News On Economics Blog

 1.The slope of the production possibility curve is the A. Marginal rate of exchange B.Margial rate of substitution C. Average rate of transformation D. Marginal rate of transformation ✓ Ans: D  2.   Solution : 5Q2+20Q+20 MC= ∆C/∆Q 5×2Q+20 MC=10Q+20......(1) P=100-3Q.....(2) TR=PQ TR=(100-3Q)Q  {P=100-3Q} TR= 100Q-3Q×Q MR= 100-6Q ....(3) MC=MR 10Q+20100-6Q 10Q+6Q=100-20 16Q=80 Q=80/16 Q=5 From (2). P=100-3Q P=100-3(5) P=100-15 P=85 Derivation of Keynes Multiplier MPC= Marginal propensity to consume MPS= Marginal propensity to save I= investment ∆I= Changed Investment S= Saving ∆S=Changed Saving K= Keynes Multiplier C= Consumption Y=Income MPC+MPS=1 MPS=1-MPC---(1) K= 1/1-MPC or K= 1/MPS----- ( From-- 1) ∆Y= K.∆I ( K = Keynes Multiplier) K∆I= ∆Y K= ∆Y/∆I S=Y-C Saving = Income - Consumption ∆S=∆Y - ∆C ---(2) ∆S=∆I---- (3) K= ∆Y/∆I K= ∆Y/∆S ----(from 3) K=∆Y/(∆Y - ∆C) -----( from  2) Dividing on Numerator a...

 Which of the following pairs is not correctly matched? Author.                                          Book          A. Simon Kuznets.              Asian Drama✓ B. J. Robinson.    Essays in the Theory of Economic Growth C. Karl Marx Das Kapital D. A.w. Lewis Theory of Economic Growth  Ans: A Explanation:  Simon Kuznets:-    Simon Kuznets was born on 30 April 1901 in  Pink,  Belarus and he was died on 8 July 1985 in Cambridge.He received Nobel prize in 1971 for his empirically founded interpretation.  1.Books he wrote National income and capital formation  2, Economic Growth and income inequality. J. Robinson:  J. Robinson was born on 31 October 31, 1903 in Camberley Surrey I'm England and died August 5, 1983 in Cambridge. Book's: 1.Essays...

 List-I.                                                                     List-II A) Offer Curve.                                             1. Public Revenue B) Laffer Curve.                                           2. Sticky Price C) Lorenz Curve.                                         3. Reciprocal Demand D) Kinked Demand Curve.                        4.Inequalitie Codes:  (a).          ...

 In the following diagram,when the income increase from 120 crores to 180 crores in an economy then what is the value of f MPC? A. 0.81 B. O.82 C .0.83✓ D. 0.84 Ans:- MPC= ∆C/∆I ∆C= 170-120=50 ∆I=180-120=60 50/60=0.83 Ans:C 2. C= 20+3/4Y and Y=80, What is the value of APC? A. 3 B 0.75 C. 0.1 D.1✓ Solution: C= 20+3/4Y                        20+(3/4)80                        20+3×20                        20+60                      =    80 APC= C/Y         =80/80         =1 Ans:D 2. Let the two regression lines be given as  3x= 10+5y and 4y=5+15x. Then the correlation between x and y is.... A.-0.40 B. 0.40✓ C. 0.89 D. 1.50 Solution: Equation y on x              ...

 Inflation Rate Definition:  According to Prof. Rowan, inflation is the process of increasing prices continuously. Rowan formula for calculating percentage rate of  inflation= P(t)= {∆pP(t)/P(t-1)}×100 Where, ∆P(t)=P(t)-p(t-1) P= Price Level (t), (t-1)= Time periods  WPI( Holesale price Index).    Aplication of the formula: Ex:- Year.                    WPI.                                               {∆pP(t)/P(t-1)}×100           Inflation Rate 2002-03.             174.                                                               -----        ...

Macro Economics  

Expectations and Interest Rate  Introduction: If someone buys a long-term bond, they must expect some changes in future interest rates. They speculate as a matter of course. Although other considerations may influence their decisions, those who are converting their cash into bonds tend to think that the interest rate will fall and the bond price will rise. Those who monetize their bonds have conflicting expectations. If the current interest rate is low, they expect the current bond price to be high. To be clear, those who believe that the current interest rate is neither high nor low, they use the normal interest rate to compare the current interest rate. This normal rate also always changes. This rate changes due to inflation. Inflation and other factors cause wealthy people to adjust their perceptions of the normal interest rate, but they may decide that the current interest rate at a time is neither higher or lower than the normal rate can decide. The amount of illusory money ba...

P= MV/T  Where: P= Price level  M=Money in Circulation  V= Velocity of Money  T= Transactions 

i Know   Budget Decision – Welfare Planning Allocation of taxes should be done one in such a way as to produce more welfare with less sacrifice. According to 'Edgeworth' and 'Piego' the principle of distribution is better in all sacrificial formulas. According to them, the theory of utility will do more good. The taxation system is essential to cover the cost of government services and the revenue generated by taxation should be distributed in an equitable manner. With this revenue, the tax distribution department distributes the income according to the desires of private individuals to the detriment of the welfare of each individual and distributes the income to the public welfare. According to Edward, the government should follow the principle of taxation with minimum sacrifice from the people. According to 'Pigu', government actions should be for public welfare. But according to 'Peegu' and 'Edworth' the principle of equality may lead to serio...