Short Answer TypeExplain the effect of appreciation of domestic currency on imports.
When the domestic currency appreciates, demand for imports by the native residents also increases. This is because appreciation of domestic currency implies depreciation of foreign currency. When domestic currency appreciates, imports become cheaper and there by the demand for import increases.
For example, a currency appreciation (fall in the exchange rate) from say, $1= Rs 40 to $1= Rs 38 implies that the goods from abroad become cheaper (that is, it now cost Rs 38 to purchase a commodity worth $1 instead of Rs 40 earlier). This would result in a rise in the demand for the imports.
Calculate “sales” from the following data:
| S.No | Particulars | (Rs in lakhs) |
| (i) | Net Value added at factor cost | 560 |
| (ii) | Depreciation | 60 |
| (iii) | Change in stock | (-) 30 |
| (iv) | Intermediate cost | 1000 |
| (v) | Exports | 200 |
| (vi) | Indirect taxes | 60 |
Giving reasons categorize the following into stock and flow:
(i) Capital
(ii) Saving
(iii) Gross domestic product
(iv) Wealth
Long Answer TypeC = 100 + 0.4 Y is the Consumption Function of an economy where C is Consumption Expenditure and Y is National Income. Investment expenditure is 1,100. Calculate
(i) Equilibrium level of National Income.
(ii) Consumption expenditure at equilibrium level of national income.
Complete the following table:
| Income (Rs) | Consumption expenditure (Rs) | Marginal Propensity to Save | Average Propensity to Save |
| 0 | 80 | ||
| 100 | 140 | 0.4 | - |
| 200 | - | - | 0 |
| - | 240 | - | 0.20 |
| - | 260 | 0.8 | 0.35 |
Calculate National Income from the following data:
| S.No. | Particulars | (Rs in crores) |
| (i) | Private final consumption expenditure | 900 |
| (ii) | Profit | 100 |
| (iii) | Government final consumption expenditure | 400 |
| (iv) | Net indirect taxes | 100 |
| (v) | Gross domestic capital formation | 250 |
| (vi) | Change in stock | 50 |
| (vii) | Net factor income from abroad | (-) 40 |
| (viii) | Consumption of fixed capital | 20 |
| (ix) | Net imports | 30 |
|
S.NO. |
Particulars |
(Rs in Crores) |
|
1
2
3
4
5
6
7
|
Gross domestic product at Market price
Net current transfers to the rest of the world Net indirect tax
Net factor income to abroad
National debt interest
Consumption of fixed capital
Current transfers from government |
2,000
(-)200
150
60
70
200
150 |
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