DSE 2017 Answer Key

[Amit Goyal]

Answer key - DSE 2017

[Statistician]

Can anyone post DSE answer key? I am trying but du website server has some problem right now.

[economics17]

Sir, could you explain why the answer of Q50 is a)? Mankiw has explicitly mentioned that fiscal expansion under fixed exchange rates has no impact on the trade balance.

[ElPsyCongroo]

It has no impact on the balance of payments, trade balance itself is just imports vs. exports.

You agree income increases with a fiscal expansion right? If income increases imports must increase, exports are simply a function of real exchange rate, so they remain unchanged.

So trade balance must deteriorate.

That's what I thought atleast, actually option d in this question pushed me to mark that as the answer, what actually happens is just the opposite of what they have described in that option (there would be an increase in import without affecting exports).

[economics17]

Okay, get it
Thanks Man!

[Ydman]

Sir , DSE 2017 Q13
Consider a consumer with utility function u(x; y; z) =
y minfx; zg. The prices of all three goods are the same.
The consumer has Rs.100 to spend on these three goods.
The demands will be such that
(a) y < x = z
(b) y > x = z
(c) x = y = z
(d) none of the above

im getting (c) even after discussion with others . As to maximise the product will be maximised if the nos are close to each other eg 5X5 instead of 5X4 .