Introduction
(i) The early 1990s witnessed reforms in the economic policy. This helped to open up Indian markets to FDI
(ii) FDI in India has increased over the years
(iii) In India, FDI has been advantageous in terms of free flow of capital, improved technology, management expertise and access to international markets
The major sectors benefited from FDI in India are:
(i) financial sector (banking and nonbanking)
(ii) insurance
(iii) telecommunication
(iv) hospitality and tourism
(v) pharmaceuticals and
(vi) software and information technology
FDI is not permitted in the industrial sectors like
(i) Arms and ammunition
(ii) atomic energy,
(iii) railways,
(iv) coal and lignite and
(v) mining of iron, manganese, chrome, gypsum, sulphur, gold, diamonds, copper etc.,
Latest trend of FDI in India
i. FDI inflow in India has increased from ＄97 million in 1990-91 to ＄5,535 million in 2004-2005.
ii. It amounted to ＄32,955 million in 2011-2012.
iii. UNCTAD’s World Investment Report 2018 reveals that FDI to India declined to ＄40 billion in 2017 from ＄44 billion in 2016

Causes of Water Pollution:
1. Discharge of sewage and waste water: Sewage, garbage and liquid waste of households, agricultural runoff and effluents from factories are discharged into lakes and rivers. These wastes contain harmful chemicals and toxins which make the water poisonous for aquatic animals and plants.
2. Dumping of solid wastes: The dumping of solid wastes and litters in water bodies cause huge problems.
3. Discharge of industrial sastes: Industrial waste contains pollutants like asbestos, lead, mercury, grease oil and petrochemicals, which are extremely harmful to both people and environment.
4. Oil Spill: Sea water gets polluted due to oil spilled from ships and tankers while travelling. The spilled oil does not dissolve in water and forms a thick sludge polluting the water.
5. Acid rain: Acid rain is pollution of water caused by air pollution. When the acidic particles caused by air pollution in the atmosphere mix with water vapor, it results in acid rain.

Classification of public expenditure are as follows:
1. Classification on the Basis of Benefit:
(a) Public expenditure benefiting the entire society, e.g., the expenditure on general administration, defense, education, public health, transport.
(b) Public expenditure conferring a special benefit on certain people and at the same time common benefit on the entire community, e.g, administration of justice etc.
(c) Public expenditure directly benefiting particular group of persons and indirectly the entire society, e.g. social security, public welfare, pension, unemployment relief etc. (d) Public expenditure conferring a special benefit on some individuals, e.g., subsidy granted to a particular industry.
2. Classification on the Basis of Function:
(a) Protection Functions: This group includes public expenditure incurred on the security of the citizens, to protect from external invasion and internal disorder, e.g., defence, police, courts etc.
(b) Commercial Functions: This group includes public expenditure incurred on the development of trade and commerce, e.g., development of means of transport and communication etc.

(i) The propensity to consume refers to the portion of income spent on consumption.
MPC = \(\frac{ΔC}{ΔY}\)
(K) = \(\frac{1}{1-MPC}\)
(ii) The multiplier is the reciprocal of one minus marginal propensity to consume.
(iii) Multiplier is 1/MPS
(iv) The multiplier is therefore define as reciprocal of MPS.
(v) Multiplier is inversely related to MPS and directly with MPC.
Numerically, if MPC is 0.75, MPS is 0.25 and K is 4.
Using formula K = \(\frac{1}{1-MPC}\)
⇒\(\frac{1}{1-0.75}\) = 1/0.25 = 4
∴ Multiplier (K) = 4

C = 100 + 0.8Y;
I = 10
Y = C + I
= 100 + 0.8 Y +9p00

0.2Y = 1000
∴ Y = 1000
Here, C = 100 + 0.8y
= 100 + 1000 = 900
S = 100 = I
After I is raised by 10, now I = 110
Y = 100 + 0.8y + 110
0.2y = 210 
y = \(\frac{210}{0.2}\) = 1050
Here, C = 100 = 0.8 (1050) = 940,
S = 110 = I
(i) It implies the variables in axis-and axis are equal.
(ii) The MPC is assumed to be at 0.8. (C = 100 + 0.8y)
(iii) The aggregate demand (C + I) curve intersects 45° line at point E.
(iv) The new aggregate demand curve is
C + I = 100 + 0.8Y + 100 + 10
Y = \(\frac{210}{0.2}\)
C = 940; S = 110 = Z

(i) The economic welfare depends upon the composition of a goods and services provided.
(ii) Higher GDP with greater environmental hazards such as air, water and soil pollution will be little economic welfare.
(iii) The production of war goods will show the increase in national output but not welfare.
(iv) An increase in per capita income may be due to. employment of women and children Dr forcing workers to. work for long hours. But it will not promote economic welfare.
(v) Therefore the physical quality of life index (PQLI) is considered a better indicator of economic welfare.

7 pillars of effective governance:
NITI AAYOG

Assumption of the Say's law of market:
(i) No single buyer (or) seller of commodity or an input can affect price.
(ii) Full employment.
(iii) People are motivated by self interest and self-interest determines economic decisions.
(iv) The laissez fair policy is essential for an automatic and self adjusting process full employment.
(v) There will be a perfect competition.
(vi) There is wage - price flexibility.
(vii) Money acts only as a medium of exchange.
(viii) Long run analysis.
(ix) There is no possibility for over production or unemployment.
(x) Unutilized resources used until reaches full employment.
(xi) No Government intervention automatic Price adjustment mechanism operated.

(1) Circular flow of income in a four sector economy.
(2) In a four sector economy. in addition to household, firms and government, a fourth sector namely, external sector is included.
(3) In real life, only four-sector economy is exists.
(4) This model is composed of four sectors namely.
(i) Households
(ii) Firms
(iii) Government
(iv) External
(5) The external sector comprises exports and imports.
(6) It is illustrated in the flow chart.

(7) In four sector economy, expenditure for the entire economy include domestic expenditure.
(C + I + G) and net exports (X-M)
(8) Therefore four sector model expressed as
y = C + I + G + (X-M)

Deviations from actual mean.

\(\bar { X } =\frac { 225 }{ 9 } =25\)
\(\sigma =\sqrt { \frac { { \sum { (x-\bar { X } ) } }^{ 2 } }{ N } } \)
\(=\sqrt { \frac { 426 }{ 9 } } \)
\(=\sqrt { 47.33 } \)
\(\sigma =6.88\)