Balance of Payment. :Balance of payments is an accounting statement that provides a systematic record of all the economics transactions between the residents of a country and the crore rest of the world in a given period of time.

A country exported goods worth Rs. 2600 crore whereas its imports amounted to Rs.1700 crore. Calculate the volume of balance of trade.

Ans. BOT=Exports –Imports=Rs. 2600 crore –Rs. 1700crore =Rs. 900 crore.

Explain equilibrium level of national income using saving and investment approach.

Draw a diagram in support of your explanation.

The equilibrium level of income and output is that level at which planned saving and planned investment are equal. In the diagram equilibrium is at e and equilibrium income is OY.

National Income – The money value of all the final goods and services produced by normal residents of a country during a financial year is called national income.

Features of National Income –

PRODUCTION FUNCTION:

Production function is the technological relationship between inputs and maximum producible output.

Note: To produce any output there is requirement of at least two inputs. A single input cannot produce any output.

PRODUCTION

The process of combining inputs to produce output is called production function.

Inputs/Factors of Production:

Factors of production used by a firm in the production of a good or services are called inputs.

Meaning of economics:  Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.

Meaning of an economy:-Economy is the system which provides people the means to work and earn a living. Or it is a frame work within which economic activities like production, consumption, and capital formation are undertaken.

Meaning of scarcity:-It is defined as excess of demand over available supply, i.e., demand of resources greater than supply of resources.