Explain the 'lender of last resort' function of a central bank.

32.

Calculate investment expenditure from the following data about an economy which is in equilibrium:
National income = 1000
Marginal propensity to save = 0.25
Autonomous consumption expenditure = 200

Government raises its expenditure on producing public goods. Which economic value does it reflect? Explain.

Calculate national income and gross national disposable income from the following:
                                                                                           (Rs.)
1. Net current transfers to abroad                                            (-) 15
2. Private final consumption expenditure                                     600
3. Subsidies                                                                               20
4. Government final consumption expenditure                              100
5. Indirect tax                                                                            120
6. Net imports                                                                            20
7. Consumption of fixed capital                                                    35
8. Net change in stocks                                                               (-10)
9. Net factor income to abroad                                                      5
10. Net domestic capital formation                                                 110                               

Explain national income equilibrium through aggregate demand and aggregate supply. Use diagram. Also explain the changes that take place in an economy when the economy is not in equilibrium.

Outline the steps required to be taken in deriving saving curve from the given consumption curve. Use diagram.