I

INTRODUCTION TOMACROECONOMICS

2009 R
1. Write a short note on Macroeconomic issues in an economy.
2012 E
2. What is macroeconomics? What are the major macroeconomic issues?
2013 E
3. What do you mean by macroeconomics?

II

NATIONAL INCOME ACCOUNTING

2008 R
1. i. Explain in brief the product method of measurement of national income. Mention the difficulties
involved in the use of product method of measurement of national income.
ii. Is increase in national income an indicator of increase in social welfare?
2008 E
2. i. Distinguish between national income at current prices and national income at constant prices.
ii. Explain the following aggregates and establish their relationship:
a. Gross Domestic Product
b. Net National Product at market price
c. Net National Product at factor cost.
2009 R
3. i. Explain the measurement of GDP using the income approach.
ii. What is the difference between gross domestic product and gross national income.
2009 E
4. i. Explain the income method of estimating national income. What are the difficulties involved in
this method?
ii. Differentiate between real national income and nominal national income. [2010 R]
2010 R
5. How is GDP computed using expenditure method?
2010 E
6. i. Explain the value added method for measuring of Gross Domestic Product?
ii. What do you know about withdrawals and injections? How are these related to circular flow of
national income?
2011 R
7. i. How is GDP computed using income method?
ii. What is depreciation? Why is it important to compute depreciation?
iii. Is increase in National Income indicator of increase in social welfare? Comment.
2011 E
8. i. Distinguish between Gross Domestic Product and Gross National Product.

ii. Explain the meaning of depreciation.

iii. What are the limitations of GDP as a measure of welfare.
2012 R
9. i. Discuss the strengths and weaknesses of using GDP as a measure of national welfare.
ii. Distinguish between real and nominal GDP.
iii. Explain the expenditure method of measurement of national income.
2012 E
10. Explain various methods of estimation of national income. What problems are faced in the
estimation?
2013 R
11. i. In the context of calculating national income by product method, explain what double counting is
and discuss why GDP is not equal to total sales.
ii. Explain the concept of implicit GDP deflator.
12. Write a short note on Operating surplus.
2013 E
13. i. Distinguish between GDP and GNP.
ii. What are the activities that are not included in GDP?
14. What is output gap? Explain two types of output gaps.
15. Write a short note on Actual and Potential GDP.

III

NATIONAL INCOME DETERMINATION

2008 R
1. i. Differentiate between linear and non-linear consumption function and explain determinants of
propensity to consume.
ii. Define investment multiplier and illustrate briefly the working of multiplier.
2. Write a short note on Leakages in multiplier.
2008 E
3. i. Distinguish between Actual and Potential GDP. [2010 R]
ii. Explain Keynes Psychological Law of consumption. What are the determinants of propensity to
consume?
iii. Distinguish between:
a. Induced investment and Autonomous investment.
b. Financial investment and Real investment.
4. What is investment multiplier? How is the value of multiplier determined? Mention various leakages
in the multiplier process.
2009 R
5. Examine the relationship between personal disposable income and consumer spending.

6. Write a short note on Relationship between APC, APS, MPC and MPS.
2009 E
7. i. Explain the relationship between consumption expenditure and disposable income using
psychological law of consumption.
ii. Explain investment multiplier. How is it related to marginal propensity to consume?
2010 R
8. i. Explain the concepts of APC, APS, MPC and MPS. How are these ratios interrelated? What
factors determine the propensity to consume?
ii. Suppose consumption function is given as: C = 50 + 0.75 Y. Write the corresponding Savings
functions. At what level of income savings become zero?
9. i.

Define investment multiplier. Explain the process of investment multiplier. What is the
relationship between multiplier and MPC?
ii. What will be the change in income if the change in investment is Rs.1,000 crores and MPC = .
iii. Calculate the value of multiplier if MPC is zero and 1.

2010 E
10. i. Explain Keynes Psychological Law of Consumption.
ii. Explain the determinants of propensity to consume.
iii. Given the following consumption function: C = 100 + 0.6Y
Derive the corresponding saving function and compute the value of saving when Y = Rs.800
crore.
11. i.

What is multiplier? Explain the relationship between marginal propensity to consume and
multiplier,
ii. What shall be the change in the level of income, if an investments change from Rs.100 crores to
Rs.250 crores and marginal propensity to consume is 0.9? Explain.
iii. Distinguish between induced investment and autonomous investment.

