#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.
#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.
