Re: sample questions of ISI ME 2 , 2010

Posted by Dheeraj on Mar 01, 2014; 9:13am
URL: http://discussion-forum.276.s1.nabble.com/sample-questions-of-ISI-ME-2-2010-tp4990586p7584969.html

 In answer 1 part (a) (ii), I think multiplier in this case should be larger because
                 Y = C + I + G
                 Y = c(1-t)Y + I + tY
    [1-t-c(1-t)]Y = I
    [(1-c) (1-t)]Y = I

so multiplier in this case would be 1/ [(1-c)(1-t) ] Y, which is larger than the usual multiplier 1/ [ 1 - c(1-t) ].

Further in (iii) part dY/dt comes out to be positive.