Explain “Banker to the Government” function of the Central B

Subject

Economics

Class

CBSE Class 12

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Sample Papers

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 Multiple Choice QuestionsShort Answer Type

31.

Explain the effect of appreciation of domestic currency on imports.

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32.

Distinguish between balance of trade and balance on current account. 

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33.

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
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34.

Giving reasons categorize the following into stock and flow:
(i) Capital
(ii) Saving
(iii) Gross domestic product
(iv) Wealth


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35.

Explain the circular flow of income.

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36.

Explain “Banker to the Government” function of the Central Bank. 


Central bank functions as a banker to the government - both central and state governments. It carries out all banking business of the government. Government keeps their cash balances in the current account with the central bank. Similarly, central bank accepts and makes payment on behalf of the government.

Also central bank carries out exchange, remittance, and other banking operations on behalf of the government. Central bank gives loans and advances to governments for temporary periods, as and when necessary and it also manages the public debt of the country. At the same time, central government can borrow any amount of money from RBI by selling its rupees and securities to the later. 



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 Multiple Choice QuestionsLong Answer Type

37.

C = 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.

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38.

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
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39.

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
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40.

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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