(a)[2]
- Calculate the inflation rate in India between 2001 and 2011. [1]
- Calculate the expected inflation rate in India between 2011 and 2013. [1]
(b)[4]
Explain, with the help of a production possibility curve, the opportunity cost to India of choosing to produce transport facilities rather than education services.
(c)[4]
Explain how improved transport facilities and education services might increase the productive potential of the economy in India.
(d)[4]
India’s exchange rate depreciated between 2010 and 2011. Explain, using supply and demand analysis and the data, what may have contributed to this change in India’s exchange rate.
(e)[6]
Using the exchange-rate changes shown in Table 1 between 2010 and 2011, Discuss whether the movement in the current account balance over this period matches what economic theory would predict.