Optionals IAS Mains Economics: Questions 119 - 127 of 199

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Question 119

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Appeared in Year: 2010

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Essay▾

Elucidate the concept of balanced growth model.

Explanation

  • Nurkse idea of balanced growth explains that a synchronized application of capital to a wide range of industries is necessary for the enlargement of market and for breaking the vicious circle of poverty in an underdeveloped country.
    • This idea rests on the balance in demand approach. He does not neglect the supply side of balanced growth.
    • He assumes s

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Question 120

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Appeared in Year: 2010

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Essay▾

What is Reciprocal Demand? Critically evaluate the reciprocal demand theory?

Explanation

By reciprocal demand, Mill meant the quantities of exports that a country would offer at different terms of trade, in return of varying quantities of imports. In other words, reciprocal demand refers to the intensity of demand for the product of one country in the other country.

  • Assumptions: (i) The trade takes place between two countries, A and B.
  • T

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Question 121

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Appeared in Year: 2015

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Essay▾

Examine the effect of international trade on the difference in the factor prices ‘between nations’, and the effect of international trade on the relative factor prices and income ‘within’ each nation.

Explanation

  • According to this theory, countries which are rich in labour will export labour intensive goods and those rich in capital will export capital intensive goods.
  • Assumptions of the model:
    • It considers a two-commodity, two-country and two factors case. It takes into account labour and capital. It is possible to extend this to multi-commodity and multi-fa

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Question 122

Balanced and Unbalanced Growth
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Appeared in Year: 2016

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Essay▾

“The best strategy of development is the creation of imbalances. ” Discuss this statement in light of Indian context.

Explanation

Hirschman’s Unbalanced growth model:

  • According to Hirschman, “Development is a chain of disequilibria that must be kept alive rather than eliminate the disequilibrium of which profits and losses are symptoms in a competitive economy.
    • If economy is to keep moving ahead, the task of development policy is to maintain, tension, disproportions and disequi

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Question 123

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Appeared in Year: 2010

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Essay▾

State briefly the key propositions of Monetarist school of macroeconomics.

Explanation

Monetary variables which includes the growth rate of the stock of money strongly influence the determination of the behavior of nominal and real GNP in the short-run.

  • Rapid growth of money supply in excess of the long-run growth of real output cannot only be offset by continuous adjustments in income velocity or short-run adjustments in output.
  • It ta

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Question 124

Theories of under Development in an Open Economy
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Appeared in Year: 2016

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Essay▾

Describe Quesnay’s Tableau economies. What effect did it have on modern economic thought?

Explanation

After discovering the source of wealth, the physio rats turned to the problem of how wealth produced by the agriculturalists gets circulated among the different classes of the society.

  • The idea was given by a famous physio rat Quesnay through tableau economies.
  • He was a doctor and applied his biological knowledge to the economy and compared the circu

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Question 125

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Appeared in Year: 2016

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Explain and derive foreign trade multiplier.

Explanation

The foreign trade multiplier, also known as the export multiplier, operates like the investment multiplier of Keynes. It may be defined as the amount by which the national income of a country will be raised by a unit increase in domestic investment on exports.

  • In a country, an increase in exporters’ income will stimulate them to expand their product

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Question 126

Balanced and Unbalanced Growth
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Appeared in Year: 2010

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Essay▾

Explain the term capital deepening.

Explanation

Capital deepening will help to increase output through better technology and higher output per worker, for example, new technology will help in making capital more productive.

  • Capital deepening will lead to rise in labour productivity. A development process involves a transition from labour intensive traditional agriculture to more capital-intensive

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Question 127

Price Versus Income, Income Adjustments under Fixed Exchange Rates
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Appeared in Year: 2010

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Essay▾

Distinguish between Hot money and Capital flight.

Explanation

Capital flight is the uncertain and rapid flowing of large sums of money out of a country.

  • Capital flight may be legal, as in the case of foreign investors who send back their profits to their home country, or it may be illegal as in the case of those economies where the transfer of assets out of a country cannot take place.
  • Capital flight can impose

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