Q.(a) Narrate the equilibrium between ADF and ASF with diagram.

(a) Effective demand and hence income/employment are fixed at the intersection of the aggregate demand function (ADF) and aggregate supply function (ASF). (b) The WTO aids India's development via market access, trade liberalisation and dispute settlement, with benefits in services/IT and agriculture but concerns over vulnerable domestic sectors and TRIPS.

(a) Equilibrium between ADF and ASF (with diagram — described)

• The Aggregate Supply Function (ASF) shows the total receipts (proceeds) that producers must get to induce them to employ a given number of workers; it rises as employment rises.
• The Aggregate Demand Function (ADF) shows the total receipts that producers actually expect to get from the sale of output at each level of employment; it also rises with employment but at a diminishing rate.
• Effective demand is the point where ADF = ASF — where expected demand just equals the supply price of that level of output. At this point employers have no incentive either to expand or to contract employment, so it is the equilibrium level.
• If ADF is above ASF, expected sales exceed supply price, so producers expand output and employment; if ADF is below ASF, they cut back. Equilibrium settles where the two are equal.

Diagram (in words): put the level of employment (N) on the horizontal axis and receipts (₹) on the vertical axis. Draw the ASF curve rising steeply and the ADF curve rising more gently; the two curves cut each other at point E. The horizontal reading of E gives the equilibrium level of employment, and E is the point of effective demand. (Note: this equilibrium can occur below full employment, giving involuntary unemployment.)

(b) Role of WTO in India's socio-economic development

• Market access: WTO membership has widened India's access to world markets by reducing tariffs and quotas among member countries, boosting exports.
• Trade liberalisation: It has integrated India into the global trading system and encouraged reforms, competition and inflow of technology and investment.
• Rules-based, non-discriminatory trade: The Most-Favoured-Nation and National-Treatment principles give Indian exports fair and equal treatment. …