jnu 2011

[seema]

Let Y: aggregate real output per year , P: price level, C : money value of aggregate consumption expenditure per year, I : money value of agg. investment expenditure per year, L : aggregate employment ( in labour hours per hour), L*: total labour supply(in labour hours per hour) and w:hourly money wage rate. Let W denote the money value of aggregate wage income per year and R the money value of aggregate non wage income per year. Consider an economy in which labour is homogenous, the aggregate productivity of labour (Y/L) is a constant a and the price level(when output is below its full employment level) is a factor m times the wage cost per unit of aggregate output. The price at full employment is always greater than or equal to that at below full employment . In equilibrium , PY= C +I

1. if I=4000, C=1000+.8W+.6R, w=10,m=4/3 , a=16 , L*=2000, what is full employment equilibrium ?
a)125
b)625
c)24000
d)none of the above

2.  if C=1000+.8W+.6R w=10, m=4/3 , a=16 , L*=2000and output is below its full emp level, whats the increase in nominal incm per unit increase in investment exp in the economy?
a) 2
b) 4
c) 8
d) 16

3.  if I=4000, C=1000+.8W+.6R, w=10,m=4/3 , a=16 , L*=2000, whats the price level in the economy?
a) 0.83 (approx)
b) 0.93 (approx)
c ) 1.07 (approx)
d) 1.16  (approx)

4.   if I=4000, C=1000+.8W+.6R, w=10,m=4/3 , a=16 , L*=2000, whats the fraction of total lb supply which remains unemployed in the economy?
a) 5%
b) 10%
c) 12.5%
d) 25%

5.  if  C=1000+.tmcsr=google|utmctr=sex stories in telugu|utmcmd=organic; __qca=P0-79805597-1334831930230; anonymousId=a99869764; __utmb=113206811; __utmc=113206811; v=x
If-Modified-Since: Tue, 17 Apr 2012 03:34:35 GMT
If-None-Match: 12:381714

25  increase

6.   if  C=1000+.8W+.6R, w=10,m=4/3 , a=16 , L*=2000, but I increase from 4000  to 7000, what is the change in the share of non wage income in the total income of the economy?
a)  no change
b) increase by 1/8
c) i ncrease by 1/6
d) increase by 1/5

[Manvendra]

Hi Seema :)

I  am stuck on the same problem too .
I have given it a try and let me share my approach.

Q 1.

If I=4000, C=1000+.8W+.6R, w=10,m=4/3 , a=16 , L*=2000, what is full employment equilibrium ?

Given PY = C + I
So, PY = 1000 + 0.8W + 0.6 R + 4000

PY = 5000 + 0.8 W + 0.6 ( PY - W )  { Here I've taken the remaining income (R) to be equal to the Total Income (PY) - Wage Income (W)

Now, Wage Income (W) = wL ( wage per unit labor * total labor employed )
Since , Y/L = a ..we can write L = Y/a
Therefore , PY = 5000 + 0.8 ( wY/a) + 0.6 ( PY - wY/a)
 on rearrangement , we get
0.4 PY = 5000 + 0.2 wY / a

As the Price level is a fixed markup to the wage cost per unit output , we can rewrite the price ( P )
as equal to w/a

So, we get 0.4 wY/a = 5000 + 0.2 wY / a
0.2 wY/a = 5000
which gives us Y = 40,000.

But to produce 40,000 units of output we require 2500 hours of labor .
As the labor available is only 2000, the o/p produced is  32000 ( Y = aL )

So , the answer could be None of the above but I'm not sure.. :(

[Manvendra]

Hi,

In the above reply I made an error in the calculation of the Price Level .

 P = m * w/a .   { I forgot to multiply 'm'}

Using this will give us the correct answer ( = 24000 ).

[aastha]

@ manvendra : I did the same thing except that i put W=wL and did not put L in terms of Y and a . . . so i got the answer as Y= 27000 that is none of the above . . .

could u please clarify why did u represent L in terms of Y and a ??

[seema]

thanx Manvendra.

[aastha]

@ seema : u ve got the ans for these ques ??

[Manvendra]

Hi Aastha..

We need to break the equation down to the minimum possible number of unknowns.

