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Corporate Finance · GDP, inflation & interest rates

BSMS2205 · 6 questions · 24 marks · 1 paper

Answer key

Indian Institute of Technology Madras

BS Degree Programme · Examination & Study Paper

BSMS2205 · Corporate Finance

GDP, inflation & interest rates

Official Paper

Examination Instructions & Guidelines

Solve on notebook/paper first before checking solutions.
MCQ: Exactly 1 option is correct. Negative marking applies.
Scientific calculator allowed for all calculations.
Official answer key is sealed at the end of this sheet.

Q1MCQ4 Marks·Choose one option
Key ↓
If nominal GDP doubles, but real GDP remains unchanged, this means
1. AOnly prices increased.
2. BOnly quantity increased.
3. CBoth prices and quantity increased.
4. DNeither prices nor quantity increased.
Q2MCQ4 Marks·Choose one option
Key ↓
If expected inflation equals nominal interest rate, then real interest rate is
1. APositive
2. BNegative
3. CZero
4. DOne
Q3MCQ4 Marks·Choose one option
Key ↓
Assume there are two periods and prices of consumption good are the same (and equal to 1) in both periods. You earn Rs 10,000 in period 1 and Rs 12,000 in period 2. In each of the two periods, your spending is equal to earnings in that period. The slope of intertemporal budget constraint is −1.12, then what is the prevailing interest rate?
1. A10%
2. B12%
3. C15%
4. DInsufficient information
Q4MCQ4 Marks·Choose one option
Key ↓
A typical consumer basket in the economy of Pangia Island consists of 1 unit of clothes, 3 units of food and 2 units of fuel. In 2022, the price of clothes was Rs 200 per unit, the price of food was Rs 50 per unit and the price of fuel was Rs 75 per unit. In 2023, the price of clothes was Rs 180 per unit, the price of food was Rs 70 per unit and the price of fuel was Rs 80 per unit. In 2024, the price of clothes was Rs 220 per unit, the price of food was Rs 80 per unit and the price of fuel was Rs 100 per unit. Considering 2022 as base year, what was the CPI in 2024? (Note: CPI in base year =100)
1. A100
2. B110
3. C120
4. D132
Q5MCQ4 Marks·Choose one option
Key ↓
A typical consumer basket in the economy of Pangia Island consists of 1 unit of clothes, 3 units of food and 2 units of fuel. In 2022, the price of clothes was Rs 200 per unit, the price of food was Rs 50 per unit and the price of fuel was Rs 75 per unit. In 2023, the price of clothes was Rs 180 per unit, the price of food was Rs 70 per unit and the price of fuel was Rs 80 per unit. In 2024, the price of clothes was Rs 220 per unit, the price of food was Rs 80 per unit and the price of fuel was Rs 100 per unit. Considering 2022 as base year, what was the annual inflation rate in 2024 with respect to 2023?
1. A10%
2. B16%
3. C20%
4. D32%
Q6MCQ4 Marks·Choose one option
Key ↓
In the economy of Moldova, the nominal GDP is accounted as 15,000 units and the real GDP is accounted as 12,000 units in 2024, then what is the value of GDP deflator in 2024 for Moldova?
1. A120
2. B125
3. C130
4. D150

Official Key

Master Answer Key & Explanations

Official answer keys from IIT Madras BS past papers. Click any question to review.

Reveal Key

Q1A

Q2C

Q3B

Q4D

Q5C

Q6B

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