Latest Economics Interview Preparation Guide

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iIt is defined as the total clampdown on the economic activities of a country which leads to a total slowdown of activities into profitable economy.

After implementation of GST , VAT is not relevant because we are talking about a single tax. But those commodities which are not included in GST or thise doesn't come under any GST tax slab where we can charge VAT

While others stand constant

Time period play important role so that people respond to prices change and demand tend to be more inelastic in long run than short run.

A Retention bonus is an incentive paid to a key employee to retain them through a critical business cycle. This could be a transitional period (such as mergers and acquisitions) to ensure productivity or to meet a critical milestone. It has proven to be a very good tool in persuading employees to stay.

Explanatory research is research conducted in order to explain any behavior in the market. It could be done through using questionnaires, group discussions, interviews, random sampling, etc.

The rise in the price of oil can be traced to a simple factor, but there are several other contributing factors.

The simplest explanation is that the demand for oil is greater than the current production. When demand exceeds supply, price will increase, as people are willing to pay more to ensure that they get their scarce resource (oil in this case).

Depending on your political views and knowledge of the situation, you may also believe that the production of oil is much lower than capacity because certain middle-eastern countries know that America depends on oil imports more than other countries. An increase in oil prices will lead to a slightly weaker US economy.

Because discretionary Income = the money people have left over once they have paid for all of their basic requirements (Food, Clothing, Shelter).

You could also call it Disposable Income because you can spend on whatever you want.

If people do not have very much discretionary income then they cannot buy all kinds of useless stuff that marketers are trying to sell them.

This would limit the potential demand for a good or service.

Consumer Demand is how much of something that consumers are wanting. A company needs to know the consumer demand so they know how much of a product to make.

It assigns costs based on the price elasticity of demand. Yet higher the elasticity (elastic), the lower the charge of fixed costs when allocated amongst products.

A tax on goods leaving or entering some place

Annual units sold, 1000. Raw materials annual cost 650. Building rent annual cost 9000. If sales volume increased to 6000 units and 8000 units, what is the total annual cost and unit cost for fixed variable?

Cost per unit of raw material=650/1000= 0.65

Fixed cost (Rent) =9000

Fixed cost per unit= 9000/1000= 9.00

If the sales volume increases to 6000 units, then total cost= 12900 and cost per unit = 2.150

Variable cost+ fixed cost= (0.65*6000) + 9000= 12900 / 6000= 2.15

If the sales volume increases to 8000 units, then total cost= 14200 and cost per unit = 1.775

(0.65*8000) + 9000= 14200 / 8000 = 1.775

Well real GDP takes into account the inflation rate and thus is more accurate at recording the actual increase in production activities. Therefore, Real GDP is better.

A control in economics means a steady profit rate that is increasing. Therefore, after one year you could have £1mill profit then the next year £3mill profit etc.

Services industry contributes 55.5% to Indian GDP.

A derogatory term applied to Reaganomics, or supply-side economics, trickle-down economics is the theory that tax cuts for the wealthy merely "trickled down" to the bottom groups and that the rich benefited at the expense of the economy. Similar criticisms were raised about the supply-side tax cuts enacted by Treasury Secretary Andrew Mellon in 1921 but not for those made by John Kennedy in the 1960s. Supply-side cuts involve cutting taxes across the board but most dramatically for those in the top tax brackets. The rationale was that those who paid the most taxes would then be able to reinvest their tax "savings." Thus, supporters have countered the phrase "trickle-down" with the one coined by John Kennedy: "a rising tide lifts all boats."

I think the answer to this question lies in the reasons, which are contributing to the rise and fall of a price of any commodity. India has now good amount of dollars and as such, demand of dollars has come down comparatively.

A perfect competitive market and pure monopoly market both have to follow the "law of demand".

The price level refers to the monetary value of a good or service.

No indifference curve can intersect because all points on indifference curve are ranked equally preferred and ranked or less more preferred than every other point on the curve.

Well, the idea of humans as capital means that humans have a certain worth to a company (or society). Education increases that worth, making individuals more able to contribute to a company (or to society). Therefore, investing in Education... in your employees, for instance, is worthwhile because then your employees increase their value to you, as an employer. In a general sense, society's investment in educational programs increases people's value to society in general.

Inflation means an overall increase in the prices of goods and services. It is a decrease in the value of a currency. There are three types of measurement, Core Inflation, CPI, and WPI. Core Inflation is a measurement of non-volatile goods such as food and non-precious metals. It leaves out goods like oil because oil's price is subject to wild fluctuations. CPI is the most common measurement, using a market basket of goods and measuring their price from a point in the past (a CPI of 100 is arbitrarily the same price level for 1982-1984). Thus, the equation is (Price of most recent market basket/price of same market basket in 1982-1984) X 100. The 100 is to give us the number we normally see. WPI is Wholesale Price Index. It is a measure of wholesaler's prices and is generally considered a pre-cursor to what CPI will be (as it takes time for goods to read the consumer).

It is true to a point. The Laffer curve shows that revenues increase as the tax rates rise (0 tax rate = 0 revenue) up to a point, but the increase slows as the rate rises higher and at some point total revenue begins to decline. If your incremental tax rate is 1% and you can work 4 hours to make $100, you will get to keep $99 and most people would be willing to do this. You would probably will to work the extra hours if you were taxed 5 or 10%. However, if you were subject to an incremental rate of 99%, you would not work that long knowing the government was only going to let you keep $1. The "magic number" seems to be somewhere around 15-20%. If the rates are above this, people are not motivated to increase their earnings. Big corporations react the same way.

Well tax incidence refers to who actually pays the tax.

Tax incidence can be divided into-

1. Formal incidence: the party liable to the tax

2. Informal incidence: party, who actually pays the tax

The tax incidence is decided by the elasticity of demand and supply for a good or service.