Economics Past Papers

Q. 1 what is inflation? And its causes/ Types of Inflation?

Inflation:
Inflation generally means day-to-day rises in prices of goods and services. According to
Professor Coulbourne Inflation is,
“too much money chasing too few goods”.
Causes of Inflation:
1. Demand-Pull Inflation:
When demand for particular goods and services rises it will cause inflation. Its causes are
I. Fiscal Stimulus
ii. Monetary Stimulus

2. Cost Push Inflation:

When there is a rise in the cost of goods, it will cause inflation. Some causes of cost-push
inflation are:
I. Increase in wages
ii. Rise in direct and indirect taxes
iii. Rise in price of imported goods

Q.2. Determinants of demand and supply.

Determinants of Demand:
Determinants of demand are as follows:
1. Income of consumer
2. Season
3. Taste
4. Fashion
5. Habit
6. Price of goods
7. Price of substitute goods
8. Price of complementary good
9. Brand loyalty
10. Indirect Taxes
11. Government Regulations
12. Advertising
13. Population
Determinants of Supply:
Determinants of supply are:
1. Cost of raw material
2. Cost of production
3. Price of goods
4. Change in technique
5. Change in season
6. Change in the availability of factors of production
7. Direct Taxes

Q.3. Explain supply.

Supply:
Supply is a fundamental economic concept that means a quantity of goods and services offered
in the market for sale at a particular price. Supply is related to price. When the Price rises
supply also rises and when the price falls supply also falls. E.g. 5000 kg out of 8000 kg is offered
for sale in the market at a particular price. 5000 kg is the supply of that commodity.
Q.4. National income? Which factors are affecting it?
National Income:
National Income is a measure of the total value of all final goods and services produced in a
country within one year.
Factors Influencing National Income:
1. Capital Accumulation (Formation)
2. Investment
3. Political stability
4. Entrepreneurial class
5. Will To progress
6. Availability of skilled manpower
7. Introduction of modern techniques of production
8. Modern means of communication and transportation

Q. 5. Give two reasons why demand curve slope moves left to right?

Reasons for demand curve slope left to right:

There are several reasons why demand curve slope mover left to right (negatively skewed). Two
of them are discussed below:
1. Demand has inverse relation with price because when price rises demand for good falls and
when price falls demand rises. Also when consumer consumes one more additional unit his
utility also decreases.
2. Income is also called the purchasing power of the consumer when income of consumer rises
his purchasing power for purchasing particular good or service also rises.

Q. 6. Why central bank is last resort of lender?

Lender Of the last resort:
The main function of Central Bank is “Lender of the Last resort”. “A friend in need is a friend
indeed”. Central Bank is like a friend of commercial bank because when Commercial bank goes
on bankruptcy stage or unable to pay their debts Central Bank is a last hope of every
Commercial Banks. It gives aids and loans to Commercial bank and make them instable
situation.

Q. 7. What is private and public sector Organization?

Private Sector Organizations:
In Private sector organizations all the four factors of production i.e. land, labor, capital and
entrepreneur is owned by private individuals or groups. It is only for profit motive. This type of
system is called Capitalism.

Public Sector Organization:

Public sector organizations are organizations in which all the four factors of production are
owned by Government. It is only for people’s welfare. This type of system is called Socialism.

Q. 8. Land, Labor, capital and enterprise (entrepreneur)?

Land:
Land are the all the free gifts of nature. It is on the soil, below the soil and above the soil.
Labour:
It is any human effort physical or mental for any reward and creating goods and services.
Capital:
Anything invest in creating goods and services for the sake of profit.
Entrepreneur:
He is a person who control, manages and organizes the business and all factors of production.

Q. 9. Economic is Normative science and positive science?

Positive Economics:
Positive Economics observes and analyzes all the economic activities without giving any
opinion. This branch of economics describe and understand economic behavior with empirical
evidence.
Normative Economics:
This also analyzes the economy but in a different way. It helps in better decision making and
policy making for government. It also observes what are happening well and bad in the
economy. It helps to make economy better.

Q. 10.Consumer’s surplus?
Consumer’s Surplus:
Consumer surplus is a benefit which a consumer gain during purchases he is able to pay less
than maximum prices which he is willing to pay.
E.g. A consumer go to market for buying T-shirt for Rs 2000 but he get T-shirt in just Rs 1500
The difference between the actual price he pay and maximum price he is willing to pay which is
Rs 500, it is consumer’s surplus.

Q. 11.Impacts of globalization?
not in feb attempt

Q.12 .Elasticity of demand and supply, cross elasticity?

Elasticity of Demand:
It is a measure of responsiveness in demand (extension and contraction) to a given variation
(rise and fall) in price.
In simple words calculation of Law of demand is called elasticity of demand
Elasticity of Supply:
It is a measure of responsiveness in supply ( extension and contraction) to a given variation (rise
and fall) in price.
In Simple words, Calculation of Law of Supply is called Elasticity of supply.

Cross Elasticity of Demand:

It is a measure of responsiveness of a commodity due to change in price of relative goods only
(substitute and complementary). Price of this commodity and income of consumer remains
unchanged.
Formula:
( Change in demand/ Change in price of relative good ) x Previous price of relative good/
Previous quantity )
Note:
In case of substitute good price of substitute good has direct relationship with demand of this
commodity. And in case of complementary good price of complementary good has inverse
relationship with demand of this commodity.

Q. 13.Cost volume profit analysis?

Not for feb attempt

Q.14 14.E-business?
Not for feb attempt

Q. 15. Cartels, monopolistic approach?

Cartel:
A cartel is an agreement of independent producers where all members in an industry regulate
production, marketing, pricing together. They can also eliminate competition by restricting
supplies and making prices high. It is either be tacit or openly admitted.

Monopolistic Approach:
There are two kinds of monopolistic approach:
1. Monopoly:
In Monopoly , single producer or seller of the product dominates entire market. There is lack of
competition in this system because of no suppliers. Product is very unique. There are several
barriers to the entry of new firms due to legal restrictions, or control over essential resources.

2. Monopolistic Competition:
In this competition there are large number of buyers and sellers. Product is not identical (
Homogeneous) but differentiated. Each firm can set market price and quantity by its ow
without affecting entire industry or market.

Q.16.Positive and negative Externalities?

