A “closed economy’’ is an economy in which ?
(a) The money supply is fully controlled.
(b) Deficit financing takes place.
(c) Only exports take place.
(d) Neither exports nor imports take place.
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Why is the open economy autonomous expenditure multiplier smaller than the closed economy one?
In case of a closed economy, equilibrium level of income is given by Y = C + cY + I + G Or, Y - cY = C + I + G Or,...
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There are three identical firms in a market. The following table shows the supply schedule of firm 1. Calculate the market supply schedule.
Price SS1 (units) SS2 (units) SS3 (units) Market Supply = SS1 + SS2 + SS3 0 0 0 0 0 1 0 0 0 0 2 2 2 2 6 3 4 4 4 12 4 6 6 6 18 5 8 8 8 24 6 10 10 10 30 7 12 12 12 36 8 14 14 14 42
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Which of the following measures would result in an increase in the money supply in the economy?
(c) 1. Purchase of government securities from the public by the Central Bank 3. Borrowing by the government from the Central Bank
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Supply of money remaining the same when there is an increase in demand for money, there will be
(c) The quantity of money demanded is inversely related to the interest rate.
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What is the price elasticity of supply associated with a straight line supply curve passing through the origin?
Price elasticity of supply is equal to unity, if a straight line supply curve passes through the origin.
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Price elasticity of supply of a good is 0.8. Is the supply elastic or inelastic? Why?
Supply is elastic because supply of a good is more than one.
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What is Perfectly Elastic Supply? When price falls by Rs.2 per unit, supply falls from 100 units to 80 units.
Es = P/Q x ΔQ/ΔP = P/100 x -20/-2 = 400/20 = Rs. 20
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Supply of money refers to quantity of money:
(c) as on any point of time.
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Describe any two methods by which Reserve Bank of India can regulate money supply.
Methods of regulating money supply (i) Bank Rate (ii) Cash Reserve Ratio (iii) Statutory Liquidity Ratio (iv) Repo Rate (v) Reverse Repo Rate (vi) Open Market Operation (vii) Margin Requirements Detailed Answer: The following are the two principal methods...
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In an economy, Aggregate Demand is greater than Aggregate Supply. Explain the changes that will take place in the economy.
In an economy, when AD > AS it is known as Inflationary Gap. The effects of excess demand are continuous and persistent rise in prices. Producer will get abnormal profit....
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