(i) It is the easiest way for the Government to get rid of the burden of payment of a loan.
(ii) In such cases, the Government does not recognise its obligation to repay the loan.
(iii) It is certainly not paying off a loan but destroying it.
(iv) However, in normal case the Government does not do so; if done it will lose its credibility.

Debit card is a card allowing the holder to transfer money electronically from their bank account when making a purchase.

1) Use of restrictive measures for BoP problems has declined markedly;
2) Services trade has been brought into the multilateral system and many countries, as in goods, are opening their markets for trade and investment;
3) The trade policy review mechanism has created a process of continuous monitoring of trade policy developments.

(i) Multi fibre agreement governed the world trade in textiles and garments since 1974.
(ii) It imposed quotas on export of textiles by developing nations to the developed countries.
(iii) This quota system was to be phased out over a period of ten years. This was beneficial to India.

Fisher extended his original equation of exchange to include bank deposits M¹ and its velocity V¹. The revised equation was:
\(\frac { PT=MV+{ M }^{ 1 }{ V }^{ 1 } }{ T } \)

The paper currency standard refers to the monetary system in which the paper currency notes issued by the Treasury or the Central Bank or both circulate as unlimited legal tender.

i. Modern technology being capital intensive requires lesslabourers and contributes to technological unemployment.
ii. Now a days, invention and innovations lead to the adoption of new techniques there by the existing workers are retrenched

1. Cyclical unemployment exists during the downturn phase of trade cycle in the economy.
2. In a business cycle during the period of recession and depression, income and output fall leading to widespread unemployment.

1. Statistics is necessary for the formulation of policies to start new course, according to the changing environment.
2. There are many educational institutions owned by public and private engaged in research and development work to test the past knowledge and evolve new knowledge.
3. These are possible only through statistics.

Net factor income from abroad is the difference between the income received from abroad for rendering factor services by the normal residents of the country to the rest of the world and income paid for the factor services rendered by nonresidents in the domestic territory of a country

The main features of GDP_MP are:
1. It includes only final goods and services produced in the domestic territory of a country;
2. It includes consumption of fixed capital (depreciation);
3. It is estimated at the prevailing prices.

a) Internal Trade and
b) International Trade.

The interdependence of economics and environment is given in the figure

This means that increased income is unlikely to lead to fall in either consumption or saving. Thus with increased income both consumption and saving increase.

(i) Ceteris paribus (constant extraneous variable).
(ii) Existence of Normal conditions.
(iii) Existence of a Laissez-faire capitalist economy.

The concept "development" refers to the structural changes towards betterment.

Unemployment is problem faced when there are people, who are willing to work and able to work but can't find suitable job.

(i) Planning is an integral part of a socialist economy.
(ii) In socialist economy all decisions are undertaken by the Central Planning Authority.

y = C + I + G + (X - M)
C - Consumption Expenditure (Households)
I - Investment Expenditure (Firms)
G - Government Expenditure (Government)
(X-M) - Net Exports (External Sector)

i) North Korea
ii) China
iii) Venezuela

(i) Socialism refers to a system of total planning.
(ii) Public ownership and state control on economic activities.

(i) Correlation is a statistical device that helps to analyse the covariation of two or more variables.
(ii) Correlation is the relationship between two or more variables which vary with the other in the same or the opposite direction.

The branch of statistics concerned with using sample data to make an inference about a population of data is called Inferential Statistics.

Environmental goods are typically non-market goods, including clear air, clean water, landscape, green transport infrastructure, public parks, rivers, mountains, forest and beaches.

(i) Both are source of public revenue.
(ii) Tax is a compulsory payment but the tax payer cannot claim any specific benefit by paying a tax.
(iii) Fee does not involve compulsion.
(iv) Government provides certain services (e.g.) driving license and charges a fee for it.

The rate at which one currency is exchanged for another currency.

A Commercial bank is a financial institution that accepts deposits and advances loans and are profit motivated.

(i) Exchange of goods for goods.
(ii) Commodities and services were directly exchanged for other commodities and services.

(i) The consumption function or propensity to consume refers to income consumption relationship.
(ii) It is a "functional relationship between two aggregates viz., total consumption and gross national, income".

