NTA UGC NET/JRF Exam, December-2022 Economics (Shift-II)

Former Reserve Bank of India (RBI) governor Y.V. Reddy was the chairman of the 14th Finance Commission was constituted on 2nd January 2013. The recommendations of the 14th finance commission came into force in April 2015.

The Zamindari system was introduced by Lord Cornwallis in 1793 through permanent settlement that fixed the land rights of the members in perpetuity without any provision for fixed rent or occupancy right for actual cultivators.

Non-excludable and non- rival in consumption resources are called common resources. These resources are available to everyone, but their consumption reduce the availability for others.

Examples of common resources include : freshwater, fish, timber, pasture, beaches, and national parks. Non-market goods and services are not bought or sold directly on markets and are often common goods or public goods.

• Common public goods are non-excludable and nonrival. Examples of common goods are coal and timber because they can only be possessed or consumed by a single user at one time but access to them is not restricted.

Interest payment is the component that distinguishes primary deficit from fiscal deficit.
Note-
It is the excess of total expenditure over total receipts/income, excluding borrowing in a fiscal year. Primary Deficit indicates the governments total borrowing requirements, except interest.
Fiscal Deficit indicates the governments total borrowing requirements, including interest.

Inflation is a supply side phenomenon is not an assumption or conclusion of the inflation targeting approach.
Important point -
The assumptions that the best that monetary policy can do support long-term growth of the economy is to maintain price stability and price stability is achieved by controlling inflation. The central bank uses interest rates as its main short-term monetary instrumen

In monetary policy, the sacrifice ratio is the cost of reducing inflation by one percentage point, measured by the amount of real GDP that is lost. It's used to help central banks decide on monetary policy actions to take when inflation is too high.
• In context of monetary policy, the sacrifice ratio refers to the output cost of reducing inflation.

The formula used to calculate the yield of treasury bills (T-bills)
Where, Y = Discounted yield
P = Price
D = Days to maturity
Y = (100-P) × 365 ×100/PxD
The formula for calculating the yield of a Treasury bill
is:
Yield Percentage = (100-Discounted T - Bill Price)
Here's how to calculate the yield of a Treasury bill.
1) Gather the bill's purchase price, purchase date and maturity date.
2) Subtract the purchase price from the face value.
3) Divide the result by the purchase price.
4) Multiply the answer by 100 get the percentage.
To annualize the yield, multiply the yield by 365 and divide by the bill's days to maturity. Treasury bills are short-term borrowing tools issued by the government at a discount to their face value, allowing investors to
profit from the difference.

To Simultaneously examine both faster growth and a more equal distribution of income, the following tools can be considered :
1) Gini Ratio - This measures income inequality within a population.

It doesn't directly measure economic growth, but by observing changes in the Gini ratio over time, one can infer how income distribution shifts with growth. A lower Gini ratio suggests a more equal income distribution.

2) Poverty-Weighted Growth Rate : This metric directly links economic growth to its impact on poverty. It places greater weight on how growth benefits the poorer sections of society, helping to analyze both growth and income distribution simultaneously.

Faster growth that benefits the poor more would show a higher povertyweighted growth rate.

3) Kuznets Curve: This economic hypothesis suggests that in the early stage of development, income inequality tends to rise with economic growth but later decreases as the economy matures.

Thus, it helps in understanding the dynamic relationship between economic growth and income inequality over time.

• Among these, the poverty-weighted growth rate is a more direct measure to assess both faster growth and a more equal distribution of income simultaneously.

The organic composition of capital is calculated by comparing the ratio of constant capital (C) to variable capital (V). The formula is as follows: • Organic composition of capital (OCC) = C/V