banks.
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1.J) What is transfer income?
Answer = Transfer incomes are basically non-exhaustive meaning they actually do not contribute to any capacity building or capital formation.Rather these are governments spending on providing benefits to various vulnerable sections of the society i.e, subsidies,providing income to unemployed people,interest subvention etc.
Like In India,the government provide lots of subsidies for farmers so as to reduce their cost burden and reduce the cost of production for some products like farmer produce etc
1.K) State Say’s Law of markets.
Answer = Say’s Law of Markets states that the supply of a good or service creates demand for that good or service. Jean Baptiste Say, a classical French economist, studied the nature of markets in his 1803 book “Treatise on Political Economy” and put forth the view that supply creates its own demand and that economic agents must first engage in production before they can demand goods and services in the market.
Like In India,the government provide lots of subsidies for farmers so as to reduce their cost burden and reduce the cost of production for some products like farmer produce etc
1.K) State Say’s Law of markets.
Answer = Say’s Law of Markets states that the supply of a good or service creates demand for that good or service. Jean Baptiste Say, a classical French economist, studied the nature of markets in his 1803 book “Treatise on Political Economy” and put forth the view that supply creates its own demand and that economic agents must first engage in production before they can demand goods and services in the market.
🔴 University of Calcutta
🔴 BA/BSC 2nd Semester
🔴 Paper Code = (GE/CC-2)
🔴 Subject = Economics
🔴 Group A Completed
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🔴 BA/BSC 2nd Semester
🔴 Paper Code = (GE/CC-2)
🔴 Subject = Economics
🔴 Group A Completed
🔴 Now Group B
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🔴 BA/BSC 2nd Semester
🔴 Paper Code = (GE/CC-2)
🔴 Subject = Economics
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2) Different measures of money supply.
Answer = The total stock of money in circulation among the public at a particular point of time is called money supply. The measures of money supply in India are classified into four categories M1, M2, M3 and M4 along with M0. This classification was introduced in April 1977 by Reserve Bank of India.
Let’s discuss these one by one:
(a) Reserve Money (M0): It is also known as High-Powered Money, monetary base, base money etc.
M0 = Currency in Circulation + Bankers’ Deposits with RBI + Other deposits with RBI
It is the monetary base of economy.
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(b) Narrow Money (M1):
M1 = Currency with public + Demand deposits with the Banking system (current account, saving account) + Other deposits with RBI
(c) M2 = M1 + Savings deposits of post office savings banks
(d) Broad Money (M3)
M3 = M1 + Time deposits with the banking system
M4 = M3 + All deposits with post office savings banks
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Liquidity of these Measures of Money Supply = The liquidity means how fast an instrument can be converted into cash. The liquidity of these measures are in order M1>M2>M3>M4 i.e. M1 is most liquid and M4 is least liquid.
🔴 BA/BSC 2nd Semester
🔴 Paper Code = (GE/CC-2)
🔴 Subject = Economics
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🔴 Group - B
2) Different measures of money supply.
Answer = The total stock of money in circulation among the public at a particular point of time is called money supply. The measures of money supply in India are classified into four categories M1, M2, M3 and M4 along with M0. This classification was introduced in April 1977 by Reserve Bank of India.
Let’s discuss these one by one:
(a) Reserve Money (M0): It is also known as High-Powered Money, monetary base, base money etc.
M0 = Currency in Circulation + Bankers’ Deposits with RBI + Other deposits with RBI
It is the monetary base of economy.
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🔴 Telegram Channel Link :- https://telegram.me/theknowledgebuddy
(b) Narrow Money (M1):
M1 = Currency with public + Demand deposits with the Banking system (current account, saving account) + Other deposits with RBI
(c) M2 = M1 + Savings deposits of post office savings banks
(d) Broad Money (M3)
M3 = M1 + Time deposits with the banking system
M4 = M3 + All deposits with post office savings banks
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Liquidity of these Measures of Money Supply = The liquidity means how fast an instrument can be converted into cash. The liquidity of these measures are in order M1>M2>M3>M4 i.e. M1 is most liquid and M4 is least liquid.