Externalities:
Externalities are side effects gain form product. It may be positive or negative. Externalities
occur in two circumstances
1. Consumption
2. Production

Positive Externalities in Production:

Benefit gain by society during production process. E.g. A farming land also provide greenery to
city.
Negative Externalities in Production:
Loss by society by production or which harms society. E.g. Smoke during production processis
harmful for people of that area.
Positive Externalities in Consumption:
Where benefit of consumption extend beyond original purchases. E.g. A newspaper bought and
after reading left in apublic place.
Negative Externalities in Consumption:
It is when buyer’s consumption of any product reduces welfare of a society. E.g. The noise for
someone riding a motorcycle.

Q. 17.Duties/ Functions of commercial bank?

Nit in feb attempt

Q. 18.Yield on financial instruments?

Not in Feb attempt

Q.19.Fiscal policy and its components, monetary policy and its instruments, expansionary and
contractionary?
Fiscal Policy
In Words of Lipsey,
“Government revenue raising and government revenue spending activities are called fiscal
policy.”
Tools For Fiscal Policy:
Taxes:
Purchasing power of consumer is related with taxes. Taxes are tools which make fluctuations in
purchasing power of consumers.
Public Work Program:
Government may start some work program for people like construction of roads or dams. It will
temporarily give peoples employment
Public Employment Scheme:
Government may start Public Employment scheme to increase purchasing power of peoples

Expansionary fiscal policy:

It is applied to boost up economy. Tools for expansionary fiscal policy are:
1.Tax rebates
2.Tax Cuts
3.Increase GovernmentSpending

Contractionary Fiscal Policy:

1.Increase Tax
2.Wage Freezes
3.Reduce subsidies

Monetary Policy:
Monetary policy refers to various steps taken by Central Bank to regulate supply of Money and
Credit for desired results of an economy.
Tools For Monetary Policy:
Quantitative Tools:
Bank Rate Policy:
It is minimum official rate at which Central Bank provides financial support to its member
banks.
Open Market Operations:
This method consists of buying and selling of government securities.
Manipulation of reserve Ratio:
Central Banks can extend or contract credit money by expanding or contracting cash reserve
ratio.
Qualitative Tools:
Credit rationing:
Central Bank can fix the credit ceiling allowed to each commercial bank. It will not goive further
loan beyond the limit
Direct Action:
Central bank can also take direct action like refusing to give furc=ther loan.
Moral Persuasion:
Central Bank may request Commercial banks not to indulge in some economic activities which
harms economy of a country.

q. 20.Exchange rate/Govt. Policy to control exchange rate?

Not in feb attempt

Q.21 GDP & Cause in decrease in equilibrium GDP?

GDP:
Gross Domestic Product (GDP) is an economic indicator that measures the final value of goods
and services within a boundary of a country during a period of one year although it is owned by
foriegners or local.

Formula:
C+G+I+(X-M)
C=Consumption
G=Government Expenditure
I=Investment
X=Exports
M=Imports

Causes of decrease in equilibirium GDP:

1. Decrease in consumer spending
2.Decrease in business investment
3.Political instability
4.Increase in Imports
5.Rise in Inflation
6.Rise in Unemployment
7.Tight Monetory Policy

Q. 22.Business cycle phases

Business Cycle:
“Economic Fluctuations over the time period is called Business Cycle”. There are four stages in
business cycle:
1.Recovery/ Revival:
Recovery is the phase of economic development where all macro economic indicators shows
sign of progress.
2.Boom:
Boom is the period of time where all the macro economic goals are achieved.
3.Recession:
It is the phase of economic downturn where all macroeconomic indicators show sign of
distortion.
4.Depression:
In this stage where economy is in crises where all macroeconomic indicators shows deep
economic crises.

Q. 23.Types of Unemployment / Why Unemployment are trend?

Types Of Unemployment:
1.Cyclical Unemployment:
This type of unemployment occurs due to fall in trade cycle means when it is suffering from
stage of recession.
2. Structural Unemployment:
It is a result of change in the structure of the economy.
3.Frictional Unemployment:
Sometimes it take longer time from moving on from one job to another. Unemployment in this
period is called frictional unemployment.
4. Non Voluntary Unemployment:
It is real form of unemployment. Indivisuals who cannot find jobs according to their
qualification.
5. Technological Unemployment:
This occurs as a result of change in production technology.
6. Real Wage Unemployment:
It occurs due to high wage rate. Firms Cannot employ many people.

Causes of Trends in Unemployment:

1.Trade Cycles:
It rises and fall with the ups and downturns in trade cycles.
2.Structural Changes:
The changes in structure of an economy can also cause unemploiyment.
3.Technology:
Automation and technological advancements may also cause demand for such service.
4.Globalization:
Globalization has a great impact on economy. It can lead to unemployment by job outsourcing
and changes in consumer preferences.

Q. 24.Acc in balance of payments (Deficit & Surplus)

Balance of Payments:
It is a systematic record of all economic transactions between the residents of a country with a
rest of world during a period of one year. In balance of payments we include both visible as well
as invisible items.
1.Surplus:
(Visible Exports + Invisble Exports ) > (Invisible imports + Visible Imports ) is termed as favorable
or surplus balance of payments.
2.Deficit:
(Visible Exports + Invisble Exports ) < (Invisible imports + Visible Imports ) is termed as
unfavorable or deficit balance of payments.

Q. 25.Terms of trades?
Not in feb attempt

Q. 26.What are factors of production? Define any One?

Factors of Production:
Factors of production are the resources that are used to produce goods and services in the
economy. There are four factors of production:
1 Land
2.Labour
3.Capital
4.Entrepreneurship

1.Land:
Land are all the free gifts of nature. It is fixed factor of production in short run .It is all the things
which are provided by nature either it is below the soil, above the soil and on the soil. The
reward of land is ‘rent’.
2.Labour:
Any Mental or physical work done for the sake of profit. This is human efforts. It is also called
active factor of production. Reward for labour is ‘Wages’. There are three types of labor:
Skilled Labour
Unskilled Labour
Semi-Skilled Labour
3.Capital:
This is anything that is invested for the sake of of future income. This is input which is invested
for making goods like buying of raw material or used for payment of rent for building. ‘Interest’
is a reward for capital.
4.Entrepreneur:
He is a person who is real owner of a business. He is a person who manages, organizes and
responsible for all the activities of business. ‘Profit’ is paid for services of entrepreneur.

Q. 27.What is Merger? How many types of mergers? Define any two?

Merger:
Where the shareholders of two or more firms agree to exchange their shares for shares in a
new firm has been to setup to combine all the activities of previously separated companies.
There are three main types of mergers:
1.Horizontal Merger
2.Vertical Merger
3.Conglomerete diversification

1.Horizontal Merger:
When all the companies which are merging are of same type of business. This may tends to
create monopoly and capture most of market share.
2.Vertical Merger:
When firm merges with other firm within same industry but operating different stages of
production. There are two types of vertical merger:
i.Backward Vertical Merger:
It means moving back to stages of production like producing of raw material.
ii.Forward Vertical Merger:
It means Moving up in stages of production like selling of goods or directly interaction with
consumers.
3.Conglomerete Diversification:
This is a one firm merges with completely another business.

