miscellaneous

[neha.neu]

#1.What are reserves with respect to the definition of high powered money?

Is M4= Currency + reserves?

#2. In a two commodity world what would shift the budget line to the right?

1.
2.

#3.who is more likely to be risk averse in an insurance contract?

1. insurer
2. policyholder

The answer says its insurer while i think its policyholder

#4.if X and Y are substitutes while Z is a complement of X and Y and if for example C(xy) is the cross price elasticity For X of Y then

1. C(xy) is positive and C(xz) is negative or
2. C(xy) is negative and c(xz) is positive

The answer says 2 my answer is 1.

#5 An increase in net capital inflows to a country will
a. increase its real interest rates
b. increase its imports
c. decrease its exports

the answer says b. why can't it be b and c

#6 Which of the following will move the budget line upwards without changing its slope?
a. price of good x and y fall by 5% while money income decreases by 2.5%
b. prices of good x and y increase by 10% while money income increases by 5%

The answer says a. Why not b?

#7 Can the burden of direct taxes be shifted?

#4.

 

[nehapodar]

#2 if price of both the commodities reduce proportionately..
well i don't know about the other reason.
#3 policy holder.as he doesn't enjoy benefits of a large business and pooling like the insurer...
#4 the correct ans is 1(according to me)
#7 no.as direct tax is tax on income which you can not reduce, as such.