Open Economy Macroeconomics — Economics STD 12 Commerce — Question

Are the following a part of a 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.

Define Credit Multiplier. What role does it play in determining the credit creation power of the banking system? Use a numerical illustration to explain.

What are revenue receipts? Explain the role of government budget in bringing stability in the economy.

Calculate the 'National Income' and 'Private Income':

		(Rs. crore)
	Rent	200
	Net factor income to abroad	10
	National debt interest	15
	Wages and salaries	700
	Current transfers from government	10
	Undistributed profits	20
	Corporation tax	30
	Interest	150
	Social security contributions by employers	100
	Net domestic product accruing to government	250
	Net current transfers to rest of the world	5
	Dividends	50

i.Mention the situations in which following equations will hold true:
i. Value of Output is equal to Value Added.
ii. National income at Current Price = National income at Constant Price
iii. Gross domestic capital formation = Gross domestic fixed capital formation
iv. Operating Surplus = Rent + Royalty + Profit
ii.Giving valid reasons explain, which of the following will not be included in the estimation of National Income of India?
a. Purchase of shares of Sethi Ltd. by an investor in the Bombay Stock Exchange.
b. Salaries paid by Indian Embassy situated at Japan, to the local workers.
c. Depreciation on capital assets charged by firms.

Write down the three identities of calculating the GDP of a country by three methods.

Giving reason explain how should the following be treated in estimating gross domestic product at market price?

1. Fees to a mechanic paid by a firm.
2. Interest paid by an individual on a car loan taken from a bank.
3. Expenditure on purchasing a car for use by a firm.

Calculate “Gross National Disposable Income” from the following data:

	( in lakhs)
Net domestic product at factor cost	3,000
Indirect taxes	300
Net current transfers from rest of the world	250
Current transfers from the government	100
Net factor income to abroad	150
Consumption of fixed capital	200
Subsidies	100

Explain the problem of ‘excess demand’ in an economy with the help of a diagram. Explain the role of bank rate in correcting it.