jnu mphil 2014- doubt.

[shelly gupta]

Q31- in a closed economy, population growth is 1.5% pa. elasticity of food consumption to per capita gdp is 0.3. suppose the growth of food consumption can be atmost 3%. what is the max rate of gdp growth that is consistent with a balance in the growth of supply and demand for food?
a) 1.5% pa
b) 5% pa
c) 6.5% pa
d) 10% pa

Q32- assume the workers consume all their wages but capitalists saves a portion of their profits. what will be the balanced budget multiplier if the tax levied on wages alone?    ( i got zero)
a) 1
b) 0
c) indeterminate
d) none of the above.  

also if you could help me with how should i approach Q33

[Ayushya Kaul]

I have the same doubts. Anyone who can help with the same?

[Ayushya Kaul]

Bump

[Dr. Strange]

31.Ans 6.5%

Let c =C/L , y=Y/L
Given, n= (1/L)* dL/dt = 1.5%
Also given , elasticity=0.3   i.e dc/c = 0.3 dy/y    .....(1)
Since c=C/L
So, 1/c * dc/dt= 1/C * dC/dt - 1/L * dL/dt
Given,1/C * dC/dt <=3% and n=1.5%
So  1/c * dc/dt <=1.5%.......(2)
Putting 2 in 1,
dc/c = 0.3 dy/y
So,1/c * dc/dt  = 0.3 *(1/y)* dy/dt
from 2 we get,
1/y * dy/dt<=5% .......(3)

Now since y=Y/L
so 1/y * dy/dt= 1/Y * dY/dt - 1/L * dL/dt
From (3) we get,
1/Y * dY/dt <=6.5%




32.Yes answer should be 0


 

[Dr. Strange]

33. Output in Investment Sector = I

Output in Consumption Sector =C
Profit In Investment Sector = M
Profit In Investment Sector=N
Total Output= Total income=GDP= Y
Now,
Total Income = wages + profits = M+N+ w(Li + Lc) =Y ......(1)
TotaL Output = I+C =Y ....(2)
Given, M= 0.75 * I ...(3)
N=0.75* C ...(4)
Also given that all consumption Item come from Consumption sector
So C= 3/8 *I+3/8*C+ w(Li + Lc) ...(5)

Using these 5 equations we get,
C/I = 5/3
SINCE Productivity is same in both sectors so Lc/Li = 5/3

[Ayushya Kaul]

Could you please explain how you get 0 for question 32?

[Ayushya Kaul]

Question 30 anyone?

30) Economy A has a debt-GDP ratio of 30 %, a fiscal deficit  of 4 % of GDP, and its nominal GDP is expected to grow at 16 % p.a. Economy B has a debt-GDP ratio of 28 %, its fiscal deficit is 3.7 % of GDP and its nominal GDP is expected to frow at 12 % p.a. Economy has a debt-GDP ratio of 25 %, a fiscal deficit  of 3 % of GDP, and its nominal GDP is expected to grow at 9 % p.a. If fiscal deficit ratios and expected nominal GDP growth are maintained, which of the following economies is likely to sustain a long-run debt-GDP ratio of at most 30 %?

a) Economy A
b) Economy B
c) Economy C
d) All of the above

[Ayushya Kaul]

How did you get 0 for question 32?

[Ayushya Kaul]

Bump.