Money Supply and Inflation

Q.

How is the exchange rate determined under a flexible exchange rate regime?

Q.

Write down the three identities of calculating the GDP of a country by the three methods. Also briefly explain why each of these should give us the same value of GDP.

Q.

An increase in the money supply will cause the AD curve to:

1. shift leftward.

2. shift rightward.

3. stay the same

4. shift leftward, but without affecting the price level.

Q. Write short notes on

1) Features of Macro-Economics

Q. Answer the following questions

What are the features of Macro-Economics?

Q.
Show withe the help of diagrams, the effect on equilibrium price and quantity when:
(i) demand is perfectly elastic and supply decreases.
(ii) supply is perfectly elastic and demand increases.

Q. What is mean by repo-rate and reverse repo-rate?

Q. State whether the following statement are TRUE and FALSE

1. Demand curve slopes upward from left to right.

2. Desire means demand.

3. When demand increases, the demand curve shifts to the left.

4. Quantity demanded varies directly with price.

5. Law of demand is explained by Prof. Robbins.

6. Individual demand is a demand by single buyer.

Q. Distinguish between:

1. Perfectly elastic demand and perfectly inelastic demand

2. Relatively elastic demand and relatively inelastic demand

Q. Explain the effect of a leftward shift of demand curve for a commodity on its equilibrium price and quantity with the help of a diagram.

Q. What do you mean by budget set of a consumer?

Q. Describe the merits and demerits of a capitalist economy.

Q.

Q. What are official reserve transactions? Explain their importance in the balance of payments.

Q. The other name of price line is ________.

1. price-income line or budget line
2. all of the above
3. price opportunity line
4. budget constraint line

Q. Draw a marginal revenue curve of a perfectly competitive firm and explain why the marginal revenue of a perfectly competitive firm is always equal to its average revenue.

Q. Which of the following is not a quantitative credit control measure of a Central Bank?

1. Bank Rate Policy
2. Open Market Operation
3. Cash Reserve Ratio
4. Moral Suasion

Q. Answer in detail

State the features of Macro-Economics.

Q. Explain determination of equilibrium level of national income using aggregate demand and aggregate supply approach. Use diagram. Also explain the effect when aggregate demand is less than aggregate supply.

Q. In case of excess demand, equilibrium price must rise.

1. True
2. False

Q. ________ defined inflation as an expansion in money supply relative to supply of goods and services.

1. JR Hicks
2. Lupin
3. Adam Smith
4. JM Keynes

Q. Distinguish between 'increase in demand' and 'increase in quantity demand' of a good.

Q. When demand decreases and there is no change in supply, both equilibrium price and quantity will _________.

1. decrease
2. increase
3. remain unchanged
4. be zero

Q.

If the money supply were decreased, what would happen to the price level?

1. Increase

2. Decrease

3. Remains constant

4. Either A or B

Q. When the liquidity trap occurs the demand for money ________________.

1. becomes perfectly interest elastic
2. becomes perfectly interest inelastic
3. means that an increase in money supply leads fall in the interest rate
4. means that an increase in the money supply to an increase in the interest rate

Q.

___ is an increase in the quantity of money in circulation without any corresponding increase in goods thus leading to an abnormal rise in price levels.

1. inflation

2. Inflation

3. High-powered money
4. Stagflation

Q. Answer the following about 200 to 250 words each

Explain various methods to measure Price Elasticity of Supply.

Q. Define or Explain the following concept:
1) Autonomous Consumption
2) Aggregate Demand
3) Aggregate Supply
4) Effective Demand

Q.

Explain The Concept Of Money Supply.

Q.

If the price level increases by 3%, what is the inflation rate over that period?

1. None of the above

2. Zero

3. 3%

4. 5%