amit sir, plz HELP with these questions

[aman]

1. An increase in the international reserves of an economy indicates that
a. ex ante savings are higher than ex ante investment
b. ex ante savings are lower than ex ante investment
c. ex ante savings are equal to ex ante investment
d. Nothing can be said about ex ante savings or ex ante investment

2. Which of the following conditions is not necessary for ordinary least squares to be the best unbiased linear estimator (BLUE)?
a. All errors are normally distributed
b. All errors are independent and uncorrelated to each other
c. All errors have expectation zero
d. All errors have the same variance

3. A theorem states that 'if P then Q'. From empirical observations it is known that P is false. Therefore it can be inferred that
a. Q is false
b. Q is true
c. the theorem 'if P then Q' is false
d. None of the above

4. Following are given
(i) Some P are Q
(ii) No R is Q
From (i) and (ii) we can infer that
a. some P are R
b. no P is R
c. all P are R
d. None of the above

5. In an economy where capital and labour are the only factors of production, we have for a particular period
Capital stock : 1000
Output-Capital ratio : 0.4
Employment : 200
Wage rate : 1
The rate of profit in the economy is
a. 5%
b. 10%
c 20%
d. There is not enough information to calculate the profit

 

[The Villain]

2 a
3 d
4 i think c
5 c

[Homer Simpson]

1(a),
4(a) - not sure

[Siddhant]

1 (d) My reasoning is that though the difference between savings and investment may indicate the inflow of reserves, the converse is perhaps not true, given that the inflow might be due to capital a/c transactions.

2 (a)

3 (d) if P then Q implies if notQ then notP. Knowing notP implies nothing.

4 (d) Drawing Venn diagrams will help. While (c) is definitely not happening, either (a) or (b) will happen, but we can't infer which.

5 (c) Output= (O/C)* Capital stock = 400. Capital's share = Total - Labour's share = 400 - 200(1) = 200. Rate of Profit = 200/1000 = 20%.

[aman]

THANKS A LOT  @siddhant, tsuki, ron..

[Ashima]

For the 1st one,

S= I + CA (current account)

Now international reserves are increasing, that means capital account is in surplus. Which means current account must be in deficit.

=> S-I <0

ex ante saving is less than ex ante investment.

which makes b.

2 a
3 d (use truth tables- you will get both the possibilities of a and b, since none is a complete solution so d)
4 d (same logic)
5 c i guess

[kangkan]

Hi Ashmia....reserves are increasing only when the central bank is buying foreign exchange....that is there is excess supply of foreign currrency or deficit of domestic currency...this can happen when foreigners want to buy more of our goods than we want to buy from from them.....like in the case of china...they have been financing their trade surplus by buying american foreign exchange reserves... buying of foreign exchange is similiar to buying assests abroad..hence enters with a negative sign :)

[Homer Simpson]

1 will be (d) - ex ante means before the event (so um we basically dont know what the condition was before anyway with S and I in terms of relative magnitudes)

[Anjali]

Any final answer for ques 1 ?

[Ashima]

Kankan: So, we can buy assets abroad only when we have current account surplus right?

This means savings are more than investment. Does it make it a then?

And ex ante means planned! Right?

[kangkan]

i think its a A..accd to wikipedia Quantities defined in terms of measurements made at the end of the period in question are referred to as ex post; quantities defined in terms of action planned at the beginning of the period in question are referred to as ex ante."[2])  ..hence if a country is buying foreign exchange,it must have  CA surplus..hence S-1 >0

[Siddhant]

Why does a country buying foreign exchange need to have CA surplus? A capital a/c surplus may well offset a CA deficit and also lead to increase in reserves.

[Ashima]

Yes! True that. Capital account surplus may also increase international reserves. Now since both a and b can be the answers, the answer will be d. Oh God! Such a silly question :(