Re: gokhalemodel papers 2 doubts

Posted by Ayushya Kaul on Jun 08, 2013; 7:13pm
URL: http://discussion-forum.276.s1.nabble.com/gokhalemodel-papers-2-doubts-tp7581987p7582027.html

If anyone can just please have a look at these doubts too, it'd be a great. Its quite a list, but your help would be greatly appreciated :D

SECTION-B

3. There are two goods: x1
 and x2. Income triples and the price of good x1
 doubles.What is the maximum increase of price of good x2
such that no one is worse off?
a) triple the price c) no change
b) double the price d) can’t say

6. The average rate of inflation in USA and Japan between the years 1960-73 is 3.2% and 6.1%
respectively, then the growth rate of
a) a) No definite conclusion can be made c) Japan will be more
b) b) USA will be more d)c) Japan will be less


8. Which of the following would likely have the least direct influence on a country’s current
account?
a) inflation c) exchange rates
b) national income d) a tax on income earned from foreign stock

12. You have two plants. Plant A has costs c(y) = y^2 and Plant B has costs c(y) = 2y^2. What is the
joint cost curve?
a) y^2 c) 5y^2/9 b) 2y^2 d) 3y^2

23. Milton Friedman advocated the use of monetary growth rules for all the following reasons
EXCEPT which one?
a) Variations in monetary growth are a major source of instability in the economy.
b) Lags in discretionary monetary policy are long and variable.
c) The private sector economy is inherently stable.
d) The velocity of money is highly unstable.

26. Under the Cash Balance Approach, Cambridge economists stated that when demand for
money increases, people will -------------expenditure on goods and services, which will in turn
bring ------------ the general price level and ---------- value of money.
a) Reduce, down, raise c) Reduce, down, decline
b) Increase, up, decline d) Reduce, up, raise

28. The following change will result in an appreciation of the rupee
a) An increase in imports c) An increase in Indian interest rates
b) An increase in remittances d) An increase in American interest rates

32. Which of the following statements is NOT a difference between the classical and Keynesian
monetary theories?
a) Keynes emphasized the role of the speculative demand for money, whereas classical
economists focused on the transactions demand.
b) Classical economists use the quantity theory channel, while Keynesians use the interest
rate channel.
c) Keynesian analysis emphasizes the long run, whereas the classical economists focus on
the short run.
d) The classical approach says that monetary changes directly affect the price level, while
the Keynesian approach states that changes in money affect the economy only indirectly
through changes in interest rates and investment.