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Brief Answer Questions Attempt ALL questions.
[10×2=20]State the features of macroeconomics.
What are the long-run determinants of investment?
What are methods of privatization?
Prepare a list of advantages of foreign employment
What are the sources of deficit financing?
Write any four assumptions of Say's Law of Market.
Differentiate money flow and real flow.
What is meant by exchange rate?
Consider the saving function. S = a + bY and interpret the components.
State the condition for labour market equilibrium according to classical economists.
Short Answer Questions (Any Five)
[5×10=50](a) Derive tax multiplier.
(b) Suppose in an economy, the following data is given;
C = 200 + b(Y - T), T = 500+tY
I = 100, G = 500, X = 100, M = 50+0.1Y
The marginal propensity to consume (b) = 0.7 and income tax rate (t) = 0.20
(i) Find the equilibrium level of income.
(ii) What will be the effect on equilibrium income when government expenditure increase by Rs. 50 billion and the tax rate decreases by 5%
Explain the dynamic analysis of macroeconomics. How does it differ from macro-static analysis?
Suppose that the Nepalese economy has realized the following structural equations for the product and money markets.
C = 200+0.8(Y -I), T = Rs. 40 billion, Msp = 200-3000i, Mt =0.5Y
I = 200-2000i, G = Rs. 100 billion, M= Rs. 400 billion
i) Compute the equilibrium rate of interest and output.
ii) It is realized that the Nepalese economy is trapped in economic recession. Nepal Rastra Bank has implemented a contractionary monetary policy. As a result money supply increased by Rs. 300 billion. The government of Nepal has also supported NRB and increased its planned expenditure by Rs. 200 billion. What will be the simultaneous effect on the equilibrium rate of interest and output?
Mention the features of budgetary policy of Nepal.
Describe the components of fiscal federalism.
Do you agree that globalization solves the economic problems like high unemployment, low productivity, BOP disequilibrium, etc, faced by developing countries like Nepal? Give your critical comment.
Analytical Answer Questions (Any Two)
[2×15=30]Consider the following figures for national income accounts:
| Description | Rs. in Million |
| Wages and salaries | 44,000 |
| Proprietor's income | 6,000 |
| Government Consumption | 6,000 |
| Receipts from the rest of the world | 800 |
| Private consumption expenditure | 52960 |
| Changes in inventories | -400 |
| Subsidy | 1600 |
| Rental income | 1800 |
| Net interest | 5000 |
| Dividends | 3600 |
| Mixed -income | 2,000 |
| Social security contributed by Employer's | 3000 |
| Corporate income | 10000 |
| Direct taxes | 1860 |
| Current transfers from the rest of the world | 5000 |
| Corporate income taxes | 2400 |
| Capital consumption allowance | 3200 |
| Social Insurance payment | 13600 |
| Current transfers from government | 8000 |
| Indirect business taxes | 3600 |
| Imports | 2600 |
| Government Investment | 3600 |
| Payments to the rest of the world | 1600 |
| Net fixed capital formation | 10800 |
| Exports | 1440 |
| Current transfers from business firms | 3000 |
| Interest paid by the consumer | 4000 |
a) Compute NNPmp by both income and expenditure methods.
b) Compute personal disposable income.
c) State the significance of real GDP in economic analysis
d) What types of conceptual difficulties are encountered in the measurement of GDP by product method?
Explain the principle of effective demand. How is it superior to the classical theory of employment?
Explain the principle of demand pull inflation. How can it be removed by monetary and fiscal polices?