EFF - Imp Questions - List - MVSIR

CA Intermediate – May 2023
Economics for Finance
EFF Important
Questions List
By CA Mohnish Vora (MVSIR)

INDEX
EFF Important Questions List
Business & Commercial Knowledge
Chp No. of Approx

Chapter Name Page No.
No. MCQs Marks
Determination of National 8 to 12
1 30 1–8
Income Marks
8 to 12
2 Public Finance 26 9 – 12
Marks
8 to 12
3 The Money Market 27 13 – 17
Marks
8 to 12
4 International Trade 27 18 - 22
Marks
120
Total 40 Marks
MCQs
FM & EFF Compiler (Que & Ans) available on – mvsir.in

EFF Important Questions
CHAPTER 1 - DETERMINATION OF NATIONAL INCOME
Q. 1 Compiler Q.3 MTP Mar 19, Apr 19

What do you understand by the term ‘final good”?
Q. 2 Compiler Q.6 PYQ Nov 18

Explain the Concept of Gross National Product at market price (GNPMP).
Q. 3 Compiler Q.8 MTP Mar 22

How GDP and GNP differ in their treatment of international transaction?
Q. 4 Compiler Q.13 RTP May 22

Can the GDP of a country be taken as an Index of welfare of people in the country?
Q. 5 Compiler Q.15 RTP Nov 22

What are the Challenges in compilation of in National Income Accounting?
Q. 6 Compiler Q.17 RTP May 20 & MTP May 20

How are the following transactions treated in national income calculation? What is
the rationale in each case?
i. Electricity sold to a steel plant
ii. Electric power sold to a consumer household
iii. A car manufacturer procuring parts and components from the market
A computer producer buys a robot produced in the same country and uses it in
production of computers.
Q. 7 Compiler Q.19 PYQ July 21, MTP Sep 22

What do you mean about gross investment of a country?
Q. 8 Compiler Q.22 PYQ Nov 20, MTP Oct 19, RTP May 22
Which is the most appropriate method for calculation of National Income in developed
countries?
OR
Is country like India unable to estimate their National Income wholly by one method?
Give comments
Q. 9 Compiler Q.27 MTP Oct 21

What is supra regional sector in an economy?
CA Mohnish Vora (MVSIR) 1

Q. 10 Compiler Q.34 PYQ Dec 21

The Nominal GDP and Real GDP of a country in the financial year 2018-19 were Rs
1,500 crore and Rs 1,200 crore respectively, you are required to calculate:
i. GDP deflator in the financial year 2018-19 and comment.
Inflation rate in the financial year 2019-20 assuming. GDP deflator rate in this year
is 140 as compared to the year 2018-19.
Q. 11 Compiler Q.36 RTP May 18

You are given the following data on an economy in millions
Consumer Expenditure (inclusive of indirect taxes) 110
Investment 20
Government Expenditure (inclusive of transfer payments) 70
Exports 20
Imports 50
Net Property Income from abroad 10
Transfer payments 20
Indirect taxes 30
Population 0.5
i. Calculate the Gross Domestic Product at market prices.
ii. Calculate the Gross National Income at market prices.
iii. Calculate the Gross Domestic Product at factor cost.
Calculate the per capita Gross National Income at factor cost.
Q. 12 Compiler Q.38 PYQ July 21

The following information is related to an economy:
Particulars (Rs.) In Crore
Domestic Sales 3600
Opening Stock 800
Exports 1000
Depreciation 300
Closing Stock 200
Net indirect tax 400
Intermediate consumption 600
Net factor income from abroad 10
2 CA Mohnish Vora (MVSIR)

Calculate the followings:

i. Gross Value of Output (GVOMP)
ii. Gross Value Added (GVAMP)
iii. Net Value Added (NVAMP)
iv. Net Domestic Product (NDPFC)
Net National Product (NNPFC)
Q.13 Compiler Q.42 RTP May 19

