Step 1: Understanding the Concept:

Price elasticity of demand (\(e_d\)) measures the responsiveness of quantity demanded to a change in price. When \(|e_d| > 1\) (elastic demand), a decrease in price leads to a proportionately larger increase in quantity demanded, causing total revenue to increase.


Step 2: Key Formula or Approach:

- \(e_d = \frac{% \Delta Q}{% \Delta P} = -2\)

- If price (\(P\)) decreases by 10% (\(% \Delta P = -10%\)), then:

\(-2 = \frac{% \Delta Q}{-10%} \implies % \Delta Q = +20%\)

- Total Revenue (\(TR\)) = \(P \times Q\).

- New \(TR = P(1 - 0.10) \times Q(1 + 0.20) = P \times Q \times (0.9 \times 1.2) = 1.08 \times TR\).

- Thus, the revenue increases by 8% (which is close to 10% in the given options). However, using the standard elasticity approximation:

\(% \Delta TR \approx % \Delta P + % \Delta Q = -10% + 20% = +10%\).


Step 3: Detailed Explanation:



Since the demand is elastic (\(|e_d| = 2\)), the percentage increase in quantity (20%) outweighs the percentage decrease in price (10%), leading to a net increase in total revenue.


Step 4: Final Answer:

The total revenue increases by 10% (approximately based on standard elasticity theory).
Quick Tip: For elastic demand (\(e_d > 1\)), price and total revenue move in opposite directions! Lowering the price boosts total revenue because consumers respond strongly to the price cut.

Step 1: Understanding the Concept:

In economics, "contraction in demand" refers to a movement along the demand curve caused exclusively by a change in the price of the commodity itself. A "decrease in demand" refers to a leftward shift of the entire demand curve caused by other factors.


Step 2: Detailed Explanation:



[Image of movement along the demand curve vs shift in demand curve]


- Option (B) describes a change in the quantity demanded due to a change in the commodity's own price, which is a "contraction" (upward movement along the curve).

- Options (A), (C), and (D) describe changes in variables other than the commodity's own price (income, substitutes, preferences), which cause the entire demand curve to shift, hence a "decrease in demand."


Step 3: Final Answer:

The situation representing a contraction is (B).
Quick Tip: "Change in quantity demanded" = Movement ALONG the curve (due to Price).
"Change in demand" = SHIFT of the curve (due to other factors like income or tastes).

Step 1: Understanding the Concept:

The investment multiplier (\(k\)) measures the effect of an initial change in autonomous expenditure on the final change in equilibrium income.


Step 2: Key Formula or Approach:

The formula for the multiplier in terms of MPC is:
\[ k = \frac{1}{1 - MPC} \]


Step 3: Detailed Explanation:



Given \(MPC = 0.75\):
\[ k = \frac{1}{1 - 0.75} = \frac{1}{0.25} = 4 \]

This means that for every 1 unit of initial investment, the total income in the economy will increase by 4 units due to the multiplier effect of consumption.


Step 4: Final Answer:

The value of the investment multiplier is 4.
Quick Tip: Remember: The multiplier is inversely related to the Marginal Propensity to Save (MPS). Since \(MPS = 1 - MPC\), the multiplier is simply \(1/MPS\). If MPC is high, the multiplier is large!

Concept:

According to Keynesian Income Determination Theory, a change in autonomous expenditure causes a multiplied change in equilibrium income. The size of this multiplied effect is measured through the Investment Multiplier.

The multiplier is given by:
\[ k=\frac{1}{1-MPC} \]

and
\[ \Delta Y=k\times \Delta I \]

where:


\(k\) = Investment Multiplier
\(MPC\) = Marginal Propensity to Consume
\(\Delta I\) = Change in Investment
\(\Delta Y\) = Change in Equilibrium Income


Step 1: Calculate the value of Multiplier.

Given:
\[ MPC=0.75 \]

Therefore,
\[ k=\frac{1}{1-0.75} \]
\[ k=\frac{1}{0.25} \]
\[ k=4 \]

This means every additional rupee of investment generates four rupees of income in the economy.

