Name Chitraksh Mahajan

SAP ID: 500071415

Answer i1:
The icircular iflow imodel idemonstrates ihow imoney imoves ithrough isociety. iMoney iflows ifrom
iproducers ito iworkers ias iwages iand iflows iback ito iproducers ias ipayment ifor iproducts. iIn

ishort, ian ieconomy iis ian iendless icircular iflow iof imoney.

The icircular iflow imodel idemonstrates ihow imoney imoves ifrom iproducers ito ihouseholds iand
iback iagain iin ian iendless iloop.

The imodels ican ibe imade imore icomplex ito iinclude iadditions ito ithe imoney isupply, ilike
iexports, iand ileakages ifrom ithe imoney isupply, ilike iimports.

When iall ithese ifactors iare itotalled, ithe iresult iis ia ination's igross idomestic iproduct ior ithe
inational iincome.

The igovernment iinjects imoney iinto ithe icircle ithrough igovernment ispending i(G) ion iprograms
isuch ias iSocial iSecurity iand iNational iParks iadministration. iJust ias imoney iis iinjected iinto ithe

ieconomy, imoney iis iwithdrawn ior ileaked ithrough ivarious imeans. iTaxes i(T) iimposed iby ithe

igovernment ireduce ithe iflow iof iincome. iMoney ipaid ito iforeign icompanies ifor iimports i(M)

ialso iconstitutes ia ileakage. iSavings i(S) iby ibusinesses ithat iotherwise iwould ihave ibeen iuse iare

ia idecrease iin ithe icircular iflow iof ian ieconomy’s iincome.

The icircular iflow iof iincome ifor ia ination iis isaid ito ibe ibalanced iwhen iwithdrawal iequals
iinjections. iThat iis:

The ilevel iof iinjections iis ithe isum iof igovernment ispending i(G), iexports i(X) iand iinvestments i(I).
The ilevel iof ileakage ior iwithdrawals iis ithe isum iof itaxation i(T), iimports i(M) iand isavings i(S).
If ibusinesses idecided ito iproduce iless, iit iwould ilead ito ia ireduction iin ihousehold ispending iand
icause ia idecrease iin iGDP. iOr, iif ihouseholds idecided ito ispend iless, iit iwould ilead ito ia ireduction

iin ibusiness iproduction, ialso icausing ia idecrease iin iGDP.

GDP iis icalculated ias iconsumer ispending iplus igovernment ispending iplus ibusiness iinvestment
iplus ithe isum iof iexports iminus iimports.

The igovernment ispending ihas irisen iin ithe icurrent isituation. iResearchers ipredicts ia
icontraction iof iover i40% iin ithe iGDP. iFor ithe istates, ithe itotal iloss idue ito iCOVID-19 iis

iestimated iat i13.5% iof ithe itotal iGross istate idomestic iproduct.

Answer i2:
Microeconomics iand imacroeconomics iare iimportant istudies iwithin ieconomics, ithat iare
iessential ito isustain ithe ioverall igrowth iand istandard iof ithe ieconomy. iWhile ithe itwo istudies

iare idifferent, iwith imicroeconomics ifocusing ion ithe ismaller ibusiness isectors, iand
imacroeconomics ifocusing ion ithe ilarger iincome iof ithe ination, ithey iare iinterdependent, iand
iwork iin iharmony iwith ieach iother. iThe imain idifferences iare:

1.Microeconomics ifocuses ion ithe imarket’s isupply iand idemand ifactors iand idetermines ithe
ieconomic iprice ilevels.

2.Macroeconomics iis ia ivast ifield, iwhich iconcentrates ion itwo imajor iareas, iincreasing
ieconomic igrowth iand ichanges iin ithe inational iincome.

3.Microeconomics ifacilitates idecision imaking ifor ismaller ibusiness isectors.

4.Macroeconomics ifocuses ion iunemployment irates, iGDP, iand iprice iindices, iof ilarger
iindustries iand ientire ieconomies.

5. iMicroeconomics iis iapplied ito iApplied ito ioperational ior iinternal iissues.
6. iMacroeconomics iis iapplied ito iEnvironment iand iexternal iissues
7. iMicroeconomics iassumes ithat iall imacro-economic ivariables iare iconstant
8. iMacroeconomics iassumes ithat iall imicro-economic ivariables iare iconstant.
Microeconomics iand imacroeconomics iare ithe ifundamental itools ito ibe ilearnt, ito iunderstand
ihow ithe ieconomic isystem iis iadministered iand isustained.

