OMTEX CLASSES: Labour cannot be stored.

Labour cannot be stored.

3. Labour cannot be stored.

Ans. Labour is perishable in nature. If a worker is absent for a day, the days labour has gone. The amount of labour lost is lost forever. Labour cannot be stored and used for future.

(i) Labourer and his labour (work) always go together. Hence labourer must be present himself where he is supposed to render his services.

(ii) Labour is perishable in nature. If a labourer is absent for a day, his labour for that day goes wasted. Thus, the amount of labour lost is lost forever, it cannot be used for future. Thus, labour cannot be stoed and used for future.

4. Macro economics is the study of aggregates.

Ans. The term Macro is derived from Greek word “Makros” which means large. It is the branch of economics, which studies the behaviour of all economics units combined together. Macroeconomics is a study of aggregates. It is the study of the economic system as a whole. Therefore, it is also called as Aggregate Economics.

Definition: -“Macroeconomics deals not with individual quantities as such, but with aggregates of these quantities; not with individual incomes but with the national incomes; not with individual prices but with the price level; not with individual outputs but with the national output’.  Defined by (Kenneth E. Boulding)

5. Cash reserve ratio (CRR) affects the lending capacity of banks.

Ans. By the Banking Act, commercial banks have to maintain a certain percent (3 percent to 15 percent) of cash with Central bank (RBI) as reserves against their demand and time deposits. This amount cannot be used by banks for lending activities.

If the CRR is increased the amount available for lending gets reduced and vice versa. Thus, the CRR affects the lending capacity of the banks.

6. Microeconomics deals with allocation of resources.

Ans. Microeconomics is concerned with the study of economic behavious of small individual economic units of an economy. Resources allocation means utilisation of resources for the production of various goods and services. The study of microeconomics is maily confined to resource allocation.

Microeconomics explains how relative prices of commodities and factors of production determine the allocation of resources. Allocation or resources determines what goods are to be produced, how the goods are to be produced and distributed, etc. Microeconomics also examines the efficiency in the allocation of resources and economic welfare of society.