Q20 of 36 Page 1

How are capital expenditure different from Revenue expenditure? Discuss briefly.

Revenue expenditure is the expenditure of the government that neither creates assets nor reduces any liability. For example, the expenditure incurred on the payment of salary, interest payment, etc.

Capital expenditure is the expenditure of the government that either creates assets or reduces liability. For example, the Expenditure incurred on the construction of bridges, repayment of loans etc.


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9

Explain the law of diminishing marginal utility using a hypothetical schedule.

OR


What is the budget line? Why the budget line is left to right downward sloping?


 17

If in an economy :

Change in initial investments (∆I) = ` 700 crores


Marginal Propensity to Save (MPS) = 0.2


Find the values of the following :


(a) Investment Multiplier (k)


(b) Change in final income (∆Y)


 23

Given the following data, find the missing values of ‘Private Final

Consumption Expenditure’ and ‘Operating surplus’.



 5

Good X and Good Y are complementary goods. If the price of Good X increases, discuss briefly its likely impact on the demand for Good Y.

OR


If the income of a consumer increases, discuss briefly its likely impact on the demand for a normal good, Good X.