Answer i3:
A itrade iwar ihappens iwhen ione icountry iretaliates iagainst ianother iby iraising iimport itariffs ior
iplacing iother irestrictions ion ithe iother icountry's iimports. i

Trade iwars iare ia iside ieffect iof iprotectionist ipolicies iand iare icontroversial.
Advocates isay itrade iwars iprotect inational iinterests iand iprovide iadvantages ito idomestic
ibusinesses.

Critics iof itrade iwars iclaim ithey iultimately ihurt ilocal icompanies, iconsumers, iand ithe
ieconomy.

Trade iwars ican icommence iif ione icountry iperceives ia icompetitor ination ihas iunfair itrading
ipractices. iDomestic itrade iunions ior iindustry ilobbyists ican iplace ipressure ion ipoliticians ito

imake iimported igoods iless iattractive ito iconsumers, ipushing iinternational ipolicy itoward ia

itrade iwar. iAlso, itrade iwars iare ioften ia iresult iof ia imisunderstanding iof ithe iwidespread

ibenefits iof ifree itrade.

A itrade iwar ithat ibegins iin ione isector ican igrow ito iaffect iother isectors. iLikewise, ia itrade iwar
ithat ibegins ibetween itwo icountries ican iaffect iother icountries inot iinitially iinvolved iin ithe

itrade iwar. iAs inoted iabove, ithis iimport itit-for-tat ibattle ican iresult ifrom ia iprotectionist

ipenchant.

A itrade iwar iis idistinct ifrom iother iactions itaken ito icontrol iimports iand iexports, isuch ias
isanctions. iInstead, ithe iwar ihas idetrimental ieffects ion ithe itrading irelationship ibetween itwo
icountries iin ithat iits igoals iare irelated ispecifically ito itrade. iSanctions, ifor iexample, imay ialso
ihave iphilanthropic igoals

In iaddition ito itariffs, iprotectionist ipolicies ican ibe iimplemented iby iplacing ia icap ion iimport
iquotas, isetting iclear iproduct istandards, ior iimplementing igovernment isubsidies ifor

iprocesses ito ideter ioutsourcing. iFor iExample:

In iJanuary i2018, iPresident iTrump istarted ithe iimposition iof ia iseries iof itariffs ion ieverything
ifrom isteel iand ialuminium ito isolar ipanels iand iwashing imachines. iThese iduties iimpacted

igoods ifrom ithe iEuropean iUnion i(EU) iand iCanada ias iwell ias iChina iand iMexico. iCanada

iretaliated iby iimposing ia iseries iof itemporary iduties ion iAmerican isteel iand iother iproducts.

iThe iEU ialso iimposed itariffs ion iAmerican iagricultural iimports iand iother iproducts iincluding

iHarley iDavidson imotorcycles.

By iMay i2019 itariffs ion iChinese iimports iimpacted inearly iUS$200 ibillion iof iimports. iAs iwith iall
itrade iwars, iChina iretaliated iand iimposed istiff iduties ion iAmerican iimports. iA istudy iby ithe

iInternational iMonetary iFund i(IMF) ishows ithat ithe iU.S. iimporters iof ithe igoods ihave iprimarily

ishouldered ithe icost iof ithe iimposed itariffs ion iChinese igoods. iMany ibelieve ithese icosts iwill, iin

iturn, ibe ipassed ion ito ithe iAmerican iconsumer iin ithe iform iof ihigher iproduct iprices. iThis

iwould iappear ito ibe ithe iexact iopposite iof iwhat ithe itrade iwar iwas iintended ito iaccomplish.

The iconsequences iof itrade iwars iare:

• Increases icosts iand iinduces iinflation

• Causes imarketplace ishortages, ireduces ichoice
• Discourages itrade
• Slows ieconomic igrowth
• Hurts idiplomatic irelations, icultural iexchange

Answer i4: i
Personal iIncome i= iprivate iincome- icorporate itax- iretain iearnings
Private iIncome= iIncome ifrom idomestic iproduct iaccruing ito iprivate isector+ i[ iNet ifactor
iincome ifrom iabroad i– iNet ifactor iincome ito iabroad i] i+ iNational iDebt iInterest+ iCurrent

itransfers ifrom ithe igov i+ icurrent itransfers ifrom ithe irest iof ithe iworld

Private iIncome= i3000+ i(4000 i– i2850) i+ i1680 i+ i1170 i+ i500

= i7500
Personal iIncome i= i7500 i– i760 i-720
iiii = i6020
Personal iDisposable iIncome i= iPersonal iIncome i– iPersonal itax i– iMisc. iGovernment ireceipts
iiiiiiiiiiii = i6020 i– i480 i- i300 i i= i5240 iAns.