Suppose in an imaginary economy GDP at Market Price in a particular fiscal year was 4,000 crores, National Income was 2,500 crores, Net Factor Income paid by the economy to Rest of the World was 400 crores and the value of Net Indirect Taxes is 450 Crores. Estimate the value of consumption of fixed capital for the economy from the given data.

If in an economy saving function is given by S = (-) 50 + 0.2 Y and Y = 2000 crores; consumption expenditure for the economy would be 1,650 crores and the autonomous investment is 50 crores and the marginal propensity to consume is 0.8. True or False? Justify your answer with proper calculations.

OR

“Economists are generally concerned about the rising Marginal Propensity to Save (MPS) in an economy”. Explain why?

Explain how the economy achieves the equilibrium level of income using Savings-Investment (S-I) approach.

What is meant by ‘official reserve transactions'? Discuss their importance in the Balance of Payments.

State the various components of the Expenditure Method that are used to calculate national income.

OR

Discuss any two differences between GDP at constant prices and GDP at current Prices.