NTA UGC NET/JRF Exam, June 2019 Economics (Shift-II)

Functions of capital market:-The capital market is a vital component of the financial system, facilitating the flow of funds and providing opportunities for investors and issuers.

It functions include mobilising savings facilitating price discovery, providing liqudity and enabling risk management.

In addition to the monetary aggregates, the working group had recommended compilation of three liqudity aggregates namely, L₁, L₂ and L₃, which include select items of financial liabilities of nondepository financial corporation such as development financial institutions and non-banking financial companies accepting.

According to Marxian analysis the surplus value depends upon surplus and necessary labor time. This implies that the amount of time a worker spends producing value beyond what is required to cover their own wages, which is ultimately captured by the capitalist as profit.

Joan Robinson has further refined the model of capital accumulation in a private enterprise economy. She relates investment with the rate of profit which in turn depends upon the distribution of income between wages and profits on the one hand and labors productivity and capital intensity on the other.

The Solow model of economic growth considers technology as exogenous variable:

Explanation-The Solow model is an exogenous growth model, which means that it assumes that the value of technology is determined outside of the model. This reflects the idea that technological change often happens independently of economic factors.

Scope of Technology-In the Solow model, technology includes a wide range of things that allow more output to be produced from a given amount of inputs. This includes techniques, processes, management practices, learning-by-doing, and economics of scale.

Expansion of healthcare infrastructure in urban sector does not determine the amount of years of schooling demanded by an individual to qualify for modern job.

Endogenous growth theory is an economic theory that states that economic growth is mainly due to internal forces rather than external ones.

The theory suggests that improvement in human capital, knowledge and innovation can lead to increased productivity and a more positive economic outlook.Endogenous growth theory emerged in the 1980s, as an extension of neo-classical growth theory.

In their 1992 paper, "A contribution to the empirics of economic growth", economists David Romer, Gregory Mankiw and David Weil developed endogenous growth theory using the same basic framework as neo-classical theory.

Axioms of inequality measures are desirable properties that inequality measures should have. These axioms help determine how inequality measures should behave and can help choose between inequality indexes. Some axioms of inequality measures include:

• The principal of transfer: Also known as the PigouDalton principle, this axiom states that the inequality index should decrease when income is redistributed from richer to poorer individuals.
• Scale invariance: An axiom of inequality measures.
• Translation invariance: An axiom of inequality measures.
• The principle of population: An axiom of inequality measures.
• Decomposability: An axiom of inequality measures.