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Economic Objectives Questions 🔥🔥✅✅

Q7 Solutions A.There are two types of banks based on the authority, these are central banks and commercial banks. Central bank can be called the apex bank, which is responsible for formulating the monetary policy of an economy. Whiles Commercial banks, on the other hand, are those banks that help in the flow of money in an economy by providing deposit and credit facilities. Commercial banks provide financial services 7b i)Higher central bank interest rates affect the cost of borrowing for banks, which then pass those costs onto businesses, consumers and even governments. ii)Effect on interest rates: When the cash reserve ratio is decreased by the RBI, banks will have more money to invest in other businesses since the amount of funds that needs to be kept with the RBI is low. This shows that banks will have an excess of funds and hence, there will be a decline in the interest rates that are charged on loans. 7c 1.Higher Price of Commodities. A rise in the price of oil would lead to higher petrol prices and higher transport costs. All firms would see some rise in costs. As the most important commodity, higher oil prices often lead to cost-push inflation (e.g. 1970s, 2008, 2010-11) 2.Imported Inflation. A devaluation will increase the domestic price of imports. Therefore, after a devaluation, we often get an increase in inflation due to rising cost of imports. 3.Higher Wages. Wages are one of the main costs facing firms. Rising wages will push up prices as firms have to pay higher costs (higher wages may also cause rising demand)

Q6b) Increases Crop Yield Large industrial farms are better suited than traditional small to medium farms for mechanized agriculture practices, which directly results in higher yields of crops, which has been the basic driving purpose of the industrialization efforts since the 1950s, to ensure food security of a rapidly growing global population. Lowers consumer costs Apart from increasing the crop yield, large industrialized farms are also better suited to lower the cost of production, making food more accessible for the masses even at the lower income levels. The use of modern machinery and technology for various agriculture processes makes industrial farming more cost-effective for farmers, which in turn lowers the overall cost of the produce for the end consumers. Technological development and innovation. Modern agricultural farms are heavily dependent on the latest tools and technology for their sustainability. This means that there is always a need for better and more efficient technology in these farms, which in turn creates higher demand from scientists and engineers to innovate, thus keeping the benchmark of development and innovation high at all times. Employment opportunities While the industrialization of farms has been blamed for reducing the employment opportunities greatly, it isn’t true completely. In reality, these modern farms do require a large number of workforce and create a significant number of employment opportunities for the local economy. https://t.me/+D6vHWbxQGE9lMjI0

Q6a. Disposable income is the income left after all taxes and service charges have been deducted bi.Gdp: total monetary value of a country finished goods and service produced within the a country at a certain time perion https://t.me/+D6vHWbxQGE9lMjI0

5b 1. Contribution to National Income: The lessons drawn from the economic history of many advanced countries tell us that agricultural prosperity contributed considerably in fostering economic advancement. It is correctly observed that, “The leading industrialized countries of today were once predominantly agricultural while the developing economies still have the dominance of agriculture and it largely contributes to the national income. In India, still 28% of national income comes from this sector. 2. Source of Food Supply: Agriculture is the basic source of food supply of all the countries of the world—whether underdeveloped, developing or even developed. Due to heavy pressure of population in underdeveloped and developing countries and its rapid increase, the demand for food is increasing at a fast rate. If agriculture fails to meet the rising demand of food products, it is found to affect adversely the growth rate of the economy. Raising supply of food by agricultural sector has, therefore, great importance for economic growth of a country. 3. Source of Foreign Exchange for the Country: Most of the developing countries of the world are exporters of primary products. These products contribute 60 to 70 per cent of their total export earning. Thus, the capacity to import capital goods and machinery for industrial development depends crucially on the export earning of the agriculture sector. If exports of agricultural goods fail to increase at a sufficiently high rate, these countries are forced to incur heavy deficit in the balance of payments resulting in a serious foreign exchange problem. https://t.me/+D6vHWbxQGE9lMjI0

Q4 a THE EFFECT OF MAXIMUM PRICES The disadvantage is that it will lead to lower supply. If firms get a lower price, there may be less incentive to supply the good, and the number of properties on the market declines. A maximum price will also lead to a shortage – where demand will exceed supply; this leads to waiting lists. In housing it could lead to a rise in homelessness. A maximum price can lead to the emergence of black markets as people try to overcome the shortage of the good and pay well above the market price Q5a) Plantation agriculture is a type of business cultivating where generating profit is a motive by growing crops. The way crops developed for profit implies that large land expected to make plantation farming fruitful. This cultivating found in regions that experience heat and humidity https://t.me/+D6vHWbxQGE9lMjI0

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