1. No single buyer or seller can affect the price.
2. Full employment
3. People are motivated by self interest Market forces determine everything right.
4. Perfect competition exists in labour and product market.
5. There is wage price flexibility.
6. Money acts as medium of exchange.
7. Long run analysis.
8. No overproduction or unemployment.

The major feature of rural unemployment is the existence of unemployment in the form of disguised unemployment and seasonal unemployment.

\(\mathrm{GNP}=\mathrm{C}+\mathrm{I}+\mathrm{G}+(\mathrm{X}-\mathrm{M})+(\mathrm{R}-\mathrm{P})\) or \(\mathrm{GNP}_{\mathrm{MP}}=\mathrm{GDP}_{\mathrm{MP}}\) + Net Factor income from Abroad.

(i) A Model is a simplified representation of real situation.
(ii) Economists use models to describe economic activities, their relationships and their behaviour.

Accepting Deposits
It implies that commercial banks are mainly dependent on public deposits.
There are two types of deposits, which are discussed as follows
(i) Demand Deposits
It refers to deposits that can be withdrawn by individuals without any prior notice to the bank. In other words, the owners of these deposits are allowed to withdraw money anytime by writing a withdrawal slip or a cheque at the bank counter or from ATM centres using debit card.
(ii) Time Deposits
It refers to deposits that are made for certain committed period of time. Banks pay higher interest on time deposits. These deposits can be withdrawn only after a specific time period by providing a written notice to the bank.

(i) Money is anything that is generally accepted as a medium of exchange.
(ii) Money must be able to act as a medium of exchange, a store of value, and a unit of account. For money to act as a medium of exchange, sellers must generally accept and buyers must generally use it to pay for goods and services.
(iii) For money to serve as a store of value, it can be used to transport purchasing power from one period of time to another.
(iv) For money to serve as a unit of account, it must function as a consistent way of quoting prices.
(v) The primary function of money is to serve as a medium of exchange.

i. Whenever resources are unemployed there is always some sort of waste.
ii. In the case of unemployment it manifests itself in the potential production of goods and services irretrievably lost.
iii. There are also other costs such as increased burdens to taxpayers to fund unemployment compensation programs and the individual cost in terms of a loss of self esteem and dignit

There are three types based upon the number of variables studied as
a) Simple Correlation
b) Multiple Correlation
c) Partial Correlation
Simple Correlation:
If only two variables are taken for study then it is said to be simple correlation. Ex. Y= a + bx
Multiple Correlations:
If three or more than three variables are studied simultaneously, then it is termed as multiple correlation.
Ex: Determinants of Quantity demanded
Qd = f (P, Pc, Ps, t, y)
Where Qd stands for Quantity demanded, f stands for function.
P is the price of the goods,
Pc is the price of competitive goods
Ps is the price of substituting goods
t is the taste and preference
y is the income.
Partial Correlation:
If there are more than two variables but only two variables are considered keeping the other variables constant, then the correlation is said to be Partial Correlation

Uses of multiplier
1. Multiplier highlights the importance of investment in income and employment theory.
2. The process throws light on the different stages of trade cycle.
3. It also helps in bringing the equality between S and I.
4. It helps in formulating Government policies.
5. It helps to reduce unemployment and achieve full employment.

(i) Individuals purchase government bonds and securities.
(ii) Banks, both private and public buy bonds from the government.
(iii) Non financial institutions like UTI, LIC, GIC etc. also buy the government bonds.
(iv) Central Bank can lend the government in the form of money supply.

Factors determining exchange rates are,
(i) Differentials in Inflation
(ii) Differential in Interest rates
(iii) Current Account Deficits
(iv) Public Debt
(v) Terms of Trade
(vi) Political and Economic Stability
(vii) Recession
(viii) Speculation

(i) Factor endowment of a country may change over time.
(ii) The efficiency of the same factor may differ in the two countries. For example: America may be labour scarce in terms of no. of workers

(i) Concentration of wealth and income
(ii) Wastage of Resources
(iii) Class struggle
(iv) Business cycle
(v) Production of non essential goods.

(i) Besides verification it is used for the prediction of one value, in relation to the other given value.
(ii) Regression coefficient is an absolute figure. If we know the value of the independent variable, we can find the value of the dependent variable.
(iii) It has wider application, as it studies linear and nonlinear relationship between the variables.
(iv) It is widely used for further mathematical treatment.

