Re: ISI Sample Paper 2013 ME-II Doubts

Posted by saureco on May 01, 2013; 12:34pm
URL: http://discussion-forum.276.s1.nabble.com/ISI-Sample-Paper-2013-ME-II-Doubts-tp7580214p7580281.html

Hey MI,

That sounds fair enough. I was thinking on some other lines. As the entire amount of investment goods are funded by imports then it should definitely be subtracted but where you've written -(I*-bi), I think this expression will entirely be 0 (as in we won't need to write it in the Income expression, Although its numerical value will be equal to some variable k of imports where 0<k<1) as it is already accommodated in the imports function i.e mY. Its like a part of imports are used for investment purposes. So what am trying to say is when there is an increase in investment there is a simultaneous increase in imports (which is where the investment is coming from in this particular case). We can say imports here are a function defined as m(Y,e,I). Where dm/dI will be +ve. Undoubtedly the answer here will also be a negative multiplier coz delta m will always have a -ve sign attached to it, I just tried explaining it a different way.


Your inputs are welcomed. :)