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Abhishek Attri 6 years, 7 months ago
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Noor Afsha 6 years, 7 months ago
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Posted by Nitasha Yadav 6 years, 7 months ago
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Yogita Ingle 6 years, 7 months ago
The transactions carried by monetary authority of a country, which cause changes in official reserves, are termed as official reserve transactions (ORT). These transactions are carried through purchase or sale of currency in the exchange market for foreign currencies or other assets. The reserves are drawn by selling foreign currencies in exchange market during deficits and foreign currencies are purchased during surplus. When the official reserves increases or decreases, it is called overall balance of payments surplus or deficit respectively.
Importance of ORT in balance of payments:
1. Purchase of a country’s own currency is a credit item in the balance of payments; whereas, sale of the currency is a debit item.
2. It helps to adjust the deficit and surplus in balance of payments.
Posted by Nitasha Yadav 6 years, 7 months ago
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Yogita Ingle 6 years, 7 months ago
Yes, when planned saving exceeds planned investment after equilibrium point, then the consumers are not consuming as much required and hence pllaned inventory accumulate.
Posted by Nitasha Yadav 6 years, 7 months ago
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Yogita Ingle 6 years, 7 months ago
The 45-degree line intersects both the y-axis and x-axis at the origin, as well as forming an angle of 45 degrees with both axes. The Keynesian model describes the relationship between aggregate expenditures and aggregate production. Production is graphed on the x-axis while expenditures is graphed on the y-axis. Due to the 45-degree line relationship, a one billion expenditure in inputs produces one billion in production value. This relationship is actually represented in a much larger representation of the Keynesian model, which includes three additional graphs depicting the foreign sector, aggregate expenditures and the equilibrium level of production.
Posted by Nitasha Yadav 6 years, 7 months ago
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Yogita Ingle 6 years, 7 months ago
- One fiscal measure that can be used to reduce gap between the rich and poor is the introduction of progressive taxes.
- A progressive tax helps to bring down the income of the high earners by taking a higher percentage of their income as tax and thereby reduce the gap between the high income and low income groups. The tax raised from progressive income tax can be utilized to augment the disposable income of the low income groups.
- The government can intervene to reduce poverty and inequality through the tax and benefits system. It can take measures for an equitable distribution of resources.
Posted by Aman Jhawar 6 years, 7 months ago
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Nitasha Yadav 6 years, 7 months ago
Yogita Ingle 6 years, 7 months ago
The law of variable proportion states that as we increase the quantity of only one input, keeping other inputs fixed, the total product increases at an increasing rate in the beginning, then increases at decreasing rate and after a level the output ultimately falls.
Posted by Divyanshi Divya 6 years, 7 months ago
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Indar Sharma 6 years, 7 months ago
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Yogita Ingle 6 years, 7 months ago
Law of diminishing marginal utility is also known as the fundamental law of satisfaction or Psychological law. It states that as consumer consumes more and more units of the commodity.
“As the amount consumed from a commodity increase, the utility derived by the consumer from the additional unit i.e. Marginal utility goes on decreasing” Alfred Marshall
Assumptions
- All the units of a commodity are same in terms of size, quality, design etc
- Unit of a good must be standard
- No change in taste
- No change in the price of substitute goods
- Continuity in consumption.
Posted by Vikas Sharma 6 years, 7 months ago
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Yogita Ingle 6 years, 7 months ago
Investment Multiplier refers to increase in national income as i multiple of a given increase in Investment. Its value is determined by MPC.
The value equals:
Multiplier = 1/1-MPC or 1/MPS
Suppose increase in investment is Rs.1000 and MPC = 0.8. The increase in National Income is in the following sequence.
(i) Increase in investment raises income of those who supply investment goods by Rs.1000. This is the first round increase.
(ii) Since MPC = 0.8, the income earners spend Rs.800 on consumption. This raises the income of the suppliers of consumption goods by Rs.800, This is second round increase.
(iii) In the similar way, the third round increase in Rs.640 = 800 x 0.8. In this way national income goes on increasing round after round.
(iv) The total increase in income is Rs.5,000 which equals.
△Y = △I x 1/1-MPC
△Y = 1000 x 1/1-0.8 = Rs.5000
Posted by Manan Chugh 6 years, 7 months ago
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Yogita Ingle 6 years, 7 months ago
The Credit Rationing is a measure undertaken by the central bank to limit or deny the supply of credit based on the investor’s creditworthiness and an increased loan demand.
Moral suasion is a mixture of both persuasion and pressure. The central bank makes an attempt to persuade commercial banks to follow its directives of monetary policy or it can pressurise them to follow its policy directives. When it fails to work, the central bank can use direct action which includes non-recognition of a commercial bank .
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Yogita Ingle 6 years, 7 months ago
Consumer’s Equilibrium It refers to optimum choice of the consumer. In terms of indifference curve analysis, the consumer achieves his optimum choice when he strikes a balance between what he wishes to buy and what he can buy. i.e. a state of maximum satisfaction given his money income.
Indifference Curve This curve shows different combinations of two goods, each combination offering the same level of satisfaction to the consumer. So that the consumer is indifferent among the various combinations offered to him
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Yogita Ingle 6 years, 7 months ago
When in an economy aggregate demand falls short of aggregate supply at full employment level, the demand is said to be deficient demand and the gap is called deflationary gap.
Inflationary gap is also referred to as excess demand. When aggregate demand is greater than aggregate supply, at full employment level in the economy, it is referred to as inflationary gap or excess demand. This situation actually results in an increase of prices, that is inflation.
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Sanskriti Tiwari 6 years, 7 months ago
1Thank You