BBA 2nd Semester
Macro Economics Board Question Paper 2023

How can a hotel manager use the business cycle information in business decision making?

Differentiate between induced investment and autonomous investment.

Calculate the disposable income if national income is Rs 4,500 billion, transfer payment is Rs 1,400 billion, corporate income tax is 1,300 billion and personal direct tax is Rs 700 billion.

Differentiate between real interest rate and nominal interest rate.

Define gross national disposable income (GNDI).

GDP of Nepal in 2020 is Rs 3,915 billion and 2021 is Rs 4,266 billion, final consumption expenditure in 2020 is Rs. 3,066 billion and 2021 is Rs 3,984 billion. Find marginal propensity to consume of Nepal for 2021.

Write any four assumptions Say's law of market.

Derive the equation of equilibrium level of income in two sector Keynesian model.

Write any four causes for poor inflow of FDI in Nepal.

Prepare a list of characteristics of trade cycle.

Explain the circular flow of income and expenditure of two sector economy.

Calculate GDP at factor cost and at market price from following data.

Explain the saving function with numerical table and figure.

Derive the tax multiplier, government expenditure multiplier and foreign trade multiplier.

Explain the labour market equilibrium.

What is unemployment? Explain its cost.

What is public private partnership (PPP)? How does PPP help for efficient resource mobilization?

Identify the factors that cause inflation, demand-pull or cost-push, in Nepalese economy and explain them.

Explain the determinants of investments.

Following data shows the quantity produced and their respective market prices of two goods A and B that a hypothetical economy produces:

Product market of an economy is represented by equations C = 550 + 0.7(Y-T), I* = 450-1200i, G is government expenditure, I is tax, Y is national income. Similarly, money market of the economy is represented by equations (L = 90 + 0.88Y, Ls = 2410 - 800i, Ms = Rs 4,500 billion, where Li is transaction money demand and Ls is speculative money demand, Y is national income, Ms is money supply and i is interest rate.
a. Derive IS and LM equations and determine equilibrium level of income and interest rate.
b. Determine the new equilibrium situation when central bank decides to decrease money supply by Rs 160 billion.
c. Analyze the effect of change in monetary policy of central bank on national income and rate of interest.

Study the following macroeconomic situation of Nepal and answer the questions followed:
The Fifteenth Plan (2019/20-23/24) of Nepal has formulated 25-year vision to graduate Nepal to a middle-income country by 2050 and to reach the level of developed countries by 2043 with a per capita national income of 12,100 US dollar. The plan projects a high economic growth rate of 10.5 percent in average for achieving the national goals under the long-term vision.
During past four decades Nepal has achieved average real GDP growth rate of 4.2 percent but still the agriculture of Nepali economy is dominated by primary agriculture sector. Basic infrastructures are limited and underdeveloped situation and the country is very far behind in technological development.
Nepal is rich in natural resources and has sufficient human resources. However, use of natural resources and human resources efficiently, increase in capital formation rate, development of social infrastructure, technological change and innovation, strengthening institutions and values toward development are the key tasks of achieving equitable economic prosperity and qualitative improvement in citizens' lives.
In budget 2022/23, government has expected economic growth of 8 percent attributed to mobility in economy, economic revival, encouraging private sector investment and the investment made by the government in economic and social sectors. For this, government has allocated Rs.1,793.83 billion out which 42 percent is for current expenditure, 21.2 percent for capital expenditure, 12.8 percent for financing and 24 percent for fiscal transfers to provinces and local levels.
In 2022/23, Nepal Rastra Bank (NRB) has kept the monetary policy cautiously tight to promote macroeconomic stability by maintaining price and external sector stability and to support economic growth through channeling productivity by channeling financial resources to the productive sector. NRB has increased the bank rate to 6.5 percent, the policy rate to 7.0 percent and cash reserve ratio to 4 percent. As a result, credit expansion to the private sector will be limited to 12.6 percent, a sharp reduction from the target of 18 percent in the last fiscal year, and growth of money supply will be limit to 12 percent from the last fiscal year's target of 18 percent.
Questions:
a. Identify the sources of economic development of Nepal and explain them.
b. Are the monetary policy and the fiscal policy 2022/23 able to achieve the targeted growth rate of 8 percent? Give your critical argument.
c. Is current pace of economic growth sufficient to achieve the goals under the long-term vision of Nepal? Give your conclusion.