Archives Answers

Solution:- Ans – (d) Explanation:- Net Investment is a flow, Capital is stock concept. Thus Statement 1 and 2 both are false.

Solution:- Ans – (b) Real flow refers to the flow of factors services from households to firm and flow of goods and services from firm to households. Thus it is also called physical flow. Thus Statement 1 and Statement 2…

Solution:- Ans – (d) Explanation:- Flow of income is circular in a two-sector economy as all factor income is expended by households on the purchase of goods and services produced in an economy due to the assumption of zero savings.…

Solution:- Ans – (a) Explanation:- In a sector economy, savings is assumed to be zero, and real flow in the form of factors services and final goods and services are equal to money flow between firms and households in a…

Solution:- Ans – (c) Explanation: Real flow involves exchange of goods and services, thus statement 1 is correct. Real flow is known as physical flow not the nominal flow, thus statement 2 is false.

Solution:- Ans – (a) Explanation:- The main focus of macroeconomics is to determine the income and employment level of an economy. thus it is also known as Income and Employment Theory. Thus Assertion (A) and Reason (R) are correct and…

Solution:- Ans – (d) Explanation:- Real flow is not a nominal flow it is known as Physical Flow. Thus Assertion (A) is false. Real flow involves a flow of goods and services between firms and households. Thus Reason (R) is…

Solution:- Ans – (b) Explanation:- The money value of total production is equal to total consumption in case of circular flow in two sector economy as savings are zero. Thus Assertion is true. As there are only two sectors Households…

Solution:- Ans –  (c) Assertion (A) is true as the stock variable does not have a time dimension as it is measured at a point of time. Thus Assertion (A) is true and Reason (R) is False.

Solution:- Ans – (a) correct Savings are assumed to be zero in two sector economy and households spend the entire factor income on consumption of goods and services. Thus, Assertion and Reason both are true and Reason (R) is the…