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Description
| SESSION | JAN – FEB 2026 |
| PROGRAM | BACHELOR OF BUSINESS ADMINISTRATION (BBA) |
| SEMESTER | II |
| COURSE CODE & NAME | DBB1214 MACROECONOMICS |
Assignment Set – 1
Q.1. Examine the role of foreign trade and foreign remittances in the circular flow of income. Discuss with reference to the four-sector model. (10 Marks)
Ans 1.
The flow of income in a circular fashion is the way in which money flows continuously between households, firms, public administration, and even the outside sector of an economy. The four-sector model is an extension of the fundamental model by including foreign trade and remittances, adding an international dimension which significantly affects the national income in addition to aggregate demand and overall stability in the economy.
The Four-Sector Model
The model of four sectors
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Q.2. Explain the classical aggregate production function and its assumptions. Outline the difference between autonomous investment and induced investment with examples. (6+4 = 10 Marks)
Ans 2.
The basic general production function as well as the distinction between various types of investments are key concepts in macroeconomics. Together they explain how an economy creates output and why investment decisions vary based on motivation. Understanding these concepts helps analyze
Q.3. Analyze the effects of inflation on economic growth of India, highlighting both positive and negative impacts. (5+5 = 10 Marks)
Ans 3.
Inflation can be described as the constant growth in the rate of inflation over the course of time. Although extreme inflation can be detrimental, lower levels of inflation can cause a variety of complex and positive impacts on growth. In the Indian context, understanding both aspects of inflation aids policymakers determine the best monetary and fiscal interventions that allow growth to be balanced with
Assignment Set – 2
Q.4. Critically examine the measures a government can take to reduce fiscal deficits. What are the advantages and disadvantages of these measures? (10 Marks)
Ans 4.
A fiscal deficit occurs when the government’s expenditure exceeds its revenue for a particular year. While some level of deficit is acceptable and even growth-promoting, persistent and large fiscal deficits threaten macroeconomic stability by raising debt levels and crowding out private investment. There are a myriad of ways that governments can lower deficits fiscally, each with distinct trade-offs.
Measures to Reduce Fiscal
Q.5. Evaluate the effectiveness of government expenditure as a tool for increasing national income in a highly open economy and discuss its impact on the trade balance. (5+5 = 10 Marks)
Ans 5.
It is a major element of aggregate demand, and the primary instrument of fiscal policy to control your national income. Its effectiveness is however greatly based on how open an economy is to global trade. For highly open economies it is the case that the Keynesian multiplier can be significantly reduced because of leakages to imports which can cause a rift between spending on fiscal and GDP growth.
Effectiveness of
Q.6. Discuss the different types of rent in economics and explain how rent is determined under extensive and intensive cultivation in Ricardo’s theory. (4+6 = 10 Marks)
Ans 6.
Rent in the classical world of economics refers to the payment made in exchange for land and other natural resources. David Ricardo developed the most significant theory of rent explaining the way in which the profit accruing for landowners comes from variations in productivity of land. Rent theory is important in analyzing the distribution of income, the pricing of agriculture, and the policies for reforming land for agrarian societies like India.
Types of Rent in Economics
Economic rent is the surplus payment made