Chandan Commerce Classes

ECONOMICS SUGGESTED QUESTIONS FOR

2023 EXAM
1. Distinguish between stock variables and flow variables.
2. Discuss and Mention two macroeconomic variables.
3. Explain the concept of circular flow of income in a two sector model.
4. Difference between micro and macro economics?
5. What do you mean by natural rate of unemployment? Do you think that full employment
means zero unemployment? Explain the concept of frictional unemployment.
6. What is the inflationary gap? Diagrammatically explain the concept of the inflationary
gap.
7. Briefly explain the concept of the money multiplier, adding a short note on its derivation.
8. What do you mean by IS curve? Derive IS curve graphically.
9. Consider a simple keynesian model with investment as an autonomous expenditure.
Show how an increase in investment expenditure produces a magnified impact on
equilibrium income. Explain briefly the concept of a balanced budget multiplier and show
that it is equal to unity under the simple Keynesian framework.
10. Show the process of simultaneous determination of equilibrium income and interest
rate with the help of IS and LM curves. Examine the effects of an expansionary fiscal
policy on equilibrium income and interest rate.
11. Explain the concept of High Powered money. Derive the money multiplier in this
context.
12. How can you determine the equilibrium income in a closed economy in the process of
government participation (consider a simple Keynesian model). Examine the stability of
that equilibrium.
13. Distinguish between demand pull and cost push inflation. Briefly explain the theory of
cost push inflation.
14. In the IS-LM framework, examine the impact of an expansionary monetary policy. Will
the effectiveness remain the same in the liquidity trap zone? Justify.
15. Categories the following into stocks and flows (with brief justification) :
a) Losses b) Wealth
16. Explain the expenditure method of calculating GDP.
17. What do you mean by ‘consumption function'? Define APC and MPC.
18. Diagrammatically represent a Keynesian linear consumption function and show how it
is affected when MPC changes.
19. Derive the LM curve graphically. How will this curve be affected when the money
supply increases.
20. Distinguish between open economy and close economy.
21. What do you mean by GDP deflator?
22. From the following data, calculate GNP at factor cost:
a) GDP at market price 5,000
b) Net factor income from abroad -100
c) Indirect taxes 150
d) Subsidy 50
e) Gross Domestic capital formation 300
f) Net Domestic capital formation 200
23. What is the difference between national income at current prices and real national
income?
24. “Every real flow has a corresponding money flow in the circular flow of income”.
Explain.
25. Distinguish between voluntary and involuntary unemployment
26. Define high powered money.
27. Calculate depreciation and national income from the following data: (Figures in
thousands crores)
GNP at market price 1,500
Net domestic private investment 100
Subsidy 200
Gross domestic private investment 300
Indirect business taxes 150

Important
Very Very Important