JNU SIS 2011

[Ridhika]

Hey guys I solved JNU SIS 2011.. and I got the following answers please confirm and let me know if you guys get the same thing? thanks!

1. b
2. a
3. c
4. d
5. c
6. missing
7. missing  
8. c
9. d
10.
11.
12.  
13. b
14.  
15. c
16.  
17.  
18. b
19. a
20. c
21. d
22. b
23. d
24. a
25. a

Someone please explain 10-12, 14, 16, 17?

[bhavya jain]

15) a
change in y= -0.8*-50/1-0.8(1-0.25)=100
20) d
reqd prob=12*0.05717=0.6875
17) b

[Granpa Simpson]

For Q10 I have used two concepts and have arrived at the answer..dont know weder dats correct or not..first of all at the point mentioned the elasticity will be greater than one...so we can rule out options a and d...after that I have used the mathematical logic that is import elasticity will be equal to=(ΔI/I)/(ΔE/E)=(ΔI/ΔE)*(E/I) now (ΔI/ΔE)=tan(θ)=(Perpendicular/Base(TC)), also at the point of tangent (E/I)=(Base(OC)/Perpendicular), therefore (ΔI/ΔE)*(E/I)=OC/TC...however plz do check...!!!!!

[Granpa Simpson]

For Q12 I think the answer will be b, because by restrictive trade a large country can change the terms of trade towards its interest..a small country is unable to do so and TOT moves against it if restrictive trade is practiced..!!!!

[divyajain]

for Q14 ans is b !

[divyajain]

dont u think answer to Q15 is b?

[Dreyfus]

@ridhika...How are u getting option a for 24? I m getting option c) as area above mc below p is 0.5*4.5*9=20.25!

[The Villain]

yes even i'm getting c..

[Dreyfus]

For 17.....IS eq is given by : i=Ā/b-(Y/mb)
where Ā= autonomous investment
            b= interest rate sensitivity of investment
            m= multiplier
In closed e economy multiplier, m=1/(1-c)
In open economy multiplier, m'=1/(1-c+n) where n is marginal propensity to import
m>m'
1/m'>1/m
This means, the IS in open economy is more steeper than in closed economy!

[Ridhika]

Why 0.5*4.5*9 .. price is 10.. so producer surplus is is 0.5*4.5*10=22.5 

----- Reply message -----
From: "Vaibhav Garg [via Discussion forum]" <ml-node+[hidden email]>
To: "Ridhika" <[hidden email]>
Subject: JNU SIS 2011
Date: Tue, May 13, 2014 11:48 PM

@ridhika...How are u getting option a for 24? I m getting option c) as area above mc below p is 0.5*4.5*9=20.25!

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NAML

[Dreyfus]

CONTENTS DELETED

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[Ridhika]

Why ? Do we have to subtract fixed cost ?

----- Reply message -----
From: "Vaibhav Garg [via Discussion forum]" <ml-node+[hidden email]>
To: "Ridhika" <[hidden email]>
Subject: JNU SIS 2011
Date: Wed, May 14, 2014 2:34 PM

@ridhika...the price is 10 only but the area should be considered with 9 only

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NAML

[Ridhika]

Vaibhav I'm getting IS flatter :( omg .. what's happening?!?

Please find my solution below and tell me what's wrong with it ?!

(Sorry it's really untidy )

----- Reply message -----
From: "Vaibhav Garg [via Discussion forum]" <ml-node+[hidden email]>
To: "Ridhika" <[hidden email]>
Subject: JNU SIS 2011
Date: Wed, May 14, 2014 12:07 AM

For 17.....IS eq is given by : i=Ā/b-(Y/mb)
where Ā= autonomous investment
            b= interest rate sensitivity of investment
            m= multiplier
In closed e economy multiplier, m=1/(1-c)
In open economy multiplier, m'=1/(1-c+n) where n is marginal propensity to import
m>m'
1/m'>1/m
This means, the IS in open economy is more steeper than in closed economy!

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NAML

[Dreyfus]

@ridhika Yes we hv to only consider the area of triangle so formed to find producer surplus, so u can't neglect 1 here!

[Dreyfus]

@ridhika....u hv subtracted imports instead of adding them! Y=C+I+G+X-M
M=N+nY!

[Ridhika]

@vaibhav .. arey no ! I have taken M= M0 + mYd

Where M0 is autonomous imports and Yd is disposable income. And m is marginal propensity to import .. it could just as well be marginal propensity for net imports.. 

So in the image M0 is a part of A and I'm adding m(Y-tY) .

----- Reply message -----
From: "Vaibhav Garg [via Discussion forum]" <ml-node+[hidden email]>
To: "Ridhika" <[hidden email]>
Subject: JNU SIS 2011
Date: Wed, May 14, 2014 8:47 PM

@ridhika....u hv subtracted imports instead of adding them! Y=C+I+G+X-M
M=N-nY!

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NAML

[Ridhika]

Omg wait ..if we think of m as marginal propensity of net imports then,  if exports > imports then m is negative and conversely m is positive (which is the only case I was assuming) .. then slope depends on balance of trade !

Could that make sense ?!

----- Reply message -----
From: "Vaibhav Garg [via Discussion forum]" <ml-node+[hidden email]>
To: "Ridhika" <[hidden email]>
Subject: JNU SIS 2011
Date: Wed, May 14, 2014 8:47 PM

@ridhika....u hv subtracted imports instead of adding them! Y=C+I+G+X-M
M=N-nY!

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NAML

[ViV]

@Ridhika
for 17th Question keep this in mind
closed economy multiplier = 1/1-mpc
open economy multiplier = 1/1-mpc+m, where m= proportionate import

For 24th, producer Surplus = Profit
P = MC, P =10 (given)
10 = 2q+1, q = 4.5
MC = 2q + 1, TC = q^2 + q
Profit = 4.5*10 -(4.5^2+4.5)
       = 20.25

[The Villain]

Why making it complicated
in closed economy multiplier is1/1-c+ct
whereas in open 1/1-c+ct+m
so multiplier is less in open so steeper

[Dreyfus]

Sry.I mistakenly wrote M=N-nY instead of M=N+ny
When u use this the identity will look like: Y= Ā+cY-nY-bi.   (U can also consider tax also)
Y=1/(1-c+n)*Ā-bi/(1-c+n)
→i= Ā/b-Y(1-c+n)/b
In closed economy n=0
i=Ā/b-Y(1-c)/b
Now, compare!