Macro Economics_March 2011

8/9/2019 Macro Economics_March 2011

1/15

XCELLON INSTITUTE - SCHOOL OF BUSINESS

PGP GM BATCH 2010-12 Course: Macroecono!cs "a#e:

2$%0&%2011

MI" TE'M EXAM ( TE'M 2 To#a) Mar*s: 100 "ura#!on: &

+ours

Nae o,

s#uen#:.......................................................

'o)) Nu/er:................... Ba#c+: ................

No#e:

• Ea !s c)ose /oo* S#uen#s canno# carr #+e!r /oo*s3

)a4#o4s or o/!)e 4+ones

• A)) 5ues#!ons are ana#or

• 6r!#e on) on #+e s4ace 4ro7!e "o no# use a!#!ona)

ans8er s+ee#

Question No. Marks1 /32 /153 /54 /65 /56 /47 /108 /129 /610 /611 /15

12 /13Total Marks /100

P

a

g

e


2/15

Q. 1. Marks: 3Microeconomics eamines t!e "e!a#ior o$ in%i#i%ual %ecision&makin' units("usiness$irms an% !ouse!ol%s.Macroeconomics %eals )it! t!e econom* as a )!ole+ it eamines t!e "e!a#ior o$economic a''re'ates suc! as a''re'ate income, consum-tion, in#estment, an% t!eo#erall le#el o$ -rices.

''re'ate "e!a#ior re$ers to t!e "e!a#ior o$ all !ouse!ol%s an% $irms to'et!er.n t!e "asis o$ t!is kno)le%'e, -lease, classi$* t!e $ollo)in' items "* -uttin' a tickmark in a--ro-riate cell in ta"le 'i#en "elo).

tem Microeconomic

#aria"le

Macroeconomic

#aria"le

urta Me!tas annual income

ate o$ n$lation in !inaTotal nnual ro%uction in s atM $actor* in uarat

; c!an'eate

ate o$ unem-lo*ment in t!e ;

u"si%ies -ro#i%e% "* n%ian 'o#t

%urin' *ear 2008&09

Q.2. Marks: 15T!ere are t!ree kin%s o$ -olic* t!at t!e 'o#ernment !as use% to in$luence t!emacroeconom*: ?iscal -olic*, Monetar* -olic* an% ro)t! or su--l*&si%e -olicies.

• ?iscal -olic* re$ers to 'o#ernment -olicies concernin' taes an% s-en%in'.

• Monetar* -olic* consists o$ tools use% "* t!e ?e%eral eser#e to control t!e@uantit* o$ mone* in t!e econom*.

• ro)t! -olicies are 'o#ernment -olicies t!at $ocus on stimulatin' a''re'atesu--l* instea% o$ a''re'ate %eman%.

Ait! t!is kno)le%'e, rea% t!e article 'i#en "elo) an% ans)er t!e @uestions at t!e en% o$ it+

T!u, Mar 24, 2011 B ;-%ate% 12.14M T22 M, 2011, 05.49M T,TRepeated rate hikes by RBI hurting India Inc: Assocham


3/15

N>A CD: eser#e EankFs re-eate% !ikes in ke* -olic* rates is !urtin' n%iancor-orates as it increases t!eir cost o$ -ro%uction an% s@ueeGes -ro$it mar'ins, in%ustr*

"o%* ssoc!am to%a* sai%.t also aske% t!e 'o#ernment to in#est more in t!e in$rastructure sector, "esi%es re%ucin't!e )aste$ul e-en%iture as a means to cur" risin' in$lation.H$ t!e econom* continues to use monetar* -olic* )it!out $iscal consoli%ation o$

a--ro-riate %e'ree, !i'!er interest rates )ill continue to $uel !i'! cost o$ -ro%uction an%s@ueeGe -ro$it mar'ins o$ n%ia nc ,H an ssoc!am stu%* sai%.T!e E !as !ike% its s!ort&term len%in' re-o an% "orro)in' re#erse re-o rates ei'!ttimes since Marc!, 2010, )it! a #ie) to ti'!ten li@ui%it* su--l* $or cur"in' in$lation. tslatest !ike o$ 25 "asis -oints eac! in re-o an% re#erse re-o rates )as announce% last)eek.ssoc!am sai% t!e countr* is -ursuin' a !i'! 'ro)t! strate'* e#en as it !as to %eal )it!!i'! in$lation on account o$ increase in -rice rise o$ $oo% items an% ot!er commo%ities.Di'! interest rates, on account o$ increase in re-o an% re#erse re-o rates, )ill a$$ect