Using the information given in the following table calculate,
Particulars Amount
Sales by firm B to general government 300
Sales by firm A 1500
Sales by firm B to households 1350
Change in stock of firm A 200
Closing stock of firm B 140
Opening stock of firm B 130
Purchases by firm A 270
Indirect taxes paid by both the firms 375
Consumption of fixed capital 720
Sales by firm A to B 300

i. Value added by firm A and firm B
ii. Gross Domestic Product at Market Price
iii. Net Domestic Product at Factor Cost.
Q.14 Compiler Q.52 ICAI SM, RTP May 20, MTP Oct 22
Calculate the Operating Surplus with the help of following data
Particulars Rs. in Crores
Sales 4000
Compensation of employees 800
Intermediate consumption 600
Rent 400
Interest 300
Net indirect tax 500
Consumption of Fixed Capital 200

Mixed Income 400
Q.15 Compiler Q.52 ICAI SM

Calculate Gross Domestic Product at market Prices (GDPMP) and derive national income
from the following data (in Crores of Rs.)
Particulars Amount
Inventory Investment 100
Exports 200
Indirect taxes 100
Net factor income from abroad - 50
Personal consumption expenditure 3,500
Gross residential construction investment 300
Depreciation 50
Imports 100
Government purchases of goods and services 1000
Gross public investment 200
Gross business fixed investment 300

Calculate National Income with the help of Expenditure Method and Income Method:
Particulars In Crore
Compensation of employees 1600
Profit 700
Net factor Income from above abroad 40
Indirect Taxes 200
Subsidies 80
Private Final Consumption Expenditure 1800
Net domestic capital formation 900
Depreciation 150
Interest 600
Rent 400

Mixed Income of self employed 800
Export 50
Import 30
Government Final consumption expenditure 1,100
Employees contribution to social security scheme 400
Q.17 Compiler Q.72 RTP Nov 2019

Calculate Personal Income from the following data:
Undistributed profits of corporation 50
Net domestic product accruing to private sector 700
Corporation tax 65
Net current transfer from rest of the world 20
Net current transfer from the government 25
Interest on national debt 40

On basis of following information, calculate NNP at market price and Disposable personal
income
Items Rs. in Crores
NDP at factor cost 14,900
Income from domestic product accruing to government 150
Interest on National debt 170
Transfer payment by government 60
Net private donation from abroad 30
Indirect taxes 335
Direct taxes 100
Subsidies 262
Taxes on corporate profits 222

Undistributed profits of corporations 105

Calculate from the following data:
a) Private Income
b) Personal Income
Savings of non-department private enterprises 5,000
Income from domestic product accruing to private sector 450
Saving of private corporate sector 250
Current Transfer from government administrative

600
departments
Current Transfer from of the world 200
Corporative Tax 80
Direct personal tax 160
Net factor Income from abroad (70)

Calculate Gross National Disposable income from the following data (in Rs. Crores)
NDP at factor cost 6000
Net factor income to abroad -300
Consumption of fixed capital 400
Current transfers from government 200
Net current transfers from rest of the world 500
Indirect taxes 700
Subsidies 600

What are the factors that causes leakages in the multiplier?
Q.22 Compiler Q.86 RTP Nov 21, MTP Sep 22

How deflationary gap arises in an economy?

Q.23 Compiler Q.88 MTP May 20, Mar 22, RTP May 18, Nov 18
What would happen if aggregate expenditures were to exceed the country’s economy’s
production capacity?
Q.24 Compiler Q.97 PYQ Dec 21

How is aggregate consumption function affected, if:
i. An impending war is expected to result in shortage of goods and an adoption of
a rationing system,
ii. Increased cost for steel, oil etc. are expected to result in higher prices for
consumer goods, or
The leadership assures that economic policy is bringing the recession to an end.
Q.25 Compiler Q.99 MTP Nov 21, Mar 22, Apr 22, RTP May 22
How is multiplier useful in of functioning of Keynesian theory of determination of
National Income?
OR
What are the factors behind the concept of multiplier?
Q.26 Compiler Q.102 MTP Aug 18

If an economy has a flat aggregate expenditure function, what would be the nature of
the multiplier?
Q.27 Compiler Q.119 MTP Mar 2019

The equilibrium level of income of an economy is Rs. 2,000 crores. The autonomous
consumption expenditure is equal to Rs.100 crores and investment expenditure is Rs.500
crores. Calculate.
i. Consumption expenditure level of National Income.
ii. Marginal propensity to save and Marginal propensity to consume
Break-even level of Income.

