Exams begin on 28 September --- Good Luck Andreans

7 Question Challenge - 2 - 2015-16

1.    The opportunity cost of a good is A)    The time lost in finding it B)    The quantity of other goods sacrificed to get another unit of that good C)    The expenditure on the good D)    The loss of interest in using savings 2.    If new firms enter a market, but demand stays the same, it can be              predicted  that: A)   Consumer surplus will fall B)   Prices are likely to fall C)   There will be reduced economic welfare D)   Prices are likely to rise 3.    Time series data show information A)   About the same point in time over different places B)   About different points in time over the same variable C)   About different variables over different places D)    About different points in time over different places 4.    When a market is in equilibrium A)   Quantity demanded equals quantity supplied B)   Excess demand and excess supply are zero C)   The market is cleared by the equilibrium price D)   All of the above 5.   If a price increase of good A increases the quantity demanded of good B,       then good B is a A)   Substitute good B)   Complementary good C)   Bargain D)   Inferior good 6.   Name the economist pictured below: 7. Can you identify this Nobel Prize winning economist? Email your answers with your name and roll number to profKMody@gmail.com by 23 September 2015

Answers: 7 Question Challenge - 1 - 2015-16

1. Which of these is not a monetary policy tool?

C. Balance account

2. Inflation is a sustained increase in the level of?

D. Prices

3. Monetary policy refers to what the Reserve Bank of India does to influence the amount of __________ and __________ in the Indian economy.
C. Money and credit

4. The goals of monetary policy do NOT include the promotion of _________________.
D. Low taxes

5. Expansionary monetary policy is most effective when
A. The economy has spare capacity

6. Who was the first Indian Governor of the Reserve Bank of India?
Dr. C. D. Deshmukh


7. Can you guess the name of this economist?

Dr. Amartya Kumar Sen. He was awarded the Nobel Memorial Prize in Economic Sciences in 1998 and Bharat Ratna in 1999 for his work in welfare economics. He was also awarded the inaugural Charleston-EFG John Maynard Keynes Prize in recognition of his work on welfare economics in February 2015 during a reception at the Royal Academy in the UK.

CONGRATS TO NEHA AND VIVEK FOR GETTING 6/7 AND ARZOO FOR 5/7

7 QUESTION CHALLENGE - 1 - 2015-16

1. Which of these is not a monetary policy tool?

A. Discount rate

B. Open market operations

C. Balance account

D. Reserve requirements

2. Inflation is a sustained increase in the level of?

A. Profit

B. Income

C. Accounts

D. Prices

3. Monetary policy refers to what the Reserve Bank of India does to influence the amount of __________ and __________ in the Indian economy.

A. Taxes and Revenue

B. Currency and Gold reserves

C. Money and credit

D. Interest and debt

4. The goals of monetary policy do NOT include the promotion of _________________.

A. Maximum employment

B. Stable price

C. Moderate long-term interst rates

D. Low taxes

5. Expansionary monetary policy is most effective when

A. The economy has spare capacity

B. The economy is in a liquidity trap

C. The economy is close to full capacity

D. The economy has a positive output gap

6. Who was the first Indian Governor of the Reserve Bank of India?

7. Can you guess the name of this economist?

Email your answers with your name and roll number to 
profKMody@gmail.com by 22 August 2015

Howz that??!!

"Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway." - Warren Buffett

Indian Economy - Monetary Policy and other Happenings

Third Bi-monthly Monetary Policy Statement, 2015-16 - August 2015) 

- Monetary and Liquidity Measures

• On the basis of an assessment of the current and evolving macroeconomic situation, it has been decided to:
• policy repo rate under the liquidity adjustment facility (LAF) unchanged at 7.25 per cent
• cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liability (NDTL)
• continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo rate and liquidity under 14-day term repos as well as longer term repos of up to 0.75 per cent of NDTL of the banking system through auctions
• continue with daily variable rate repos and reverse repos to smooth liquidity

Observations:

• Economic recovery is still work in progress
• Hardening of inflation, excluding food and fuel, is most 
• Retains growth target at 7.6 per cent for 2015-16
• RBI says banks have passed on an average 0.3% interest rate cut as against its 0.75% rate cut since January
• Govt’s capital infusion in PSBs to help loan growth and transmission of interest rate cuts as well as ease liquidity
• After strong rainfall in June, July has been below par, but overall monsoon is near normalMost worrisome is sustained hardening of inflation except food and fuel

Of Matters Economic and Beyond ..... Of Matters Greek...

How did it happen?

The roots of Greece's crisis are simple. Before Greece joined the Eurozone, investors treated it as a middle-income country with poor governance — i.e., a credit risk. After Greece joined the Eurozone, investors thought that Greece was no longer a credit risk — they figured, if push came to shove, other Eurozone members like Germany would bail Greece out. They were wrong.

After Greece joined the Eurozone, investors began lending to Greece at about the same rates as they lend to Germany. Faced with this sudden availability of cheap money, Greece began borrowing like crazy. And then, when it couldn't pay back its debts, Germany and other Eurozone nations weren't willing to simply bail Greece out.

That led the market to panic around 2010, and the interest rates on Greek debt spiked. Those high interest rates make it basically impossible for Greece to borrow, and that makes it impossible for Greece to pay its debts.

The result:

Greece is insolvent and the Eurozone isn't as tight a union as the financial markets — and maybe the Eurozone's member states — believed. That's the crisis.

So what?

Greece's debt-to-GDP ratio is an insane 172%.  It's much higher than any other country in the Eurozone. Making matters worse is the fact that the financial markets no longer see Greece as debt-worthy. No one wants to lend to Greece at reasonable rates, and so Greece can't keep paying to service its current debts while carrying out basic government functions.

Human crisis?

Greece's problems are often framed as a financial crisis, or a political crisis. But what they really are is a human crisis. Unemployment in Greece is over 25% — higher than the United States during the Great Depression. And high unemployment is leading to political backlash. incomes are plummeting, often to levels not seen since the 1970s or 1980s. This is one reason the anger in Greek society is so widespread: no economic group is safe from the crisis.

Economic crisis?

The debt crisis destroyed Greece's economy, which in turn destroyed Greece's ability to pay back its creditors or employ its people, which in turn forced Greece to beg the Eurozone and IMF for help and the austerity measures they demanded destroyed Greece's economy even more.

Before the crisis, Greece's population was growing. Since the crisis, it's shrinking. And it's a good bet that the people leaving Greece are some of the most economically productive.  It means it will be that much harder for the Greek economy to recover.

What else do we observe?

Greeks are worried that Greece is going to leave the Euro, in whole or in part. They worry that Greece is either going to return to its own currency, or in order to keep paying its debts, revert to some kind of temporary government scrip. Either way, whatever replaces euros will be worth a whole lot less than the euro, and so anyone who can get their money out is doing it as fast as they can. Or, at least, they were doing it as fast as they can. Greece has shut down its banks and imposed limits on daily ATM withdrawals in order to end the run.

Crisis for Greece alone?

A few years ago, Greece's crisis was the Eurozone's crisis. After all, it wasn't just Greece sagging under the weight of debts it couldn't obviously pay back; it was Spain, Portugal, and Italy, to name just a few.

But no longer.

While that may be good for the Eurozone, it's bad for Greece, as it reduces their negotiating leverage. Four years ago, the Eurozone believe that it needed to save Greece to survive. Now it thinks it can survive a "Grexit" just fine.

To know more follow this link:

http://www.nytimes.com/interactive/2015/business/international/greece-debt-crisis-euro.html?_r=0

WELCOME TO 2015-16   .....     

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