👍1
Q.3.pdf
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🔴 University of Calcutta
🔴 BA/BSC 2nd Semester
🔴 Paper Code = (GE/CC-2)
🔴 Subject = Economics
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3. Circular flow of income.
🔴 BA/BSC 2nd Semester
🔴 Paper Code = (GE/CC-2)
🔴 Subject = Economics
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3. Circular flow of income.
🔴 University of Calcutta
🔴 BA/BSC 2nd Semester
🔴 Paper Code = (GE/CC-2)
🔴 Subject = Economics
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6. Value added method of estimating national income.
Answer = This method is used to measure national income in different phases of production in the circular flow. It shows the contribution (value added) of each producing unit in the production process.
i. Every individual enterprise adds certain value to the products, which it purchases from some other firm as intermediate goods.
ii. When value added by each and every individual firm is summed up, we get the value of national income.
Value added Method is also known as:
(I) Product Method;
(ii) Inventory Method;
(iii) Net Output Method;
(iv) Industrial Origin Method; and
(v) Commodity Service Method.
Concept of Value Added:
Value added refers to the addition of value to the raw material (intermediate goods) by a firm, by virtue of its productive activities. It is the contribution of an enterprise to the current flow of goods and services. It is calculated as the difference between value of output and value of intermediate consumption.
Value Added = Value of Output – Intermediate Consumption
Example of Concept of Value Added:
Suppose a baker needs only flour to produce bread. He purchases flour as inputs worth? 500 from the miller and then by virtue of its productive activities, converts the flour into bread and sells the bread for Rs. 700.
In the given example:
1. Flour is an input (Intermediate goods) and its value of Rs. 500 are termed as value of ‘Intermediate Consumption’.
2. Bread is the Output and its value of Rs. 700 are termed as ‘Value of Output’.
3. Difference between the value of output and intermediate consumption is termed as ‘Value Added’. It means, that the baker has added a value of Rs. 200 to the total flow of final goods and services in the economy.
🔴 BA/BSC 2nd Semester
🔴 Paper Code = (GE/CC-2)
🔴 Subject = Economics
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🔴 Group - B
6. Value added method of estimating national income.
Answer = This method is used to measure national income in different phases of production in the circular flow. It shows the contribution (value added) of each producing unit in the production process.
i. Every individual enterprise adds certain value to the products, which it purchases from some other firm as intermediate goods.
ii. When value added by each and every individual firm is summed up, we get the value of national income.
Value added Method is also known as:
(I) Product Method;
(ii) Inventory Method;
(iii) Net Output Method;
(iv) Industrial Origin Method; and
(v) Commodity Service Method.
Concept of Value Added:
Value added refers to the addition of value to the raw material (intermediate goods) by a firm, by virtue of its productive activities. It is the contribution of an enterprise to the current flow of goods and services. It is calculated as the difference between value of output and value of intermediate consumption.
Value Added = Value of Output – Intermediate Consumption
Example of Concept of Value Added:
Suppose a baker needs only flour to produce bread. He purchases flour as inputs worth? 500 from the miller and then by virtue of its productive activities, converts the flour into bread and sells the bread for Rs. 700.
In the given example:
1. Flour is an input (Intermediate goods) and its value of Rs. 500 are termed as value of ‘Intermediate Consumption’.
2. Bread is the Output and its value of Rs. 700 are termed as ‘Value of Output’.
3. Difference between the value of output and intermediate consumption is termed as ‘Value Added’. It means, that the baker has added a value of Rs. 200 to the total flow of final goods and services in the economy.
🔴 University of Calcutta
🔴 BA/BSC 2nd Semester
🔴 Paper Code = (GE/CC-2)
🔴 Subject = Economics
🔴 Group B Completed
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🔴 Paper Code = (GE/CC-2)
🔴 Subject = Economics
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7.pdf
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🔴 BA/BSC 2nd Semester
🔴 Paper Code = (GE/CC-2)
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7. What are the assumptions of a Simple Keynesian model? How is equilibrium income determined in this model?