2011 R
12. Explain the concept of multiplier. What is the relationship between marginal propensity to consume
and value of the multiplier?
13. Write a short note on Determinants of Propensity to Consume.
2011 E
14. Write a short note on Investment multiplier.
2012 R
15. i. Explain the concept of multiplier. Why is the value of multiplier greater than unity?
ii. How does an increase in wealth affect the Keynesian Consumption Function?
2012 E
16. Explain the concept of consumption function. What are the factors which affect the propensity to
consume and the propensity to save?
17. Distinguish between public investment and private investment. Discuss the determinants of
investment.

2013 R
18. i. Explain consumption function and savings function.
ii. Suppose for an economy, consumption function and investment are given as under:
C = 100 + 0.8Y; I = Rs.1000 crores.
a. Find the equilibrium level of GDP.
b. By how much will the equilibrium level of GDP change if investments increase by Rs.1500
crores?
2013 E
19. Explain the working of multiplier when increase in investment in an economy is Rs.1,000 crores and
MPC is 0.50. Also estimate the change in equilibrium level of income and value of multiplier.

IV

NATIONAL INCOME DETERMINATION IN AN OPEN ECONOMY WITH GOVT.

2008 R
1. i. Calculate the equilibrium level of income from the following data:
Consumption C = 40 + 0.6YD, YD is the disposable income.
Investment = 80crores.
Government Expenditure = 40crores.
Taxes = 40crores.
ii. What is net exports function? Explain the factors responsible for shift in net export function.
2. Write a short note on Inflationary Gap. [2009 E, 2010 R]
2008 E
3. i. Given that I = 1000; C = 100 + 0.8YD; G = 100; T = 100; X = 500; M = 0.25Y. Find the
equilibrium level of national income in the economy.
ii. What is net exports function? What factors cause upward shift in net exports function? Explain
with the help of a diagram.
2009 R
4. i. Suppose you are given the following information:
Consumption Function
C = 60 + 0.8YD
Disposable income
YD = Y T
Taxes
T = Rs.40 crores
Investments
I = Rs.70 crores
Government Expenditure
G = Rs.70 crores
Net Exports
NX = 50 0.05YD
a. Find the equilibrium output.
b. What happens to the equilibrium output when there is a Rs.10 crore increase in autonomous
investments? What is the value of investment multiplier?
ii. Explain the net exports function. Why does the trade balance deteriorate as domestic income
increases?

5. Explain the multiplier impact of changes in government spending and taxes on equilibrium level of
output in an economy.
2009 E
6. Explain the determination of equilibrium level of GDP using the aggregate expenditure approach and
the savings investment approach in a two sector model.
7. Write a short note on Tools of Fiscal Policy. [2012 R]
2010 R
8. i. Given the following information, find:
a. Equilibrium level of GDP in the economy.
b. Marginal Propensity to save in the economy.
Consumption Function
C = 100 + 0.6YD
Autonomous Investment
I = 500 crores
Government Expenditure
G = 800 crores
Taxes
T = 200 crores
Exports
X = 200 crores
Import Function
M = 50 + 0.3Y`
ii. What is net exports function? Explain the reasons why it is negatively related to the level of
GDP? Explain briefly why net export function shifts?
9. i. Distinguish between inflationary gap and recessionary gap.
ii. What are the tools of fiscal policy? How are these tools used to fill the inflationary gap?
2011 R
10. Consider a three sector economy where:
Consumption Function
:
C = 20 + 0.80YD
Investment
:
I = Rs.50 crore
Government Expenditure
:
G = Rs.20 crore
Taxes
:
T = Rs.10 crore
i. Compute equilibrium level of income and show it diagrammatically.
ii. Compute consumption at equilibrium level of income.
iii. Compute total leakages in the economy at equilibrium level of income.
11. i. What is net exports function?
ii. What factors cause a shift in net export function?
12. Write a short note on Inflationary gap and Deflationary gap.
2011 E
13. Explain the determination of equilibrium level of income in a two sector model of the economy in
Keynes framework using aggregate expenditure approach. Do you think that equilibrium will always
occur at full employment level of output?
14. i. Explain the concept of balanced budget multiplier.
ii. The following information is given for an economy:
C = 50 + 80 YD; T = Rs.20 crore; I = IO = Rs.40 crore; G = GO = Rs.10 crore.
a. Compute the value of government budget deficit/surplus.
b. Find out the equilibrium level of GDP.
c. What is the value of government expenditure multiplier?

