q.1)option.a)....In a closed economy (Govt purchase Multiplier+Tax multiplier=1) that means If govt increase the tax by 1 unit n spend it then total increse in income in the economy is equal to 1 unit...Balanced budget multplier in closed economy always =(1-mpc)/(1-mpc)=1.
q9).option.b)....Exchange rate devaluation means a reduction in the official value of domestic currency in terms of other currency...e.g If exchange rate is Rs.50/$ officially today n reduce to Rs.55/$ by authority then there is a devaluation of rupee..and revaluation of dollar...now the rupee will buy less dollar or dollar will buy more rupee...
So, If that is the case the the Net export will increase n import will decrease..which means trade balance will improve.
q14).options.b)...In competitive industry p=MC...here in this question P=14 and at q=5 Mc=11 n at q=6 Mc=18...So the firm will produce 5 units bcoz it can't produce 6th units...If firm decide to produce 6th unit then at q=6 mc=18...which will be greater then price..n it will cause firm by reduce in profit.(i.e at q=6 profit will not be maximized)..
q16).option.d)....profit(17)=pq-cost=17*5-75=10.
q52)..option.a)..a flow variable..flow variable are always taken as per period of time.(e.g like GDP,int.rate n
govt budget deficit)n stock variable are taken at given point of time.(i.e as on)..(e.g govt debt, person wealth etc).
q55). option.a)...we know quantity equation M*Vt=PT or M*Vy=PY where vt=transaction velocity n vy=income velocity...
given vt-vy=5, PT=6PY & M=1000
So, by using vt-vy=5 & vt=pt/m & vy=py/m..
we have (PT-PY)/m=5...
now by putting pt=6py in above equation...
you will get (py=m)..
so, Py=1000(i.e money value of aggregate income)
q70)..option.c)...already disscussed on forum before...
q74).option.c).Terms of Trade is the ratio of quantities of domestic goods that a country must give up to obtain a unit of imported goods...
q75)..option a)...Autarky means country is operating in abscence of trade...which means country can consume only those goods which it able to produce..which in turn decide by country's PPF..
q93)..option.c)....Market capitalization is the total value of the issued shares of a company n it is equal to the share price multiplied by outstanding share of the company..
M.A Economics
Delhi School of Economics
2013-15
Email Id:sumit.sharmagi@gmail.com
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