attracti#eness o$ in#estin' in t!e in%ustr* an% %eter $uture -roects, it sai%.T!e ?inance Minister !a% in !is Eu%'et s-eec! !a% stresse% t!at risin' in$lation coul% "e tackle% )it!out com-romisin' on economic 'ro)t!.T!e stu%* sai% a lar'e -art o$ t!e in$lation -ro"lem stems $rom risin' $oo% -rices t!at iscause% %ue to su--l* s!orta'e. >#en t!ou'! some $oo% article -rices are no) coolin',t!e $oo% articles in%e is still !o#erin' at 10 -er cent $rom last *ear.HT!is !as s-urre% a more "roa%&"ase% in$lation in manu$acture% 'oo%s,H ssoc!amecretar* eneral < a)at sai%.?oo% in$lation %urin' t!e $irst )eek o$ Marc! )as 9.42 -er cent. >#en !ea%line in$lation!as "een a"o#e 8 -er cent, since ?e"ruar*, 2010.

Non&$oo% manu$acture% -ro%ucts in$lation rate um-e% to 6.1 -er cent in ?e"ruar* $rom4.8 -er cent in Ianuar*, t!e stu%* sai%.t t!e same time, t!e in%ustrial -ro%uction %ro--e% to 5.5 -er cent in Q3 ?J211 $rom9.1 -er cent in t!e -re#ious @uarter.T!e -ro%uction tren%s o$ consumer non&%ura"les %is-la* anot!er 'ro)t! c!allen'e, )it!

-er$ormance sli%in' to minus 1.9 -er cent in Q3 $rom 1.5 -er cent in Q2 ?J11.More )orr*in'l*, t!e 'ro)t! in ca-ital 'oo%s sector && t!at re$lects $uture in%ustrial'ro)t! -ros-ects && !as tum"le% to to 6.9 -er cent in Q3 ?J11 $rom 21.3 -er cent in Q2,t!e stu%* sai%.

HT!is in%icates not onl* t!e -resent slu''is!ness, "ut also a certain %i- in t!e -er$ormance o$ in%ustrial sector in t!e s!ort&term mainl* %ue to risin' in-ut cost,Ha)at sai%.De sai% t!e -rice sta"ilit* o"ecti#e continues to "e elusi#e, %es-ite monetar* action.

2a A!ic! microeconomic $actors o$ n%ian cor-orate are "ein' a$$ecte% ne'ati#el* "*eser#e EankFs re-eate% !ikes in ke* -olic* ratesK Marks: 3


4/15

LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL

LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL

2" ssoc!am also aske% t!e 'o#ernment to in#est more in t!e in$rastructure sector, "esi%es re%ucin' t!e )aste$ul e-en%iture as a means to cur" risin' in$lation. n )!at

t*-e o$ -olicies can t!e n%ian 'o#t incor-orate t!ese su''estions = Monetar*, ?iscal orro)t! -oliciesK ns)er clearl*. Marks: 3



2c ssoc!am stu%* sai% a lar'e -art o$ t!e in$lation -ro"lem stems $rom risin' $oo% -rices t!at is cause% %ue to su--l* s!orta'e. n )!at t*-e o$ -olicies can t!e n%ian 'o#tuse to sol#e t!is -ro"lem = Monetar*, ?iscal or ro)t! -oliciesK ns)er clearl*.

Marks: 3 LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL


2% A!ic! Macroeconomic #aria"le in t!e article re$lects $uture in%ustrial 'ro)t! -ros-ectsK Mark: 1

LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL

A!at %oes it re$lectK Marks: 2



2e No) take a look at t!e %ia'ram 'i#en "elo).


