ECONOMICS


Paper I

ITime Allowed Three Hours IIMaximum Marks 300 I
INSTRIJCTIONS
Each question is printed both in Hindi and

in English.
Answers must be written in the medium specified in the Admission Certificate issued to you, uihich must be stated clearly on the cover of the answer-book in. the space provided for the purpose. No marks will be given for the answers written in a mediu,m other than that specified in the Admission. Certificate..
Candidates should attempt Questions no. 1 aTJ-d 5 which are compulsory; and, any three of the' remaining questions selecting at least one question from each Section.
.
The number of marks "carried by each question is indicated at the end of the ques#on.
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(Jraphs /illustrations, wherever required,


may be aone.in the answer-book itself.


SECTION A


1.Answer the following in not more than 200 words each
Elucidate how does Kalecki's theory of distribution
share the value of output between labour and capital.

(b)The marginal efficiency of capital together with
the current rate of interest determine the profitability
of an investment project. How does it help in the selection
of an investment project?

Friedman's quantity theory of money close to Classical
or Keynesian approach to the aggregate demand for-money?
Give justifications for your arguments.

2.(a)The 'non-viral nature' of social goods consumption
has important bearing on efficient resource allocation.
Explore the problem with the examples and diagrams. 20
How does the burden of tax distribution between
buyers and sellers in the ratio of elasticity of demand
and that of supply take place? 20

(c)'Monetarists are of the view that only money does
and Keynesians believe that money does not matter.' What is
your reasoning of the-extreme views held by the monetarists
and the Keynesians 20


What is the difference between horizontal equity and
vertical equity while considering ability to pay ?How should
the problem be resolved Illustrate graphically. 20

What is 'liquidity How does it occur? Illustrate. 20

Would the introduction of automatic teller machines,
which allows people to withdraw cash from banks as needed,
maKe deposits more inconvenient and affect the money supply
Elucidate. 20



How do the small trading nations share the gains from
trade which occur as a consequence of gains from exchange
and gains from specialisation? 20
.
all assumptions hold true, how does trade between
nations tend to bring about equalisation of factor prices . . ..... . 20
(c)How does portfolio balance approach differ from
monetary approach in determining the exchange rate? 20
SECTION B


5. Answer the following in not more than 200 words each 20x3=60
What do the following terms signify in structural
transformation and growth?
Kuznets' U-shaped curve
Environmental Kuznets curve
(iii)N-shaped Kuznets curve in the long-run
How can the structural independence between A-sector
and K-sector in the dualistic economy foster
growth in the absence of external stimuli

Compare Human Development Index with
Human Poverty Index as a measure of
development. How is the Human Poverty Index
different from the Happy Planet Index?

Why do energy elasticities tend to unity· in
industrially advanced countries? 20
What are the negative externalities of high energy
coefficients? 20

(c)How is subsidy better than tariff to achieve domestic
objectives 20


7.(a)How does the policy mix of fiscal and monetary
policies maintain equilibrium In balance of
payments and full employment? 20
How is warranted growth different from natural
rate of growth? Explain why Harrod's growth
model is called 'knife-edge'. 20
the contemporary world of perfect capital
mobility and fixed exchange rates, why is the
monetary policy ineffective to maintain
equilibrium? 20.
How does Slow incorporate investment In
education in the growth model to achieve long-run
growth? 20
What are the objectives of National Environment
Policy,2006 20
(c)What are India's gains under WTO regime with
respect to
Service sector,
(ii)Globe-Hex model 20