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August 25, 2020 11:43 pm 30 pts
45. Assume that last year the consumer price index (CPI) was 150 and a house- hold's nominal income was Rs. 30,000. Ifthe CPIthis year is 160, to be as well off as last year, the household should have an increase in nominal income of 45. (1) Rs. 1,800 (2) Rs. 1,875 (3) Rs. 2,000 (4) Rs. 4,800 30,000 R (CPI) 160 TrT a 3T f=i q (1) 1,8000 (2) 1,875 (3) 2,000 (4) 4,800 46. As per JM Keynes variations in the bank rate influence economic activity through their impact upon (1) Short Tem Rate of Interest (2) Long Term Rate of Interest (3) Both Short & Long Term Interest Rates (4) Has no impact on the economy at all
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46. The answer is (2). Keynes suggested that bank rate influences long term interest rate and this way affects investment demand and economy.