5/15

n expansion, or boom, is t!e -erio% in t!e "usiness c*cle $rom a trou'! u- to a -eak,%urin' )!ic! out-ut an% em-lo*ment rise. contraction, recession, or slum- is t!e

-erio% in t!e "usiness c*cle $rom a -eak %o)n to a trou'!, %urin' )!ic! out-ut an%em-lo*ment $all.e$er a'ain to t!e %ata mentione% in t!e ssoc!am stu%* a"o#e. n )!ic! -!ase o$

"usiness c*cle n%ian econom* seems to "e -ositione% at -resentK Mention $acts $romt!e article to su--ort *our ans)er. Marks: 3






Q.3. Marks: 5


6/15

?ill in t!e t)o "lank s@uares o$ t!e %ia'ram a"o#e "* -lacin' t!e entitiesHOUSEHOLDS an% IR!S correctl*.


7/15

Q. 4 Marks: 6

A "irm#s $a%ue added is the $a%ue o" its output minus the $a%ue o" the intermediate

goods the "irm used to produce that output&

$armer 'ro)s a k' o$ cotton an% sells it to a tetile -rocessor $or s.100/&.T!e tetile -rocessor -rocesses t!e cotton into cotton tetile an% sells it lea%in' $as!ion

%esi'ner o!it ala*a $or s. 500/&.T!e $as!ion %esi'ner ala*a uses t!e cotton tetile to make a %ress an% sells it to urtaMe!ta $or s. 2000/&.urta Me!ta )ears t!e "eauti$ul %ress an% 'oes to cellon to atten% ustanti#o.;sin' t!e in$ormation 'i#en a"o#e,4a om-ute #alue a%%e% at eac! sta'e o$ -ro%uction. !o) all ste-s. Marks: 4


LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL



4" om-ute ross


8/15

Q.6. Marks: 4T!e )or%s a#aila"le to *ou to $ill in t!e "lanks are+ #alue, -rice, interme%iate, $inal,current, mo%ern, a#era'e, constant, "ase, latest, a"normal.

Select the appropriate word and fill in the blanks below to give meaning to lines.


9/15

Q.8. Marks: 12

2006 2007

rice s Quantit* k's rice s Quantit*k's

rice s Quantit*k's

oo% 30 100 35 110 45 140

oo% E 40 150 45 200 45 210

oo% 50 350 40 360 40 200

)D* De"%ator + ,-- . /(omina% )D* 0 Rea% )D*1

• ;sin' t!e %ata 'i#en in t!e ta"le a"o#e, com-ute nominal


10/15

2008

Q.9. Marks: 6

Take a look at t!e e@uation "elo)+

9a ?ill in t!e "lanks "elo)+ Marks: 3T!e


11/15



Q.10. Marks: 64he 5onsumer *rice Inde. /5*I1 is a 6eighted a$erage o" prices re%ati$e to their

$a%ue in the base period& 4he 6eight on each 7price re%ati$e8 re"%ects that good#sre%ati$e importance in the 5*I#s basket& (ote that in 5*I the 6eights remain "i.ed

o$er time&

No) use *our common sense an% $ill in t!e "lanks usin' a--ro-riate o-tion.T)o o-tions a#aila"le to *ou are an%


12/15


LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL

11c e$er to tatement 5 an% i%enti$* #alues o$ , , an% N at 2004&05 -rices $or*ear 2008&09. !an'e in stocks an% #alua"les can "e clu""e% )it! .



11% A!ic! o$ t!e $our statements a--ear to "e $ollo)in' t!e e@uation RRRN tocalculate


13/15


14/15


15/15

Q.12. ?ill in t!e "lanks. Marks: 13

a LLLLLLLLLLLLLLLLLLLLL ?unction tates t!e relations!i- "et)een in-uts an%

out-ut.

" T!e LLLLLLLLLLLLL run is %e$ine% as t!e -erio% o$ time taken to #ar* all $actors o$

-ro%uction.

c LLLLLLLLLLLLLcosts are t!e costs t!at are not relate% %irectl* to -ro%uction = rent,

rates, insurance costs, a%min costs, etc. T!e* can c!an'e "ut not in relation to out-ut.

% LLLLLLLLLLLLLLL cost is t!e cost o$ a%%in' one more unit o$ -ro%uction.

e

Macro Economics_March 2011

Documents

Transcript of Macro Economics_March 2011