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'India has been dealing with the problem of Deficient Demand, since the imposition of Covid lockdown in March 2020'. State and discuss any two monetary policy measures to combat the situation of Deficient Demand in India.
'Keynes suggested the use of various tools to deal with the situation of Inflationary Gap prevailing in an economy. State and discuss any two monetary policy measures to combat the situation of Inflationary gap in a hypothetical economy.
Define Inflationary Gap. State, how the government can control the situation of inflationary gap, using the taxation policy.
Define Deflationary Gap. State, how the government can control the situation of deflationary gap, using the taxation policy.
Define Inflationary Gap. State, how the Central Bank of an economy can control the situation of inflationary gap, using any monetary policy measure.
'Excess demand creates greater opportunities of employment in the economy.' Defend or refute the given statement with valid explanation.
Explain the role of legal reserve ratio and Bank rate in correcting inflationary gap in an economy.
Explain the concept of deficient demand. How can government spending policy be helpful in correcting the situation of deficient demand ?
Explain the concept of excess demand. How can government spending policy be helpful in correcting the situation of excess demand ?
"The Government has raised the exemption limit for the payment of Income tax from Rs. 2 lakh to Rs. 2.5 lakh." If the situation of deficient demand is prevailing in the economy, what will be the impact of this action taken by the Government ?
"In an economy Planned spending is more than planned output". Explain its impact on the level of output, income and employment. For a hypothetical economy, assuming there is an increase in the Marginal Propensity to Consume from 80% to 90% and change in investment to be Rs. 2,000 crore. Using the concept of investment multiplier, calculate the increase in income due to change in Marginal Propensity to Consume.
Read the following statements : Assertion (A) and Reason (R). Choose the correct alternative given below. Assertion (A) : Excess demand does not lead to any increase in the level of real output. Reason (R) : Excess demand creates a gap between actual demand and desired demand corresponding to full employment level. Alternatives :
Discuss briefly, how the government can control the situation of deflation using the following : (a) Taxation Policy (b) Government Expenditure Policy
"If actual demand for final goods falls short of the actual output of final goods corresponding to full employment level, it may lead to an unintended accumulation of inventories." Do you agree with the given statement ? Give valid reasons in support of your answer. Complete the following table. Construct the consumption function at Rs. 200 crore level of income.
Inflationary gap in an economy may exist when _________ at full employment level. (Choose the correct alternative to fill in the blank)
Inflationary gap in an economy may exist when ________ at full employment level. (Choose the correct alternative to fill in the blank)
Arrange the following in the correct sequential order, if the government of a nation is trying to curtail the situation of inflationary gap : (i) Decrease in disposable income (ii) Increase in taxes (iii) Decrease in Aggregate Demand Alternatives :
Arrange the following in the correct sequential order, if the government of a nation is trying to curtail the situation of inflationary gap : (i) Decrease in disposable income (ii) Increase in taxes (iii) Decrease in Aggregate Demand
(i) "With an objective to reduce inflation, government may reduce public Expenditure." Discuss the rationale behind such a step which may be taken by the Government. (ii) Define Effective Demand Principle. (i) State the meaning of 'unintended accumulation of inventories'. (ii) "In an economy, Aggregate Demand (AD) is more than Aggregate Supply (AS)." Elaborate the possible impacts of the same, on the level of output, income and employment.
(A) On the basis of the given image, explain the steps which may be taken by the Government of India to control the indicated macro-economic issue. (B) Define 'Open Market Operations'. (A) Explain any one fiscal policy measure that can be taken up by the Government to control the situation of inflation prevailing in an economy. (B) Define 'Open Market Operations'.
Read the following text carefully : According to a report issued by a research organisation, there is a sharp decline in the overall demand in the economy, particularly in the private consumption segment. This dip in the macro economic variables, highlights the urgent need for strategic actions to stimulate economic activities. On the basis of the given text and common understanding, explain the measure which the government may take to solve the indicated problem.
Read the following statements carefully : Statement 1 : During deflationary gap, the Central Bank of a country may increase the repo rate. Statement 2 : The government can reduce the deflationary gap by purchasing Government Securities (G-Sec) in the open market. In the light of the given statements, choose the correct option from the following :
Read the following text carefully : In an economy, a significant reduction in Aggregate demand raised concerns about future growth prospects of the country. This economic downturn underscores the urgent need for strategic measures to boost confidence of households and stimulate economic activities. Based on the above text and common understanding, explain the measures which the government may take to stabilise the indicated situation.
Suppose in an economy, planned spendings are greater than planned outputs. Identify the correct option with respect to effects on the economy : (i) Decrease in planned inventories in the economy (ii) Rise in National Income (iii) Decrease in real output level in the economy (iv) Decrease in employment level in the economy
"An economy is operating at under-employment level of income." What does this situation indicate ? Discuss any one fiscal measure to tackle this situation. Elaborate using a hypothetical numerical example, how a given initial increase in investment affects the level of final income of the economy.
(A) "In an economy ex-ante investment (I) is less than ex-post savings (S)." Explain the likely impact of the given situation on output, employment and income. (B) Define deficient demand.
(a) "In an economy, ex-ante Aggregate Demand (AD) is more than ex-ante Aggregate Supply (AS)." Explain the likely impact of the given situation on output, employment and income. (b) Define deficient demand
In an economy, when __________ is insufficient to achieve the level of output corresponding to the full employment, the difference is termed a deflationary gap. (Choose the correct option to fill in the blank)
Refer the given image carefully : Explain any two measures that can be taken by the Central Bank to control the indicated macroeconomic problem.
Read the following statements : Assertion (A) and Reason (R). Choose the correct option from those given below : Assertion (A) : Government can control the situation of deficient demand through its taxation policy. Reason (R) : Reduction in tax rates by the government leads to increase in the disposable income of the people.
An economy may operate at a level below full employment due to a deficiency in Aggregate Demand (AD) leading to a/an ___________ employment equilibrium. (i) Full (ii) Over (iii) Under (Choose the correct option to fill in the blank)