PAPER-III
ECONOMICS

JA-001-17 1 P.T.O.

ECONOMICS
Paper – III

Note This paper contains seventy five objective type questions of two marks each. All questions are compulsory.

1. Which among the following is/are true for a Cartel

I. It aims at maximising of individual firm’s profit.

II. It decides the total output in the industry to which Cartel represents .

III. It does not fix the price at which members sell their output.

Answer from the code below All are true. I and II are true. Only II is true. Only I and III are true.

2. Why does demand curve have a negative slope

I. Due to income effect only

II. Due to substitution effect

Answer from the code below Both I and II Only I Only II Neither I nor II

3. In the entry prevention model of Bain, firms charge premium over Long period competitive price Short period competitive price Lowest average cost None of the above

4. Which among the following is not well matched Goods Nature Fishing in the large lake – Non-exclusive but rival Air – Non-exclusive and non-rival Use of a light house – Rival Stock of washing machines – Exclusive

5. The slope of the production possibility curve is the marginal rate of exchange marginal rate of substitution average rate of transformation marginal rate of transformation

6. <img src='./qimages/12521-6.jpg'>

The gain in profit income from an increase in immigration according to this diagram is the area BDL'L the area of WBDW' the areas WBFW' and FDL'L together the areas WBDW' and FDL'L together

7. The demand for rare paintings, and rare stamps etc. is explained by which among the following effect Snob effect Bandwagon effect Veblen effect None of the above

8. A market is said to be economically efficient if it maximises consumer surplus producer surplus aggregate of consumer and producer surplus None of the above

9. Who among the following economists are associated with the concept of Quasi rent

I. A. Marshal

II. J. Robinson

III. D. Ricardo

Answer from the code below Only I and III I and II All the three Only III

10. In the adjoining diagram, which of the line represent law of returns

<img src='./qimages/12521-10.jpg'> OA BC DE Both and above

11. In the adjacent diagram, which of the following effects will alter the Aggregate Demand Curve AD ?

<img src='./qimages/12521-11.jpg'>
Trade effect Liquidity effect Wealth effect All of the above

12. Match List – I with List – II

List – I List – II

a. Keynes i. Interest is real phenomenon.

b. Irving Fisher ii. Interest is non-monetary phenomenon.

c. Wicksell iii. Interest is both monetary and non­monetary phenomenon.

d. Classical Economist iv. Interest is monetary phenomenon.

Select the correct answer from the codes given below

Codes
a b c d
(1)iv ii iii i i ii iii iv
(3)iv iii ii i ii i iv iii

13. 1973 oil crisis also triggered a wide spread economic crisis in USA and some European nations. In this context which statements are true It led to disillusionment with established policies based on Keynesian economics. There emerged a malady known as stagflation. New classical economics emerged as a challenge to Keynesian economic ideas. All of the above are true

14. As per IS-LM framework, an increase in government expenditure will result in increase in income and interest rate both. increase in income only. decrease in investment and interest rate both. decrease in income and interest rate both.

15. Which of the following can be considered as leakages in the force of the multiplier Higher propensity to import Higher marginal propensity to save Both and above Neither nor above

16. According to Robinson-Uzawa theorem, steady state growth is possible if the technical progress is only Hicks neutral only Harrod neutral only Solow neutral Both Hicks and Harrod neutral

17. Which one of the following is not an assumption of permanent income hypothesis Transitory income can be both positive and negative. Permanent income depends on human and non-human wealth. Transitory consumption can be both positive and negative. Average propensity to consume is greater than marginal propensity to consume.

18. The Accelerator model predicts that changes in investment are determined by the changes in Interest Output Capital Inventory

19. Which among the following statements are true for Schumpeter’s theory of economic development

I. Development is evolutionary.

II. Development is financed by real savings.

III. Capitalism keeps its character intact overtime.

Of the above which statement(s) is/are true Answer from the code below

Codes Only I Only I and II All the above None of the above

20. Who among the following has not given his model based on the concept of unlimited supply of labour D.W. Jorgenson Ranis-Fei W.A. Lewis Gunnar Myrdal

21. Which aspect of economic development did Gunnar Myrdal concentrate upon Capital scarcity Human resource scarcity Regional inequalities Population exploitation

22. Fei-Ranis’s theory of economic development is based on dualistic approach to development presence of disguised unemployment importance of agricultural development All of the above

23. Andre Gunder Frank, a major dependency theorist suggests that the following economic activities have contributed to underdevelopment Replacing indigenous enterprises with technologically more advanced, global, subsidiary companies.