Q. 28.Government Fiscal Polices?

Fiscal Policy
In Words of Lipsey,
“Government revenue raising and government revenue spending activities are called fiscal
policy.”
Tools For Fiscal Policy:
Taxes:
Purchasing power of consumer is related with taxes. Taxes are tools which make fluctuations in
purchasing power of consumers.
Public Work Program:
Government may start some work program for people like construction of roads or dams. It will
temporarily give peoples employment
Public Employment Scheme:
Government may start Public Employment scheme to increase purchasing power of peoples

Expansionary fiscal policy:

It is applied to boost up economy. Tools for expansionary fiscal policy are:
1.Tax rebates
2.Tax Cuts
3.Increase GovernmentSpending

Contractionary Fiscal Policy:

1.Increase Tax
2.Wage Freezes
3.Reduce subsidies

Q. 29.Some types of Indifference Curves/Characteristics of Indifference curve.

Indifference Curve:
An indifference curve represents satisfaction of the consumer from two commodities. It is
drawnon the assumption that all possible points ( all combination of two commodities ) on an
indifference curve, the total satisfaction remains the same.
Types of Indifference Curve:
1.Convex indifference curve
2.Concave indifference Curve
3.Linear Indifference Curve
Characteristics of Indifference Curve:
1. Indifference Curve is negatively sloped because there is an inverse relationship between both
goods.
2. It is always convex to the origin because marginal rate of substitution diminishes at all
combinations.
3. If we draw two or more indifference curve on one graph it will not intersect with each other.
4. Higher the curve means higher the satisfaction.
5. It can also not touch to axis.

Q. 30.Define public private partnership with examples

Not in feb attempt

Q.31.GNP
GNP:
GNP stands for Gross National Product. It is the most important and commonly used concept to
describe economic performance of nation. It is measure of total value of output of a goods and
services produces by residents of a country whether it is produce within a country or not. The
term GNP is wider than GDP.
Formula;
GNP = C + Ig + G + (X-M) + Net factor income from abroad.

Q. 32. Explain Law of supply /Aggregate Supply Curve

Law of Supply:
Supply has a direct relationship with price. When price rises , supply also rises and vice verca. It
can be defined as
“If other things remains the same, when price of a particular commodity rises, its supply also
rises and when price of a particular commodity falls, supply falls.”
We observe law of supply form producer point of view. He always try to maximize his profit
(rational producer ).
Aggregate Supply Curve:
The aggregate supply curve represents the total quantity of goods and services that all firms in
an economy are willing and able to produce at different price levels. It shows the relationship
between overall prices and total output of goods and services produced in an economy. The
short run aggregate supply curve is upward sloping as prices rises firms are willing to produce
more output but in long run aggregate supply curve is more elastic, reflecting economy’s
capacity to adjust production levels over time.

Q. 33.Define Multiplier effect

Multiplier:
Multiplier (k) is the ratio of change in national income to change in national income due to
change in investment.
Professor Keynes argue that a small change in investment causes a greater change in output
which he termed as “Investment Multiplier”.
Formula:
1/(1-MPC)
Money always circulate in an economy which is consumed.

Q. 34.Why demand curve for inferior goods slope is downward.

The demand curve for inferior goods is negatively sloped, an increase in income will cause
demand curve for inferior good fall because of rise in income of consumer will tend to increase
in demand for expensive goods. Expensive goods are substitute for inferior good. When income
rises consumer will move to higher quality products.

Q.35.Explain why supply curve moves left to right /Explain why demand curve moves left to
right/ Reasons of shift in aggregate demand
Causes of movement of supply curve from left to right:
1.Price:
Price has a direct relationship with supply. Supply rises due to increase in price and vice versa.
2.Profit Motive:
Suppliers has only concern with their profits. When price increases profit also increases which
directly impact supply and vice versa.
3.Cost of production:
The cost of production is also a main factor that affects supply.
4.Market Conditions:
Changes in Market conditions may have a great impact on supply of a product.
Causes of moving Demand curve moves left to right:
1.Change in Income:
Increase in income of consumer cause an increase in demand because an increase in income
will make consumer purchasing power more.
2.Change in consumer preferences:
Change in consumer preferences like a change in taste, fashion or mental condition of a
consumer.
3.Change in price of relative goods:
The change in price of relative goods i.e substitute and complementary will directly affects
demand.
4.Change in population:
The change in population will cause demand curve.

Reasons of shift in aggregate demand:

Aggregate demand represents the total quantity of goods and services demanded in an
economy at different price levels. A shift in aggregate demand curve occur due to:
1.Changes in taste
2.Changes in fashion
3.Change in National Income
4.Change in Government spending
5.Change in Investment
6.Future Expectations
7.Fiscal Policy
8.Net Exports
9.Inflation Expectations
10.Natural disasters

Q.36.Fiscal policy and explain its components

Fiscal Policy
In Words of Lipsey,
“Government revenue raising and government revenue spending activities are called fiscal
policy.”
Components of Fiscal Policy:
There are three main components of fiscal policy:
1.Governmments Receipt:
Government receipts refers to amount of money collected government through various
sources, like taxes, fees and fines etc.
2.Government spending:
These are also called government ecpenditures. It is the total amount of money spent by
government on various types of activities and programs. It is a key component of national
budget.
3.Public Debt:
When government is not in a condition of collecting taxes they may adopt debts collection from
its internal and external sources.

Q. 37.Difference between depreciation and devaluation

Not in feb attempt

Q. 38.Essential economic decisions

Economic decisions are the choices that individuals, firms and societies make about how to
allocate scarce resources to overcome problems:
1.What to produce?
Goods and services that are produced in a market economy are determined by consumers’
demand. Only those goods and services which are demanded will be produced.
2.How to produce?
Firms produce for profit and their only aim is to get maximum profit in least cost. Cost can be
minimized by using more cheaper factors and less of costly factor.
3.For whom to produce?
The simple rule is produced for those who have ability and willingness to pay.

