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macro Flashcards

1
Q

in what form do firms make payment to the factors of production

A

rent, wages, interest, and profit

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2
Q

What are you three faces of circular flow of income

A

Generation, distribution and disposition

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3
Q

In which phase the income received by factors of production is spent on goods and services produced by firms

A

Disposition

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4
Q

In which phase, firms produce goods and services with the help of factor services

A

Generation phase

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5
Q

The phase which involves the flow of factor incomes from firms to the households is called

A

Distribution phase

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6
Q

Variable which is measured at a particular point of time is called

A

Stock

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7
Q

Variable which is measured over a period of time is called

A

Flow

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8
Q

classify the following as stock or flow:
national wealth, Quantity of wheat stored, national income, quantity of heat produced, population of India as on 31st March, number of births during 2018, money supply, expenditure, cars produced during 2019, money supply

A

stock: national wealth, wheat stored, population as on 31st march, money supply,
flow: cars produced during 2019, expenditure, number of births during 2018, national income, wheat produced

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9
Q

Real flow is also called as

A

Physical flow

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10
Q

Money flow is also called as

A

Nominal flow

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11
Q

Which flow is known as the flow of factor services from households to firms and corresponding flow of goods and services from firms to households

A

Real flow

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12
Q

Which flow refers to the flow of factor payments from firms to households for their productive services and corresponding flow of consumption expenditure from households to firms for purchase of goods and services

A

Nominal flow

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13
Q

Which flow includes exchange of money

A

Money flow

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14
Q

Which flow includes exchange of goods and services

A

Real flow

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15
Q

Apart from political frontiers, domestic territory also includes

A

1. Ships and aircraft owned and operated by residents
2. Fishing vessels, oil and natural gas rigs and floating platforms
3. Embassies, consulates and military establishments of a country located aboard 

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16
Q

Will Japan’s embassy in India be a part of Indian domestic territory?

A

No, it will be japan’s territory 

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17
Q

UN is located in USA, will it be a part of American domestic territory

A

No

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18
Q

An individual who ordinarily resides in the country and whose centre of economic interest also lies in that country is called

A

Normal resident of that country

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19
Q

Who all are not included in resident of a country

A
  1. Foreign tourists and visitors
  2. Foreign staff of embassies, officials
  3. International organisations
  4. Employees of international organisations
  5. Crew members of foreign vessels, commercial travellers and seasonal workers
  6. Border workers
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20
Q

If an American is working in the UN office in India for more than one year then he will be treated as a normal resident of which country

A

India

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21
Q

An American working in the UN office located in India for less than a year will be considered as normal resident of which country

A

America

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22
Q

Indian working in the Indian embassy in USA will be considered as normal resident of which country

A

India

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23
Q

Which income is referred to as the income received by factors of production for rendering factor services in the production process

A

Factor income

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24
Q

Which income is referred to as the income received without rendering any product or service in return

A

Transfer income

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25
Q

Old age pension, scholarship, unemployment allowance is a part of which income

A

Transfer income

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26
Q

Which income is neither included in national income or domestic income

A

Transfer income

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27
Q

Name all eight aggregates of national income

A

NNPfc, GNPfc, GDPfc, NDPfc, GDPmp, NDPmp, NNPmp, GNPmp

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28
Q

Write the definition of national income

A

It refers to the net value of all final goods and services produced within the domestic territory of a country as well as abroad, valued at factor cost during one year. It includes NFIA, It excludes depreciation and net indirect taxes

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29
Q

explain domestic income

A

It is the net value of all final goods and services produced in the domestic territory of a country valued at factor cost, excluding depreciation, NFIA and net indirect taxes

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30
Q

How many methods in national income be calculated by, name all methods

A

Value-added method, income method, expenditure method

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31
Q

give the formula for value added method?

A

GVAmp = GVO - IC
or
GVAmp= domestic sales + exports + change in stock + production for self consumption - IC (raw material, imports, electricity, fuel)

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32
Q

the problem of counting the value of an output more than once while passing through various stages of production

A

double counting

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33
Q

double counting leads to ___ estimation of national income

A

over

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34
Q

what two methods have been can be used to avoid double counting

A

value of final output and value added method

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35
Q

why is final output method not used?

A

because every consumer considers his production as final

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36
Q

formula for income method is?