Step 2: Calculate change in equilibrium income.

Increase in investment:
\[ \Delta I=80 crore \]

Applying multiplier formula:
\[ \Delta Y=k\times \Delta I \]
\[ \Delta Y=4\times80 \]
\[ \Delta Y=320 crore \]

Step 3: Interpret the result.

An increase of \(80\) crore in investment initiates multiple rounds of spending and income generation. As a result, the final increase in national income becomes four times the initial increase in investment.

Hence,
\[ \boxed{\Delta Y=320 crore} \]

Therefore, option (C) is correct. Quick Tip: For CUET questions on multiplier: \[ k=\frac{1}{1-MPC} \] \[ \Delta Y=k\Delta I \] Higher MPC \(\Rightarrow\) Higher Multiplier \(\Rightarrow\) Larger increase in National Income.

Concept:

A budget line represents all possible combinations of two goods that can be purchased with a given income at given prices.

The budget equation is:
\[ P_X X + P_Y Y=M \]

where:


\(P_X\) = Price of Good \(X\)
\(P_Y\) = Price of Good \(Y\)
\(M\) = Income


Any combination satisfying the equation lies exactly on the budget line.

Step 1: Write the budget equation.

Given:
\[ P_X=20 \]
\[ P_Y=10 \]
\[ M=400 \]

Therefore,
\[ 20X+10Y=400 \]

Dividing by \(10\),
\[ 2X+Y=40 \]

Step 2: Check Option A.
\[ 2(5)+25=35 \]
\[ 35\neq40 \]

Hence, not on the budget line.

Step 3: Check Option B.
\[ 2(10)+20=40 \]
\[ 40=40 \]

Hence, this combination lies exactly on the budget line.

Step 4: Verify remaining options.

Option C:
\[ 2(15)+5=35 \]

Not equal to \(40\).

Option D:
\[ 2(8)+18=34 \]

Not equal to \(40\).

Only Option B satisfies the budget equation.

Therefore,
\[ \boxed{X=10,\;Y=20} \]

lies on the budget line. Quick Tip: To quickly identify a point on a budget line, substitute the values directly into: \[ P_X X + P_Y Y=M \] If LHS = RHS, the point lies on the budget line.

Concept:

Open Market Operations (OMO) are an important quantitative monetary policy instrument used by the Reserve Bank of India to regulate money supply and liquidity in the economy.

The RBI can:


Purchase government securities.
Sell government securities.


When RBI purchases securities, it injects money into the banking system.

When RBI sells securities, it withdraws money from the banking system.

Step 1: Understand the given situation.

RBI purchases government securities worth:
\[ ₹5,000 crore \]

The sellers of these securities receive money from RBI.

Thus,
\[ Money flows from RBI to the public/banks \]

Step 2: Analyze impact on banking system.

As money enters banks:


Bank reserves increase.
Lending capacity increases.
Credit creation increases.
Market liquidity increases.


Step 3: Analyze effect on money supply.

Higher reserves allow banks to create additional deposits through the process of credit creation.

Therefore,
\[ Money Supply \uparrow \]

and
\[ Liquidity \uparrow \]

Step 4: Evaluate options.

Option A: Opposite effect.

Option B: Correct.

Option C: CRR is unchanged.

Option D: Deposits tend to increase rather than decrease.

Hence the correct answer is:
\[ \boxed{Increase in liquidity and money supply} \] Quick Tip: Remember: RBI buys securities \(\Rightarrow\) Money enters economy \(\Rightarrow\) Liquidity increases. RBI sells securities \(\Rightarrow\) Money leaves economy \(\Rightarrow\) Liquidity decreases.

Concept:

Under the Expenditure Method, Gross Domestic Product at Market Price is calculated as the sum of expenditure incurred on final goods and services produced within the domestic territory during an accounting year.

