Macroeconomics Theory And Policy 1st Edition Vanita Agarwal - Solutions

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What is crowding out? Why is it important?
‘To implement fi scal policy, the government has at its behest several instruments which include taxation, government expenditure and public borrowing.’ Comment.
How can fi scal policy actions tackle the problem of stabilization in the economy?
‘Open market operation is an instrument of monetary control which is most powerful and which is most widely used by the central bank’. Discuss.
What are the instruments of monetary policy? How are the two categories diff erent from each other?
Write a short note on the bank rate policy.
Why are variations in reserve requirements said to be an inferior tool of monetary policy as compared to open market operations?
What is fi scal policy? Discuss.
What is an open market operation?
What is the meaning of monetary policy?
What is the diff erence between the repo rate and the reverse repo rate?
What are excess reserves? Why are they held by the banks?
Name the two categories of instruments of monetary policy at the disposal of the central bank.
Mention the main objectives which the monetary policy aims at achieving.
What is the diff erence between monetary policy and credit policy?
Reverse repo rate is the rate at which the central bank infuses short-term liquidity into the system.TRUE OR FALSE
According to the statutory liquidity requirement, banks are required to maintain a certain fi xed proportion of their liabilities in the form of designated liquid assets.TRUE OR FALSE
Required reserves are cash balances which the central bank holds to meet its statutory reserve requirements.TRUE OR FALSE
Th e two categories of instruments of monetary policy at the disposal of the central bank are the quantitative or general measures and the qualitative or selective measures.TRUE OR FALSE
Monetary policy is an operation by the monetary authorities of the country.TRUE OR FALSE
What are the objectives of macroeconomic policy in India? Discuss.
Write a short note on the targets and instruments of macroeconomic policy.
Are there any confl icts between the diff erent objectives? Discuss.
What are the objectives of macroeconomic policy? Discuss.
Write a short note on the meaning of and the advent of macroeconomic policy.
‘Th e objectives of macroeconomic policy are determined by the government keeping in mind the economic and social needs of the country.’ Comment.
Does the objective of a healthy growth confl ict with any of the other objectives?
Which is the most important objective of macroeconomic policy?
Discuss any two objectives of macroeconomic policy.
What do you mean by macroeconomic policy? Which are the two most popular macroeconomic policies?
‘If one had to single out the most important objective of macroeconomic policy today, then it would certainly be infl ation.’ Comment.
‘One of the main objectives of macroeconomic policy has been to not only achieve full employment but to maintain it at that level.’ Explain.
What does the objective of a high and sustainable economic growth imply? Explain.
What are fi scal policy and monetary policy?
Defi ne macroeconomic policy.
In the short-run the Phillips curve is vertical, implying that the rate of unemployment is independent of the rate of infl ation.TRUE OR FALSE
Balance of payments of a country is a record of all fl ows of money into and out of the country.TRUE OR FALSE
If the real GNP is corrected for the increases in the population, the real consumption per capita can be obtained.TRUE OR FALSE
Monetary policy is an operation by the government and it operates through changes in the government expenditure and tax collections.TRUE OR FALSE
Macroeconomic policy refers to the action taken by the government through the diff erent policies to achieve some macroeconomic objectives of the economy.TRUE OR FALSE
What is devaluation? Discuss the conditions under which it is expected to improve a defi cit in the balance of payments of a country?
‘To determine whether the balance of payments is in equilibrium or disequilibrium, only the autonomous transactions are considered.’ Explain.
Th e balance of payments of a country will always balance because of the double entry system of bookkeeping’.Explain.
What does the capital account of the balance of payments measure? Discuss the constituents of the capital account of the balance of payments.
What does the current account of the balance of payments measure? Discuss the constituents of the current account of the balance of payments.
Discuss the eff ectiveness of monetary and fi scal policies as expenditure reducing policies in tackling a balance of payments defi cit.
Briefl y discuss the diff erent kinds of disequilibria in the balance of payments.
Diff erentiate between autonomous and accommodating transactions.
Write a short note on the offi cial international reserve account.