A

NDPfc = compensation of employees + operating surplus + mixed income of self employed
OR

wages in cash + salaries in cash + wages in kind + salaries in kind + employer’s contribution to SSS + rent + royalty + interest + corporate tax + dividend + retained earnings + mixed income of self employeed

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37
Q

formula for expenditure method is?

A

GDPmp= PFCE + GFCE + GDCF + net exports
or
PFCE + GFCE + GFCF + change in stock + net exports

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38
Q

GFCF has how many parts?

A

gross business fixed investment + gross residential construction investment + gross public investment

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39
Q

will remittances from abroad be included in national income

A

no, no productive value addition

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40
Q

will meals to beggars given be included in national income

A

no, transfer payment

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41
Q

will indirect taxes be included in national income ?

A

no, transfer payments

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42
Q

nominal national income is also called?

A

national income at current prices

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43
Q

real national income is also called?

A

national income at constant price

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44
Q

which income provides the real picture about economic growth of a country and why?

A

real national income because it is measured at a fixed price. nominal national income can show rise in national income due to rise in price and no rise in output

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45
Q

which year is taken as base year in india?

A

2011-2012

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46
Q

formula for converting national income at current price into national income at constant price

A

national income at constant price = national income at current price/ current price index * 100

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47
Q

why is gdp not the appropriate index for welfare?

A
  1. distribution of gdp: income inequalities
  2. change in prices
  3. non market transactions not included
  4. externalities
  5. rate of population growth
48
Q

_____ Refer to benefits or harms of an activity caused by firm or an individual for which they are not paid or penalised

A

Externalities

49
Q

Environmental pollution caused by industrial plants that have a negative effect on health are an example of

A

Negative externality

50
Q

what all does M1 comprise of?

A

currency and coins with public + demand deposits of commercial banks + other deposits with RBI

51
Q

which measure of money is most liquid

A

M1

52
Q

M1 is also called?

A

transaction money

53
Q

Currency money is also called as?

A

Fiat money

54
Q

Which money is defined as the money which is under order from the government to act as money and must be accepted for all debts?

A

fiat money

55
Q

Which money is called as legal tender money

A

M1

56
Q

Does legal tender money include deposits of the Indian bank and commercial banks with RBI

A

No

57
Q

what all does M2 comprise of?

A

M1 + saving deposits with post office savings bank

58
Q

are saving deposits with post office saving bank withdrawable by cheque

A

no, that is why m2 was evolved as a concept

59
Q

what all does M3 comprise of?

A

M1 + net time deposits with banks

60
Q

what all does M4 comprise of?

A

M3 + total deposits in post office savings bank

61
Q

is national saving certificate included in M4?

A

no

62
Q

M3 is also called?

A

aggregate monetary resources of the society

63
Q

which is the most narrow concept and which is the most broad concept?

A

M1, M4

64
Q

What are the primary functions of commercial bank

A

Accepting deposits and advancing loans

65
Q

how many types of deposits are there?

A

Current account deposits, fixed deposits, saving deposits

66
Q

deposits which are repayable by banks on demand

A

Current account deposit

67
Q

Current account deposits are also called

A

Demand deposits

68
Q

Which deposits can be drawn upon by cheque without any restriction

A

Demand deposits

69
Q

On which deposits do banks pay the highest rate of interest

A

Fixed deposit

70
Q

On which deposits do banks impose service charges for running these accounts

A

Current account deposits

71
Q

Which deposits are deposited for a fixed period of time

A

Time deposits

72
Q

Time deposits are also called

A

Fixed deposits

73
Q

Which deposits are given check facility but with some restrictions imposed on number and amount of withdrawals

A

Saving deposits

74
Q

Which deposits do not enjoy cheque-able facility

A

Fixed deposits

75
Q

Which loan is given to the borrower against his current assets like shares, stocks, bonds et cetera

A

Cash credit

76
Q

A credit limit is sanctioned and the amount is credited in the account holders account. The borrower may withdraw any amount within the limit credit limit and interest is charged on the amount actually drawn. Which type of loan is this

A

cash credit

77
Q

Which loans can be recalled on demand by the bank at any time

A

Demand loans

78
Q

Which loans are given his personal loans against some collateral security

A

Short-term loans

79
Q

Name some secondary functions of the commercial banks

A

Overdraft facility, discounting bills of exchange, agency functions, general utility functions