Q. 39.Why GDP decrease from the equilibrium

Causes of decrease in equilibirium GDP:
1. Decrease in consumer spending:
Decrease in consumer spending means marginal propensity to consume will become low which
direcly effect multiplier which will cause GDP equilibrium to be decrease.
2.Decrease in business investment:
Sometimes company do their business in some countries but the income generated from these
countries is not spent on those cpuntries again.
3.Political instability:
Politics has a great impact on countrys’ GDP.
4.Increase in Imports:
Increase in imports means fall in demand for local goods either local goods has not a good
quality or is not produced in our country.
5.Rise in Inflation:
Inflation means steady and sustainable rise in general price levels of a country. This will also
causes decrease in aggregate demand
6.Rise in Unemployment:
Rise in unemployment will directly cause a fall in purchasing power of people which will cause
decrease in equilibrium of GDP.
7.Tight Monetory Policy:
Sometimes Government regulates tight and strict monetory policy which harms country
national income.

Q. 40.Consumers equilibrium?
Consumer’s Equlibrium:
A consumer is I equilibrium position when he obtains maximum possible satisfaction from his
limited resources given that prices of commodity in the marketand the money to be spend are
in accordance with following assumptions.
Assumptions of Consumer’s Equlibrium:
1.Consumer is rational
2.There is perfect competition in the market
3.Each good is homogeneous and perfectly divisible
4.Consumer has an indifference map showing his scale of preferences for various combination
of Good X and Good Y
5.Consumer has fixed amount of money to be spent on both goods
6.Prices of Good X and Good Y are given

Q. 41.Economic development and Economic growth / and factors affecting it?

Economic Development:
It is the process of improving the quality of life. It is typically measured by increasein er capita
income , employment opportunities, access to education and healthcare, infrastructure
development and overall improvements in the standard of living. It involves progressin all
sectors of a country.
Economic Growth:
It is the increase in the production and consumption of goods and services in an economy over
a period of time. Economic growth is usually measured by the percentage change in the gross
domestic product (GDP) or the gross national income (GNI) of a country.
Factors Affecting Economic Development and Economic Growth:
Factors that affect economic development and economic growth are defined below:
1.Human Resources:
These are skills, education, and training of labour force that determine the efficiency and
productivity of economic activities.
2.Capital or Investment:
These are the stock of assets like new machinety, infrastructure, and land. It will also create
jobs which direcly make good standard of living
3.Technology:
Technology significantly impacts economic development and growth by enhancing productivity,
fostering information and transforming industries.
4.Natural Resources:
It is the quantity and availability of land, water, minerals, energy and other natural assets that
can be used for production. It will work as an investment for industries.

Q. 42.Marginal Utility & it’s types.

Marginal Utility:
It is a concept in economics which refers to an additional benefit which a consumer derives
from consuming one more unit of good or service. It is the change in total utility resulting from
a change in the quantity ofcommodity consumed.
Types of Marginal Utility:
1.Positive Marginal Utility:
When total satisfaction increases with every unit of consumption. Here Marginal utility is
greater than 0.
2.Negative Marginal Utility:
When total satisfaction decreases with every unit of consumption. Here Marginal utility is less
than 0.
3.Zero Marginal Utility:
Total satisfaction remains the same with additional unit of consumption this is called Zero
Marginal utility.
4.Increasing Marginal Utility:
Here current marginal utility is more than previous marginal utility.
5.Decreasing Marginal Utility:
When Marginal utility decreases with every additional unit called decreasing marginal utility.

Q. 43.Define Economics as a part of social science.

Economics is a branch of social science that studies how individuals, businesses, societies
allocate scarce resources to satisfy their multiple ends. It studies production, exchange,
distribution and consumption of goods and services within a society. The fundamental concepts
of economics include demand and supply. The role of incentives, and allocation of resources to
maximize overall welfare. It analyzes human behavior in a context of decision making regarding
the utilization of limited resources to satisfy are unlimited wants. It also helps government to
make policy and resource allocation.

Q. 44.What is black economy

Black economy also called informal economy, operates outside country’s legal framework and
involves illegal activities like drug sales or evading taxes. It can negatively impact country’s
economic condition and social well-being by reducing taxes revenue, distortion of official
statistics, unfair competitions and undermining or rule of law. Characteristics of black economy
are informal labor, illegal activities, prices are greater then maximum prices set by government,
social and economic inequality and soon.

Q. 45.What is price flooring

Price flooring is a government imposed minimum price that is set above the market equilibrium
price for a particular good or service. The intention behind establishing a price floor is typically
to ensure that the market price does not fall below a certain level, particularly to protect the
incomes of producers or workers in a specific industry. When a price floor is implemented it will
increase supply for goods and services exceeding demand which will cause excess inventory,
reduced consumer welfare, and wastage of resources.

Q. 46.Overshooting exchange rate

Not in feb attempt

Q. 47.Explain Law of diminishing Marginal utility/with example

Law of diminishing Marginal Utility:
“The additional benefit which a person derives from a given increase of his stock diminishes
with every increase in a stock that he already has.”
In other words it means that if individual consumes one more unit of any commodity his
additional utility from additional unit will be less than previous unit.
Example:
If you are thirsty, the satisfaction you will get from last sip is less than first sip of water.

Q. 48.Difference between demand and supply.

Demand:
The quantity of a commodity which consumer is able and willing to buy is termed as demand.
Demand has an inverse relationship with price of a commodity that’s why demand curve is
negatively sloped. The main objective of demand of consumer is to get maximum satisfaction.
Consumer’s demand have little control over market prices.
Supply:
The quantity which producer is willing and able to sale is called supply. Supply has direct
relationship with prices of a commodity that’s why supply curve is upward sloping. The main
objective of producer is to maximize profit so he increases his supply due to increase in price.
Producer has more control over market prices but less than government.

Q. 49.Describe the role of subsidies of government fiscal policy.

Subsidies are payments or tax breaks made by government to certain industries for economic
support. The role of subsidies is to encourage economic development, protect industries from
being close, reduce market imperfections that lead to inefficient outcomes. The main purpose
of subsidies is to stabilize market prices and redistribution of income. It has some drawbacks
like market distortions, inefficiencies, or fiscal strain which will have negative impact on
economy.

