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Money supply will reduce.

A part of deposits are to be deposited by the com. bank to the central bank which is called as cash reserve ratio.

It consists of buying and selling of government securities and bonds in the open market by central bank.

Commercial banks create deposits in by credit creation. A commercial bank creates credit in the sense that it gives more loans than the cash deposits received from the depositors. When a bank grants loan to a person, it does not give it in cash to the borrower rather loan is credited in the borrower’s account. Every bank loan, thus, creates an equivalent deposits with the bank. The bank on the basis of legal reserve ratio is required to maintain a specified percentage of its deposits as cash reserve. Legal reserve ratio (a mix of Cash Reserve Ratio and Statutory Liquidity Ratio) is determined by the central bank of the country. If legal reserve ratio is increased, the capacity of bank to create credit is reduced. 

Thus, the capacity of commercial banks to create credit depends on following two factors : 

1. Amount of deposit 

2. Legal reserve ratio 

Given the amount of fresh deposits and legal reserve total money creation will be as under : 

Total money creation = Initial Deposit x \(\frac{1}{Legal\,Reserve\,Ratio}\)

Let us take an example. Suppose a bank gets a deposit of ₹ 40,000. Legal Reserve Ratio is 20%. It means that bank can lend 80% of ₹ 40,000 i.e.,₹32,000. Borrowers are not given loan in cash and loan is credited to their account. Again 80% of ₹ 32,000 may be advanced as a loan to other borrowers. This process goes on and on. As a result, the bank creates credit a number of times (5 times) of primary deposits i.e., ₹ 2,00,000. 

Total money creation = 40,000 x \(\frac{1}{0.20}\)

 = ₹ 2,00,000.

Cash Reserve Ratio refers to the minimum percentage of a bank’s .total deposits, which it is required to keep with the central bank.

Central bank serves as a bank to other commercial banks and its relation with other banks is akin to the relation of commercial banks with their customers. 

Central bank acts as a banker’s bank in following three capacities : 

1. Central bank is the custodian of the cash reserves of the commercial banks. 

2. Central bank is the lender of the last resort. 

3. Central bank acts as a bank of central clearance, settlement and transfers.

It refers to minimum percentage of net total demand and time liabilities, which commercial banks are required to maintain with themselves. 

Non-price competition under oligopoly: When there are only a few firms they are normally afraid of competing with each other by lowering the price. It may start a price war and firm who starts the price war may ultimately lose. Thus, firms indulge in nonprice competition in order to increase their shares in sales and profit. Under non-price competition, they mainly utilise publicity and selling techniques for increasing the sales of their product.

Firms under oligopoly follow the policy of rigidity. Price rigidity refers to a situation in which price tends to stay fixed irrespective of changes in demand and supply conditions.

As a banker to the government, the central bank performs same functions as performed by the commercial banks to their customers. 

1. It receives deposits from the government and collects cheques and drafts deposited in the government account. 

2. It provides cash to the government as resumed for payment of salaries and wages to their staff and other cash disbursements. 

3. It makes payments on behalf of the government. 

4. It also advances short term loans to the government. 

5. It supplies foreign exchange to the government for repaying external debt or making other payments.

Correct Option  (c) Subsidies.

(b) Corporation tax

Central bank acts as the banker to the banks in three ways : 

1. custodian of the cash reserves of the commercial banks; 

2. as the lender of the last resort; and 

3. as clearing agent. 

1. As a custodian of the cash reserves of the commercial banks, the central bank maintains the cash reserves of the commercial banks. Every commercial bank has to keep a certain percent of its cash reserves with the central bank by law. 

2. As Lender of the Last Resort. (a) As banker to the banks, the central bank acts as the lender of the last resort. (b) In other words, in case the commercial banks fail to meet their financial requirements from other sources, they can, as a last resort, approach to the central bank for loans and advances. 

3. The central bank assists such banks through discounting of approved securities and bills of exchange. (c) As Clearing Agent 

(i) As the custodian of the cash reserves of the commercial banks, the central bank acts as the clearing house for these banks. 

(ii) Since all banks have their accounts with the central bank, the central bank can easily settle the claims of various banks against each other simply by book entries of transfers from and to their accounts. 

(iii) This method of settling accounts is called Clearing House Function of the central bank

(d) None of the above

Correct Option (c) Buying government securities.

