JNU MACRO, PLEASE HELP !

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JNU MACRO, PLEASE HELP !

Mauli
LP
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Re: JNU MACRO, PLEASE HELP !

Dr. Strange
Y= Worker's income(W) + Profits(P)

G= P/4

Public investment = P/8

Private Investment = 0.5 * 3P/4 =3P/8
Total investment = P/2
Given K/Y =4
dK = 4 dY
dK= P/2
P/2 = 4 dY
P/2Y = 4 dY/Y
Given dY/Y=6
So P/2Y=24
P/Y =48 ....Ans

Now new case,
G= P/2

Public investment = P/4

Private Investment = 0.5 * P/2 =P/4
Total investment = P/2
Total investment is same as earlier case so growth rate is same and social spending is higher

Please confirm the answer



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Re: JNU MACRO, PLEASE HELP !

Mauli
 Thank you for solving this question
but shouldn't pvt I be 3P/4.?  
and how did you get dk=P/2? Please can you explain ..
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Re: JNU MACRO, PLEASE HELP !

Dr. Strange
Half of profit is saved for private investment(acc to ques).Rest half is consumed. since after tax profit=3P/4 so Private Investment=3P/8

And dK = CHANGE IN CAPITAL STOCK= total investment= private +public investment= 3P/8+P/8=P/2
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Re: JNU MACRO, PLEASE HELP !

Mauli
I got it now!!  yes the answers are correct.
thanks a lot:)