Q. 50.Importance of Principal agent in an organization.

Not in feb attempt

Q. 51.Three factors to measure GDP.

There are three factors to measure Gross Domestic Product. All are discussed below:
1.Product method:
Economy is divided into various sectors like agriculture, industries and soon. The gross product
is found out by adding up of all production that has taken place in all sectors during a year.
Formula: Sales-Cost of Sales
2.Income Method:
this method of national income means summing up of all incomes received by individuals or
payments to all four factors of production.
Formula: Rent+Wages+interest+Profit
3.Expenditure Method:
This method arrives at national income by adding up all expenditures made on goods and
services during a year.
Formula: Consumer Expenditure(C)+Government Expenditure(G)+Gross
Investment(Ig)+(Exports-Imports)

Q. 52.Characteristics of perfect market competition.

Characteristics of perfect market competition:
1. Large numbers of buyers and sellers
2. Homogeneous product
3. Perfect knowledge of the market
4. No Government intervention
5. Individual firms are price takers and unable to influence market price individually
6. There are no transportation cost or information gathering cost
7. Free mobility of factors of production
8. Free entry and exit of firms.

Q. 53.Income effect on the consumer’s consumption.

Income Effect on Consumer’s Consumption:
By income effect we mean the change in consumer income will change in consumer’s
equilibrium as a result of it his satisfaction would increase or decrease. Change in income will
cause change in standard of living of consumer and also change in purchasing power. There are
two types of goods:
1. Normal Goods:
Normal goods are those whose demand increases with an increase in income and vice versa.
2. Inferior Goods:
When income rises consumption of those good decreases and vice versa.

Q. 54.Monopolistic competition Market

Monopolistic Competition Market:
A market structure where many firms produce similar but not identical product (homogeneous
product). Each firm price and quantity without affecting market price as a whole. Some main
features of monopolistic competition are:
1. Many buyers and sellers
2. Differentiation of a product
3. Free entry and exit of firms
4. Difference in the prices for the similar product
5. Advertising and propaganda.
Q. 55.Define Monopoly/ Why Monopoly should be controlled,reasons?
A monopoly is a market structure where, there is just one supplier of the product and there is
absence of competition. There are several barriers to entry and exit of firms and it is profit
maximizing firm. Monopoly must be controlled for several reasons:
1. Price Exploitation
2. Limited consumer’s choice
3. Inefficiency
4. Barriers to entry
5. Consumers feel depressed due to prices
6. Economic inequality
7. Circulation of money in just few hands

Q. 56.Define indifference Curve theory.

Indifference Curve:
An indifference curve represents satisfaction of the consumer from two commodities. It is
drawnon the assumption that all possible points ( all combination of two commodities ) on an
indifference curve, the total satisfaction remains the same.

Characteristics of Indifference Curve:

1. Indifference Curve is negatively sloped because there is an inverse relationship between both
goods.
2. It is always convex to the origin because marginal rate of substitution diminishes at all
combinations.
3. If we draw two or more indifference curve on one graph it will not intersect with each other.
4. Higher the curve means higher the satisfaction.
5. It can also not touch to axis.

Q. 57.What is trade cycle and explain recession phase?

Trade Cycle:
“Economic Fluctuations over the time period is called Trade Cycle”. There are four stages in
business cycle:
1.Recovery/ Revival
2.Boom
3.Recession
4.Depression
Recession:
It is a period of time in which all economic indicators shows sign of distortion. In this stage
economy become slow and contracts. There are some features of it
1. Declining in business confidence
2. Declining business growth
3. Decreasing investment
4. Increasing unemployment
5. Sharply drop in business profit

Q. 58.Difference between narrow and abroad money

Narrow Money:
Narrow money refers to the most liquid forms of money like physical currencies (coins, and
currency notes) and demand deposits (money in current account). These assets are easily
accessible and quickly converted into goods and services.
Formula:
M=C+D
C means currencies
D means demand deposits

Broad Money:
Broad money includes a more extensive range of financial assets than narrow money. In
addition to the components of narrow money, it incorporates near-money assets such as saving
accounts, shares, time deposits and Bonds.
M=C+D+T+Sb+S+B
C=Currency
D=Demand Deposits
T=Time Deposits
SB=Saving Bank Deposits
S=Shares
B=Bonds

Q. 59.Seven factors to promote economic growth and economic development

Factors to promote Economic Growth and Economic Development:
1. Political Stability:
Good political conditions will encourage investors to invest more in country.
2. Technological Advancements:
Technology plays a vital role in increasing productivity and efficiency in production. Investment
in technologies will cause economic growth and development in state.
3. Infrastructure:
A good infrastructure means efficient transportation and communication system will increase
growth in economy of a country.
4. Monetory Policy:
Effective monetory policy ensures economic stability in country.
5. Research and Development (R&D):
Investment in research and development will cause innovation in a country, leading to the
development of a new products which maximizes profit and increases growth.
6. Market Competition:
A good competition in market will give efficiency and innovation and ensures that resources
are allocated effectively.
7. Global Economic Growth:
Globalization also is beneficial for economic growth because it will promote international trade.

Q. 60.Why Deflation is harmful for a society

Deflation harms society by creating several problems. When prices fall people delay spending,
expecting lower prices for goods in future. This reduce demand for goods, causing business to
reduce production which make profit less and cut jobs. Rising unemployment will cause more
decrease in spending which worsening economic downturn. Deflation also increases the real
burden of debt, making it difficult for firms and also individual to pay off their debts. Central
Banks also find it challenging to boost economic activity through cuts in interest rate during
deflation.

Q. 61.Govt.Policies to control inflation

There are several policies made by government to control inflation. These are discussed below:
1. Monetory Policy:
Central bank regulate money supply and interest rates to control inflation.
2. Fiscal Policy:
Government adjust spending and taxation to adjust demand and supply to control inflation.
3. Supply side policies:
Enchancing production efficiency and reducing hurdles will overcome inflationary gap in the
economy.
4. Exchange rate policies:
Managing exchange rates impacts prices of imported goods.
5.Wage and price control:
Setting up of maximum prices for goods and services and maximum wage rate will reduce
inflation.

Q. 62.Components of Money Supply.

M1 - Narrow Money:
Currency in circulation (coins and notes outside the central bank)
Demand deposits (checking accounts) held by the public.
M2 - Broad Money:
M1 (currency in circulation and demand deposits).
Savings deposits.
Time deposits or fixed deposits.
M3 - Broad Money (extended):
M2 (M1 and savings and time deposits).
Large time deposits.
Institutional money market funds.

Q. 64.What happens when (G>T)/What Happens when government spending is higher than its
tax revenue?
When Government Spending is more than tax revenue it causes a budget deficit. Here is a
more detailed explaination:
1. Borrowing:
To cover the deficit government borrow money from internal resources like issuing bonds and
bills.
2. Increase National Debt:
As government starts borrowing from internal resources it will cause increase in national debts
of a country wich will repayed in future.
3. Crowding out of Private investment:
Higher government borrowing causes an increase in interest rate which will cause
disinvestment of public sector.
4. Future tax implications:
To cover these deficit and paying off debts will cause rise in taxes in future.