1. Open Market Operation consists of buying and selling of government securities and bonds in the open market by central bank. 

2. To control availability of credit, central bank sells government securities and bonds to commercial bank. 

3. With the sale of these securities, the power of commercial banks of giving loans decreases.

(c) Buying government securities.

Primary Deficit: The difference between the fiscal deficit and interest payment is termed as Primary Deficit. It indicates the borrowing requirements of the government to meet fiscal deficit excluding interest payments.

Primary Deficit = Fiscal Deficit - Interest Payments.

Consumption curve does not start from origin because of the assumption that there is some minimum level of consumption even at zero level of income. 

Fiscal Deficit: The excess of the total expenditure (revenue and capital expenditure) over the actual receipts excluding borrowings (revenue and capital receipts) over a period of one accounting year, is termed as Fiscal Deficit. Fiscal Deficit is met by the borrowings of the government. It increases the liability of the government in the form of repayment of loans with interest.

Fiscal Deficit= Total Budget Expenditure - Total Budget Receipts (Excluding Borrowing)

Given nominal income other than base year we can find real income by eliminating changes in price index. The effect of change in prices on the nominal income of current year can be eliminated in the following way :

Real income = Nominal Income/Price index  x 100

Price index plays the role of deflator deflating current price estimates into constant price estimate.

Nominal income is the income one gets in money terms and real income is the amount of goods and services a person can buy from the nominal income. Nominal income is calculated with current year price and real income is calculated with base year' price. Real income is calculated by dividing nominal income by the price level. For example: 

If Real income is Rs.400 and Price Index is 105,  Nominal Income will be Real Income = (Nominal Income,/Price Index of the Current Year) x 100 

400= (Nominal Income/105) x 100 nominal income= Rs.420 

Consumption curve does not start from the origin because of the assumption that there is some minimum level of consumption even if the income level is zero.

(c) Buying government securities

Revenue Deficit: When revenue receipts are less than the revenue expenditures in a government budget, this shortfall is termed as Revenue Deficit. It signifies that the government current expenses are greater than current income. The bulk of these expenses is interest payment, wages for government employees and defence. 

Revenue Deficit =Revenue Expenditure - Revenue Receipts

(a) Milk purchased by a tea stall is intermediate good because it is purchased from another production unit for resale indirectly.

(b) Bus purchased by a school is a final product because expenditure on school bus is investment expenditure.

(c) Juice purchased by a student from the school canteen is a final good because purchased by consumer for own use and not for resale.

Detailed Answer :

(a) Milk purchased by a tea stall is an intermediate good, because it is purchased by a firm as a raw material for the process of production of other good.

(b) Bus purchased by a school is a final good as it is purchased for the consumption and not for reselling. 

(c) Juice purchased by a student from the school canteen is a final good as it is purchased for the consumption and not for reselling

Consumption is an activity of using goods and services by the people to satisfy human wants. 

Consumption has two components : 

1. Autonomous consumption – Autonomous consumption is the consumption which is independent of the level of income. Such expenditure is incurred even if income is zero. 

2. Induced consumption – Induced consumption is the consumption which is influenced by the level of income. Such consumption bears a positive relation with the level of income.

Thus, C = C + bY Since autonomous consumption is incurred without having any income, consumption expenditure will always be positive and cannot be zero because survival needs consumption. Hence, consumption curve will not start from the origin i.e., from zero

(a) Milk purchased by a tea stall is an intermediate good because milk will be used up by the tea stall in the process of production i.e., for preparing tea meant for sale. It remains within production boundary. 

(b) Bus purchased by a school is a final good because a bus is a durable product and shall be available for use in future also. A bus crosses over production boundary and does not remain in production boundary. 

(c) Juice purchased by a student from the school canteen is a final good because it is used for consumption by a consumer. It is not found in production boundary.

Output Method :

(i) This method is also known as inventory method or product method. Under this method, the economy is divided into different sectors such as agriculture, mining, manufacturing, small enterprises, commerce, transport communication and other services.

(ii) The output or product method is followed either by valuing all the final goods and services, produced during a year, at their market price or by adding up all the values at each higher stage of production, until these products are turned into final products.

(iii) While using this method, utmost care must be taken to avoid multiple or double counting. In order to do so, output method suggests two alternative approaches for the measurement of GNP namely, the Final Goods Approach or Final Product Approach and the Value Added Approach / the Value Added Method.

