Money and Banking — Economics STD 12 Commerce — Question

If the Nominal GDP is ₹ 600 and Price Index (base = 100) is 120, calculate the Real GDP.

Read the passage given below and answer the following questions from 1 to 4. India has scaled back expenditure, including on productive assets that aid economic growth, as the government is confronted with the risk of its budget deficit blowing out. Capital expenditure-the money spent on creating, maintaining or improving fixed assets like roads and factories-Stood at 40% of the budgeted amount in the six months to September, down from 55.5% in the year-ago period, data from the government's Controller General of Accounts show. The overall spending during the period was 49% of the budget aim compared to 53% last year. That's despite Prime Minister Narendra Modi's Government outlining measures worth more than 21 trillion rupees (281 billion) to counter the economic and social fallout of the Covid-19 outbreak. A closer look at the numbers shows the bulk of the spending was directed towards the poor and the farmers, with crucial sectors such as coal, power, shipping and steel receiving less than a third of their annual budget allocation. Spending on capital assets has so far trailed the so-called revenue expenditure that includes interest payments and overheads such as salaries, the data released last week showed. Modi's Government placed spending curbs on some ministries from April through December to manage its cash flow. Source: Business Standard, Nov. 5, 2020

1. Capital expenditure of the government ............ the assets of the government:

1. Increases
2. Decreases
3. Both [a] and [b]
4. None of these

2. Expenditure on health due to Covid-19 is ............ expenditure of the government.

1. Direct
2. Revenue
3. Both [a] and [b]
4. None of these

3. The overall spending has......... as compared to last year.

1. Increased
2. Decreased
3. Both [a] and [b]
4. None of these

4. A closer look at the numbers shows the bulk of spending was directed towards the poor and the.............?

1. Farmers
2. Labour
3. Manager
4. None of these

Calculate (a) Gross domestic product at market price, and (b) Factor income from abroad from the following data:

S. No.		(₹ in crores)
(i)	Profits.	500
(ii)	Exports.	40
(iii)	Compensation of employees.	1,500
(iv)	Gross national product at factor cost.	2,800
(v)	Net current transfers from rest of the world.	90
(vi)	Rent.	300
(vii)	Interest.	400
(viii)	Factor income to abroad.	120
(ix)	Factor income to abroad.	250
(x)	Net domestic capital formation.	650
(xi)	Gross fixed capital formation.	700
(xii)	Change in stock.	50

If you were to be appointed as the Finance Minister of India, which taxes would you prefer: direct taxes or indirect taxes and why?

With the help of saving function S = -50 + 0.2(Y) calculate consumption expenditure at the income level of ₹ 5,000 crore.

Explain the role of reverse repo rate in increasing money supply.

What are non-debt creating capital receipts? Give two examples of such receipts.

What are two alternative ways of determining equilibrium level of income? How are these related?

As a result of increase in investment by ₹ 125 crore national income increases by ₹ 500 crore. Calculate marginal propensity to consume.

The break-even level of income for an economy is given to be ₹ 5000 crore. If the economy saves 50 percent of additional income, calculate the value of autonomous consumption.