If saving function S = -10 + 0.2Y and autonomous investment I = 50 Crores. Find out
the equilibrium level of income, consumption and if investment increases permanently by
Rs. 5 Crores, what will be the new level of income and consumption?

The consumption function is C = 40 + 0.8Yd,T= 0.1Y, I = 60 Crores G = 40 Crores, X
= 58 and M = 0.05 Y. Find out equilibrium level of income, Net Export, net export if
export were to increase by 6.25.

For an Economy with the following specifications Consumption,
C = 50 + 0.75 Yd
Investment, I = 100

Government Expenditure, G = 200

Transfer Payments, R= 110
Income Tax = 0.2Y
i. Find out the equilibrium of income and the value of expenditure multiplier.
ii. If autonomous taxes worth Rs. 25 Crores are added. Find out equilibrium level of
Income.
If the economy is opened up with exports X = 25 and imports M = 5 + 0.25Y Calculate
the new level of Income and balance of Trade (Assume that there are no autonomous
Taxes.

CHAPTER 2 - PUBLIC FINANCE
1. Compiler Q.2 MTP SEP 22

Describe the various interventionist measures adopted by the government?
2. Compiler Q.4 MTP Mar 22

Explain how the role of State is pivotal in Public Finance?
3. Compiler Q.6 PYQ Jan 21, RTP Nov 19, May 22

How can the government influence the resource allocation in an economy?
4. Compiler Q.15 MTP Mar 19, Mar 21, ICAI SM

Describe rationale for the stabilisation function of government policy.
5. Compiler Q.17 RTP Nov 22

Does government intervention always result in correcting market failure?
6. Compiler Q.20 MTP May 20, Apr 22

How do the markets fail in an economy? What are the main reasons behind this
market failure and economic inefficiency?
7. Compiler Q.23 PYQ Nov 20, July 21, Dec 21 MTP Apr
19, RTP Nov 18
Explain the different types of externalities? How do externalities lead to welfare
loss of markets?
8. Compiler Q.29 RTP May 18

Identify the market outcomes for each of the following situations
i. A few youngsters play loud music at night. Neighbours may not be able to
sleep.
ii. Ram buys a large SUV which is very heavy
iii. X smokes in a public place.
iv. Rural school students are given vaccination against measles
Traffic congestion making travel very uncomfortable.
9. Compiler Q.30 ICAI SM

Identify the market outcomes for each of the following situations
a) Piracy of computer programs
b) Some species of fish are now getting extinct because they have been caught
indiscriminately.
c) The municipality provides sirens four times a day
d) Burglar alarms are installed by many in your locality

e) Global warming increases due to emissions of fossil fuels
10. Compiler Q.34 PYQ Jan 21, MTP Aug 18, RTP May 19
Distinguish between private cost and social cost
11. Compiler Q.40 PYQ May 18, PYQ Nov 20

What are the Features of Public Goods?
12. Compiler Q.48 MTP Oct 20

Define near public goods. Is it desirable to keep people away from such goods? Give
comments.
13. Compiler Q.51 PYQ July 21, MTP Mar 19, May 20,
Oct 20, ICAI SM
Define common access resources? Why are they over used?
14. Compiler Q.59 PYQ Nov 20, RTP May 22

Explain the situation “where a pharmaceutical Company has full information regarding
the risks of a product, but it continues to sell”?
15. Compiler Q.62 PYQ Dec 21, MTP Oct 19, ICAI SM
How does the government intervene to minimize market power?
Or
How do governments ensure that market power does not create distortions in the
market?
16. Compiler Q.65 PYQ Nov 19

