GNP_FC =  NDP_MP + D + NFIA - NIT
            = 24,000 + 4,000 + (400 - 600) - (120 - 30)
            = 24,000 + 4,000 + (-200) - (90) = ~ 27,710 crores

Producer is in equilibrium at 6th unit of output.
Reason Maximum profit, i.e. Rs 2 (TR- TC).

Multiplier = 1

Value of Output = \({ NVA }_{ FC }\) + Depreciation + (Excise Duty - Subsidy) + Intermediate Consumption
                        = 100 + 10 + (20 - 5) + 75 = 185 + 15 = Rs 200 crore

We know that,
MPC + MPS = 1, \(\overline { C } =RS.100\)
According to question, \(MPC=\frac { 1 }{ 3 } MPS\)
\(\therefore \quad \frac { 1 }{ 3 } MPS+MPS=1\\ \quad \quad \quad \quad \quad \quad \ MPS=\frac { 3 }{ 4 } \\ \quad \quad \quad S\quad or\quad MPS=0.75\)
and b or MPC = 1 - 0.75 = 0.25.
Consumption function (C) = \(\overline { C } \) + bY = 100 + 0.25 Y
We also know that, \(-\overline { S } \) is the negative expression of \(\overline { C } \). Saving function (S) = \(-\overline { S } \)+ sY = - 100 + 0.75Y.
The economy suggests that people consume less and save more out of their additional income.

(a) Net National Disposable Income = \({ NDP }_{ FC }\) + Net Factor Income from Abroad + Indirect Taxes + Net Current Transfers from Abroad

= 1020 + (-50) + 100 + (-20)

=Rs 1050 crore

(b) Personal Disposable Income = - Domestic Product Accruing to Government + Net Factor Income from Abroad + Current Transfers by Government + Net Current Transfers from Abroad + National Debt Interest - Corporation Tax - Undistributed Profit of Private Organisation - Personal Tax

= 1020 - 200 + (-50) + 30 + (-20) + 40 - 60 - 10 - 70 = Rs 680 crore

Elasticity of Demand measures the degree of responsiveness in quantity demanded due to change in own price of the product(price elasticity) or change in the income of the consumer(income elasticity)or change in the price of related goods(cross elasticity).There are many factors that affect Elasticity of Demand and market form is definitely an important factor affecting Elasticity of Demand.

Elasticity of Demand in different market forms is given below:

Here Y=Rs.600, \(\overline { C } \)=Rs.150, MPC or b=0.70
We know that,
Y=C+S or Y=C-S or S=600-\((\overline { C } +bY)\)

600-(150+0.7 \(\times \)600)=600-570=Rs.30
As, I=S=Rs.30
Hence, Investment=Rs.30

Given, P = Rs. 9, Q = 18 units
\({ E }_{ d }=(-)1,{ P }_{ 1 }=Rs.10,\triangle P={ P }_{ 1 }-P=10-9=Rs.1\)
\({ E }_{ d }=\frac { \triangle Q }{ \triangle P } \times \frac { P }{ Q } ,\)     \((-)1=\frac { \triangle Q }{ 1 } \times \frac { 9 }{ 18 } ,\triangle Q=\frac { 18 }{ 9 } =2\)
\({ Q }_{ 1 }=Q-\triangle Q=18-2=16units\)

% rise in prise = 25
\({\Delta p\over p}\times100=25\)
\(\Delta p={25\times4\over100}=1\)
New price=4+1=5

\(E_d={\Delta q\over \Delta p}\times{p\over q}={-20\over 1}\times{4\over 100}=(-)0.8\)

It relates to the choice between labour and capital. Labour-intensive technique raise wages share in COP thereby bringing equity. Capital-intensive technology raises the share of profits and brings efficiency. Efficiency raises productivity and accelerates the pace of growth. Thus, equity and growth are the conflicting issues while addressing the problem of how to produce.

(i) Interest paid by banks on deposits by individuals should be included in estimation of National Income as it will be treated as factor income.
(ii) National debt interest should not be included in estimation of National Income as it is assumed that government borrows for consumption and hence, it is treated as transfer payment.

No, this is not correct.The price of luxury items like diamond does not fall even if there is a decrease in demand.these items indicate social status of rich class due to which the price remains high, irrespective of change in demand.

(i) False, because Balance of Trade only records the export and import of visible items, i.e. goods.
(ii) False, because external assistance are unilateral receipts which are included in the current account of Balance of payments. 
(ii) False, because external assistance are unilateral receipts which are included in the current account of Balance of payments. 