(i) On the supply side of the vicious circle of poverty there is low rate of saving and investment.
(ii) In UDCs to increase the rate of investment and capital formation, the marginal rate of savings must be greater than the average rate of savings.
(iii) On the demand side, Nurkse suggested balanced growth.
(iv) If investment is made in several industries simultaneously the workers will become consumers of each other's products creating mutual demand.

Discharge of sewage and waste water:
(i) Sewage, garbage and liquid waste of households, agricultural runoff and effluents from factories are discharged into lakes and rivers.
(ii) These wastes contain harmful chemicals and toxins which make the water poisonous for aquatic animals and plants.
Dumping of solid wastes:
(i) The dumping of solid wastes and litters in water bodies cause huge problems.
Discharge of industrial wastes:
(i) Industrial waste contains asbestos, lead, mercury, grease oil and petrochemicals.
Oil Spill:
(i) Sea water gets polluted due to oil spilled from ships and tankers.
Acid Rain:
(i) When the acidic particles caused by air pollution mix with water vapour, it results in acid rain.
Global warming:
(i) The increase in water temperature affects aquatic plants and animals.
Eutrophication:
(i) The increased level of nutrients in water depletes oxygen in water and this negatively affects fish and other aquatic animal population.

Canon of Ability
1. The Government should impose tax in such a way that the people have to pay taxes according to their ability.
2. Rich person should pay more tax.
Canon of Certainty
1. There is no uncertainty regarding the rate of tax or the time of payment.
Canon of Convenience
1. The method of tax collection and the timing of the tax payment should be convenient to the people.
Canon of Economy
1. The Government should impose only those taxes whose collection costs are very less and cheap.

(i) Trade blocks cover different kinds of arrangements between or among countries for mutual benefit.
(ii) Free Trade Area, Customs Union, Common Market and Economic Union.

FDI has the following objectives.
(i) Sales Expansion
(ii) Acquisition of resources
(iii) Diversification
(iv) Minimization of competitive risk

(i) A non-banking financial institution or company is a financial institution that does not have a full banking license or is not supervised by the central bank.
(ii) They receive deposits and give loans.
(iii) They mobilize people's savings and use the funds to finance expenditure on investment activities.
(iv) The undertake borrowing and lending in the money and capital markets.
(v) They are classified into Stock Exchange and Other Financial institutions.
(vi) Under other financial institutions come Finance Companies, Finance Corporations, Chit Funds, Building Societies, Issue Houses, Investment Trusts, Unit Trusts and Insurance Companies.

(i) It is the slowing down the rate of inflation by controlling the amount of credit (bank loan, hire purchase) available to consumers without causing more unemployment.
(ii) It is defined as the process of reversing inflation without creating unemployment or reducing output in the company.

(i) Classical unemployment occurs when real wages are kept above the market clearing wage rate, leading to a surplus of labour supplied.
(ii) Classical unemployment is also called real wage unemployment.
(iii) Unemployment occurs when the worker is willing to accept (Real Wages)(RW) is in excess of those an employer is willing to pay (Market Clearing Wage)(MCW).
(iv) Real wage may be above the equilibrium level because of minimum wage policies or union bargaining.
(v) classical unemployment of Q₁-Q₂ can be solved by a wage cut.
(vi) If wages are allowed to fall to the market clearing level, unemployment is solved

(i) It is the total of income payment made to factors of production.
(ii) From the money value of NNP at market price, we deduct indirect tax and add subsidy.
(iii) \(\mathrm{NNP}_{\mathrm{FC}}=\mathrm{NNP}_{\mathrm{MP}}-\) Indirect taxes + Subsidies

Let sales of a firm be denoted by X and expenses be denoted by Y
Calculations for Coefficient of Correlation

\(\bar { X } =\frac { \sum { X } }{ N } =\frac { 580 }{ 10 } =58\ and\ \bar { Y } =\frac { \sum { Y } }{ N } =\frac { 140 }{ 10 } =14\)
Applying the Eq. (4.3a), we have, Pearsonian coefficient of correlation
\({ r }_{ xy }=\frac { { \sum { d } }_{ x }{ d }_{ y } }{ \sqrt { { \sum { d } }_{ x }{ ^{ 2 } }d_{ y }^{ 2 } } } \)
\({ r }_{ xy }=\frac { 70 }{ \sqrt { 360x22 } } \)
\({ r }_{ xy }=\frac { 70 }{ \sqrt { 7920 } } \)
\({ r }_{ xy }=0.78\)
The value of = 0.78 xyr , indicate a high degree of positive correlation between sales and expenses.

