Q 1 (c) Upward sloping
Q 2 (c) Unanticipated, anticipated
Q 3 (a) IS curve was vertical and stuck at a low level of income
Q 4 (d) An increase in the savings rate has no impact on the steady-state growth rate.
Q 5 (b) Decreasing; Decreasing
Q 6 (d) Complete crowding out and no increase in equilibrium income
Q 7 (b) The IS curve is vertical and the LM curve is upward sloping
Q 8 (b) The larger the induced change in interest rates and smaller the responsiveness of investment to these changes.
Q 9 (b) The savings rate is exogenous in the former, but endogenous in the latter
Q 10 (b) It leads to lower level of output in the new equilibrium
Q 11 (a) Household R chooses technology A; household P chooses B
Q 12 (d) 1/4 ((K(t,r))^2 + (K(t,p))^0.5 - 2K(t,r)-2 K(t,p))
Q 13 (b) Income of household R grows perpetually while income of household P approaches a constant
Q 14 (b) Both households would have still invested in capital
Q 15 (b) (i) and (ii) remain unchanged; (iii) depreciates
Q 16 (b) u(x, y) = min(3x, 2y)
Q 17 (c) Reduced her demand by 8.
Q 18 (c) 0.2
Q 19 (c) 18
Q 20 (a) Decreasing returns to scale and diminishing marginal product for factor x.
Q 21 (c) x = 2y
Q 22 (c) 9
Q 23 (b) A Pareto improvement could be achieved by having the government pay the firm a subsidy of 59 and insisting that the firm offer slops at zero price.
Q 24 (a) Raise p(2)
Q 25 There is typo in option(a). Correct answer is 6750.
Q 26 (b) Total milk production is 8,000
Q 27 Poorly stated question. Given the information, solution is D1 = 2.5 and D2 = 1.5
Q 28 (b) H1=14 and H2=16
Q 29 (a) 80 square meters
Q 30 (c) A straight line with slope 1/4 passing through the upper right corner of the box.

Initially, The monopolist was earning -5 in case of price=7
If govt gives subsidy of 59 his profits are coming out to be +5 and since there is no variable cost associated with his cost function so it is pareto improvement

Question 27 is solved easily if we replace rs. 50 with rs. 0.5.

Infact on googling the question you'll find the original question in a forum somewhere where it's given .50dollars. They just copied the question and changed rupees to dollars, and wrongly ignored the decimal.