Q 65.Four Components of Spending.

The term "Four Components of Spending" typically refers to the categories that make up a
country's Gross Domestic Product (GDP). The four main components of spending in the context
of GDP are:
1. Consumption:
This represents the total spending by households on goods and services.
2. Investment:
Investment is an injection in the economy. It is crucial for long term economic growth and
productivity.
3. Government Spending:
This includes all government spending on goods and services. It encompasses spending on
welfare of public.
4. Net Exports:
This component represent difference between eports and imports of a country.

Q. 66.Four different types of government revenue?

Types of Government revenue:
1. Tax revenue:
This is the primary source of government revenue. Government imposes charges on individuals
and businesses.
2. Non Tax Revenue:
This category include revenue from spurces other than taxes like fess and fines imposed on
such activities.
3. Grants:
Sometimes government get grants from international governements or organizations. These
funds are provided for such special activity.
4. Borrowing:
Government also get loans from internal sources like issuing bonds or get loan from Central
bank and also get loans form external sources like borrowing from International Monetory fund
(IMF).

Q. 67.What is purchasing power parity (PPP)?

not in feb attempt.

Q 68.After this exam if you decide to continue further study and give exam what will be your
opportunity cost
Opportunity cost is a thing that you forgo with the use of one thing. Continually studying after
the current exam incurs several opportunity costs:
1. Potential Income:
While you are studying, you might not be earning sufficient amounts of money.
2. Work Experience:
The time spent in further education could be used for any other work experience.
3. Personal Time:
The time you spent on your studies that you might use for personal activities.

Q69.Production Possibility Curve(PPC)AndProduction Possibility Frontier (PPF).

A production possibility curve is a graphical representation in economics that illustrates the
maximum feasible combination of two goods or services an economy can produce, given its
existing resources and technology. The concave to the origin shapes reflect increasing
opportunity costs, conveying that as the production of one good rises, the sacrifice of the other
good escalates. To achieve unattainable goals, firms have to utilize other natural resources,
provide training, and use better technology.

Q. 70.Role Of Financier Intermediate

Not in feb attempt

Q. 71.Utility, Total Utility

Utility:
Utility in economics refers to the satisfaction which we get from consuming any commodity. It
varies from person to person. It doesn’t same for all peoples. It also cannot measure in terms of
number.
Total Utility:
It is the overall satisfaction which we get from consuming a particular quantity of any
commodity. It is a sum of all utility which we get from consumption of any good.

Q. 72.Difference between commercial bank and investment bank.

Not in feb attempt

Q 73.The lowest point of business cycle is?

The lowest point of the business cycle is "depression.". In this stage, the economy is in crisis,
and all macroeconomic indicators show deep economic crises. This phase represents the
bottom of the economic downturn. During this period, key economic indicators such as
employment, production, consumption and investment reached their lowest levels ever. But
after this stage expansion of economic growth is started.

Q. 74.Why it’s difficult for firm to raise his finance.

Not in feb attempt

Q. 76.Rationing?
Rationing is the controlled distribution and allocation of scarce resources, goods, and services
to ensure fair and equitable distribution during times of shortage or crisis. It is implemented by
the government to manage supply and prevent hoarding, which will cause shortages in the
future. Rationing typically involves the idea that individuals can purchase only a specific
quantity of goods and services they are allowed to control demand for.

Q. 77.Sources of economies of scale

Economies of scale are cost advantages that a business can achieve as a result of an increase in
its scale of production. There are two types of economies of scale:
1. Internal Economies of Scale:
These are the benefit which only a company can gain from increase in scale of production.
Some internal economies of scale are listed below:
i.Administrative economies
ii.Commercial economies
iii.Financial economies
iv.Technical Economies
2. External Economies of Scale:
These are the benefit which is given to all peoples or whole industry due to increase in scale of
production.
i.Average price of equipment is reduced
ii.Availability of skilled manpower
iii.banking Facilities
iv.Research& training centres
v.Better Transportation & communication.

Q.78.Diff b/w micro economics and macro economics(Dec 2023).

Micro Economcs:
Micro Economics is also called “Price theory”. The word micro mreans a miro means a millionth
part. When we speak of micro economics what we mean is that it is some small part or
component of the whole economy that we are analyzing.
Macro Economics:
Macro Economics is also called “the theory of income and employment”. Macro Economics is
concerned with aggregates and averages such as national income, aggregate output, total
employment, total consumption, saving and investment and general price level.
Q. 79.Classification of monopoly and explain two of them.
Classification of monopoly is given below:
1. Natural Monopoly
2. Legal Monopoly
3. Public Monopoly
4. Simple Monopoly
4. Technological Monopoly
6. Private Monopoly

1. Natural Monopoly:
When way of manufacturing is more practical and cheaper for just one company.
2. Legal monopoly:
When Government allow one company to sell and manufacture such commodity.
3. Public Monopoly:
The government is only manufacturer and seller of one commodity.
4. Simple Monopoly:
When one company make something without any complications and regulations is called
sample monopoly.
5. Technological Monopoly:
There is a simple company who knows how to make something because of its soecial
technology.
6. Private Company:
When one private sector is a manufacturer of only the manufacturer of commodity.

Q. 80. And ek situation thi ke ek show ke tickets overnight sold hogye hai lkn abhi bhi teenagers
rehty hai jin ko tickets chaye show ki tu yeh market equilibrium mein hai ya nhi and explain it.
If tickets for a show have sold out overnight but their are still teenagers who want tickets, then
the market is not in equilibrium because the condition of market equilibrium is that demand
must be equal to supply. There is a shortage of goods on the market; that's why several
possibilities occur:
1. Ticket prices will increase due to the scarcity of tickets.
2. Organizers could use a ballot or a first-come, first-served basis.
3. Organizers may decide to schedule any additional shows for teenagers in the near future,
giving other teenagers a chance to attend shows.

Q. 81.Effective policies to control minimum prices(Price Floor)

Controlling minimum prices is a policy tool used by governments to set a minimum legal price
for a good or service to secure producer rights and help him to get maximum profit. Some
policies might taken to control minimum prices which are:
1. regular market analysis must be taken.
2. Introduction of minimum prices gradually.
3. build flexibility into the policy with mecahnisms for periodic reviews and adjustments.
4. Implement support programs with price floors to help producers or consumers affected by
the policy.
5. Consider the potential impact on international trade.