The formula is:
\[ GDP_{MP}=C+I+G+(X-M) \]

where:


\(C\) = Private Final Consumption Expenditure
\(I\) = Gross Domestic Capital Formation
\(G\) = Government Final Consumption Expenditure
\(X-M\) = Net Exports


This method measures aggregate demand in the economy.

Step 1: Write the given values.
\[ C=8000 \]
\[ I=3000 \]
\[ G=2000 \]
\[ (X-M)=-500 \]

Step 2: Substitute into the GDP formula.
\[ GDP_{MP}=8000+3000+2000+(-500) \]
\[ GDP_{MP}=13000-500 \]
\[ GDP_{MP}=12500 \]

Step 3: Economic interpretation.

The economy generated total final expenditure worth ₹13,000 crore, but because imports exceeded exports by ₹500 crore, net exports became negative.

Therefore,
\[ GDP_{MP}=₹12,500 crore \]

Hence, option (B) is correct. Quick Tip: Always remember: \[ GDP_{MP}=C+I+G+(X-M) \] If imports exceed exports, Net Exports become negative and reduce GDP.

Step 1: Understanding the Concept:

A firm maximizes profit where Marginal Revenue (MR) equals Marginal Cost (MC). MR is the derivative of Total Revenue (TR), and MC is the derivative of Total Cost (TC).


Step 2: Key Formula or Approach:

- MR = \(\frac{d(TR)}{dQ} = \frac{d(120Q)}{dQ} = 120\)

- MC = \(\frac{d(TC)}{dQ} = \frac{d(200 + 40Q + Q^2)}{dQ} = 40 + 2Q\)

- Set MR = MC: \(120 = 40 + 2Q\)


Step 3: Detailed Explanation:



Solving the equation:
\(120 - 40 = 2Q\)
\(80 = 2Q\)
\(Q = 40\)

At 40 units, the cost of producing an additional unit is exactly balanced by the revenue gained from it, maximizing total profit.


Step 4: Final Answer:

The profit-maximizing output level is 40 units.
Quick Tip: Always remember the golden rule: MR = MC. If MR > MC, produce more; if MC > MR, reduce production to boost your profit!

Step 1: Understanding the Concept:

Price elasticity of demand (\(e_d\)) represents the relationship between the percentage change in quantity demanded and the percentage change in price.


Step 2: Key Formula or Approach:
\(e_d = \frac{% \Delta Q}{% \Delta P}\)

Given \(e_d = -1.5\) and \(% \Delta P = +10%\).


Step 3: Detailed Explanation:



[Image of different elasticities of demand graph]


Substituting the values into the formula:
\(-1.5 = \frac{% \Delta Q}{10%}\)
\(% \Delta Q = -1.5 \times 10% = -15%\)

The negative sign indicates a decrease in quantity demanded.


Step 4: Final Answer:

The quantity demanded will decrease by 15%.
Quick Tip: The law of demand dictates that price and quantity move in opposite directions. If price rises, quantity MUST fall! The elasticity value (1.5) just tells you by how much (1.5 times the price change).

Step 1: Understanding the Concept:

This question covers foundational macroeconomic theory regarding AD-AS equilibrium and the difference between ex-ante (planned) and ex-post (actual) variables.


Step 2: Detailed Explanation:



- Statement I is True: Investment is a key component of AD (\(AD = C + I + G + NX\)).

- Statement II is False: Ex-ante savings (planned) are not necessarily equal to Ex-post savings (actual/realized).

- Statement III is True: Ex-ante investment and Ex-ante savings reflect plans and often differ, which leads to disequilibrium.

- Statement IV is True: Equilibrium is defined by the intersection of the aggregate demand and aggregate supply curves.


Step 3: Final Answer:

Statements I, II, III, and IV are correct. Therefore, the correct option is (D).
Quick Tip: Remember the "Ex" rule: Ex-ante means "planned/expected" and Ex-post means "actual/realized." They only align when the economy is in perfect equilibrium!