d. What will be the value of GDP if government expenditure goes up by Rs.20 crores?
e. What will be the value of the investment multiplier?
15. What are the tools of fiscal policy? How can the government use these tools to control recession in
the economy? What are the limitations to the use of discretionary fiscal policy?
2012 R
16. Calculate the equilibrium level of income from the following data:
C = 100 + 0.75YD; I (investment)= 200 crores; T(taxes) = 100 crores; G (Govt. expenditure) = 500
crores; YD = disposable income.
2012 E
17. i. What is net exports function? What factors cause a shift in this function?
ii. Consider the function: Y = a + b (Y T) + I + G + (X M)
If I = Rs.20 crores; b = 0.75; G = T = Rs.25 crores; X = Rs.22 crores; M = Rs.30 crores, find the
equilibrium level of income using both aggregate expenditure-aggregate output approach and
saving-investment approach.
2013 R
18. Explain how government can use its tools of fiscal policy (government spending and taxation) to end
a recession. Assume prices are constant.
19. Write a short note on Net exports function.
2013 E
20. Given the following data for an economy:
Consumption Function
C = 60 + 0.8YD
Investments
I = Rs.120 crores
Government Expenditure
G = Rs.100 crores
Taxes
T = Rs.50 crores
Disposable income
YD = Y T
Calculate:
i. Equilibrium level of income.
ii. Change in equilibrium level of income if government expenditure increases by Rs.50 crores.
21. i. How does the foreign GDP and international prices affect net exports function?
ii. Show the effect of change in tax rate on the equilibrium level of income in a three sector
economy.

GDP & PRICE LEVELIN SHORT & LONG RUN

2008 R
1. i. What is aggregate demand? How is aggregate demand curve derived?
ii. Analyse the impact of aggregate demand shocks on equilibrium GDP and price level in short run.
2. Write a short note on Aggregate Supply Shocks.

2008 E
3. Write a short note on Long Run Aggregate Supply Curve.
2009 R
4. i. Define aggregate demand. How is the aggregate demand curve derived from the aggregate
expenditure schedule when the price level changes in an economy?
ii. Examine the effect of an expansionary aggregate demand shock on real GDP and price level in
the short run when aggregate supply is (i) horizontal and (ii) vertical.
2009 E
5. Explain how aggregate expenditure shifts when the price level changes? Derive the aggregate demand
curve.
2010 R
6. i. Distinguish between the movement along AD curve and shifts in the AD curve.
ii. Explain graphically, how short run aggregate supply curve changes in the slopes of SRAS curve
influence the price level and GDP.
7. Write a short note on Aggregate demand shocks.
2010 E
8. i. What is aggregate demand? How is aggregate demand curve derived?
ii. What is aggregate supply shock? Explain the factors responsible for aggregate supply shocks.
2011 R
9. Show with the help of diagrams that aggregate demand shocks cause the price level and real GDP to
change in the same direction while aggregate supply shocks cause the price level and real GDP to
change in opposite directions.
10. Write a short note on Short Run Aggregate Supply (SRAS) Curve. [2012 E]
2011 E
11. What is meant by aggregate demand shock? Explain the consequences of an expansionary demand
shock upon the equilibrium level of GDP in an economy in the short-run.
2012 R
12. Distinguish between the Short Run Aggregate Supply Curve and the Long Run Aggregate Supply
Curve.
13. i.

Discuss the effect of inflationary and recessionary gap on real GDP and price level in the long
run.
ii. Explain the differences in the adjustment process when the economy is in inflationary and
recessionary gap.

14. Explain what is meant by automatic stabilisers.

2013 R
15. i. Define Aggregate Supply curve. What factors determine its shape in short run?
ii. What factors can cause shift in the AS curve?

iii. Explain how equilibrium level of real GDP and price level changes due to an increase in
aggregate supply.
16. Show the effect of expansionary demand shock on the price level and GDP in short run and long run.
17. Write a short note on Automatic stabilisers. [2013 E]
2013 E
18. i. What is aggregate demand? Show the derivation of aggregate demand curve.
ii. Explain how the positive slope of short run aggregate supply curve affects the price level and real
GDP?