(iv) In the method of Final Goods Approach, the value of all final goods and services produced in primary, Secondary and tertiary sector are included and the value of all intermediate transactions are ignored. For example: the price of bread includes, the cost of wheat, making of flour etc. Hence, only the value of final product, i.e. bread should be considered to avoid double counting.

(v) In the method of Value Added Approach, the value added at each stage of the production process is included. The difference between the value of final outputs and inputs at each stage of production is called the value added.

For Example: A farmer produces and sells wheat for Rs. 1000/- to the miller. Miller sells flour for Rs. 1500/- to the baker. Baker sells bread for Rs. 1800/- to the retailer/merchant. Retailer sells bread for Rs. 2000/- to the consumers. So, the value added by farmer (Rs. 1000/-), miller (Rs. 500/-), baker (Rs. 300/-) and retailer (` 200/-), i.e. total of Rs. 2000/- should be included in the national income.

(vi) Output method is widely used in the underdeveloped countries, but is not considered that reliable because of the margin of error.

(vii) In India, this method is applied to agriculture, mining and manufacturing section including handicrafts, but it is not applied for transport, commerce and communicating sector.

Nominal income is the income one gets in money terms and real income is the amount of goods and services a person can buy from the nominal income. Nominal income is calculated with current year price and real income is calculated with base year' price. Real income is calculated by dividing nominal income by the price level. For example: 

If Real income is Rs.400 and Price Index is 105,  Nominal Income will be Real Income = (Nominal Income,/Price Index of the Current Year) x 100 

400= (Nominal Income/105) x 100 nominal income= Rs.420

The Central Bank issues loans to a Commercial Bank against specified and approach securities of the bank. In this way, the Central Bank ensures the smooth functioning of Commercial Banks and appropriate flow of credit in the economy. By offering loans to the Cornrnercial Banks in situation of  emergency the Central Bank ensures that the banking system of the country does not suffer any set back and that money market remains stable. Due to the above-stated reasons, the Central Bank is termed as "Lender of Last Resort".

Multiplier is a measure of effect of change in investment on national income. It establishes relation between investment and income. It measures the change in income due to change in investment.

The size of multiplier is determined by the Marginal Propensity to Consume. There is a direct relation between MPC and K. Higher the MPC, higher is value of K and vice-versa.

K=ΔY/ΔI =Change in Income / Change in Investment

The relationship between the value multiplier and

MPC is as follows :

K=1/1-MPC

The equation shows that the higher the value of MPC, the higher is the value of multiplier. The reason is that higher the expenditure on consumption, higher the increase in income of the producers of consumer goods and services.

The marginal propensity to consume (MPC), if the value of multiplier (K) is a will be :

K=1/1-MPC

=> 4=1/1-MPC

=> 1-MPC=1/4

=>MPC=1-1/4

=>MPC=0.75.

Following are the main features of monopolistic competition : 

(i) Limited number of sellers – The number of sellers is so limited that each individual seller can influence the market in a limited way. 

(ii) Firms producing differentiated products – In monopolistic competition, firms produce differ-entiated products. The products are similar but not identical. Products are differentiated by brand name, colour, package, credit conditions, customer service etc. The products may physically be the same but consumers treat them different products. This gives an individual firm some monopoly of its own differentiated product. 

(iii) Free entry and exit – Buyers and sellers (firms) are free to enter or leave the market at any time they like. Large profit will induce the new firms to enter the industry whereas losses will compel inefficient firms to leave the industry. The characteristic of differentiated products separates monopolistic competition from perfect competition. Under perfect competition, firms sell homogeneous products which are identical in size, colour, quality and weight. As such, products sold by the firms under perfect competition are perfect substitutes of one another.

Monopolistic Competition is a type of imperfect competition such that producers sell products that are differentiated from one another as goods but not perfect substitutes (such as from brandin& quality, or location). Monopolistic Competition is found in the industry where there is a large number of sellers, selling differentiated product to a large number of buyers. There is freedom of entry and exit for the firms.

Characteristics of Monopolistic Competition :

(1) Large number of buyers and sellers,

(2) Product differentiation,

(3) Free entry and exit of firms.

Product differentiation makes monopolistic competition different from perfect competition. All the firms in the perfect competitive market sell homogeneous (identical) products. The products are perfect substitutes to one another. Where as product differentiation or differentiated product is a distinct feature of monopolistic competition. Though the number of firms is large but their product differs in colour, shape, brand, quality, durability, etc. 

