Monetary Theory and Keynesian Models
30 Questions
4 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the primary focus of Part Four of the provided content?

  • Inflation and Business Cycles
  • Monetary Theory (correct)
  • Macroeconomic Policies
  • Growth Models

    • Which of the following models is NOT discussed in Part Six of the provided content?

  • The Harrod-Domar Models
  • The Solow-Swan Model of Growth
  • The Keynesian Model of Income (correct)
  • The Endogenous Growth Theory

    • What is the title of Chapter-1 in Part One of the provided content?

  • Economic Welfare and National Income
  • The Nature and Scope of Microeconomics
  • Introduction to National Income
  • The Nature and Scope of Macroeconomics (correct)

    • In which part of the provided content is the topic 'Balance of Payments' discussed?

    <p>Part Nine – Macroeconomics in Open Economy</p> Signup and view all the answers

    What is the primary focus of Part Two of the provided content?

    <p>National Income and Economic Welfare</p> Signup and view all the answers

    Which of the following topics is NOT discussed in Part Eight of the provided content?

    <p>The Keynesian Theory of Money and Prices</p> Signup and view all the answers

    What is the primary focus of economic dynamics?

    <p>Tracing out the actual path of movement of the economy between two static equilibrium points</p> Signup and view all the answers

    What is the main limitation of comparative statics?

    <p>Its scope is limited, excluding many important economic problems</p> Signup and view all the answers

    What does Keynesian employment, income, and output analysis rely on?

    <p>Comparative statics</p> Signup and view all the answers

    What is the difference between the two income levels OY1 and OY2?

    <p>OY2 is higher than OY1</p> Signup and view all the answers

    What is the main difference between comparative statics and economic dynamics?

    <p>Economic dynamics studies transitional periods, while comparative statics does not</p> Signup and view all the answers

    What is Kurihara's criticism of Keynes' approach?

    <p>Keynes did not show the process of transition from one equilibrium to another</p> Signup and view all the answers

    What is the primary reason why imported goods are not included in national income?

    <p>They are not manufactured within the country.</p> Signup and view all the answers

    What is the correct formula for calculating GNP according to the Expenditure Method?

    <p>C + I + (X - M) + G</p> Signup and view all the answers

    Why is government expenditure on transfer payments not included in GNP?

    <p>Because it is not made in exchange for goods and services produced during the current year.</p> Signup and view all the answers

    What is the term for the difference between exports and imports?

    <p>Export surplus</p> Signup and view all the answers

    Why is the expenditure on government enterprises included in GNP?

    <p>Because it is a part of government expenditure on goods and services.</p> Signup and view all the answers

    What is the relationship between GNP calculated by the income method and the expenditure method?

    <p>Both methods will give the same result if all items are correctly calculated.</p> Signup and view all the answers

    What is the formula to calculate GNP at Factor Cost?

    <p>GNP at Market Prices - Indirect Taxes + Subsidies</p> Signup and view all the answers

    What is the primary reason for deducting depreciation from GNP to arrive at NNP?

    <p>To account for the value of fixed capital</p> Signup and view all the answers

    What is the primary reason for excluding interest received on governmental loans from the GNP?

    <p>It is a mere transfer of national income</p> Signup and view all the answers

    What is the term used to describe the process of fixed capital wearing out, being damaged, or becoming obsolete?

    <p>Depreciation</p> Signup and view all the answers

    What is included in the GNP according to the concept of mixed incomes?

    <p>Profits of unincorporated businesses, self-employed persons and partnerships</p> Signup and view all the answers

    What is the term used to describe the net value of final goods and services evaluated at market prices?

    <p>Net National Product at Market Prices</p> Signup and view all the answers

    What is the term used to describe the income earned by factors of production through participation in the production process?

    <p>National Income</p> Signup and view all the answers

    Why are indirect taxes included in the GNP?

    <p>Because they are included in the price of commodities</p> Signup and view all the answers

    What is the term for the allowance made by corporations for expenditure on wearing out and depreciation of machines, plants and other capital equipment?

    <p>Depreciation</p> Signup and view all the answers

    What is the formula to calculate NNP at Market Prices?

    <p>GNP at Market Prices - Depreciation</p> Signup and view all the answers

    What is the difference between the value of exports of goods and services and the value of imports of goods and services known as?

    <p>Net income earned from abroad</p> Signup and view all the answers

    What is the primary reason for including undistributed corporate profits in the GNP?

    <p>Because they are retained by the companies</p> Signup and view all the answers

    Study Notes

    Economic Dynamics vs. Comparative Statics

    • Economic dynamics tracks the movement of the economy between two equilibrium points over time.
    • Comparative statics analyzes changes in equilibrium without studying the transitional movement between points A and B.
    • Keynesian theory emphasizes shifting equilibrium levels of income, comparing income levels over time.

    GNP and Its Components

    • GNP (Gross National Product) = Private Consumption Expenditure (C) + Gross Domestic Private Investment (I) + Net Foreign Investment (X–M) + Government Expenditure on Goods and Services (G).
    • Excludes transfer payments as they are not made in exchange for current goods and services produced.

    Net National Product (NNP)

    • NNP accounts for the depreciation of capital, calculated as NNP = GNP - Depreciation.
    • It reflects the net value of output after accounting for capital consumption.

    GNP Measurements

    • GNP at Market Prices = NNP at Market Prices + Depreciation.
    • GNP at Factor Cost is derived from GNP at Market Prices by accounting for indirect taxes and subsidies.

    Keynesian Economic Models

    • Keynes applied comparative statics to show different equilibrium levels without detailing the transition process.
    • Analyzes unemployment and full employment, and its applicability to underdeveloped countries is a key focus.

    Monetary Theory

    • Focuses on various aspects such as changes in the value of money, credit creation, and central banking functions.
    • Discusses the supply of money and factors influencing interest rates.

    Inflation and Business Cycles

    • Examines the concepts of inflation and deflation along with business cycle characteristics.

    Economic Growth Models

    • Describes growth theories like the Harrod-Domar model, Solow-Swan model, and endogenous growth theory.
    • Emphasizes on steady-state growth and the golden rule of accumulation for sustainable development.

    Macroeconomic Policies

    • Reviews monetary and fiscal policies, including classical, Keynesian, and modern perspectives.
    • Evaluates the effectiveness of monetary and fiscal interventions on economic stability.

    Modern Macroeconomics

    • Introduces theories such as rational expectations, supply-side economics, and New Keynesian economics.
    • Highlights the new classical macroeconomics and real business cycle theory.

    International Economics

    • Examines balance of payments, its components, and adjustment mechanisms.
    • Discusses foreign exchange rates and related policies crucial for open economies.

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Description

    Test your knowledge of monetary theory, including the quantity theory of money, Keynesian theory, and monetarist approaches. Learn about the supply of money, credit creation, and central banking functions.

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser