MODEL PAPER 5 Economics - MODEL PAPER 5

Exchange rate for currencies is determined by supply and demand in system of:

Apart from currency notes and coins, the balance in ________, held by the public in commercial banks is also considered money since the amount in these accounts can be used to settle transactions. Such deposits are called demand deposits because they are payable by the bank on demand from the account-holder.

Suppose in a hypothetical economy, the income rises from ₹ 5,000 crores to ₹ 6,000 crores. As a result, the consumption expenditure rises from ₹ 4,000 crores to ₹ 4,600 crores. Marginal propensity to consume in such a case would be ________.

In order to correct the situation of deficient demand

Explain the demerits of flexible exchange rate.

What do you mean by official reserve transaction? How it is treated in BoP account.

Distinguish between Gross Domestic Product at Market Price and Net Domestic Product at Market Price.

What is money multiplier? What determines the value of this multiplier?

In an economy, aggregate demand function is given by:
AD = ₹ 160 crore + 0.8Y
Autonomous consumption = ₹ 100 crore
a. Calculate the equilibrium level of income.
b. How much is the total savings at equilibrium level of income? Calculate.

Show inflationary gap using a well labelled diagram. Suggest any two fiscal measures to correct the situation of inflationary gap.

(i) Can there be a fiscal deficit in a government budget without a revenue deficit? Explain.
(ii) Give meanings of Capital receipts and revenue receipts with an example of each.

i. Calculate Net National Product at Market Price.

	Contents	(Rs. in arab)
(i)	Consumption of Fixed Capital	40
(ii)	Change in Stocks	(-)10
(iii)	Net Imports	20
(iv)	Gross Domestic Fixed Capital Formation	100
(v)	Private Final Consumption Expenditure	800
(vi)	Net Current Transfer to Rest of the World	5
(vii)	Government Final Consumption Expenditure	250
(viii)	Net Factor Income to Abroad	40
(ix)	Net Indirect Tax	130

ii.Calculate Gross National Product at Factor Cost by
a. Income method and
b. Expenditure method.

Items	(Rs.in Crore)
Net domestic capital formation	500
Compensation of employees	1850
Consumption of fixed capital	100
Government final consumption expenditure	1100
Private final consumption expenditure	2600
Rent	400
Dividend	200
Interest	500
Net exports	(-)100
Profits	1100
Net factor income from abroad	(-)50
Net indirect tax	250

A shift from crop farming to other areas of productive activity with a view to raising income known as

Which of the following are not matched correctly?

Column I	Column II
(A) Marketed Surplus	(I) Large increase in production of food grains resulting from use of HYV seeds
(B) Green Revolution	(II) Portion of agricultural produce which is sold in the market by the farmers
(C) HYV Seeds	(III) Raised agricultural yield per acre to incredible heights
(D) Land Reforms	(IV) Change in the ownership of landholdings

Which of the given statements are correct with regard to commercialisation of agriculture?
a. Production for self-consumption
b. Production of cash crops instead of food crops
c. Production of crops for sale in the market
d. Commercialisation improved the economic status of the farmers

India heavily depends on _______ and ______power plants.

In 1958, there were _____ communes in China covering the entire farm population.

Why is it not an easy thing for a country like India to maintain employment growth at 2%?

70 lakhs cars get added on the roads of metropolitans every year. Is it justified? What policy measures can you suggest?

State the role of Pollution Control Boards in India.

What is migration? What are its costs and benefits?

Discuss pains and gains of globalisation.

Agriculture sector appears to be adversely affected by the economic reform process.
Explain the given statement.

Differentiate between Self Reliance and Self Sufficiency.

Read the following text carefully and answer the questions given below:
THE FUTURE POPULATIONS OF CHINA AND INDIA
In the absence of catastrophic events such as nuclear war, the populations of India and China are destined to become even larger, and by a large margin. If the Chinese were to achieve a total fertility rate of as low as 1.7 children born per woman by 1990 and maintain fertility that low for 30 years, the population would increase to a maximum of 1.22 X 10 in 2020 about 75% greater than the 700 x 106 it was when the birth rate began its big decline in the mid-1960s. To limit the increase to this amount will require an extraordinary success of the birth planning program.
For many years, 30% of parents would need to have only one child, and 70% only two. If a significant fraction had three or more, the proportion of one-child couples would need to be higher still. The social cost would be substantial. Many children would grow up with no siblings; many in the next generation would have no aunts, uncles, or cousins; very many parents would have no sons, and there would be an age structure with a marked relative shortage of younger workers, males of military age, etc. These features are very foreign to Chinese customs and values; the stringent and allegedly coercive means needed to achieve such low fertility might have adverse political effects as did less draconian measures in India.
In India, the failure to have started a large decline in fertility as early as in China implies a prospective growth on the order of 75% or more of the current population-to a maximum of at least 1.2 x 109, because the current population is nearly the size the Chinese population was when the birth rate in China began its dramatic fall.
The death rate in India is higher than that in China, but the prospective decline in fertility in India is surely more gradual; the attainment of a replacement-level (total fertility rate of about 2.2 or 2.3 children) is long in the future, to say nothing of attainment of lower rates.
The reason for the large continuing increases in population in each country even after fertility is reduced is that population growth has its own momentum. High birth rates in the recent past mean that there will be many more potential parents for another generation than there are now. Even if every couple merely replaces itself, the population continues to increase by 50% or more.
Thus, the world's two largest populations are destined to become much larger. I believe today, as I did when working with Hoover, that if sensible economic policies are followed it will be possible to provide a somewhat better life for these larger populations than is enjoyed in the two countries today. Reducing fertility soon to no higher than needed for long-run replacement would improve the prospects significantly and would especially improve the social and economic future as seen from the perspective of early in the next century. Yet, the mistakes of the past cannot be cancelled; the birth rate cannot be lowered retrospectively. A lower birth rate now is desirable, but the ideal rate is not zero. There are social and political costs of excessive emphasis on the immediate achievement of very small families; the rights and sensibilities of the current population and the disequilibrating effects of drastic changes in age composition must enter the calculation of desirable population policies.
Questions:
i. Outline any two implications (apart from population arrest) of the one-child policy of China introduced in the late 1970s.
ii. Delineate the reasons why the world's two largest populations are destined to become much larger in the future?

i. Organic Farming is the need of the hour to promote sustainable development but, has its own limitations. Elaborate any two advantages and limitations each of organic farming in the light of the above statement.
ii. Economists and scholars have identified certain key issues that are associated with rural development. Write the name of some key issues.

i. Explain the role of micro-credit system in meeting credit requirements of poor.
ii. State any three limitations of organic farming.