MB0042- MANAGERIAL ECONOMICS

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ASSIGNMENT

DRIVE FALL	2013
PROGRAM	MBADS / MBAHCSN3 / MBAN2 / PGDBAN2 / MBAFLEX
SEMESTER	I
SUBJECT CODE & NAME	MB0042- MANAGERIAL ECONOMICS
BK ID	B1625
CREDITS	4
MARKS	60

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

Q.1 Economic stability implies avoiding fluctuations in economic activities. It is important to avoid the economic and financial crisis. The challenge is to minimise the instability without affecting productivity, efficiency, employment.  Find out the instruments to face the challenges and to maintain an economic stability.              

Answer:  Explanation of economic stability  :

Economic stability refers to an absence of excessive fluctuations in the macro economy. An economy with fairly constant output growth and low and stable inflation would be considered economically stable. An economy with frequent large recessions, a pronounced business cycle, very high or variable inflation, or frequent financial crises would

Q.2 Explain any eight macroeconomic ratios.

Answer: Macroeconomics :

Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole, rather than individual markets. This includes national, regional, and global economies. With microeconomics, macroeconomics is one of the two most general fields in economics. Macroeconomists study aggregated indicators such as GDP, unemployment rates, and price indices to understand how the whole economy functions. Macroeconomists develop models that explain the relationship between such factors as national income, output, consumption,

Q.3 Define Inflation and explain the types of inflation.

Answer : Inflation :

In economics, inflation is a persistent increase in the general price level of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the consumer price index) over time. Inflation's effects on an economy are various and can be simultaneously positive and

Q.4 Define Fiscal Policy and the instruments of Fiscal policy

Answer: Fiscal Policy :

Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy. It is the sister strategy to monetary policy through which a central bank influences a nation's money supply. These two policies are used in various combinations to direct a country's economic goals. Here we look at how fiscal policy works, how it must be monitored and how its implementation may affect different people in an economy. Fiscal policy is based on the theories of British economist John Maynard Keynes.

Q.5 Investment is a part of income which can be used for various purposes. It is necessary to create employment in an economy and to increase national income. To understand the benefits of income, study the various types of investment. 

Answer : Investment  :

An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price. The building of a factory used to produce goods and the investment one makes by going to college or university are both examples of

Q.6 Discuss any two law of returns to scale with example.

Answer: The law of returns are often confused with the law of returns to scale. The law of returns operates in the short period. It explains the production behavior of the firm with one factor variable while other factors are kept constant. Whereas the law of returns to scale operates in the long period. It explains the production behavior of the firm with all variable factors. This behavior of output with the increase in scale of operation is termed as increasing returns to scale, constant returns to scale and diminishing returns to scale.

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