Some doubts

[Shefali]

These quest are from eco xam of acturial science,April 2014.I thought these are good ones so thought of sharing .Pls share your answers

q1 The budget deficit tends to decrease when:
A national income falls.
B national income rises.
C governments decrease the personal income tax rate.
D government expenditure increases.

q2 The US has been running a large current account deficit, and China has a large current
account surplus. If their exchange rates were both flexible, how would such
imbalances be eliminated?
A The US dollar appreciates and the Chinese renminbi depreciates.
B The US dollar depreciates and the Chinese renminbi depreciates.
C The US dollar appreciates and the Chinese renminbi appreciates.
D The US dollar depreciates and the Chinese renminbi appreciates.

q3 Other things remaining the same, the effect of an increase in the budget deficit is to:
A lower short term interest rates because the aggregate demand curve shifts to
the left.
B raise short term interest rates because the aggregate demand curve shifts to the
left.
C lower short term interest rates because the aggregate demand curve shifts to
the right.
D raise short term interest rates because the aggregate demand curve shifts to the
right

[Dreyfus]

Q1 c...
Q2..D

[mrittik]

1.a
2.d
3.c

check & clarify

[Homer Simpson]

1)(B)
2)(D)
3(D)

[Dreyfus]

Q1 should a..I mistakenly read as increase in tax rate

[The Villain]

1a ,2 d , 3 i'm not sure
Btw how many exams have you cleared of acturials shefali?

[Shefali]

thanxx guys pls expalin q1...
@ron...i just started ..gave 1st xam in april..wat abt u, are u also doing acturials?

[ViV]

1 a
2 d
3 d

[Homer Simpson]

Please correct me if i am wrong!

BD = G - tY >0

let G = 8000
t = 0.10
Y = 12000

so BD = 6800

now Y' = 20000 (Y rises)

BD' = 6000

So BD has fallen. Intuitively, a rise in tax collection will lower the budget deficit for given government expenditure level. Tax collection rises when either t rises or taxable income rises.

[ViV]

fall in G or increase in T will reduce Income also Budget deficit will reduce if either of these happens..

[The Villain]

@ shefali use option shefali, c and definitely cannot be...and when there is budget deficit nat income dec so a

Ya i 'm also pursuing acturials...hve cleared three papers :)

[Shefali]

thnxx a lot everyone.

Ron...man awesome,3 papers is a big thing(considering the difficulty of acturial)! Ma in eco and acturials, well too good!!