(a) Kumar is cyclically unemployed. He has lost his job as a result of the general economic recession.
(b) Sathish is frictionally unemployed. Job openings exist for him. It is merely a case of tracking down a position.
(c) Latha is structurally unemployed. Unemployment due to technological change in an industry is classified as structural.
(d) Devi, is frictionally unemployed. Job openings exist for her.

Introduction
(i) International trade helps a country to export its surplus goods to other countries and secure a better market for it.
(ii) Similarly, international trade helps a country to import the goods which cannot be produced at all or can be produced at a higher cost.
(iii) The gains from international trade may be categorized under four heads.
I. Efficient Production
International trade enables each participatory country to specialize in the production of goods in which it has absolute or comparative advantages. International specialization offers the following gains.
1. Better utilization of resources.
2. Concentration in the production of goods in which it has a comparative advantage.
3. Saving in time.
4. Perfection of skills in production.
5. Improvement in the techniques of production.
6. Increased production.
7. Higher standard of living in the trading countries
II. Equalization of Prices between Countries
International trade may help to equalize prices in all the trading countries
1. Prices of goods are equalized between the countries (However, in reality it has not happened).
2. The difference is only with regard to the cost of transportation.
3. Prices of factors of production are also equalized (However, in reality it has not happened).
III. Equitable Distribution of Scarce Materials
International trade may help the trading countries to have equitable distribution of scarce resources.
IV. General Advantages of International Trade
1. Availability of variety of goods for consumption.
2. Generation of more employment opportunities.
3. Industrialization of backward nations.
4. Improvement in relationship among countries (However, in reality it has not happened).
5. Division of labour and specialisation.
6. Expansion in transport facilities

(A) GNP_MP = Sum of net value added by all the industries
(i) value - added by industry A.
= Sale of goods to industry B + Sale of goods to industry C − Value of imports
Sale of goods to consumers = Rs. 400 + Rs. 200 + Rs. 1,000 − Rs. 100
= Rs. 1,590.
(ii) Value - added by industry B
= Sale of goods to industry C + Sale of goods to consumers.− Purchase of goods from industry  A
= Rs. 500 + Rs. 800 − Rs. 400
= Rs. 900.
(iii) Value - added by industry C
= Sale of goods to consumers + Exports − (purchase of goods from industry A+purchase of goods from industry B)
= Rs. 600 + Rs. 500 - Rs. 200 - Rs. 500
= Rs. 400.
Gross National Product at market prices, or
GNP_MP equals
Rs. 1,500 + Rs. 900 + Rs. 400
= Rs. 2,800
Gross National Product at factor cost or GNP_FC equals
GNP_MP − Indirect taxes + Subsidies
= Rs. 2,800 − Rs.100 + Rs. 50
= Rs. 2,750.
Net National Product at market prices, or NNP_MP equals.
GNP_MP − Depreciation
= Rs. 2,800 − Rs. 100
= Rs. 2,700.
Net National Product at factor cost or NNP_FC equals
NNP_MP - Indirect.taxes + Subsidies
= Rs. 2,700-Rs. 100 + Rs. 50
= 2,650.
as factors of production and include things such as land, labour, capital and entrepreneurship.
1. Producers of goods and services incur a cost for using these factors of production. These costs are ultimately added onto the price of the product.
2. The factor cost refer to the cost of production that is incurred by a firm when producing  goods and services.
3. Examples of such production costs include the cost of renting machines, purchasing machinery and land, paying salaries and wages, cost of obtaining capital, and the profit margins that are added by the entrepreneur.
4. The factor cost does not include the taxes that are paid to the government since taxes are not directly involved in the production process and, therefore, are not part of the direct production cost.
5. However, subsidies received are included in the factor cost as subsidies are direct inputs into the production.

