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Fiscal deficit: When TE (RE + CE) > TR (RR + CR) of the government, excluding borrowing. It is termed as fiscal deficit.
Multiplier: It is the number by which change in investment should be multiple in order to find out the resultant change in income and output.
State the relationship between MPC and multiplier? Answer: The value of multiplier differs directly with MPC. K=1/1 - MPC.
Determine the relationship among APC and APS? Answer: APC + APS = 1.
Linear consumption function: It is a consumption function that is given on the basis of steady marginal propensity to consume. C = c + bY Here c = autonomous consumption B = marginal propensity to
Autonomous or public investment: It is a type of investment that is not of profit motivated.
Induced investment: It is a type of investment that is of profit motive in nature.
Advertising costs or persuasive advertising: When the expenses incurred by a find to persuade the potential consumer to present their brands or products as different or better compared to another bran
Patent rights: It is a unique license or right granted to a company or an Individual to make a specific product or utilize a specific technology.
Break-even price: This is the price at which firms form zero normal profit.
Abnormal profit: It is the gain earned over and above the normal profit.
What happened when demand and supply curve do not intersect with each other? Answer: The outcome is: Economically non–viable industry.
If demand for good falls due to increase in its own price. Then what is the change in demand termed? Answer: Contraction of demand
An increase in the income of consumer X leads to a fall/down in the demand for that good by the consumer. What is good X termed? Answer: Normal good
Deficient demand: If AD < AS at full employment level, then it is defined as deficient demand.
Excess demand: If AD > AS at the full employment level. Then it is termed as Excess demand.
What is APS? APS = S/Y.It is the ratio of income to saving which is termed as APS.
What is APC? Answer: APC= C/Y.The ratio of income to consumption is termed as APC.
Barter system: It is the Exchange of goods for goods is termed as barter system.
Saving function: The relationship among saving and income is termed as saving function.
Consumption function: The relationship among income and consumption is termed as consumption function.
An increase in the price of goods, outcomes in an increase in expenses on it. This demand is elastic or inelastic? Answer: Inelastic since there is direct relation among price and expenditure.
Revenue deficit: Whenever revenue expenses are greater than revenue receipts, it is termed as revenue deficit.
What is the formula for primary deficit? Answer: Primary deficit = fiscal deficit – interest payment.
Why production possibility curve is concave? Answer: This is due to increasing the marginal opportunity cost.