Write short notes on the(a) Balance of Trade(b) Balance of Invisible Trade
Which two macroeconomic policies are utilized for correcting disequilibrium in the balance of payments?
What are accommodating transactions?
What do you understand by autonomous transactions?
What are unilateral transfers?
Defi ne the balance of payments.
According to the Marshall Lerner condition, for a devaluation to have a positive eff ect on a country’s balance of payments the sum of the absolute values of the elasticity of demand for its exports and imports should be greater than one.TRUE OR FALSE
Structural disequilibrium occurs due to business cycles.TRUE OR FALSE
To determine whether the balance of payments is in equilibrium or disequilibrium, only the accommodating transactions are considered.TRUE OR FALSE
Autonomous transactions are those transactions that take place independently of other items in the balance of payments.TRUE OR FALSE
Th e capital account of the balance of payments measures the fl ow of goods, services and income which occurs across the national borders.TRUE OR FALSE
Discuss the relative advantages and disadvantages of the fi xed and fl exible exchange rate systems.
Analyse the determination of the supply of foreign exchange in a fl exible or fl oating exchange rate system.
Explain the determination of the demand for foreign exchange in a fl exible or fl oating exchange rate system.
Which are the two nominal exchange rate systems? Analyse with the help of a brief history of the exchange rate systems adopted by the diff erent countries.
What are the functions performed by the foreign exchange market? Discuss.
What are the factors that lead to fl uctuations in the exchange rate under a fl exible exchange rate system? Explain.
What are the factors that determine the shape and slope of the demand curve for foreign exchange in a fl exible exchange rate system?
(a) What is the exchange rate? Diff erentiate between the nominal and real exchange rates.(b) Which are the two nominal exchange rate systems? Explain.
What is hedging? Explain.
What are the two types of foreign exchange transactions? Discuss.
‘Th e exchange rate refl ects the purchasing power of one country’s currency in terms of the purchasing power of another country’s currency.’ Explain.
What type of an arrangement is the currency board?
How does speculation occur in the foreign exchange market? What is a speculative attack?
What do you mean by an arbitrage? Explain.
What is a foreign exchange market?
Th e real exchange rate is the rate at which the currency of one country is traded for the currency of another country.TRUE OR FALSE
Th e exchange rate is the rate at which one country’s currency exchanges for another country’s currency.TRUE OR FALSE
Currency board is an arrangement where a country abandons its domestic currency and adopts a strong foreign currency like the dollar.TRUE OR FALSE
Th e foreign exchange market is a market where foreign currencies are purchased and sold.TRUE OR FALSE
A forward transaction is one where the seller of the foreign exchange has to deliver the exchange to the buyer on the spot, that is, within two days of the deal.TRUE OR FALSE
How do unemployment benefi ts increase the rate of unemployment? Discuss.
Discuss the relationship between Okun’s law and the sacrifi ce ratio?
What is wait unemployment? What are the causes of wait unemployment?
What is frictional unemployment? What are the causes of frictional unemployment?
What is natural rate of unemployment? Suggest some policies to reduce natural rate of unemployment.
Diff erentiate between frictional unemployment and wait unemployment.
What is unemployment? What are the costs of unemployment?
Th e Phillips’ curve shows that there exists a trade-off between the rate of unemployment and the rate of increase in money wages. Explain.
Write short notes on(a) Wait unemployment(b) Frictional unemployment
Write short notes on(a) Unemployed(b) Employed(c) Labour Force
What is the modern Phillips’ curve? How is it diff erent from the original Phillips’ curve?
What is the Phillips’ curve? What does it show?
What is the frequency of unemployment?
Write a short note on the unemployment pool.
What is unemployment rate?
Th e Phillips’ curve shows that there exists a direct relationship between the rate of unemployment and the rate of increase in money wages.TRUE OR FALSE
Job rationing occurs when, at the going wage rate, the demand for labour is greater than the supply of labour.TRUE OR FALSE
Unemployment in excess of frictional unemployment is called the natural rate of unemployment.TRUE OR FALSE
Natural rate of unemployment is the average rate of unemployment around which any economy fl uctuates in the long run.TRUE OR FALSE
Labour force consists of only those people who are employed.TRUE OR FALSE

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Macroeconomics Theory And Policy 1st Edition Vanita Agarwal - Solutions

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