Q. 82.Source for long term capital for firms

Not in feb attempt

Q. 83.Causes of Unemployment.
1. Fluctuations in trade cycle causes unemployment.
2. The shifts in industries due to technological changes or other factors.
3. Automation and advancements replacing human labor.
4. Increase in international trade impacting job opportunities in certain sectors
5. Temporary unemployment due to changes in job or moving from one job to another
7. People don't get jobs that suit their skills.
8. Some government policies such as minimum wage law causes unemployment
9. Due to some natural disasters and economic shocks.

Q. 84.EGS of market which regulate price slowly and quickly

Not in feb attempt
Q. 85.Spot Rate, Forward Rate.
Not in feb attempt

Q. 86.How economic conditions would affect currency exchange rate?

not in feb attempt

Q. 87.Approaches of GDP
There are three approaches to measure Gross Domestic Product. All are discussed below:
1.Product method:
Economy is divided into various sectors like agriculture, industries and soon. The gross product
is found out by adding up of all production that has taken place in all sectors during a year.
Formula: Sales-Cost of Sales
2.Income Method:
this method of national income means summing up of all incomes received by individuals or
payments to all four factors of production.
Formula: Rent+Wages+interest+Profit
3.Expenditure Method:
This method arrives at national income by adding up all expenditures made on goods and
services during a year.
Formula: Consumer Expenditure(C)+Government Expenditure(G)+Gross
Investment(Ig)+(Exports-Imports)

Q. 88.Opportunity cost
Opportunity cost represents the potential benefits that a business, investor or individual
consumer misses out on when choosing one alternative on another. Is simple words, the value
of resources in its next best use.

Q. 89.What is deducted when we calculate national income by value added method(MCQ’s)

Intermediate goods or goods used to make finished good

Q. 90.Imputed rent of owners owns building(MCQ’s)

Implicit cost

Q. 91.National income from abroad

This is the total income earned by a country's residents, both domestically and abroad. It's
calculated by taking the gross national product (GNP) and subtracting depreciation. The GNP
itself is GDP plus net income from abroad.

Q. 92.Goods and services produced for self-consumption

irrelevant question
Q. 93.What are the essential economic activities.
Essential economic activities refers to the fundamental process that contribute to the
production till consumption stage. These activities are critical for the functioning and
development of any economic system. These re discueed below:
1. Production :
This involves the creation of goods and services.
2. Distribution:
Once goods and services are produced, they need to be transported and made available to
consumers.
3. Exchange:
The buying and selling of goods and services take place through exchanges or markets. This
involves transactions between producers, consumers, and intermediaries.
4. consumption:
Consumers play a crucial role in the economy by using and enjoying the goods and services
produced.

Q. 94.What are advantages and disadvantages of floating exchange rates context government
policy?
Not in feb attempt

Q. 95.What are the 4 important components of economy.

The four key components of the economy are commonly identified as:
Households: Engaged in consumption of goods and services, providing labor to the economy.
Businesses (Firms): Involved in the production of goods and services, organizing resources for
output.
Government: Performs various roles such as providing public goods, regulating economic
activities, and implementing policies.
Financial Institutions: Facilitate the flow of money and capital, providing financing and
contributing to the efficient functioning of financial markets.

Q. 96.Explain law of demand with the help of demand schedule/Explain Demand with graphical
representation(graph nhi banaana, sirf samjhana hai ky demand kb brhti hai ya decrease hoti
hai)

Law of demand can be defined as:

“ If other things remaining the same and price of a particular commodity rises, its demand falls
and when price falls, its demand rises”.
We understand law of demand from consumer point of view. The main objective of rational
consumer is to get maximum satisfaction from his limited resources. That’s why price and
demand has inverse relationship.
| Price | Quantity Demanded |
|---------|-------------------|
| $10 | 100 units |
| $8 | 120 units |
| $6 | 150 units |
| $4 | 180 units |
| $2 | 200 units |

Q. 97.Which approach satisfies the state when consumer has chosen combination of goods that
maximizes marginal utility subject to budget constraint? Either the indifference approach or
marginal utility approach
The approach that satisfies the condition where a consumer has chosen a combination of goods
that maximizes marginal utility is indifference curve.
Indifference curves: This approach uses indifference curves, which represent all combinations
of two goods that provide the same level of satisfaction (utility) to the consumer.
Budget line: The consumer's budget constraint is represented by a budget line, which shows all
the affordable combinations of goods given their income and prices.

Q. 98.Increase and decrease in demand/Supply

Increase in demand:
When price of commodity decreases people will buy more of a commodity.
Decrease in Demand:
when price of a commodity increases people will buy less of a commodity.
Determinants of Demand:
Determinants of demand are as follows:
1. Income of consumer
2. Season
3. Taste
4. Fashion
5. Habit
6. Price of goods
7. Price of substitute goods
8. Price of complementary good
9. Brand loyalty
10. Indirect Taxes
11. Government Regulations
12. Advertising
13. Population

Increase in Supply:
When price increases, supply a commodity increases.
Decreases in supply:
when price of a commodity decreases , its supply also decreases.
Determinants of Supply:
Determinants of supply are:
1. Cost of raw material
2. Cost of production
3. Price of goods
4. Change in technique
5. Change in season
6. Change in the availability of factors of production
7. Direct Taxes

Q. 99.Benefits and cost of Free trade

Not in feb attempt

Q. 100. External Diseconomies of Scale

External diseconomies of scale refer to the situation in which the costs of production for a firm
increases due to external factors to the firms as the industry expands:
1. There may be higher competition in the market which effects profit of a company.
2.When an industry grows, there might be increase in prices of raw material.
3. Growing industries may generate negative externalities such as pollution, which is social cost
to the society.
4.this may cause rise in wage rate which is not good for firms.

Q. 101. Aggregate demand curve/Aggregate Supply Curve(Dec 2023)

Aggregate demand curve:
the aggregate demand curve shows the total quantity of goods and services demanded in an
economy at different price levels. It is downward sloping, indicating inverse relationship
between the price level and quantity demanded of real GDP.

Aggregate supply curve:

The aggregate supply (AS) curve shows the amount of real GDP that businesses will supply at
different price levels.

Q. 102. Govt provide service by household.

Not in feb attempt

Q. 103. Economic condition can influence exchange rate

Not in feb attempt

Q. 104. How external economy of scale rises?

External economies of Scale:
These are the benefit which is given to all peoples or whole industry due to increase in scale of
production.
As an industry expands, there is often specialization and expertise.
The growth of an industry also attract investments in infrstructure.
A larger industry can attract a more skilled and specialized workforce.
Industry growth often stimulateds technological advancements.
A growing industry may attract suppliers and input providers.

