Economics (030) Class Xii (2014-15) Worksheet Page 14
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21is the ratio of prices that prevail in the market and gives the actual units of Good Y
that need to be sacrificed to obtain an extra unit of Good X in the market.
(1)
Suppose MRS
>
XY
•
It means that the consumer is willing to sacrifice more of Good Y than she needs to
give up actually in the market for an extra unit of Good X.
•
The consumer gains and increases consumption of Good X.
•
As consumption of Good X increase, its marginal utility declines.
•
Thus, the willingness to pay for additional units of Good X (in terms of Good Y)
falls.
•
Process continues till MRS
=
(2)
XY
Suppose MRS
<
XY
•
It means that the consumer is willing to sacrifice less of Good Y than is actually
required in the market for as extra unit of Good X.
•
The consumer loses and reduces the consumption of Good X.
•
As consumption of Good X decreases, its marginal utility increases.
•
Thus, MRS
increases.
XY
•
The process continues till MRS
=
(2)
XY
Section B: Macroeconomics
15. a)
(1)
16. Repo rate or repurchase rate is the rate at which commercial banks borrow money from
the Central Bank for a short period by selling their financial securities to the Central Bank.
(1)
17. b)
(1)
18. c)
(1)
19. b)
(1)
20. The role of the Central Bank in maintaining the foreign exchange rates under different
regimes is:
6
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