CHRIST (Deemed to be University), Bengaluru – 560 076

Faculty of Social Sciences

Department of Economics
MID SEMESTER EXAMINATION – MARCH 2021

Programme Name: BBA Max. Marks: 50

Course Name: Macroeconomics Time: 2.00 Hours
Course Code: BBA233

Course Outcomes (COs):

The students will able to:
CO1: Describe the measurement of GDP and identify its components. (RBTL 2)
CO2: Explain the methodology/stages of constructing the cost-of-living index and the
impact of such indices on the Economy. (RBTL 2)
CO3: Analyse the economic growth and market for loanable funds and illustrate its impact
on the economy. (RBTL 4)

General Instructions:
 All answers must be hand written and uploaded as a PDF file.
 All rough work should be done in the answer script.
 Verify the Course code / Course title.
 Malpractices will be viewed very seriously.
 Draw neat sketches and diagrams wherever required. Assume the necessary /
required data if it is not available in the question.
 The question paper is divided into two sections. Kindly read the instructions against
each section.

Part – A (Answer any THREE of the following questions)

Revised
Questions blooms
Marks

CO

taxonom
Q. No

y
(RBTL)
1 How an increase in tax changes saving-investment 10 CO 2
balance, government purchases and net export? Explain 1
the scenario using national income identity.

2 The following table shows the prices and the quantities 10 CO 2

books and pencils purchased by a typical consumer. 2
Yea Pric Quantit Price Quantit Pric Quantit
r e of y of of y of e of y of
Boo books Penci Pencils Pen Pens
k l
2015 ₹ 50 10 ₹ 1.00 100 ₹5 100
2017 ₹ 50 12 ₹ 1.00 200 ₹ 10 50
2019 ₹ 60 12 ₹ 1.50 250 ₹ 20 20

a) What is the value of the CPI in 2015, 2017 and

2019? Comment on the standard of living of
people between 2015 and 2019.
b) Use the Consumer Price Index to Compute the
 Inflation Rate in 2017 and in 2019 from Previous
Years
c) What type of bias do you observe in the CPI and
corresponding inflation rates you generated above?
Explain.
d) If your money income increases by the rate of
inflation as measured by the CPI calculated above,
would your standard of living increase, decrease,
or stay the same over the years 2015–2019? Why?
e) Again, suppose your money income increases by
the rate of inflation as measured by the CPI
calculated above. If you personally only consume
pens (no paper or pencils), would your standard of
living increase, decrease, or stay the same over the
years 2015–2019? Why?

3 A developing economy at a slower rate faces crisis in 10 CO 2

allocating resources due to lack of technology and 3
productivity, and thus the growth of the economy slows
down and results in lower standard of living. In this
context, explain how government policies would help in
increasing the productivity and standard of living?

4 Explain various cost of inflationary pressure in an 10 CO 2

economy using theoretical expectation and examples. 3

Part – B (Case Study)

Revised
Q. blooms
Mark
N Questions CO taxonom
s
o y
(RBTL)
5 Indian economy is an emerging economy among the 20 CO3 4
world market players. In the recent past evidences very
clearly indicate that, India is witnessing an “atypical
transformation”, and the role of market and
macroeconomic indicators have become more and more
significant in the eyes of investors in a day-to-day
discussion. Due to the sudden economic crisis, the
government decided borrows Rs.8000 Crores more than
the last year. How this will affect the market/economic
condition?

a. How this will affect the interest rate? Justify with

suitable diagram(s).
b. What will be the impact on Investment, savings of
the household and the nation? Compare the size of
the changes to the Rs.8000 Crores of extra
government borrowing.
c. How does the concept of elasticity of market forces
(DD and SS) of loanable funds affect the magnitude
of these changes? Justify your argument with
suitable diagram(s).
d. How this higher government borrowing is going to
affect the future outcome of the fiscal policy of the
economy? In this connection, how the expectation
of the household is going to affect their saving
behavior and SS of loanable funds?

Revised Bloom’s Taxonomy (RBTL) Levels:

1 – Remembering 2 – Understanding 3 – Applying
4 – Analyzing 5 – Evaluating 6 - Creating