80
Q

What are the agency functions of commercial banks

A

Transfer of funds, collection and payment of various items, purchase and sale of foreign exchange, Purchase and sale of securities, income tax consultancy, trustee and executor, letters of reference

81
Q

Commercial banks preserve the wheels of their customers as trustees and execute them after their death, which function is this

A

Trustee and executor

82
Q

What are the five general utility functions of commercial banks

A

Locker facility, travellers checks, letter of credit, underwriting security, collection of statistics

83
Q

It is legally compulsory for the bank to keep a certain minimum fraction of the deposits as reserves, what is this called

A

Legal reserve ratio

84
Q

who fixes the amount of legal reserve ratio

A

Central bank

85
Q

What is the formula for money multiplier

A

One upon LRR

86
Q

Who issues one rupee notes and coins in India

A

Finance ministry

87
Q

Who issues currency notes after one rupee

A

Reserve Bank of India

88
Q

Which authority acts as a banker, agent and a financial advisor to the central government in all state governments

A

Reserve Bank of India

89
Q

Which state does RBI not at as a financial advisor to

A

Jammu And Kashmir

90
Q

The proportion of deposits that commercial banks are required to park with the central bank is called

A

Cash reserve ratio

91
Q

When commercial banks fail to meet their financial requirements from other sources they approach the central banks to give loans and advances. This function of the central bank is called

A

Centre of the last resort

92
Q

The policy adopted by the central bank of an economy in the direction of credit control or money supply is called

A

Monetary policy

93
Q

The rate at which the central bank of a country lends money to commercial banks to meet their short-term needs is called

A

Re-purchase rate

94
Q

Rate at which the central bank of a country lends money to commercial banks to meet their long-term needs is called

A

Bank rate

95
Q

Bank rate is also called

A

Discount rate

96
Q

Commercial banks park their surplus funds with the central bank, the interest paid by the central bank on such deposits is called?

A

Reverse repurchase rate

97
Q

Buying and selling of government securities by the central bank from or to the public and commercial banks is called

A

Open market operations

98
Q

To increase the banks ability to give credit what should the central bank do in open market operations

A

Purchase of securities

99
Q

The minimum percentage of net demand and time liabilities to be kept by commercial banks with the central bank is called

A

Cash reserve ratio

100
Q

The minimum percentage of net demand and time liabilities which commercial banks are required to maintain with themselves is called

A

Statutory liquidity ratio

101
Q

How does the RBI work as custodian of cash reserves

A

By maintaining a certain proportion of central bank’s deposit with themselves called cash reservation

102
Q

The difference between the amount of loan and market value of the security offered by the borrower against the loan is called

A

Margin requirement

103
Q

why are margin requirements necessary

A

Because if a bank gives a loan equal to the value of security, then bank will suffer a loss in case of fall in price of security 

104
Q

If the margin fixed by a central bank is 40% then commercial banks are allowed to give a loan up to? 

A

60% of the value of security

105
Q

A combination of persuasion and pressure the central bank applies in order to get them to act in a manner in line with its policy is called

A

Moral suasion

106
Q

RBI gives directions to other banks to give or not to give credit for certain purposes to particular sectors this is called?

A

Selective credit control

107
Q

Which banks deal with the public directly, have no power to issue currency, work on the principle of maximisation of profits and can be owned and governed by the government or private sector

A

Commercial bank

108
Q

Total value of all final goods and services which all sectors of an economy are planning to buy at a given level of income during a period of one accounting year is called

A

Aggregate demand

109
Q

planned expenditure is also called

A

Aggregate demand

110
Q

What are the implications of fiscal deficit

A

Debt trap, inflation, foreign dependence, hampers the future growth 

111
Q

What are the sources of fiscal deficit financing

A

Borrowing and printing new currency

112
Q

What is the formula for primary deficit, fiscal deficit, revenue deficit, budget deficit 

A

fiscal - interest payments

total exp- total receipts (except borrowing) or only borrowing

revenue exp - revenue receipts

total exp - total receipts

113
Q

Neither create any liability nor cause reduction in assets

A

revenue receipt

114
Q

Either create a liability or cause a reduction in the assets of the govt

A

capital receipt

115
Q

Either creates assets or causes a reduction in the liabilities

A

capital expenditure

116
Q

Neither creates any asset nor causes any reduction in the liability of company

A

revenue expenditure

eco (4 decks)

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