Describe the problems in administering an efficient pollution tax.
17. Compiler Q.70 PYQ Nov 18, MTP Nov 21, RTP May 20
How do government correct market failure resulting from demerits goods?
Or
Why is government intervention required in case of demerit good?
18. Compiler Q.74 PYQ Nov 20, MTP Mar 19, Apr 19, May
20, Sep 22, RTP Nov 18, Nov 19,
Nov 21, ICAI SM
Describe price ceilings with examples.
Or
Explain why government imposes price ceilings, Explain market outcome of price
ceiling through diagram
Or
What is the market outcome of price ceiling explain with a help of a diagram?
Or

When price of certain essential goods rises excessively, how does the government
intervene to control the price? Explain with the help of an example and with suitable
diagram
19. Compiler Q.79 RTP Nov 20, MTP Sep 22, Oct 21,
ICAI SM
Explain why do governments provide subsidies? Illustrate a few examples of
subsidies.
Or
What are the role of subsidy as part of government intervention in public finance?
Or
What is the objective of government subsidy?
20. Compiler Q.83 PYQ Nov 19, MTP Oct 19, RTP May 22,
ICAI SM
What is the distinction between discretionary and non-discretionary fiscal policy?
21. Compiler Q.85 PYQ Nov 20, MTP May 20, Apr 22, RTP
May 18, Nov 18
Examine what types of fiscal policy measures are useful for redistribution of income
in an economy?
Or
Fiscal policy plays a significant role in reducing inequality and achieving equity and
social justice. Do you agree? Substantiate your answer with examples.
22. Compiler Q.86 PYQ Nov 18, Nov 19, Dec 21, MTP Mar
19, Oct 20
Explain the term Contractionary Fiscal Policy. What are the measures undertaken
in a contractionary fiscal policy?
23. Compiler Q.88 RTP May 18, May 20

Analyse what should be the tax policy during recession and depression?
Or
Suppose country X is passing through recession, what type of tax policy should be
framed during this period?
24. Compiler Q.95 PYQ May 18, Jan 21, MTP Mar 19, Nov
21, RTP Nov 22, ICAI SM
What is meant by Crowding out?
Or
How is economy effected by crowding out effect?

25. Compiler Q.96 PYQ Jan 21

Calculate the Fiscal Deficit and Primary Deficit from the data given below:
Total Expenditure on Revenue Account and Capital Account 547.62
Revenue Receipts 226.82
Non-debt Capital Receipts 103.00
Interest Payments 84.00
26. Compiler Q.99 MTP Aug 18

The equilibrium level of real GDP is Rs 1,000 billion, the full employment level of
real GDP is Rs 1,250 billion, and the marginal propensity to consume (MPC) is 0.60.
How much government spending (∆G) would be needed to raise income to full-
employment level?

CHAPTER 3 - Money Market
1. Compiler Q.3 PYQ Nov 18, ICAI SM

Mention the general characteristics of Money.

Do you think money is a unique store of value?

Which of the functions of money do the following items satisfy?
i. A credit card.
ii. A token of specified amount of money which can be used for shopping
4. Compiler Q.12 PYQ May 18, MTP Oct 20, RTP Nov 19
Explain the classical version of quantity theory of demand for money
OR
Explain the Fisher’s Quantity theory of demand for money?
OR
Explain the following modified equation of exchange as given by Irving Fisher: MV
+M'V’=PT
5. Compiler Q.16 PYQ July 21

Fisher's equation of exchange is: MV =PT. If velocity (V) = 25, Price (P) 110.5 and
volume of transaction (T) = 200 billion.
Calculate:
1. Total money supply (m)
2. Effect on M when velocity (V) increases to 75
Velocity (V) when the volume of transactions increases to 325 billion.
6. Compiler Q.18 PYQ Nov 19, MTP Aug 18

Explain the Cambridge Version of Cash Balance Approach, Md = k P Y
Or
Explain the neo-classical approach to demand for money
7. Compiler Q.20 PYQ May 18, Dec 21, MTP Oct 21, Sep 22
Why do people hold money balances?
Or
Explain why people hold money according to Liquidity Preference Theory
Or
What are the different motive for holding cash according to Keynes?