Since Y = C + I we can write Y = a + bY + I.
This equation can be rearranged to yield
Y - bY = a + I
Y(1 - b) = a + I
We can then solve for Y in terms of I by dividing through by (1 - b):
Y = (a + I) (1/1 - b)
Now we can see that an increase in I will increase Y by
ΔY = ΔI x (1/1 - b)
Since b D MPC, the expression becomes
ΔY = ΔI x 1/(1 - MPC)
Therefore, the multiplier is 1/1 - MPC or 1/MPS.

1. Private Ownership of Property and Law of Inheritance: The basic feature of capitalism is that all resources namely, land, capital, machines, mines etc. are owned by private individuals. The owner has the right to own, keep, sell or use these resources according to his will. The property can be transferred to heirs after death.
2. Freedom of Choice and Enterprise: Each individual is free to carry out any occupation or trade at any place and produce any commodity. Similarly, consumers are free to buy any commodity as per their choice
3. Profit Motive: Profit is the driving force behind all economic activities in a capitalistic economy. Each individual and organization produce only those goods which ensure high profit. Advance technology, division of labour, and specialisation are followed. The golden rule for a producer under capitalism is ‘to maximize profit.’
4. Free Competition: There is free competition in both product and factor market. The government or any authority cannot prevent firms from buying or selling in the market. There is competition between buyers and sellers.
5. Price Mechanism: Price mechanism is the heart of any capitalistic economy. All economic activities are regulated through price mechanism i.e, market forces of demand and supply.
6. Role of Government: As the price mechanism regulates economic activity, the government has a limited role in a capitalistic economy. The government provides basic services such as, defense, public health, education, etc.
7. Inequalities of Income: A capitalist society is divided into two classes – ‘haves’ that is those who own property and ‘have-nots’ who do not own property and work for their living. The outcome of this situation is that the rich become richer and poor become poorer. Here, economic inequality goes on increasing.

(i) GST will mainly remove the cascading effect on the sale of goods and services.
(ii) Removal of cascading effect will directly impact of the cost of goods.
(iii) Tax is eliminated in this regime, the cost of goods decreases.
(iv) GST is also mainly technologically driven.
(v) All activities like registration, return filing, application for refund and response to notice need to be done online on the GST portal. This will speed up the processes.

1. Human Resources
(i) Human resource is named as human capital because of its power to increase productivity and thereby national income. There is a circular relationship between human development and economic growth.
(ii) If labour is efficient and skilled, its capacity to contribute to growth will be high. For example Japan and China.
2. Technical Know-how: As the scientific and technological knowledge advances, more and more sophisticated techniques steadily raise the productivity levels in all sectors.
3. Political freedom: The process of development is linked with the political freedom.
4. Social organization: People show interest in the development activity only when they feel that the fruits of development will be fairly distributed. Mass participation in development programs is a pre-condition for accelerating the development process.
5. Corruption free administration:
Corruption is a negative factor in the growth process. Unless the countries rootout corruption in their administrative system, the crony capitalists and traders will continue to exploit national resources. The tax evasion tends to breed corruption and hamper economic progress.
6. Desire for development:
The pace of economic growth in any country depends to a great extent on people's desire for development.
7. Moral, ethics and social values:
(i) These determine the efficiency of the market.
(ii) If people are not honest, market cannot function.
8. Casino Capitalism:
If People spend larger proportion of their income and time on entertainment liquor and other illegal activities, productive activities may suffer.
9. Patrimonial Capitalism:
If the assets are simply passed on to children from their parents, the children would not work hard, because the children do not know the value of the assets. Hence productivity will be low.

(i) The agricultural development, an organization is called The Agricultural Refinance Development Corporation.
(ii) It was established by an act of parliament and it started functioning from 1 July, 1953.
(iii) The main aim of ARDC is to bridging the gap in agricultural finance and to extend credit for projects.
Objective of ARDC:
(i) To provide necessary funds by way of refinance to eligible institutions such as the Central land development Banks, State co-operative Banks and Scheduled Banks.
(ii) To subscribe to the debentures floated by the Central land Development Banks, State co-operative Banks, and Scheduled Bank provided they were approved by the RBI.