Model Paper 2 — Economics STD 12 Commerce — Question

Are the following a part of country's Net Domestic Product at Market Price? Explain.

1. Net Indirect Taxes.
2. Net exports.
3. Net Factor Income from Abroad.
4. Consumption of fixed capital.

Calculate Net Domestic Product at Factor Cost by the expenditure method and production method.

S.No.	Contents	₹ (in crore)
(i)	Value of Output in Economic Territory	4,100
(ii)	Net Exports	(-)50
(iii)	Intermediate Purchase by Primary Sector	600
(iv)	Private Final Consumption Expenditure	1,450
(v)	Intermediate Purchases by Secondary Sector	700
(vi)	Government Final Consumption Expenditure	400
(vii)	Net Domestic Fixed Capital Formation	200
(viii)	Intermediate Purchases by Tertiary Sector	700
(ix)	Net Change in Stock	(-)50
(x)	Net Indirect Taxes	100
(xi)	Consumption of Fixed Capital	50

Explain why the tax multiplier is smaller in absolute value than the government expenditure multiplier.

Calculate Autonomous Consumption Expenditure from the following data about an economy which is in equilibrium:

State the four functions of money. Explain anyone of them.

Distinguish between APS and MPS. The value of which of these two can be negative and when?

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

Read the following text carefully:
“Union Finance Minister stated, that investments in infrastructure and productive capacity have a large multiplier impact on growth and employment and in view of this, capital investment outlay is being proposed to increase steeply in the Budget 2023-24 by 1,000 crore”.
Based on the given text and common understanding, explain the working process of the increase in investment on the National Income, assuming the Marginal Propensity to Save (MPS) as 20%.

Giving reason, classify the following into capital goods and consumer goods.

1. Ice-cream purchased by a consumer.
2. Plant and machinery of XYZ company.