8. Compiler Q.23 PYQ Dec 21 RTP May 18

Explain how speculative motive for holding cash is related to market interest rate
9. Compiler Q.28 PYQ July 21

Justify the following statements in the light of holding cash balance.
1) For investment in interest bearing assets
2) In the prevailing scenario, usually all transactions are made through online or E-
banking.
Money is a unique store of value
10. Compiler Q.29 MTP Oct 21, Mar 22, RTP May 21
Explain the concept of Liquidity Trap.
Or
What are the impact of liquidity trap on the economy?
11. Compiler Q.30 PYQ Dec 21, RTP Nov 18

Critically examine the post Keynesian theories of demand for money?
12. Compiler Q.37 MTP Nov 21, Mar 22, RTP Nov 19
Why empirical analysis of money supply is important?
OR
What is the rationale of measuring money supply?.
13. Compiler Q.44 PYQ Nov 19 Jan 21 RTP Nov 19

What is high powered money? Calculate it from the following data:
Components in Million (Rs.)
Net RBI Credit to the Government 41,561.2
RBI credit to the Commercial sector 18,459.3
RBI’s net non-monetary liabilities 24,981.2
RBI’s claims on banks 31,456.2
RBI’s Net foreign assets 10,456.1
Government’s currency liabilities to the public 21,417.1
14. Compiler Q.47 PYQ Dec 21

The following information is given:
Components in Crores (Rs.)
Notes in Circulation 25,00,000
Circulation of Rupee Coins 26,000

Circulation of Small Coins 850
Cash on hand with Banks 95,000
Bankers' Deposits with RBI 4,500
Other Deposits with RBI 180
Total Post office Deposits 12,000
Time Deposits with Banks 15,000

You are required to compute:
i. Currency with the Public; and
Reserve Money.
15. Compiler Q.52 RTP Nov 20

Distinguish between M1 and M2. Find out M1 when a country has the following
monetary asset information as of Mar 20:
Components in Million (Rs.)
Cash in hands of the public 300
Demand Deposits 400
Savings Type accounts 2000
Money Market Mutual Funds 1000
Traveller’s checks 50
Small Time Deposits 500
Large Time Deposits 450
Other Checkable Deposits 150
16. Compiler Q.56 PYQ Nov 20, Jan 21

Compute M3 from the following data
Components in Crores (Rs.)
Currency with the public 2,25,432.6
Demand Deposits with Banks 3,40,242.4
Time Deposits with Banks 2,80,736.8
Post office savings Deposits

446.7
(Excluding National Saving Certificates)
Other Deposits with RBI

392.7
(Including Government Deposits)

Post Office National Saving Certificates 83.7
Government Deposits with RBI· 102.5

Calculate liquidity aggregate L2 when the following information is given-
Particulars in Crores (Rs.)
Term deposits with term lending institutions 750
Term borrowing by refinancing institutions 450
All deposits with post office savings banks 1,320
Term deposits with refinancing institutions 590
Certificate of deposits issued by FIs 290
Public deposits of non-banking financial companies 450
NM3 2,650
National saving certificates 240
18. Compiler Q.65 PYQ Jan 21, RTP Nov 18, Nov 21
What is money multiplier approach to supply of money?
19. Compiler Q.68 PYQ May 18, Nov 20, MTP Oct 18,
RTP Nov 18
Explain how each of the following may affect money multiplier and money supply?
i. Fearing shortage of money in ATM’s, people decide to hoard money?
ii. During festival season, people decide to withdraw money through ATMs very
often
iii. Banks open large number of ATMs all over country
iv. E banking becomes very common and nearly all people use them
v. If Commercial banks decide to keep 100% reserves.
vi. If Commercial Banks do not keep reserves
vii. If Commercial Banks keep excess reserves.
viii. If Commercial Banks keep less reserves

“The deposit multiplier and the money multiplier though closely related are not
identical". Explain briefly.
21. Compiler Q.76 MTP May 20, Oct 22, ICAI SM

What effect does government expenditure have on money supply?