(i) Decrease in bank rate: For controlling deficient demand, the Central bank should decrease the bank rate. A decrease in bank rate lowers the rate of interest and credit becomes cheaper. Accordingly, the demand for credit expands and aggregate demand increases.
(ii) Purchase of Government Securities: For controlling deficient demand, the Central bank should resort to buying of government securities. By buying the government securities, the Central bank injects additional purchasing power in the system which results in the expansion of credit. As a result, aggregate demand increases.
(iii) Reduction in cash reserve ratio: For controlling deficient demand, the Central bank should reduce the cash reserve ratio with a view to increasing the flow of credit. As a result, aggregate demand increases.
(iv) Lower the Margin Requirements: To correct the situation of deficient demand' in an economy the central bank can lower minimum margin requirements in case of selected commodities, against which the commercial bank advance loans. This in turn will raise the capacity to borrow of the borrowers. They will now borrow more, thereby AD will increase and situation of deficient demand be corrected.
(v) Increase in government expenditure during a situation of deficient demand: There is a need for the government's expenditure to be increased. This.increase in expenditure will directly increase AD and thereby be helpful in closing the deflationary gap in the economy.

As coffee (Y) and tea (X) are substitutes, when price of coffee increases, the demand for tea shall increase and vice versa i.e.,
                           \(P_{ Y }\uparrow \{ D_{ Y }\downarrow \} D_{ X }\uparrow \\ P_{ Y }\downarrow (D_{ Y }\uparrow \} D_{ X }\downarrow \)
Explaining the above analysis with the help of a diagram given below.
When the price of coffee(Y) rises, this will lead (to fall in its demand) but a rise in the demand for tea when both X and Y are substitutes. The Increase in demand for Tea is graphically shown by the "Rightward Shift" of the given demand curve DD' to D₁D₁. Point X₁ denotes the new point of equilibrium (because of the intersection of new demand curve D1D1 with given supply curve SS'). OP₁ denotes the new equilibrium price, which is greater than the original equilibrium price OP. OQ₁ denotes the new equilibrium quantity, which is greater than the original quantity OQ.
Similarly, when the price of coffee(Y) falls, this will lead to a decrease in demand for tea i.e., \(P_{ Y }\downarrow (D_{ Y }\uparrow \} D_{ X }\downarrow \) . This decrease in demand is graphically shown by the "Leftward Shift" of the given demand curve DD' to D₀D₀ in above diagram. Point Xo denotes the new point of equilibrium; OP₀ denotes the new equilibrium price, which is lesser than the original equilibrium price OP. OQ₀ denotes the new equilibrium quantity, which is lesser than the original equilibrium quantity OQ.

Consumer's equilibrium with respect to purchase of one good is attained when
(i) the marginal utility of the good is equal to its of the good price.
(ii) MU should decrease with increase in consumption.
Example: Suppose a consumer is buying oranges and the price of each unit of orange is Rs.4. Hypothetical marginal utility schedule of orange is given as:

P_x=MU_x
It is evident from the schedule that the consumer will purchase 4 unts of oranges and reaches an equilibrium position. In this situation, the condition of consumer's equilibrium MU_x (in Rs) = P is satisfied. At this level of consumption, the marginal utility is equal to the price of orange, i.e., 4 = 4.

The counting of the value of commodity more than once is called double counting. This leads to over estimation of the value of goods and services produced. Thus, the importance of avoiding double counting lies in avoiding over estimating the value of domestic product. e.g. a farmer produces one tonne of wheat and sells it for Rs 400 in the market to a flour mill. The flour mill sells it for Rs 600 to the baker. The baker sells the bread to the shopkeeper for Rs 800. The shopkeeper sells the entire bread to the final consumers for Rs 900. Thus,

Value of Output = Rs (400 + 600 + 800 + 900)

= Rs 2700

In fact, the value of the wheat is counted four times, the value of services of the miller thrice and the value of services by the baker twice. In other words, the value of wheat and value of services of the miller and of the baker have been counted more than once. The counting of the value of commodity more than once is called double counting. To avoid the problem of double counting, following two methods are used:

(i) Final output method: According to this method, the value of intermediate goods is not considered. Only the value of final goods and services is considered. In the above example, the value of final goods, i.e. bread is Rs 900.

(ii) Value added method: Another method to avoid the problem of double counting is to estimate the total value added at each stage of production. In the above example, the value added at each stage of production is Rs (400 + 200 + 200 + 100) = Rs 900