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Administrator
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Q 1 (c) Upward sloping
Q 2 (c) Unanticipated, anticipated
Q 3 (a) IS curve was vertical and stuck at a low level of income
Q 4 (d) An increase in the savings rate has no impact on the steady-state growth rate.
Q 5 (b) Decreasing; Decreasing
Q 6 (d) Complete crowding out and no increase in equilibrium income
Q 7 (b) The IS curve is vertical and the LM curve is upward sloping
Q 8 (b) The larger the induced change in interest rates and smaller the responsiveness of investment to these changes.
Q 9 (b) The savings rate is exogenous in the former, but endogenous in the latter
Q 10 (b) It leads to lower level of output in the new equilibrium
Q 11 (a) Household R chooses technology A; household P chooses B
Q 12 (d) 1/4 ((K(t,r))^2 + (K(t,p))^0.5 - 2K(t,r)-2 K(t,p))
Q 13 (b) Income of household R grows perpetually while income of household P approaches a constant
Q 14 (b) Both households would have still invested in capital
Q 15 (b) (i) and (ii) remain unchanged; (iii) depreciates
Q 16 (b) u(x, y) = min(3x, 2y)
Q 17 (c) Reduced her demand by 8.
Q 18 (c) 0.2
Q 19 (c) 18
Q 20 (a) Decreasing returns to scale and diminishing marginal product for factor x.
Q 21 (c) x = 2y
Q 22 (c) 9
Q 23 (b) A Pareto improvement could be achieved by having the government pay the firm a subsidy of 59 and insisting that the firm offer slops at zero price.
Q 24 (a) Raise p(2)
Q 25 There is typo in option(a). Correct answer is 6750.
Q 26 (b) Total milk production is 8,000
Q 27 Poorly stated question. Given the information, solution is D1 = 2.5 and D2 = 1.5
Q 28 (b) H1=14 and H2=16
Q 29 (a) 80 square meters
Q 30 (c) A straight line with slope 1/4 passing through the upper right corner of the box.
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