22. Compiler Q.80 MTP Nov 21, Mar 22, RTP Nov 21
What are the operating procedures and instrument of monetary policy?
OR
Explain operating procedures in the context of monetary policy of India?
23. Compiler Q.84 PYQ Nov 18, RTP May 20

How does the monetary policy influence the price level and the national income?
24. Compiler Q.90 PYQ Nov 20, Jan 21, MTP Mar 19,
Sep 22, RTP Nov 18
Explain the function of SLR? What are the eligible securities of SLR?
Or
What are the eligible securities for SLR?
Or
Explain the functioning of SLR?
Or
How do changes in Statutory liquidity ratio impact the economy?
25. Compiler Q.95 PYQ May 18, July 21

Explain the difference between Liquidity Adjustment Facility (LAF) and Marginal
Standing Facility (MSF).
26. Compiler Q.99 PYQ Jan 21, MTP May 20, Mar 22, Sep
22, RTP May 18, May 19,
ICAI SM
What role does Market Stabilization Scheme (MSS) play in our economy?

Explain the role of Monetary Policy Committee (MPC) in India.

CHAPTER 4 - International Trade
1. Compiler Q.2 PYQ May 19, MTP Oct 19, MTP May
20, ICAI SM
How does trade increase economic efficiency and which view argued that trade is a
zero- sum game and how?
2. Compiler Q.8 ICAI SM

The table below shows the number of labour hours required to produce wheat and
cloth in two countries X and Y.
Commodity Country X Country Y
1 unit of cloth 4 1.0
1 unit of wheat 2 2.5

1. Compare the productivity of labour in both countries in respect of both
commodities
2. Which country has absolute advantage in the production of wheat?
3. Which country has absolute advantage in the production of cloth?
4. If there is trade, which commodity should these countries produce?
What are the opportunity costs of each commodity?

Countries China and India have a total of 6000 hours each of labour available each
day to produce shirts and trousers. Both countries use equal number of hours on
each good each day. China produces 1000 shirts and 300 trousers per day. India
produces 300 shirts and 200 trousers per day.
In the absence of trade:
i. Which country has absolute advantage in producing Shirts and Trousers?
ii. Which country has comparative advantage in producing Shirts and Trousers?
4. Compiler Q.12 PYQ Nov 19, Nov 20 MTP Mar 19 Oct

21, Apr 22
What are the reason for superiority of Hecksher Ohlin theory of International
Trade over the theory of comparative advantage?
OR
What is the crux of Heckscher-Ohlin theory of International Trade
OR
Explain the key features of modem theory of international trade
5. Compiler Q.16 PYQ July 21, May 22, MTP Nov 21,
RTP May 21
Briefly explain the New Trade Theory and its importance.

Or
What is the effect of New Trade Policy on Industries?

The price index for exports of Bangladesh in the year 18-19 (based on 2010-11)
was 233.73 and the price index for imports of it was 220.50 (based on 2010-11)
i. What do these figures mean?
ii. Calculate the index of terms of trade for Bangladesh.
iii. How would you interpret the index of terms of trade for Bangladesh?
7. Compiler Q.21 RTP NOV 22

How do trade Policy influence international trade?
8. Compiler Q.25 MTP Mar 22, RTP May 20, PYQ May 18,
PYQ July 21, MTP May 20
Explain how a tariff levied on an imported product affects both the country
exporting a product and the country importing that product.
OR
What role tariff plays as response to trade distortions?
9. Compiler Q.28 PYQ May 19, RTP May 22

What is Compound tariff and how it is different from Mixed Tariff?
10. Compiler Q.32 PYQ Dec 21, MTP May 20, Sep 22, ICAI
SM
How does Escalated tariff structure work and discriminated ?
11. Compiler Q.38 PYQ May 18, MTP Mar 19, Apr 22, RTP
May 18, ICAI SM
Define ‘dumping’? What is meant by an ‘Anti-dumping’ measure?
12. Compiler Q.41 PYQ Nov 20, MTP Nov 21, PYQ May 22,
ICAI SM
What is countervailing duty and how does it effect trade policy?

