Explain how national income is determined in a 3-Sector Economy ?
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Question. 1
: What is macro economics? Explain how national income is determined in a 3-Sector
Economy?
Question.2
: Show with the help of iso-quants that a firm will be in equilibrium regarding use of a
factor combination when marginal rate of technical substitution between factors is equal to
the ratio of factor prices
Question. 3
: What will the effect on the iso cost line if the wage rate of labour falls keeping rent of
capital unchanged. Also show the shift in iso-cost if the rent of the capital falls keeping wage
rates of labour unchanged.
Question. 4
:"If government levies an additional tax on luxury items, the prices of these items will
increase. However this will cause demand to decrease and as a result the prices will fall back
down, perhaps even to their original levels." Do you agree with the statement. Explain
Question.5
: What do you understand by economic stability ? Illustrate the role of monetary policy
in maintaining economic stability in the country.
Definition Definition Monetary value of all goods and services produced in an economy during a financial year. National income also refers to the total income earned by the factors of production during a financial year.
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