Economics

Q11. What are the primary responsibilities of a central bank? (4M)

Q12. What are the three ways a central bank can change money supply? (3M)

Q13. How do commercial banks create money? Why don’t they hold 100% reserves? (3M)

Q14. Define net exports and net capital outflows. Explain how and why they are related. (3M)

Q15. Explain the relationship between saving, investment and net capital outflow. (3M)

Q16. What is the economic logic behind the theory of purchasing power parity? (3M)

Q17. If India printed rupees at a higher rate than the US printed dollars what would happen to the inflation rates and what would happened to the number of dollars a rupee could buy? (3M)

Q18. Describe the difference between foreign direct investment and foreign portfolio investment. Would each of the following transactions be included in net exports or net capital outflow from India’s perspective? Also indicate whether it would be considered an increase or decrease in the variable. In case its capital outflow also indicate whether its direct investment or portfolio investment. (6M)

a.            An American buys 100 shares of stock in an Indian company

b.            An Indian firm builds a factory in Bolivia

c.            A Japanese buys a carpet made in Sonepat

d.            An Indian mutual firm buys stock in Iceland

Q19. Explain the East Asian Crises and its impact on capital flight on a countries interest rate, exchange rate? Or

Or Explain the broad sequence of events in the US crises of 2008

Or Explain the continuing crises in Europe

Q20. Why does the aggregate demand shift? (5M)

Q21. Why does the short run aggregate supply curve shift? (5M)

Q22. Why is the long run aggregate supply curve vertical? And when does it shift? (4M)

Q23. What are the plausible reasons for the Great Depression, its severity and duration? How did World War 2 affect it and why? (7M)

Q25. Suppose consumer confidence is weakening, what will its impact be on aggregate demand and interest...