You are given the following information:
Good M India Japan China
(Mobile Phones) (in $) (in $) (in $)
Average Cost 70.5 69.4 70.9
Price per unit for domestic sales 71.2 71.10 70.9
Price charged in Dubai 71.9 70.6 70.6

a) Which of the three exporters are engaged in anticompetitive act in the

international market while pricing its export of mobile phones to Dubai?
What would be the effect of such pricing on domestic producers of mobile phones?
14. Compiler Q.45 PYQ Jan 21, MTP Apr 22, RTP Nov 18
Nov 19 May 21
Explain how ‘technical barriers to trade’ (TBT) may operate as a protectionist
measure?
Or
Food Laws, Quality Standards and Industrial Standards are examples of which type
of non-tariff measures? Give Comments.
Or
Describe different technical barriers to trade (TBT) and their effects on trade?
15. Compiler Q.52 MTP Oct 20, RTP Nov 19

Is prohibition of import of poultry from countries affected by avian flu, meat and
poultry processing standards to reduce pathogens, residue limits for pesticides in
foods etc. an example of Sanitary and Phytosanitary (SPS) measure? How?
Or
Which technical measures are applied to protect human, animal or plant life from
risks arising from additives, pests, contaminants, toxins or disease-causing
organisms. Explain with an example.
16. Compiler Q.53 PYQ Dec 21

Discuss the non-technical measures adopted by the countries with reference to
i. Trade related investment measures; and
ii. Price control measures
17. Compiler Q.57 PYQ July 21, MTP Oct 18, RTP May 22,
ICAI SM
What is Voluntary Export Restraints? Under which circumstances exporters commit
to voluntary export restraint? Discuss.
18. Compiler Q.61 PYQ Dec 21, RTP Nov 20

Describe the different types of agreements that take place during the negotiations
of trade?
19. Compiler Q.65 PYQ May 18, Nov 19, Nov 20, July 21, Dec 21,
MTP Aug 18, May 20, RTP May 18, May 22
What are the major functions/objectives of the WTO? What do you understand by
the term ‘Most-favored-nation’ (MFN)?


World Trade Organisation (WTO) has a three-tier system of decision making.“
Explain.
21. Compiler Q.72 MTP Aug 18, MTP Oct 18

What is meant by ‘safeguard measures’ under WTO?

Differentiate Trade- Related Investment Measures (TRIMS) and Trade-Related
Aspects of Intellectual Property Rights (TRIPS).
23. Compiler Q.85 PYQ Dec 21, MTP Oct 18, RTP May 21,
ICAI SM
Mention the types of transactions in the forex market? Also distinguish between
forward premium and forward discount.
24. Compiler Q.88 PYQ July 21, MTP Oct 19, Oct 22
What are the main advantages of fixed rate regime in an open economy?
25. Compiler Q.90 PYQ Dec 21, RTP May 19

How is exchange rate determined under floating exchange rate regime?
OR
How is the nominal exchange rate determined? Explain.

Explain the concept of soft peg and hard peg exchange rate policies.

The Nominal Exchange rate of India is Rs. 56/1 $, Price Index in India is 116 and
Price Index in USA is 112. What will be the Real Exchange Rate of India?
28. Compiler Q.102 RTP NOV 22

How does appreciation and depreciation of currency affect real economy?

Compare and contrast between devaluation and depreciation in the context of
exchange rate.
30. Compiler Q.108 PYQ Jan 21, PYQ Nov 20

Following exchange rate quotations are available for different periods:
1. The spot exchange rate changes from Rs. 65 per $ to Rs. 68 per $.
2. The spot exchange rate changes from $ 0.0125 per rupee to $ 0.01625 per
rupee.

