1432 8 fThis question paper contains 8 printed pages.

l
(i) Nominal income increases. Your Roll N o..,.......,.,..
(ii) Money supply increases. (5,10) Sr. No, of Question Paper: l43Z F
($) r< aEcTft-o snc st *r q-erq corff 61 Fd: Unique Paper Code 2272201201
ffi ++ n-d d q-6+ *? Fit t trrft r,.o n-*

d srlr qnqr qt fr m usr+< i Name of the Paper Introductory Macroeconomics

C+
3iR-q6FI d ++ ak d cr{&-d 6.dr ir Name of the Course B,A, (Prog.) f,conomics
(Major and Non-Major)
(s) qro d et grr + niir *r $ t ++ fi:fRn +ft (DSC)
i? q-q .. 61 6"qr +dr e qE. ,,..
Semester II
(i) nrqqTrd onq i gk *e *r
Duration : 3 Hours Maximum Marks : 90
(ii) Tcr ffi ca,e *r
I r;

8. Explain the followings:

Instructions for Candidates
1l
.:,...
(i) Monetary Aggregates 1. Write your Roll No. on the top immediately on receipt
(ii) Inflation of this question paper.

(iii) Consumption Function and Saving Function. 2 There are eight questions in the question paper
(l s) Answer any six questions.
ffift{d fr qnqi dftq:
) All questions carry equal mark
(i) c}tr*. {S."c
4 Answers may be written either in English or Hindi;
(ii) g{ldfr but the same mediurn should be used throughout the
(iii) scrt{ s-tr{ *i q?R s-{ p ap er.

(s0o)
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 1"432 7
1432 2

6 (a) What is national wealth, and why is it important?

Erii+frqff&I How is national wealth linked to national saving?
l. Ert crT- rl-t + m ff scr Rs rtg fftriRe rqrq w gITfl
(b) How the demand for and supply of central bank
irtrqroftReq t
money determines the equilibrium interest rates in
z. crtqit e qfil r ffi o sfi] *satffftq t
an economy with currency and checkable deposits?
Explain using formal analysis and diagrams.
s. RScri S or+- qqr< * r
(5,10)
4. {tIvrr-.r;tt6I-* O**6ffffi qo qrqrtAfuq, Afr-{
qrft Tf,t 6r ctg{ vq ff *<r qGq I (sr) n91c ffi wr *, *t qa a-rdpi dr e? (Erq ffi
{Erq q{d t *t qgr *?

(s) +frc +5 + E+ S {i{r str on$ T{r ${ dr? +Jc

(a) What is Macroeconomics? Briefly discuss the
sqr* sr& 3l{qdelr if R-Ed-{ qre <it d *t fuiRt
different Macroeconomic issues.
I q.{fr A? iM+' mqq *t 3rM 61 3q+{r 6G
(b) Compare the classical and Keynesian views on qrcqr qil
the speed of wage and price adjustment' What
are the important consequences of the differences
views? (8,7) 7 (a) Why do we call mechanisms such as proportional
in the classical and Keynesian
income taxes and the welfare system automatic
wk stabilizers? Choose one of these mechanisms and
(er) mk il*ns wI *? *c { frft-q 3drrr€
it
explain carefully how and why affects
!i w q-ut ott
fluctuations in output.

(s) +o-{ ft
1a wri-w< fr rrfr qt urdq d{ +iR+< (b) How is the rate of interest determined by the

ftqt- + ga-+ atr {r6c *{ +rifu+q ftqt" + 3l'dt demand and supply of money? What happens to
+ Tt-€Wi cRqr< flr l? the interest rate if:
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1432 6 1432 3

(i) Calculate the equilibrium level of income 2 (a) How does GDP differ from GNp? If a country
and the multiplier in this model. employs many foreign workers, which is likely to
be higher: GDP or GNP?
(ii) Calculate also the budget surplus, BS.
(b) Discuss the product and Income approach to
(iii) Suppose that t increases to.25. What is
measuring Gross Domestic Product (GDp).
the new equilibrium income? The new
(5, l0)
multiplier. (7,8 )

