Q20 of 30 Page 1

Foreign exchange transactions dependent on other foreign exchange transaction are called: ( choose the correct alternative)

(a)Current account transactions


(b)Capital account transactions


(c)Autonomous transactions


(d)Accommodating transaction


Foreign exchange transactions dependent on other foreign exchange transaction are called accommodating transactions. Foreign exchange transactions which are dependent on other foreign exchange transactions are known as accommodating transactions. These transactions are international economic transactions that are not made with a profit motive such as government financing. This transaction is meant to restore the balance of payment identity.


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18

What is revenue expenditure?

 19

Fiscal deficit equals : (choose the correct alternative)

(a)Interest payments


(b)Borrowings


(c)Interest payments less borrowing


(d)Borrowing less interest payments


 21

Find net value added at factor cost (Rs lakh)

(i)Fixed capital good with a life span of 5 years 15


(ii)Raw material 6


(iii)Sale 25


(iv)Net change in stock (-) 2


(v)Taxes on production 1


 22

Distinguish between marginal propensity to consume and average propensity to consume. Give a numerical example.

OR


Explain the role of taxation in reducing excess demand.