1. vital for Foreign Institutional Investors (FII) and Foreign Direct Investment (FDI) flows. It measures the increase/decrease in wealth, economic growth, and
development of a country. Q19: How does fiscal policy differ from monetary policy? A19: Fiscal policy involves the government's use of revenues/expenditures
to influence the economy, while monetary policy regulates money supply and interest rates. Fiscal policy is enforced by the government, while monetary policy
is enforced by the central bank. Q20: What is the impact of high fiscal deficit on a country's economy? A20: High fiscal deficit absorbs domestic savings, limiting
the private sector's access to investment, hindering economic growth. It can also lead to avoidance by foreign investors, risk of sovereign rating downgrade, and
higher borrowing, weakening internal economic strength. Q21: How does the law of demand explain the relationship between price and quantity demanded?
A21: The law of demand states that higher prices lead to lower demand due to increased opportunity cost, while lower prices result in higher demand. Q22:
What is the concept of equilibrium in economics? A22: Equilibrium is a state of balance where quantity supplied equals quantity demanded, resulting in no
market price change. Q23: What is the difference between individual demand and market demand? A23: Individual demand refers to the demand by a single
consumer or firm for a specific product, while market demand is the aggregate demand from all individuals and firms for a product. Q24: What are the factors
influencing the supply curve in economics? A24: Factors influencing the supply curve include production costs, technology, availability of inputs, government
policies, market nature, and the number of producers. Q25: What is the purpose of the Gross Domestic Product (GDP) in measuring a country's economic
performance? A25: GDP measures the total market value of all goods and services produced in a country during a specific period, providing an indication of the
country's economic growth and development. Q26: How do oligopolies affect pricing in the market? A26: Oligopolies tend to stick to established prices due to
interdependence. Independent pricing strategies can lead to revenue loss, and rivals strategically respond to price changes. Q27: What is the significance of the
balance of trade in international economics? A27: The balance of trade, which is the difference between a country's exports and imports, indicates whether a
country has a trade surplus (exporting more than importing) or a trade deficit (importing more than exporting). Q28: How does the central bank use open
market operations to regulate the economy? A28: The central bank uses open market operations to buy or sell government securities in the market. Selling
securities reduces money supply, aiding inflation control, while buying securities increases money supply, stimulating economic growth. Q29: What is the
purpose of fiscal deficit in economic analysis? A29: Fiscal deficit, calculated as the difference between government revenue and expenditure, indicates the
government's borrowing needs. It is crucial in economic analysis as it affects borrowing costs, inflation, and overall economic stability. Q30: How does inflation
impact interest rates and borrowing costs in the economy? A30: Inflation creates demand-supply imbalances, leading to higher interest rates as a corrective
measure by central banks. Higher interest rates increase borrowing costs for individuals and businesses, affecting investments and economic growth.