VI

MONEY IN A MODERN ECONOMY

2008 R
1. How do commercial banks create credit in multiple banking system? Can commercial banks create
unlimited amount of credit?
2. Write a short note on Functions of money. [2010 R]
2008 E
3. i. Discuss the importance of money in a modern economy.
ii. Explain various functions of money.
iii. Explain various alternative measures of money supply given by RBI.
4. Write short notes on:
i. Credit creation by commercial banks
ii. Demand for money.
2009 R
5. i. What is the relation between speculative demand for money and the rate of interest?
ii. Briefly explain the quantity theory of money.
6. Explain the process of credit creation in a multiple bank economy using the ratios approach.
7. Write a short note on Functions of money.
2009 E
8. Explain quantity theory of money.
9. i. What are the functions of money?
ii. Explain the process of credit creation in a single bank economy using ratios approach.
10. Explain the three motives of holding money. Explain derivation of money demand curve.
2010 R
11. i. Explain briefly the classical quantity theory of money.
ii. Distinguish between Transactions demand for money and Asset demand for money.

2010 E
12. What are the factors on which credit creation depends? Can commercial banks create as much credit
as they wish? Give reasons.
13. Explain the instruments of Monetary Policy used by the Central Bank.
2011 R
14. i. Explain the process of credit creation by commercial banks.
ii. Describe the components of money supply.
15. i. Explain Fishers Quantity Theory of Money.
ii. Throw light on different motives to hold money.
2011 E
16. i. What is money and what are is functions?
ii. Explain the ratios approach to creation of credit in the economy.
17. Write a short note on Speculative demand for money. [2012 R]
2012 R
18. Explain the process of credit creation by commercial banks assuming a cash reserve ratio of 8% and
the primary deposit of Rs.100.
19. Critically examine the quantity theory of money.
2012 E
20. i. Explain various functions of money. Can bank or paper money in isolation perform all these
functions satisfactorily?
ii. What are various measures of money supply in India? Which of these measures are more
important?
21. Write short notes on:
i. Credit creation

ii. Monetary policy.

2013 R
22. i. Distinguish between money and near money.
ii. Explain the shape of demand for money as a function of interest rate.
2013 E
23. i. What is fiat money? What are the limitations of barter system?
ii. What is money? What are its functions in an economy?
24. Explain the process of credit creation in a single bank economy using ratios approach.

VII

IS-LM ANALYSIS

2008 R
1. i. Derive IS curve from product market equilibrium. Explain how shift in IS curve affects the rate of

interest and GDP.

ii. Using the IS-LM model, explain how shift in LM influences rate of interest and GDP.
2008 E
2. Derive the IS-LM curves with the help of diagrams. What are the factors responsible for the flatness
and steepness of IS curve?
2009 R
3. Write a short note on Derivation of IS-LM curves.
2009 E
4. i. Define the IS-LM curves. Explain their derivation.
ii. Explain the effect of an increase in money supply on equilibrium GDP using these curves.
2010 R
5. Derive IS and LM curves. What is the effect of shift of LM curve on GDP and rate of interest?
2010 E
6. What happens to equilibrium real GDP and rate of interest when IS and LM curves shift?
2011 R
7. Derive IS and LM curves. What do they exhibit?
2011 E
8. i. Explain the meaning and derivation of IS curve.
ii. Explain the meaning and derivation of LM curve.
iii. How does an increase in money supply lead to a shift in LM curve?
2012 R
9. Derive the LM curve. What causes LM curve to shift?
2012 E
10. i. What is an IS curve? How is it derived?
ii. Derive AD curve from IS-LM model.
2013 R
11. Define IS and LM curves. How is LM curve and AD curve affected if these is an increase in the
money supply?
2013 E
12. What is IS curve? What causes a shift in IS curve?

VIII

BOP & EXCHANGE RATE

2008 R
1. Distinguish between balance of trade and balance of payments. Analyse the causes of adverse balance
of payments. How is it corrected?
2008 E

2. Define the concept of Balance of Payments. What are its components? Explain various methods to
correct adverse Balance of Payments.
2009 R
3. i. Explain the current account and capital account of the balance of payments of a country.
ii. If a countrys balance of payments shows a current account deficit but a capital account surplus,
what does it indicate?
2009 E
4. Write a short note on Components of Balance of Payments. [2010 R]
2010 E
5. Distinguish between Balance of Payments and Balance of Trade. Analyse the causes of adverse
balance of payments. How is it corrected?
2011 R
6. Write a short note on Components of Balance of Payments. [2011 E, 2012 E]
2012 R
7. i. Explain fixed and flexible exchange rates.
ii. What causes flexible exchange rates to change? Discuss various demand and supply side factors.
Use suitable diagrams.
8. Write a short note on Purchasing Power Parity.
2013 E
9. i. Distinguish between Current Account and Capital Account of Balance of Payments.
ii. Discuss the factors that cause fluctuations in equilibrium exchange rate.
10. Write a short note on Fixed exchange rate system.