Money and Banking — Economics STD 12 Commerce — Question

What are the main functions of money? How does money overcome the shortcomings of a barter system?

Will the following be a part of domestic factor income of India? Give reasons for your answer:

1. Factor income from abroad.
2. Salaries to Indian residents working in Russian Embassy in India.
3. Profits earned by a company in India, which is owned by a non resident.

Explain the concept of 'deflationary gap'. Also, explain the role of 'margin requirements' in reducing it.

Explain the equilibrium level of income with the help of saving and investment curves. If savings exceed planned investment, what changes will bring about the equality between them?
OR
Explain with the help of a diagram and using Saving = Investment approach the determination of equilibrium output and income level in an economy. What happens when the economy is not in equilibrium and saving exceeds investment?

Outline the steps required to be taken in deriving the Consumption Curve from the given Saving Curve. Use diagram.

Calculate:

1. Net National Product at market price.
2. Gross Domestic Product at factor cost.

		(₹ in crores)
(i)	Rent and interest	6,000
(ii)	Wages and salaries	1,000
(iii)	Undistributed profit	400
(iv)	Net indirect taxes	100
(v)	Subsidies	20
(vi)	Corporation tax	120
(vii)	Net factor income to abroad	70
(viii)	Dividends	80
(ix)	Consumption of fixed capital	50
(x)	Social securty contribution by employers	200
(xi)	Mixed income	1,000

Derive the multiplier when MPS is:

1. 0.10
2. 0.20
3. 0.25

Using these multiplier values, find the change in the equilibrium level of income that results from ₹ 20 crore decrease in investment.

(i) A large fiscal deficit leads to a higher revenue deficit in future. Do you agree with the statement? Give reasons in support of your answer.
(ii) Giving reasons, classify the following as direct and indirect taxes:
i. Income Tax
ii. Goods and Services Tax
iii. Corporate Tax
iv. Capital Gains Tax

Explain the functions of Central Bank.

Calculate (a) national income, and (b) net national disposable income:

		₹ in crores
(i)	Compensation of employees	2,000
(ii)	Profit	800
(iii)	Rent	300
(iv)	Interest	250
(v)	Mixed income of self-employed	7,000
(vi)	Net current transfers to abroad	200
(vii)	Net exports	(–) 100
(viii)	Net indirect taxes	1,500
(ix)	Net factor income to abroad	60
(x)	Consumption of fixed capital	120