Important QuestionS

NATIONAL INCOME AND RELATED

AGGREGATES {10 MARKS}
Circular Flow of Income
1. Explain
the Circular Flow of
Income intwo-sector economy.
a
2. Discuss the concepts of: (i)
Stock; (i) Flow; (ii) Real Flow; and
(iv) Money Flow.
3. Distinguish Between: (i) Stock and
Flow; (i) Real Flow and Money Flow.
Basic Concepts of Macroeconomics
4. What is meant by net factor income from
abroad?
Briefly discuss its various components.
5. Explain,
brief, the meaning of
in
consumption goods and capital goods.
6. Distinguish between:
() Intermediate Goods and Final Goods
(i) Factor Income and Transfer Income

National Income and Related

Aggregates
7. Give the
meanings of: ) NDPFC: i) NDP,Mp Gii) GDPFCi (iv) GDPMp: (V)
NNPFC; (vi) NNP MP: (vii) GNP FCi (vii) GNPMP
8. Distinguish between:
(0 Domestic Income and National Income
(i) GDPMp
MP and GNPFC
(ii) National Income and
GDP MP
Measurement of National Income
9. Discuss in brief the
steps and precautions of
(i) Value Added Method
i) Income Methood
(ii) Expenditure Method
 avoided?
10. Explain the problem of double counting. How can it be
11. Briefly discuss the meaning of Mixed Income.

GDP
12. Discuss the concepts of Real GDP and Nominal

13. How far GDP can be taken as an indicator of economic welfare?

Note:A question like"Whether the following items are included in the national income and/or da
income (along with the reasons)" is also important from the examination point of view
mestic

MONEY AND BANKING (6 Marks)

Money
14. What is a barter system? Discuss its drawbacks.
15. Define money. What is meant by 'money supply'? Discuss, in brief: (i) Currency held by the Public

(Gi) Net Demand Deposits held by Commercial Banks.

Bank
Banking: Commercial Banks and the Central
16. What is meant by a commercial bank? What are the two essential conditions for an institution to becoma
ome
a bank?
17. Explain the concept of money creation or credit creation done by commercial banks with the help of an

example.
18. What is meant by a Central Bank? Why is it known as an Apex Body?
19. Discuss the differences between Central Bank and Commercial Bank.

20. Explain the following functions of a Central Bank:

0 Currency Authority or Bank of Issue
i) Banker to the Government
(i) Banker's Bank and Supervisor
(iv) Controller of Money Supply and Credit
21. What are open market operations? What is their effect on the availability of credit?
22. What is Repo Rate, Reverse Repo Rate and Bank Rate Policy? How do they work as methods ofcredit controli

23. How does change in margin requirements help in controlling credit?

24. Define cash reserve ratio and statutory liquidity ratio. How do they work as methods of credit control

DETERMINATION OF INCOME AND EMPLOYMENT (12 Marks)

Aggregate Demand and Related Concepts
25. What is meant by aggregate demand? Explain the various components of aggregate demanc.
26. What is meant by propensity to consume? Discuss the two types of propensities to consume
27. Give the meaning of propensity to save. Discuss the two types of propensities to save.

28. Explain, in brief, the concept of ex-ante and ex-post savings and investments.
of
29. Distinguish between average propensity to save and marginal propensity to save. The value o
these two can be negative and when?
 30. Dis inquish between average
which of thesettwo can be propensity to consume and
greater than one and
Give the meaning of: () when? marginal propensity to
involuntary unemployment; consume. The value of
Income
Determination and (i) full
ernployment
olain the
32. Explain the c
determination of
Multiplier
appr (i)
Saving and Investment equilibrium level
of income
approach. by: () Aggregate
33. what changes will take place to demand and
nlanned investment; () plannedbring an economy in equilibrium aggregate supply
Can an economy be in a state of
savings are less than when: () planned
savings are greater than
under planned investment.
employment
Discuss the state of full
employment equilibrium withequilibrium?
aF
Explain with the help of a
36. What is meant by mutiplier? What the help of a diagram. diagram.
can be its
Discuss the working of investment minimum value and
why?
24 Explain the relationship between multiplier with the help of a numerical example.
MPC and
multiplier with the help of an
Excess Demand and example.
Deficient Demand
39. Explain the concepts of excess
demand and
40. Discuss the
inflationary gap with the help of diagram.
a
concepts of deficient demand and
the role of following in
deflationary gap with the help of a diagram.
41. Explain correcting 'Excess Demand' and/or 'Deficient Demand' in an
Change in Government Spending. (i)
Change in Taxes. economy: ()
42. How does change in money supply
help in controlling the situation of excess demand/ deficient
in an economy? demand

43. Explain the role of bank rate and open market

operations in controlling the situation of excess demand/
deficient demand.
44. What are margin requirements? How does a change in margin requirements control the situation of excess
demand and deficient demand?

GOVERNMENT BUDGET AND THE ECONOMY (6 Marks)

45. Define Government budget. Explain the various objectives of government budget.
46. What is meant by non-tax revenue? Explain the different sources of non-tax revenue

47. Define tax revenue. What are the two kinds of tax revenues? Give two examples of each.

48. Distinguish between:

) Direct Tax and Indirect Tax
i) Revenue Receipts and Capital Receipts
(ii) Revenue Expenditure and Capital Expenditure and capital expenditure?
into revenue expenditure
. W h a t is the basis ofclassifyinggovernment expenditure
50. Categories the items into:
Receipts
0 Revenue Receipts and Capital
Tax
(i) Direct Tax and Indirect
Expenditure
(in) Revenue Expenditure and Capital
deficit?
51. What is meant by revenue
52. Discuss the concept of fiscal deficit.
53. What do you mean by primary deficit?

BALANCE OF PAYMENTS 6 MARKS}

Foreign Exchange Rate
54. Give the meaning of: (0) Foreign Exchange; (ii) Foreign Exchange Rate; (ii) Foreign Exchange Market.
55. Discuss the concepts of: (i) Fixed exchange rate system; (i) Flexible exchange rate system; (ii) Managed
floating rate system.
56. Distinguish between: (i) Devaluation and depreciation of Domestic Currency; (i) Revaluation and
Appreciation of Domestic Currency.
57. Discuss the major reasons for demand (outflow) and supply (inflow) of foreign exchange.
58. Why does a rise in foreign exchange rate cause a rise in its supply?
59. Explain the effects of 'Appreciation' and 'Depreciation' of domestic currency on exports and imports.

Balance of Payments
60. What is the meaning of balance of payments? State its main components.
61. What is the meaning of balance of trade? What does a deficit in the balance of trade account indicate?
62. What is meant by Current Account? Briefly discuss its various components.
63. What is capital account? What items are included in the capital account of balance of payments?
64. Distinguish between:
(i) Balance of Trade and Balance of Payments
(ii) Current Account and Capital Account
(ii) Autonomous Items and Accommodating Items.
65. What is meant by deficit in balance of payments?
Note: Practical Problems of each chapter are equally important from the examination point
So, they should be practised thoroughly.