Q. 105. Which policies control inflation(MCQs)

Fiscal Policy
Monetory Policy

Q 106. Which business earn most(MCQs)

According to situation

Q 107. Railways is monopolistic competition(MCQs)

In context of pakistan, it is monopoly

Q. 108. Commercial bank function(MCQs)

According to situation

Q. 109. Price rises then...

Demand Fall and supply rises.

Q. 110. Higher inflation causes?

According to situation

Q. 111. Bread and butter are?

Complements

Q. 112. IMF stands for

International Monetory funds

Q. 113. Micro economics concentrate on what

Individuals

Q. 114. What will happen if Govt put price above the equilibrium price and what will be if below
the equilibrium price
if Govt put price above equilibrium price it will cause excess or surplus in the market and if
government put below the equilibrium price it will causes shortages in markte.

Q 115 Price Equilibrium and its determinants

Price determination is the point where quantity demanded and quantity supplied are equal. In
other words, it is the point of intersection of demand and supply. There is no shortages of
goods at this point. This level of point is called price equilibrium. Its determinants are:
1.Forces of demand and supply
2.Consumer preferences
3. Prices of goods
4. Government regulations
5.technology
6. Market structure

Q. 116. Define Public Finance? Explain Its Branches

Public finance involves the activity of how the government manages money, with taxation,
government spending, budgeting, and financial administration. It explores the economic impact
of government policies and the efficient allocation of resources.It branches are discuees below:
1. Public Receipts:
the branch focuses on government sources of revenue including taxation and much more.
2. Public Expenditure:
It is the expenditure government made by government for allocation of resources.
3. Public debts:
It involves activity of borrowingof government from other sources like IMF or World bank to
cover deficits.

Q. 117. Why Money Should be controlled

Controlling money is necessary because:
1.Proper control of money supply helps to prevent excessive inflation.
2.Control over money supply helps to maintain economic stability.
3.Control over money allows central banks to influence interest rates.
4. It helps prevent excessive risk-taking and promotes responsible lending and borrowing
practices, reducing the likelihood of financial crises.
5.Effective money control ensures that resources are allocated efficiently in the economy.
6.Through monetary policy, authorities can influence employment levels.

Q. 118. Why Govt. Control Exchange Rate.

Not infeb 2024

Q. 119. What is Competitive Market.

Characteristics of competitive market are:
1. Large numbers of buyers and sellers
2. Homogeneous product
3. Perfect knowledge of the market
4. No Government intervention
5. Individual firms are price takers and unable to influence market price individually
6. There are no transportation cost or information gathering cost
 7. Free mobility of factors of production
8. Free entry and exit of firms.

Q.120. Advantages and disadvantages of exchange rate according to Govt Policy (Fiscal Policy).
Not in feb attempt

Q. 121. Price Determination

Price determination is the point where quantity demanded and quantity supplied are equal. In
other words, it is the point of intersection of demand and supply. There is no shortages of
goods at this point. This level of point is called price equilibrium.

Q. 122. Inferior Good Demand Curve Upward Slope.

When the income of consumers decreases, they tend to buy less of normal goods and more of
inferior goods. In the case of inferior goods, the lower income prompts consumers to shift their
preferences towards cheaper alternatives.

Q. 123. Size Of Market and Factors on which it depends.(Also repeated in Dec 2023)
The size of market refers to the total sales value or quantity of particular product or service
within specific industry or area. There are several factors that influence the size of the market,
including:

1. Population size
2. Consumer preferences
3. Economic conditions
4. Government regulations
5. Technology
6. Competition
7. Market trends
8. Marginal Efficiency of capital
9. Globalization
10. Political conditions

Q. 124. Inflationary & Deflationary Gaps

An inflationary gap occurs when the demand for goods and services exceeds production due to
higher levels of employment and increase in trade activities. When actual real gdp surprasses
the potential gdp.

 When potential GDP is higher than the real GDP, the gap is reffered as deflationary Gap.

Q. 125. Who maintain Gold & Foreign currencies Reserve/Which organization hold foreign
currency and gold(Dec 2023)
 Not in feb attempt

Q. 126. Market Equilibrium

Price determination is the point where quantity demanded and quantity supplied are equal. In
other words, it is the point of intersection of demand and supply. There is no shortages of
goods at this point. This level of point is called price equilibrium.

Q. 127. What is Large Market? Factors Which Affect it?

A large market refers to a significant and expansive economic arena where goods and services
are bought and sold at larger scale. Factors which affect it are:
1.Monetory Policy:
By adjusting interest rates, central banks can stimulate or slow down economic growth.
2.Fiscal Policy:
which includes government spending and taxation, also affects market stability and inflation
rates.
3.Expectations:
Market participants’ expectations about future economic conditions shape their current
actions.

 4.Demand and supply:

The balance between supply and demand for products, services, and investments drives price
movements.

 Q. 128. Cause in decrease in equilibrium GDP

A decrease I equilibrium is due to several causes , which are:
1.When aggregate demand(the total spending on goods and services) declines.
2.If the economy was initially operating above potential GDP cause inflationary gap.
3.A decrease in business confidence causes a decrease in investment by private sector.
4. Changes in fiscal policy (tax rates, government spending) or monetary policy (interest rates)
can impact aggregate demand
5. A decline in net exports (exports minus imports) due to global economic conditions or trade
policies can reduce aggregate demand.

Q. 129. Consumer Equilibrium

A consumer is an equilibrium position when he obtins maximum possibke satisfaction from his
purchases given that the prices of a commodities in the market and the money to be spend are in
correspondence with the following assumptions.
1. Consumer is rational
2.There is perfect competition in the market.
3.Each good is omogeneous and perfectly divisible
4.Consumer has an indifference curve showing is scale of preferences for various combination of good X
and good Y.
5.Consumer has fixed amount of money (Constant income) to spend on Good X and Good Y.
6. Prices of good X and good Y are given.
Q. 130. Effect of Increase & Decrease in Demand & Supply
Effect of increase in demand:
price increases
quantity increases
producer income increases
Consumer Surplus Decrease/Increase

Effect of decreases in demand:

price decreases
quantity decreases
producer income decreases
consumer surplus increases

Effect of increase in Supply:

Price decreases
Quantity increases
producer revenue decrease
consumer surplus increases

Effect of decrease in supply :

Price increase
Quantity decreases
producer revenue increases
Consumer surplus decreases.

Q.131. Non-Profit Government or Govt. estimated and household

Not in feb attempt

Q. 132. Iss type ka question tha ky “Credit creation is a type of deposit? Explain”
Not in feb attempt.