Home 
About
Blog
Brief Answer Questions:
[6 x 1 = 6]Write any four assumptions of classical theory of employment.
Derive government expenditure multiplier.
Write any four determinants of saving function.
List out any two sources of deficit financing.
Write any four components of current account of BOP.
What are the causes of market failure?
Descriptive Answer Questions:
[6 x 3 = 18]Explain the concept of macro dynamic analysis.
How is national output determined in a four sector economy?
Derive IS curve.
Describe any three causes of demand pull inflation.
Explain the quantitative instruments of monetary policy.
Differentiate economic growth and economic development.
Problem Solving Questions:
[4 x 6 = 24]Consider the following information at MPC = 0.8
| Yd | C | S |
|---|---|---|
| 100 | 120 | --- |
| 200 | --- | --- |
| 300 | --- | --- |
| 400 | --- | --- |
| 500 | --- | --- |
| 600 | --- | --- |
i) Complete the table from the given information.
ii) Using graph, explain three propositions of psychological law of consumption function.
Consider the following figures for national income accounts.
| Description | Rs in Billion |
|---|---|
| Rent | 2.0 |
| Mixed income | 160 |
| Employer's contribution to social security | 40 |
| Consumption of fixed capital | 80 |
| Indirect taxes | 100 |
| Addition to stocks | (-20) |
| Net domestic fixed capital formation | 120 |
| Net factors income from abroad | (-40) |
| Net Exports | (-20) |
| Wages and salaries | 200 |
| Government consumption expenditure | 80 |
| Private consumption expenditure | 400 |
| Operating surplus | 80 |
| Subsidies | 20 |
(a) Compute GDPMP by both income and expenditure methods.
(b) Do you agree that final product method avoids double counting? Justify.
Let, investment function I = 200 + 0.1Y and saving function S = -400 + 0.2Y
a. Compute the equilibrium income, saving and investment.
b. Compute equilibrium income, saving and investment when planned saving increases by Rs 100 billion.
c. Does this condition reflect the concept of paradox of thrift?
From the following information
| Year | Price of goods X | Quantity of goods X | Price of goods Y | Quantity of goods Y |
|---|---|---|---|---|
| 2019 | 10 | 1,000 | 20 | 500 |
| 2022 | 20 | 2,000 | 30 | 1,000 |
| 2021 | 30 | 3,000 | 40 | 1,500 |
a. Compute Nominal GDP, Real GDP, GDP Deflator and rate of inflation.
b. State the significance of real GDP in economic analysis.
Comprehensive Answer Questions:
[1 x 12 = 12]Read the following situations and answer the questions given below.
Foreign direct investment (FDI) is considered an indispensable mode of economic development. For a least developed-country (LDC) like Nepal with huge saving-investment gap; limited, albeit growing, contribution to gross domestic product (GDP) ratio; and limited amount of foreign aid flow. Even FDI is traditionally viewed as foreign investments made in manufacturing and services sectors, which undoubtedly contribute to employment opportunities as well as economic growth, they are increasingly attracted by host country Nepal for meeting financing requirements for large infrastructure projects. This is an area in which foreign investors used to shy away from investing in the past due to various risks associated with such projects resulting from long gestation and pay back periods. In the context of Nepal, although FDI is generally welcome in all sectors, due to acute dearth of resources for infrastructure financing, it has become an imperative in the latter sector. It is to be noted that the utility of foreign investment for a country like Nepal does not end there. It is an instrument for the transfer of technology from the technology-rich countries to technology-deficient countries. Similarly, leadership and managerial skills transferred by foreign investors and eventual expansion of local knowledge and skill base. As Nepal welcomes FDI in all sectors of the economy, it has several obstacles like political instability, labour conflict, market etc. for investment friendly environment so; those unwanted situations should be removed.
a. What are the causes for poor inflow FDI in Nepal?
b. Do you agree that FDI helps in solving the problems of unemployment and technological backwardness faced by developing country like Nepal? Justify.
c. What types of fiscal measures would you suggest to attract more FDI in Nepal?