ECO/III/03 Student's Copy
2 0 1 8
Pre-CBCS
3rd Semester
ECONOMICS
THIRD PAPER
Macroeconomics—I
Full Marks 75
Time 3 hours
PART A—OBJECTIVE
Marks 25
The figures in the margin indicate full marks for the questions
SECTION—A
Marks 10
Tick the correct answer in the brackets provided 1×10=10
1. National Income is
stock concept
flow concept
None of the above
2. If the rate of population growth and the rate of increase in national income
are equal, then per capita income will
increase
decrease
remain unchanged
/206 1 Contd.
3. The classical economists assume
over-full employment
full employment
under-full employment
4. In the Keynesian analysis effective demand consumption and investment
expenditures relate to the private sector because Keynes assumed
government expenditures as
autonomous
constant
negligible
5. The marginal propensity to consume is
the ratio of change in consumption to change in income
the ratio of change in consumption to change in investment
the ratio of change in consumption to change in saving
6. MPC is generally
equals to 1
less than 1
greater than 1
7. Investment dependent on the level of income and the rate of interest is
induced investment
autonomous investment
All of the above
8. Investment multiplier is
k

1
1 MPC

k

1
1 MPS

k

1
1 APC

ECO/III/03/206 2 Contd.
9. Liquidity trap is a situation where the rate of interest is
so high that people prefer to spend money
so low that people prefer to hold money
None of the above
10. The classical theory of interest is a
monetary interest theory
loanable interest theory
real theory of interest
SECTION—B
Marks 15
Answer/Write notes on the following 3×5=15
1. Define GNP.
2. Effective demand
3. Autonomous investment
4. Marginal efficiency of capital
5. Classical concept of interest
ECO/III/03/206 3 Contd.
PART B—DESCRIPTIVE
Marks 50
The figures in the margin indicate full marks for the questions
1. Briefly explain the methods of measuring national income. 10
OR
2. Discuss the difficulties in the correct measurement of national income. 10
3. "General over-production and general unemployment are impossible."
Discuss. 10
OR
4. Explain the determination of equilibrium level of employment in terms of
the principle of effective demand. 10
5. Distinguish between APC and MPC. Explain the factors determining
propensity to consume of the community. 3+7=10
OR
6. What do you mean by consumption function? Explain the factors that
determine propensity to consume of a community. 3+7=10
7. "Savings and investment are equal in equilibrium". Explain. 10
OR
8. What is investment multiplier? How does it work? 2+8=10
9. Explain the loanable funds theory of interest. 10
OR
10. Discuss the liquidity preference theory of interest. 10