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Pongrengdera Chambugong 1 year, 5 months ago

Multiplier and it's applications in the Indian Economy
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Sia ? 3 years ago

Self-reliance implies discouraging the imports of those goods that could be produced domestically. Achieving self-reliance is of prime importance for a developing country like, India as otherwise, it would increase the country’s dependence on foreign products. Dependence on foreign goods and services can promote economic growth of India but this would not contribute to the development of domestic productive resources. Dependence on foreign goods and services provides impetus to foreign country’s industries at the cost of domestic infant industries. Further, imports drain away the scarce foreign reserves that are of prime importance to any developing and underdeveloped economy. Therefore, achieving self-reliance is an important objective for developing countries in order to avoid themselves from being acquiescent to the developed nations.

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Gaurav Seth 3 years, 3 months ago

Induced investment refers to the investment which is made with the motive of earning profit as it is done in private sector. Induced investment depends directly upon profit expectations. It is income-elastic. If national income goes up, induced investment also goes up, i.e., increase in income induces investment. Its reason is that increase in national income leads to an increase in demand for goods and services which raises the expected profitability of producers. Thus producers are induced to make great investments. 

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Kuldeep Rathore 3 years, 4 months ago

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Gaurav Seth 3 years, 9 months ago

Suppose there are two goods 'x' and 'y' on which the consumer has to spend his given income. If MUx / Px is greater than MUy / Py, then the consumer will substitute good 'x' for good 'y'. As a result the marginal utility of good 'x' will fall. EXPLANATION: The consumer’s behavior is based on two factors: (a) Marginal Utilities of goods 'x' and 'y' (b) The prices of goods 'x' and 'y' The consumer is in equilibrium position when marginal utility of money expenditure on each good is the same. The Law of Equi-Marginal Utility states that the consumer will distribute his money income in such a way that the utility derived from the last rupee spent on each good is equal. The consumer will spend his money income in such a way that marginal utility of each good is proportional to its rupee. The consumer is in equilibrium in respect of the purchases of goods 'x' and 'y' when: MUx = MUy Where MU is Marginal Utility and P equals Price Px Py. If MUx / Px and MUy / Py are not equal and MUx / Px is greater than MUy / Py, then the consumer will substitute good 'x' for good 'y'. As a result the marginal utility of good 'x' will fall. The consumer will continue substituting good 'x' for good 'y' till MUx/Px = MUy/Py where the consumer will be in equilibrium. Thus this is also known as the law of substitution.

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Devansh Shorewala 3 months, 1 week ago

Barter system means the direct exchange of one commodity for another

Khushi Varshney 3 years, 10 months ago

It's Barter System

A system in which goods were exchanged for goods.

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Devansh Shorewala 3 months, 1 week ago

Metallic money: • Full-bodied money-coins. • Token coins. Paper money: • Representativ paper money. • Convertible paper money. • Inconvertible paper money. Credit money: • Bank cheques are considered as 1. Credit money or 2. Near-money.

Khushi Varshney 3 years, 10 months ago

Money is classified as:

Fiat money and fiduciary money

Full-Bodied money and Credit money

Arun Gupta 4 years ago

M1, M2, M3 & M4
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Raj Kumar 4 years, 4 months ago

Udhami kon hai
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Yogita Ingle 5 years ago

Demand is a quantity of a commodity which a consumer wishes to purchase at a given level of price and during a specified period of time.
In other words, demand for a commodity refers to the desire to buy a commodity backed with sufficient purchasing power and the willingness to spend.

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Yogita Ingle 5 years, 2 months ago

Absolute poverty:

  • When a household does not have sufficient income to sustain even a basic acceptable standard of living / meet basic needs
  • Absolute poverty thresholds will vary between developed and developing countries
  • The extreme poverty measure now used by the World Bank is the percentage of the population living on less than $1.90 a day (PPP)
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Gaurav Seth 5 years, 3 months ago

Demand is a quantity of a commodity which a consumer wishes to purchase at a given level of price and during a specified period of time.
In other words, demand for a commodity refers to the desire to buy a commodity backed with sufficient purchasing power and the willingness to spend.

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Gaurav Seth 5 years, 3 months ago

Money or Credit Creation by Commercial Banks Commercial banks increases the flow of money in an economy by credit creation. This process of credit creation is an outcome of its two primary functions, i.e. acceptance of loans and advancement of deposits. The banks issue loans from their cash reserves with the confidence on their historical experience that all depositors will not withdraw their funds at the same time. In this way, commercial banks create credit many more times than their cash reserves and contributes to increase money supply in the economy. It depends on initial level of deposits and money multiplier.

Money creation is determined by :
(i) The amount of the initial fresh deposits.
(ii) The Legel Reserve Ratio (LRR) is the minimum ratio of deposits legally required to be kept as cash by the banks.
(iii) Money Multiplies = 1/LRR

Total Money Creation = Initial Deposits x 1/LRR

e.g. Let the LRR be 20%

Fresh deposits = Rs.  10000
Amount required by the banks to keep = Rs. 2000 as cash suppose the banks lend the remaining amount of Rs. 8000. The commercial banks also know by way of their historical experience that all the depositors would not show up in the banks to withdraw all their deposits at a point of time. Those person who borrow, use this money for making payments, also all the transactions will be carried out through banks.
Further, it is also assumed that, those who receive fresh deposits of Rs. 8000, the banks again keep Rs. 1,600 as cash and lend Rs. 6,400, which is also 80% of the last deposit, the money again comes back to the banks leading to a fresh deposit of Rs.6,400. In this way, the money goes on multiplying and ultimately total money creation is Rs.50,000.
As, according to the formula
Total money creation =10,000 x 1/20 x 100 = Rs.  50,000

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Gaurav Seth 5 years, 4 months ago

Aggregate Supply (AS) It is the money value of the final goods and services or national product produced in an economy during one year. It is equal to income generated.

  • Components of Aggregate Supply

(i) Consumption expenditure (C)                               (ii) Saving (S)
Thus, Aggregate Supply can also be written as AD = C + S

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Gaurav Seth 5 years, 4 months ago

Expenditure on the purchase of fixed assets during the accounting year + Expenditure on the inventory stock during the accounting year.

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Vysakh Vijay 5 years, 5 months ago

It is the study of aggregates of economic activities

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