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🔴 Subject = Economics
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7. What are the assumptions of a Simple Keynesian model? How is equilibrium income determined in this model?
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🔴 Subject = Economics
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Q.9.pdf
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🔴 University of Calcutta
🔴 BA/BSC 2nd Semester
🔴 Paper Code = (GE/CC-2)
🔴 Subject = Economics
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9. Define inflation.
Answer :- Inflation is the decline of purchasing power of a given currency over time. A quantitative estimate of the rate at which the decline in purchasing power occurs can be reflected in the increase of an average price level of a basket of selected goods and services in an economy over some period of time.
9. Distinguish between demand pull inflation and cost push inflation.
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🔴 Paper Code = (GE/CC-2)
🔴 Subject = Economics
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9. Define inflation.
Answer :- Inflation is the decline of purchasing power of a given currency over time. A quantitative estimate of the rate at which the decline in purchasing power occurs can be reflected in the increase of an average price level of a basket of selected goods and services in an economy over some period of time.
9. Distinguish between demand pull inflation and cost push inflation.
🔴 University of Calcutta
🔴 BA/BSC 2nd Semester
🔴 Paper Code = (GE/CC-2)
🔴 Subject = Economics
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8. Discuss the Quantity theory of Money.
Answer = In monetary economics, the quantity theory of money (often abbreviated QTM) is one of the directions of Western economic thought that emerged in the 16th-17th centuries. The QTM states that the general price level of goods and services is directly proportional to the amount of money in circulation, or money supply. For example, if the amount of money in an economy doubles, QTM predicts that price levels will also double. The theory was originally formulated by Polish mathematician Nicolaus Copernicus in 1517,[1] and was influentially restated by philosophers John Locke, David Hume, Jean Bodin. The theory experienced a large surge in popularity with economists Anna Schwartz and Milton Friedman's book A Monetary History of the United States, published in 1963.[2][3]
The theory was challenged by Keynesian economists,[4] but updated and reinvigorated by the monetarist school of economics, led by economist Milton Friedman. Critics of the theory argue that money velocity is not stable and, in the short-run, prices are sticky, so the direct relationship between money supply and price level does not hold.[5] In mainstream macroeconomic theory, changes in the money supply play no role in determining the inflation rate as it is measured by the CPI.
Alternative theories include the real bills doctrine and the more recent fiscal theory of the price level.
🔴 BA/BSC 2nd Semester
🔴 Paper Code = (GE/CC-2)
🔴 Subject = Economics
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🔴 Group - C
8. Discuss the Quantity theory of Money.
Answer = In monetary economics, the quantity theory of money (often abbreviated QTM) is one of the directions of Western economic thought that emerged in the 16th-17th centuries. The QTM states that the general price level of goods and services is directly proportional to the amount of money in circulation, or money supply. For example, if the amount of money in an economy doubles, QTM predicts that price levels will also double. The theory was originally formulated by Polish mathematician Nicolaus Copernicus in 1517,[1] and was influentially restated by philosophers John Locke, David Hume, Jean Bodin. The theory experienced a large surge in popularity with economists Anna Schwartz and Milton Friedman's book A Monetary History of the United States, published in 1963.[2][3]
The theory was challenged by Keynesian economists,[4] but updated and reinvigorated by the monetarist school of economics, led by economist Milton Friedman. Critics of the theory argue that money velocity is not stable and, in the short-run, prices are sticky, so the direct relationship between money supply and price level does not hold.[5] In mainstream macroeconomic theory, changes in the money supply play no role in determining the inflation rate as it is measured by the CPI.
Alternative theories include the real bills doctrine and the more recent fiscal theory of the price level.
🔴 University of Calcutta
🔴 BA/BSC 2nd Semester
🔴 Paper Code = (GE/CC-2)
🔴 Subject = Economics
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8. What are the limitations of this theory?
Answer = See Photo for Answer
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8. What are the limitations of this theory?
Answer = See Photo for Answer
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🔴 Paper Code = (GE/CC-2)
🔴 Subject = Economics
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♦️ All questions are solved.
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🔴 Subject = Economics
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