It has two important implications:

(i) It allows a firm a partial control over price of its product.

(ii) It causes high elasticity of demand for the firm's product owing to the availability of a large number of close substitutes.

Characteristics of monopolistic competition – 

(i) A large number of sellers and buyers.

(ii) Firms produce differentiated products.

(iii) Freedom of entry and exit from the market.

• Differentiated Product : Under monopolistic competition firms produce differentiated products, which are close substitutes of each other. If buyers prefer the product of a particular producer, that producer is in a position to influence the price.

Whereas, in a perfectly competitive market products are homogenous and firm is the price-taker. This makes monopolistic competition different from perfect competition.

Detailed Answer : Monopolistic Competition is a type of imperfect competition such that producers sell products that are differentiated from one another as goods but not perfect substitutes (such as from branding, quality, or location). Monopolistic Competition is found in the industry where there is a large number of sellers selling differentiated product to a large number of buyers. There is freedom of entry and exit for the firms. Characteristics of Monopolistic Competition :

(1) Large number of buyers and sellers,

(2) Product differentiation,

(3) Free entry and exit of firms.

Product differentiation makes monopolistic competition different from perfect competition. All the firms in the perfect competitive market sell homogeneous (identical) products. The products are perfect substitutes to one another. Whereas product differentiation or differentiated product is a distinct feature of monopolistic competition. Though the number of firms is large but their product differs in colour, shape, brand, quality, durability, etc.

It has two important implications:

(i) It allows a firm a partial control over price of its product.

(ii) It causes high elasticity of demand for the firm's product owing to the availability of a large number of close substitutes.

(a) Under perfect competition there are no barriers to entry and exit of firms into/from industry. When in short run there are abnormal profits, new firms enter. This will increase market supply and price will fall. This process continues till abnormal profits reduce to normal profits.

Similarly if firms are incurring losses, firms will start leaving. This reduces market supply and price will rise till losses are wiped out.

(b) As there are few firms in oligopoly, firms try to avoid price competition for the fear of price war. They use nonprice methods price like advertising, free gifts etc. to compete with others.

(a) Freedom of entry and exit to firms under perfect competition:

The industry is characterised by freedom of entry and exit of firms. In a perfectly competitive market, there are no barriers to entry or exit of firms. Implication : The implication of this assumption is that given sufficient time, all firms in the industry will be earning just normal profit. Suppose the existing firms are earning super normal profits. Attracted by the positive profits, the new firms enter the industry. The industry’s output, i.e., market supply goes up. The price comes down. New firms continue to enter till economic profits are reduced to zero. Now suppose the existing firms are incurring losses. The firms start leaving the industry. The industry’s output starts falling and price starts going up. All this continues till losses are wiped out. The remaining firms in the industry once again earn just the normal profits.

(b) Non-price competition under oligopoly:

When there are only a few firms they are normally afraid of competing with each other by lowering the price. It may start a price war and firm who starts the price war may ultimately lose. Thus, firms indulge in non-price competition in order to increase their shares in sales and profit. Under nonprice competition they mainly utilise publicity and selling techniques for increasing the sales of their product. Firms under oligopoly follow the policy of rigidity. Price rigidity refers to a situation in which price tends to stay fixed irrespective of changes in demand and supply conditions.

- Violence on women is used to keep this hierarchical relationship intact.

- Widespread domestic and sexual violence in all societies.

- India: Sati, Dowry, Honor Killing

- Anti-Woman culture in all societies

Infant mortality rate is the no. of deaths per 1,000 births of children in a year.

Remaining unemployed in a few months of the year due to change in season.

Dispersion is the extent to which values in the distribution differ from the average of the distribution.

Correct option  (a) The ordinary business 

Relationship between two or more data / variables in a distribution.

Correct option (a) Attributes like physical status, nationality etc. 

i.Spatial classification.

ii. Percentiles. 

iii. Prime Minister. 

iv. 1991. 

v. AYUSH

Correct option (b) 10 years

Correct option (a) Kerala.

Correct option (c) MGNREGA 

Correct option (a) Poor and non-poor.

 Correct option (c) 1850.

(b) Pitting

Difficult to monitor and very dangerous form of corrosion is pitting.