Money and Banking — Economics STD 12 Humanities & Commerce — Question

Starting from an initial situation of consumer's equilibrium state, how does increase in marginal utility of one rupee affect the quantity demanded of a product?

What is investment multiplier? Explain its working using a suitable numerical example.

Explain the 'bank of issue' function of the Central bank.

A consumer buys 20 units of a good at ₹ 10 per unit. The price elasticity of demand of this good is (-)1. Calculate quantity demanded by the consumer when price falls to ₹ 8 per unit.

Calculate National Income by (a) expenditure method and (b) production method from the following data:

S. No.		(₹in crores)
(i)	Gross value added at market price by the primary sector.	300
(ii)	Private final consumption expenditure.	750
(iii)	Consumption of fixed capital.	150
(iv)	Net indirect taxes.	120
(v)	Gross value added at market price by secondary sector.	200
(vi)	Net domestic fixed capital formation.	220
(vii)	Change in stocks.	(-)20
(viii)	Gross value added at market price by the tertiary sector.	700
(ix)	Net imports Government final consumption expenditure.	50
(x)	Government final cosumption expenditure.	150
(xi)	Net factor income from abroad.	20

1. Expenditure on fertilisers by a farmer.
2. Purchase of tractor by a farmer.

Explain any four limitations of using GDP as a measure/ index of welfare of a country.

Distinguish between stock and flow. Between net investment and capital which is a stock and which is a flow? Compare net investment and capital with flow of water into a tank.

An economy is in equilibrium. Find 'autonomous consumption' from the following:

National Income	=	1,000
Marginal Propensity to consume	=	0.8
investment expenditure	=	100

Giving reason, state whether the following statements are true or false.

1. The demand for a good increases with increase in the income of its buyer.
2. If the good X and Y are substitutes a rise in the price of X will result in a rightward shift of the demand curve of Y.