Q20 A of 38 Page 1

Note: The following question is for the Visually Impaired Candidates only, in lieu of Q. No. 20 :

What is meant by the inflationary gap? Suggest any two fiscal measures to correct the situation of the inflationary gap.


Inflationary gap refers to a situation when the actual aggregate demand exceeds the aggregate demand required to maintain full employment level.

Two fiscal measures to correct the inflationary gap are mentioned below:


c. A reduction if the expenditure by the government.


d. Increase in the level of taxes.


More from this chapter

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19

In recent times the Indian Rupee (<) depreciated to an all-time low against the US dollar ($). Discuss its impact on India’s Imports.

OR


‘‘A country with trade deficit cannot have a current account surplus in its Balance of Payments.’’ Do you agree with the given statement? Discuss with reason.


 20

Show the inflationary gap using a well-labeled diagram. Suggest any two fiscal measures to correct the situation of inflationary gap.

 21

State which of the following statements are true or false. Give valid reasons.

(a) According to the Keynesian theory of employment, the state of full employment is obtained only when the economy is in equilibrium.


(b) In a two-sector economy, if consumption is equal to income, the average propensity to save will be zero.


 22

(a) Distinguish between revenue receipts and capital receipts of the government.

(b) Do ‘disinvestment’ and ‘loan proceeds from abroad’ constitute revenue receipts of the government? Give reason.


OR


Given the following data estimate the values of (i) Revenue deficit, and (ii) Fiscal deficit :