Published by: Dikshya
Published date: 27 Mar 2023
POKHARA UNIVERSITY
Level: Bachelor Semester: Fall Year: 2018
Programme : BBA/BBA-BU/BCIS/BHCM/BBA-TT Full Marks: 100
Course: Introductory Macroeconomics Pass Marks: 45
Time: 3hrs
Candidates are required to give their answers in their own words as far as practicable. The figures in the margin indicate full marks.
Section”A”
Very Short Answer Question
Attempt all the questions. 10*2
1. Define Macroeconomics.
2. List out the types of unemployment.
3 Point out any four objectives of monetary policy.
4. What are the propositions of the Keynes's psychological law of consumption?
5. Write any four characteristics of prosperity phase of business cycle.
6. What are the leakages of investment multiplier?
7. State any four determinants of investment.
8. Derive balanced budget multiplier.
9. What is effective demand?
10. What is inflamary gap?
Section "B"
Descriptive Answer Questions
Attempt any six questions. 6*10
11. Explain basic issues in macroeconomics. How are these issues related with business? Elucidate.
12. What in injection and leakages in circular flow of income and expenditure? Illustrate with circular flow of income and expenditure in three sector economy.
13. Suppose that the consumption function and investment under the two sector economy are given as: S= -100+ 0.3Y and I= 200+ 0.2Y.
a. Compute the initial equilibrium level of income investment and saving.
b. Suppose the autonomous saving increases by Rs50 billion, what will be the effect on the equilibrium level of income investment and saving? Comment whether paradox of thrift justifies
comparing initial and new equilibrium income and saving.
14. Suppose the following functions are given:
C = 100 + 0.8Yd (where, Yd = Y - T) I = 200 - 2000i and T =Rs 40 million
Ms =Rs 500 million
Mt = 0.5Y
Msp =100-1000i
15. State and explain the Classical Theory of Employments.
16. Consider the following data.
|
Year |
Price of X good |
Quantity of X Good |
Price of Y Good |
Quantity of Y Good |
|
2015 |
Rs.50 |
1500 |
Rs.40 |
1000 |
|
2016 |
Rs.60 |
2500 |
Rs.60 |
2000 |
|
2017 |
Rs.70 |
3000 |
Rs.80 |
3000 |
a) Calculate national GDP, real GDP, GDP deflator and rate of inflation.
b) What is the significance of real GDP in economic analysis?
17. How is national output determined in a four sector economy?
Section "C
Case Analysis
18. Read the case situation given below and answer the questions that follow: [20]
Ministry of Finance, Government of Nepal Economic Survey FY 2016/17 and Budget Speech of FY 2017/18
The government aims to achieve broader economic objectives of economic growth, employment creation, making equitable distribution and maintaining economic stability mainly through the mobilization and utilization of fiscal instruments such as revenue, public expenditure. public debt and foreign grants. Every year, government revenue has been increasing together with public expenditure. Despite continuous growth in the ratio of revenue to GDP, the contribution of foreign trade based revenue to total revenue collection stands at 50 percent. Though there has been adequate fiscal space to use public finance in the productive sector, public debt has not been utilized to the desired extent. In the changing context, sustainable and inclusive economic development needs to be achieved through appropriate and equitable distribution of federal, provincial and local economic resources as per federal structure. The balance between economic growth and equity has to be maintained towards achieving development and equality through sustained economic growth and equitable distribution. There has been an indication of improvement in the ability of making capital expenditure in the current fiscal year though such ability appears to have declined in last few years. When the government's fund is unspent, the pace of capital formation becomes slow which consequently makes the slowdown in economic activities thereby contracting the economic expansion. Hence, it is imperative to establish the roles of the government in economic development in a sustainable and complementary manner by enhancing government's spending capacity. Nepal government allocated Rs.1278.99 billion for the Fiscal Year 2017/2018. Out of the total allocation, Rs.803.53 billion or 62.8 percent for the recurrent expenditure, Rs. 335.17 billion or 26.2 percent for capital expenditure and Rs.140.28 billion or 11 percent for financing.
With respect to the financing of the proposed allocation for the Fiscal Year 2017/18, 730.05 billion will be financed through revenue mobilization, Rs. 15.00 billion from principal repayment and Rs. 72.16 billion from foreign grants. With this financing, the budget deficit will remain at Rs. 461.77 billion. To meet this deficit, Rs. 214.03 billion will be arranged from foreign loan. After financing from revenue and foreign aid, there will be a net deficit of Rs. 247.73 billion. Of the total deficit, Rs. 145.00 billion will be financed through domestic borrowing and Rs. 102.73 billion through current year's cash balance.
(a) Do you agree that fiscal policy is essential to boost the Nepalese economy? Give your critical comments.
(b) How has Nepal been financing its expenditure? What challenges do you think on the sources of financing government expenditure?
(c) Nepalese economy is facing the problem of high rate of inflation and mounting trade deficit. Is IT necessary to maintain coordination between fiscal policy and monetary policy to solve these Problems? Give your comment with proper reasons?