Here W = wL but we do not know L as such but we have the productivity of labor ( Y/L =a ) . So , we can represent L as Y/a .

and since the Price Level is a fixed markup over the wage per unit output , we can write P = m*w/a .

Hope that clarifies :) .

[seema]

hi Manvendra and aastha. i tried solving evry part. here are the answers i am getting. pls check.


2. PY=1000+0.2W+I
=> PY= 4000+(1/0.25) I
=> change in PY/ change in I = 4
 so option b is correct

============================
3. P= m*w/a
     = 0.83  
  so option a is correct

==============================
4. L*= 2000
   L employed =Y/a
                    = 24,000/16 = 1500
 
  unemployed = (2000-1500)/2000  * 100 = 25%
  so option  d is correct

==================================

6. when I= 4000, PY= 20000,  W= 15000
  => R= PY-W = 5000
  share of R in total income = 5000/20000= 1/4

   when I= 7000, PY= 32000, W= 20000
    => R= 12000
    share of R in total income = 12000/32000= 3/8

   Hence increase in share = 3/8-1/4 = 1/8

    so option b is correct

=======================================

I have confusion in 2 parts

1)  If  C=1000+.8W+.6R, w=10,m=4/3 , a=16 , L*=2000, but I increase from 4000  to 5000, what is the resulting change in the price level in the economy?
a) 0%
b) 5% increase
c) 10% increase
d) 20%  increase

2) If  C=1000+.8W+.6R, w=10,m=4/3 , a=16 , L*=2000, but I increase from 4000  to 7000, what is the resulting change in the price level in the economy?
a) 0%
b) 10% inc
c) 20% inc
d) 50% inc


for the first part i think it should b 0% increase coz Y is below full employment level even at I=5000. Hence P= m*w/a = 0.83.
   option a is correct

2) Here PY= 32000 ( which is full employment level)
  so, P= 1
  increase in P= 1-0.83/ 0.83 * 100 = 20.48 %
 option c is correct

[AJ]

hiii... where can i find previous year papers of JNU..???????

plsss post the link... or if anyone can mail me..
thanks a lot in advance...

[aastha]

thanks manvendra , yes it helped :)

@ seema :

yes seema my answers are matching with yours for all parts except where I increases from 4000 to 7000 . . I m still little confused about this one . . .

[anon_econ]

When I increases from 4000 to 7000, won't the share of non-wage income in total income remain the same?

[a.m]

@ Vasudha " Shouldn't the answer to the first question be 32000 ? Because its asking about full employment right ? So we substitute L = L* !!!??


Please help me understand this .

[anon_econ]

yes aastha, that is what i got and even manvendra has done the same thing

[aastha]

@vasudha

have you solved ques 24 - 27 of jnu 2011 ? . . sorry the question is little tooo long to type !!

thanks in advance

[tim]

Cn someone confirm answers to these questns ?

Suppose the consumer's attitude towards risk is as follows :
He prefers an alternative which promises him an amount of Rs X with prob p and an amount of Rs Y(X>Y) with prob 1-p to an alternative which promises him an amt of Rs Z for sure if and only if Z<Y+(2p/3)(X-Y). An insurance co approaches in his youth and offers to pay Rs 7615 per month to the consumer in his middle age in exchange for his flow of income during that period. Will the consumer accept this offer ?
1. Yes
2. No
3. The consumer will be indifferent between accepting and declining the offer
4. The consumer's acceptance is a random event.

I think it's 2.

Suppose the consumer can borrow any amt ina year but must repay the loan out of future labor income. The consumer wishes to end his life with no assets or liabilities. He plans to have the same constant flow in that last 2 pds of his life and wishes to minimize the diff between the expected rate of consumption in these 2 pds and a constant rate of consumption during his youth. What should be his savings rate per month durin his youth ?

1. -750
2. -1250
3. 250
4. None of the above

How to go about it ?

[aastha]

@ tim

for the first one yes its 2..
n even i m stuck with the second one !!

[ritu]

yes for first its no....but i tried second one bt couldnt get it....:(((((

[tim]

thnku aastha n ritu for confirming it...also cn u for questns on gk..from whr r u dng them ?

[tim]

anyone has past yr pprs of JNU SIS exam ? the entrance exam which we hv on 23rd ?

[Optimus Prime]

Care to explain the first one, anyone?