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Unemployment resulting from the time lags involved in the redeployment of labour is known as frictional unemployment.

A person is said to be voluntarily unemployed if he is not willing to work at the current wage rate.

The Planning Commission has defined the poverty line on the basis of the recommended nutritional intake of 2,400 calories per person per day for rural areas and 2,100 calories for urban areas. On this basis, in rupee terms, the poverty line works out at 972 per head per month for rural areas and at 1407 per head per month for urban areas, both at the 2013-14 prices. In the year 2014-15 in India 29.8 percent people were below poverty line.

1. Since indirect taxes are collected in small amounts at intervals of time, they are more convenient and less pinching in effect. They are convenient from the point of view of the govt, also, since the tax amount is generally collected from manufacturers or the importers.
2. Indirect taxes are generally difficult to be evaded as they are included in the price of the commodity. A person can evade an indirect tax only when he decides not to purchase the taxed commodity.

It is the ratio of consumption to income.

Growth rate is that percentage rate from which it is known that in comparison to one year how much percentage change has taken place in national income or per capita income in any other year.

It is calculated by using following formula:

Growth Rate = Change in Per Capita Income × 100/Original Capita Income.

Rate of Interest.

Following are the common types of unemployment:

1. Voluntary Unemployment: Voluntary unemployment is a situation where workers are not willing to work on prevailing wage rates. In the words of Prof. Dillard, “Voluntary unemployment exists when potential workers are unwilling to accept the going wages or slightly less than going wages.”

2. Involuntary Unemployment: Involuntary unemployment is contrary to the voluntary unemployment. It is a situation in which the workers are ready to work at prevailing wage rates or even less than prevailing wage rates, but they do not get work. In this way involuntary unemployment is forced on the worker. According to Prof. J.M. Keynes, “Involuntary unemployment is a condition in which a person is willing to work at lower real wages than the current real wages whether or not he is willing to accept the lower money wages.”

3. Open Unemployment: In this type of unemployment labourers have not any work to do. He can get even less work. In the lack of work labourers completely remain unemployed. This type of unemployment exists in urban sectors like industrial unemployment and educated unemployment.

4. Seasonal Unemployment: Seasonal unemployment exists due to the seasonal nature of some occupations. For example, agricultural workers get work for few months in a year. Labourers in sugar mills get work from November to April and for other months they remain seasonal unemployed.

5. Structural Unemployment: Structural unemployment exists due to the change in the industrial structure. If we replace old machine for new machine, so during this replacement period worker remain unemployed. This type of unemployment is called structural unemployment.

6. Frictional Unemployment: Frictional unemployment comes into existence due to the mobility of the economy and imperfections in the labour market. In the words of Prof. Dillard, “Frictional unemployment exists when men are temporarily out of work because of imperfections in the labour market.”

Thus frictional unemployment exists in the economy due to immobility of labour in different industries, seasonal nature of some occupations, breakdown of the machinery and ignorance of job opportunities, etc.

Bank Rate: The rate at which the central bank lends money to commercial banks is known as the bank rate. By changing the bank rate, the credit and thus the money supply can be affected. With an increase or decrease in the bank rate, the market rate of interest also increases or decreases. Thus with the increase in bank rate, credit becomes dearer and vice-versa. Obviously, when it becomes necessary to control the credit, then the bank rate is increased and when credit is to be expanded, the bank rate is decreased.

Open Market Operation: By open market operations, we mean the sale and purchase of securities in the open market by the Central Bank of the country. If the Central Bank of the country wants to control credit, then it will start selling the securities lying with it. And when it is necessary to expand the credit, then the Central Bank starts purchasing securities from the open market.

It is the ratio of change in consumption to change in income.

By foreign aid, we mean the inflow of external assistance in the form of foreign capital, loans, grants aid assistance by foreign countries, private individuals, business organisations, foreign banks and international organisations.

Minimum Cash Reserve Ratio: The commercial banks have to keep some percent of their total reserves with the Central Bank in the form of reserve fund. The changes in cash reserve ratio affect the lending capacity of the commercial banks. If credit is to be controlled, then this ratio is increased and if credit is to be expanded, then this ratio is decreased.

Liquidity Ratio: The commercial banks have to keep- a certain fixed proportion of their total reserves with themselves in the form of cash. This is known as liquidity ratio. This amount cannot be lent by commercial banks. If the credit.is to be expanded then the Central Bank lowers this ratio. On the other hand, the liquidity ratio is increased if it becomes necessary to control the credit.

1. Price stability
2. Full employment
3. Economic development
4. Exchange rate stability
5. Reduction in economic inequalities

Fiscal policy is related to the government income and expenditure.

Balance of payments is a statement of systematic record of all economic transactions between one country and the rest of the world (or foreign countries). Thus the account of receipts and payments of the government of one country from other countries during a period of one year is called Balance of Payments. In the words of Kindleberger, “Balance of payments is a systematic record of all economic transactions between the residents of the reporting country and residents of foreign countries during a given period of time.”

Induced investment is that investment which depends upon the level of income and profit. Most of the private investment is induced investment.

Economic Development.

1. Taxation
2. Public debt
3. Deficit financing
4. Public expenditure

1. Economic development
2. Price stability
3. Exchange rate stability
4. Full employment
5. Economic equality

Correct option is (d) Fiscal

The policy of the government regarding income and expenditure is known as fiscal policy. As a matter of fact, fiscal policy is the policy of any govt, regarding its expenditure, taxation, borrowing, budget to achieve the various macro-economic objectives.

That investment which is independent of the changes in the level of income, output and profits, is called as autonomous investment. Most of public investment or government investment is autonomous investment.

One instrument of fiscal policy Taxation.

Net Investment = Gross Investment – Depreciation.

Domestic factor income is the sum of factor income within the domestic territory of a country.

It is the difference between the income received by the residents of a country from abroad and the income paid for the factor services provided by the non-residents in the domestic territory of a country.