Econometrics: Literally, the word econometrics means economic measurement or the measurement of economic relationships. According to Goldberger: Econometrics may be defined as the social science in which the tools of economic theory, mathematics and statistical inference are applied to the analysis of economic phenomena. Uses/functions/objectives of econometrics: Testing economic theories and models Estimating numerical values

Short Questions Consumption is that part of disposable Income which is spent on consumer goods and services. The relationship between consumption and income is represented by consumption function written as C=f(Y). The slope of this function is called MPC. Saving is that part of disposable income that is not consumed.

LQ.1. Explain the law of diminishing utility. Illustrate your answer with appropriate diagrams. Discuss also the assumptions and limitations of this law. Law of Diminishing Marginal utility (Gossen’s First Law) “The Law of Diminishing Marginal Utility states that as a consumer consumes more and more units of a good, then

LQ 1: Define Macroeconomics. Discuss its scope, importance and limitations. Macroeconomics Macroeconomics deals with the behavior and performance of the economy as a whole. It studies aggregate economic activities such as aggregate output, aggregate demand, national income, aggregate price level, employment level, international trade, business cycles etc. Scope of Macroeconomics