Q30 of 30 Page 1

Compute (a) National Income and (b) Personal Disposable Income. (6)

National income=compensation of employee+Rent+Mixed Income+ Net factor income from abroad

=(1600+500+500+300+2500+(-)50)Cr


=Rs5350 Cr


Personal disposable income=Personal income-Direct Tax-interest paid


=4000-300-500


=rs3200 Cr


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26

Explain the concepts of Real GDP and Nominal GDP, using a suitable numerical

example.


OR


State the various precautions of Product Method that should be kept in mind while


estimating national income. (4)

 27

a) “Fiscal deficit is necessarily inflationary in nature”. Do you agree? Support your

answer for valid reasons.


b) Elaborate ‘Economic Growth’ as an objective of the government budget.

 28

What is the range of values of investment multiplier? Clarify the relation of investment

multiplier with marginal propensity to consume (MPC) and with marginal propensity to


save (MPS). (6)

 29

Discuss how the central bank plays the role of `controller of credit` in an economy?

OR


Using a numerical example elaborate the credit creation process as handled by the


commercial banks.