Macroeconomics and Policy

The base effect pertains to low inflation numbers a year ago, which makes even a small increase in the price index now appear much larger. The index is higher this year then the next year inflation figures may be lesser (as base is higher).

An economy that does not interact with the economy of any other country. A closed economy prohibits imports and exports, and prohibits any other country from participating in their stock market.

Current account deficit can be reduced by devaluating the domestic currency (boosting export), increase in the export subsidy (boosting export) and adopting suitable policies which attract greater FDI and more funds from FIIs.

Economic growth is usually coupled with inflation. There has been considerable debate on the existence and nature of the inflation and growth relationship. Some consensus exists suggesting that macroeconomic stability, specifically defined as low inflation, is positively related to economic growth.

 (c)

 (c)

 (c)

 (c)

 (a)

Correct option is (4).

Statement 1: It is correct. Several factors determine the inflationary impact in the country. One of the factors is Demand, i.e. when the aggregate demand in the economy has exceeded the aggregate supply or described as a situation where too much money chases just few goods. Example: A country has a capacity of producing just 500 units of a commodity, but the actual demand in the country is 800 units. Hence, due to scarcity in supply, the prices of the commodity rise.  Statement 2: It is correct. The other major factor is supply that is responsible for rising inflation in India. The agricultural scarcity or the damage in transit creates a scarcity causing high inflationary pressures clubbed with high cost of labour increases the final output produced and eventually increasing the production cost and leads to a high price for the commodity. Statement 3: It is correct. Domestic factor is also one of the factors responsible in inflation rising in India. There is a gap in India for both the output and the real money gap. The supply of money grows rapidly while the supply of goods takes due time which causes increased inflation. Similarly, Hoarding has been a problem of major concern in India where onion prices have shot high in the sky. Statement 4: It is correct. External Factors such as exchange rate is also an important component for the inflationary pressures that arises in the India. As the prices in USA rise, it impacts India where the commodities are imported at a higher price impacting the price rise. Hence, the nominal exchange rate and the import inflation are measures that depict the competitiveness and challenges for the economy. Hence, the correct option is 4.

Wilson's administration saw domestic reforms (New Freedom) during WWI, and FDR's administration saw the expansion of the New Deal during WWII. Both presidents utilized the wartime environment to push through significant domestic policy changes.

The Federal Reserve is the central bank of the United States and is responsible for conducting monetary policy, which includes managing the money supply and interest rates to promote economic stability.

The Federal Reserve Act of 1913 was passed to provide the nation with a safer, more flexible, and more stable monetary and financial system by regulating the money supply and interest rates.

The Great Depression was caused by factors like the stock market crash, over-speculation, and income inequality. Increasing federal taxes and social programs were actually part of the New Deal response to the Depression, not a cause of it.