(er) t-+-a *q 3-icr, r-*-a r$q siqrc + fr-s rfin F-d

(or) g'm wr i? {ur6 frcrd sqttlugft (MpC) t B{ i? qR +{ ?n 6''i fr?trr ,lm *
n-sIrR tdr t, *
y-on ffie i? vErr<or qBr eq dfrgr
0{8o, *+ * qa{r{{I *: ffSff qI m?
(e) frqRfud q,d eru qflrd,
(a) r+-e *q c-wre (GDp) d rrci + frs EilrE *r
iFTTr(I C:50+.8YD iflc Effir qt q-d otr
fratr r=70 !

(.ort qc fr=2oo 3 S uppose Congress decides to reduce tran

s fe r

payments (such as welfare) but to increase government

TQIFN<RUT Eqn = too
purchases of goods and services by an equal amount.
6"{fr({ ff =.zo That is, it
undertakes a change in fiscal policy such
that AG = -ATR. Where G : Government Expenditure,
(i) rs .i-sd t onq * wga-r wt a1i yro * TR: Transfers
rrqar otr
(i) Woutd you expect equilibrium income to rise or
(n, Ttrd BrEiq fr ft wm oi, fiVqr fall as a result of this change? Why? Check
your answer with the following example: Suppose
(Ir) qrt Afrs ft 1q66-1 .2s A ,,rdr *r r{ wga-{
that, initially, c =.8, t =.25 and Yo = 600. Now
3rrc *i {cr yro wr *rn? let AG = l0 and ATR = -10.

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1432 4 ' t"432 5

(ii) Find the change in equilibrium income, AYo (b) What is the difference between the Desired
Capital Stock and the User Cost of Capital?
(iii) What is the change in the budget surplus, BS?
(c) Explain the concept of Money Multiplier.
Why has BS changed? (15)
(s,s,s)
clT dfts fr 6t}s ERr{{ur Trdm (it o-aror) d 6,t
qti qr *e-ar a.'{ff l, afulvrr<war i <qfr d{ i-sr$ (or) utRrt ot -crsq qr<fu+ qrm Er qfr{R-d oi r qR
qrfr i[rc qr q{ d (( q-ft +, n} sqFd 16r - tljlilK
fr t-c6rt rct-q d {a+ * ftsr ${-( m rrq-dfrq {fr
er+afrm qrq E{ 6r flr +dr e?
+ Eq r+'R qMq Erdt i fr ac: -ATR I vd G = {.61t
EIq, TR = leIFfl<RUI (s) sfu( Efrrrd Rt6 *t iS d sv+rr+ni arT t* &q

(i) wr 3lrc y<r * qfuncscc e-gil{ Slrc + gE

ircitn wr smt *?

qr Fr<r+e fr 3d-d *t? d?

t (rr) (fr Tdwur * :reu{qr d qq-flst

FrqRftfi g-cl6wr t sc+ sfr{ * *q qt: qr< frfrq

ft vRtr t, c= 8, t: .25 *t Yo = 600 | trq qrnr
5 (a) What is Multiplier? How multiplier is related to
AG=10*<arn=-t0 t Marginal Propensity to Consume (MPC)? Explain
with an example.
(ii) t-g-d-{ ilrc + cR{dq Erc dfrg, AY I

(b) Described by the following functions:

(iii) Ttrc aftiq, As{ { wr qwrq *? ss d tr{cT rI'rI
Consumption C = 50 +.8YD
*?
Investment 1= 70

4 (a) Define the expected after-tax real interest rate'

Government Expenditure G = 200

If the tax rate on interest income declines, what Transfers TR: 100
happens to the expected after-tax real interest Tax Rate t:.20
rate?
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