Q21 of 39 Page 1

Distinguish between ‘Qualitative and Quantitative tools’ of credit control as may be used by a Central Bank.

The central bank of the country, i.e, Reserve Bank of India controls the credit supply in an economy through various controls. These are either in quantitative or qualitative forms. These controls help to control the inflationary and deflationary situations. These two can be distinguished in the following table:



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19

Classify the following statements as revenue receipts or capital receipts. Give valid reasons in support of your answer.

(a) Financial help from a multinational corporation for victims in a flood-affected area.


(b) Sale of shares of a Public Sector Undertaking (PSU) to a private company, Y Ltd.


(c) Dividends paid to the Government by the State Bank of India.


(d) Borrowings from the International Monetary Fund (IMF).


 20

‘‘Higher Gross Domestic Product (GDP) means greater per capita availability of goods in the economy.’’ Do you agree with the given

statement? Give valid reason in support of your answer.


OR


Explain the meaning of Real Gross Domestic Product and Nominal Gross Domestic Product, using a numerical example.


 22

(a) Define ‘‘Trade Surplus’’ and ‘‘Trade Deficit’’.

(b) Discuss briefly the concept of a managed floating system of foreign


exchange rate determination.


 23

Discuss the adjustment mechanism in the following situations :

(a) Aggregate demand is lesser than the Aggregate Supply.


(b) Ex-Ante Investments are greater than Ex-Ante Savings.