Macro-Economics Analysis and Policy Regular Previous Year Question Paper Year 2005 : IInd Year

SECTION ‘A’

Q. 1. Distinguish between aggregate demand and effective demand. Explain the relationship between aggregate demand and effective demand and level of full employment. 5, 10
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Q. 2. Explain the concept of investment multiplier and show its relationship with MPS.
Find out the value of multiplier and increase in the level of income if MPS is .5 and increase in investment is Rs. 2 lakhs.
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Q. 3. Define Money. What are its functions ? Which are the various components of money supply used in India by RBI ?
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Q. 4. Distinguish between demand-pull, cost-push inflation.
What is the effect of inflation on different sections of the society ?
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Q. 5. Write short notes :
(a) Concept of inflationary gap;
(b) Marginal efficiency of capital;
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Section ‘B’

Q. 6. Describe the balance sheet of a commercial bank. How do the commercial banks reconcile the contradictory aims of liquidity and profitability of their assets.
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Q. 7. How do the commercial banks create credit ? What are their limitations ? Answer :

Q. 8. Differentiate between direct and indirect taxes. Why is the share of direct taxes less than that of indirect taxes in a developing country ?
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Q. 9. Fiscal and monetary policies play a complementary role in a developing economy. Discuss.
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Q. 10. Write short notes:
(a) Functions of a central bank;
(b) Increasing importance of public expenditure.
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