Answer the following:

A. Identify the nature of rate quotations in (1) and (2) above.
B. Identify the base currency and counter currency in (1) and (2) above.
What are possible consequences on exports and imports of (1) and (2) above.
31. Compiler Q.110 MTP Aug 18, MTP Mar 19, RTP May 21,
RTP Nov 21, Nov 22, ICAI SM
What is Arbitrage? What is the outcome of Arbitrage?
Or
How does arbitrage prevents the risk arising out of the fluctuations in the exchange
rate?
32. Compiler Q.114 PYQ May 19, RTP Nov 18

Enumerate the bases of distinction between FDI and FPI
33. Compiler Q.119 PYQ Nov 18, MTP Oct 18, Oct 21, Apr
22, ICAI SM
What are the different routes for securing FDI?
OR
What are the different modes of foreign Direct Investment?
34. Compiler Q.121 PYQ July 21, RTP Nov 20, MTP Oct 22,
ICAI SM
Into how many parts are FDIs categorized according to the nature of foreign
investment? Describe them.
Or
Distinguish between horizontal, vertical and conglomerate type of foreign
investments.
35. Compiler Q.125 PYQ Jan 21, MTP Mar 19, RTP May 18
Define foreign direct investment (FDI). Mention two arguments made in favour of
FDI to developing economies like India?
36. Compiler Q.126 MTP Apr 19, RTP May 19

How do foreign direct investments affect human capital in recipient countries?
or
Mention the effects of FDI on host country labour.
37. Compiler Q.133 PYQ May 18

Describe deterrents to Foreign Direct Investment (FDI) in the country.

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CA Intermediate – May 2023

Economics for Finance

By CA Mohnish Vora (MVSIR)

EFF Important Questions List

Business & Commercial Knowledge

Chp No. of Approx

FM & EFF Compiler (Que & Ans) available on – mvsir.in

CHAPTER 1 - DETERMINATION OF NATIONAL INCOME

Q. 1 Compiler Q.3 MTP Mar 19, Apr 19

Q. 2 Compiler Q.6 PYQ Nov 18

Q. 3 Compiler Q.8 MTP Mar 22

Q. 4 Compiler Q.13 RTP May 22

Q. 5 Compiler Q.15 RTP Nov 22

Q. 6 Compiler Q.17 RTP May 20 & MTP May 20

Q. 7 Compiler Q.19 PYQ July 21, MTP Sep 22

Q. 9 Compiler Q.27 MTP Oct 21

CA Mohnish Vora (MVSIR) 1

Q. 10 Compiler Q.34 PYQ Dec 21

Q. 11 Compiler Q.36 RTP May 18

Government Expenditure (inclusive of transfer payments) 70

Net Property Income from abroad 10

Q. 12 Compiler Q.38 PYQ July 21

Domestic Sales 3600

Opening Stock 800

Closing Stock 200

Net indirect tax 400

Intermediate consumption 600

Net factor income from abroad 10

2 CA Mohnish Vora (MVSIR)

Calculate the followings:

Q.13 Compiler Q.42 RTP May 19

Sales by firm B to general government 300

Sales by firm A 1500

Sales by firm B to households 1350

Change in stock of firm A 200

Closing stock of firm B 140

Opening stock of firm B 130

Purchases by firm A 270

Indirect taxes paid by both the firms 375

Consumption of fixed capital 720

Sales by firm A to B 300

Compensation of employees 800

Intermediate consumption 600

Net indirect tax 500

Consumption of Fixed Capital 200

CA Mohnish Vora (MVSIR) 3

Mixed Income 400

Q.15 Compiler Q.52 ICAI SM

Inventory Investment 100

Indirect taxes 100

Net factor income from abroad - 50

Personal consumption expenditure 3,500

Gross residential construction investment 300

Government purchases of goods and services 1000

Gross public investment 200

Gross business fixed investment 300

Q.16 Compiler Q.61 RTP May 2022

Compensation of employees 1600