Theory of Employment, Output, Inflation, Money and Finance-The Classical Theory of Employment and Output and Neo Classical Approaches [IEcoS (Economic Services) Economics Paper-2]: Questions 1 - 4 of 4

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Question number: 1

» Theory of Employment, Output, Inflation, Money and Finance » The Classical Theory of Employment and Output and Neo Classical Approaches

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Essay Question▾

Describe in Detail

Explain the Harrod- Domar model and bring out the differences between the two versions.

Explanation

Harrod- Domar model was developed as a reaction to Keynes’ analysis in 1950s. Harrod and Domar models differ in details but basically, they are similar in substance. Both the models highlight the essential conditions for achieving and maintaining steady growth.

Image shows Harod- Domar Model

Image Shows Harod- Domar Model

  • Ideas of Keynesian analysis, which were incorporated in the

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Question number: 2

» Theory of Employment, Output, Inflation, Money and Finance » The Classical Theory of Employment and Output and Neo Classical Approaches

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Appeared in Year: 2018

Essay Question▾

Describe in Detail

What is liquidity trap? Discuss the effectiveness of monetary policy and fiscal policy in this context?

Explanation

At a very low rate of interest, the liquidity preference becomes perfectly elastic and the speculative demand for money is infinitely elastic.

  • This portion of the curve indicates the position of absolute liquidity preference of the people. At a very low rate of interest, people will hold with them as inactive balances any amount of money they come t

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Question number: 3

» Theory of Employment, Output, Inflation, Money and Finance » The Classical Theory of Employment and Output and Neo Classical Approaches

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Appeared in Year: 2011

Essay Question▾

Describe in Detail

Explain the speculative demand for money and its relationship with the ‘liquidity trap’.

Explanation

Speculative Demand for Money: Money is also demanded as an asset.

  • The speculative demand for money is for securing profit from knowing better than the market what the future will bring forth.

  • Money held for speculative purposes is a liquid store of value which can be invested at an opportune moment in interest bearing bonds or securities.

  • The higher i

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Question number: 4

» Theory of Employment, Output, Inflation, Money and Finance » The Classical Theory of Employment and Output and Neo Classical Approaches

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Appeared in Year: 2015

Essay Question▾

Describe in Detail

Is inflation better measured by CPI or WPI?

Explanation

  • Wholesale price index (WPI) and Consumer price index (CPI) are the two primary measures of inflation.

    • Inflation should be measured based on the rise in price of a basket of inflationary items that directly affect the common man. CPI-based inflation captures this better than WPI-based inflation.

    • A high CPI, on the other hand, is something that directl

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