(ii) Closing the economy to trade with, and investment from, developed countries.

(iii) Workers migrating from villages to foreign dominated urban complexes.

(iv) Forming an unskilled labour force to work in factories and mines and on plantations.
Choose the correct answer from the codes given below

Codes and and and and

24. In a Harrodian economy, ICOR is 4.5 population growth is per annum, and the investment rate is 27%. Hence the annual growth of per capita will be 2.5 9 6 4

25. Which among the following is not correctly matched

Author Book M. Friedman – Capitalism and Freedom Amartya Sen – Argumentative Indian Joseph Stiglitz – In Defense of Globalization Ruchir Sharma – The Rise and Fall of Nations

26. Which among the following statements is not true for the Golden Age equilibrium in the growth model of Mrs. Joan Robinson Rate of profit tends to rising. Level of real wages rise with output per worker. Technical progress is neutral. Population is growing at a steady rate.

27. For the Union Budget of 2015-16, arrange the following in the ascending order of their percentage in GDP :

Revenue deficit Effective deficit

(iii) Primary deficit Fiscal deficit

Choose the correct answer from the codes given below

Codes

28. While recommending horizontal distribution, which of the following criterion got the least weightage by the 14th Finance Commission Demographic change Area Population Income distance

29. If in a year, the gross fiscal deficit of Government is Rs 3,00,000 crores, revenue deficit is Rs 1,50,000 crores and interest payments are Rs 80,000 crores, which of the following is the primary deficit of the Government in the year Rs 70,000 crores Rs 23,000 crores Rs 2,20,000 crores Rs 1,50,000 crores

30. As per proposals of Union Budget of 2016-17, which of the following tax contributes maximum share out of total tax revenue collection Corporation tax Union Excise Duty Custom Income Tax

31. Concepts of concentration and displacement effect in public expenditure are attributed to Allen T. Peacock and Jack Wiseman A.R. Prest and I.M.D. Little A.C. Pigou and J.K. Mehta Kenneth Arrow and Paul A. Samuelson

32. Which one of the following statements is true for the Verdoon’s law Long run productivity generally grows proportionally to the square root of output growth. Short run productivity generally grows proportionally to the growth of output. The value of Verdoon’s coefficient is nearly equal to 1. Verdoon’s law is quite in consonance with Solow model’s functioning.

33. Which among the following can contribute to improvement in industrial climate of the region Development banks Trade unions Natural resources All of the above

34. Researchers indicate that income velocity of money is falling overtime due to income elasticity of demand for money is greater than unity. income elasticity of demand for money is less than unity. income elasticity of demand for money is equal to unity. All of the above

35. According to Monetarists, demand for money function is stable and interest inelastic constant and interest elastic stable and interest elastic unstable and interest inelastic

36. Arrange the following liquid assets in decreasing order Time deposits Saving deposits Currency Demand deposits

Select the answer from the codes given below c a c d

37. Match the following

List – I List – II

a. Alfred Marshall i. M PKT

b. Irving Fisher ii. M PKY

c. Robertson iii. N PK

d. Keynes iv. MV PT

Select the correct codes given below

Codes
a b c d
(1) iv iii ii i
(2)ii iv i iii i ii iii iv
(4) iii i iv ii

38. In his theory of money, James Tobin did not agree with which of the following inferences/ assumptions of the demand for money for liquidity preference enunciated by Lord Keynes

I. Elasticity of expectations of future interest rates

II. Individuals hold either money or bonds

Of the above which are correct Answers from the codes below

Codes Only I Only II Both I and II Neither I nor II

39. A population pyramid of a country shows the age structure of male and female population age structure of male population age structure of female population age structure of rural and urban population

40. If the actual unemployment rate is below the natural rate of unemployment, it would be expected that the rate of inflation would increase. wages would fall. the Phillips curve would shift to the right. the natural rate of unemployment would fall.

41. Demographic transition means Shift from the condition of low birth and high death rates to high birth and high death rates. Shift from the condition of high birth and high death rates to low birth and low death rates. Shift from the condition of high death and low birth rates to high death and high birth rates. None of the above.

42. In the context of International Trade dumping refers to Free distribution of used products by developed countries in developing countries. Selling a commodity cheaper in foreign market and costly in domestic market. Sending cheap goods to developing countries by developed countries. None of the above

43. Match List – I with List – II and select correct answer from the codes given below List – I List – II

a. International Monetary Fund i. Lending to private sector

b. International Bank for Reconstruction ii. Balance of Payments problems and Development

c. International Development Association iii. Soft Loan to poor countries

d. International Finance Corporation iv. Socio-economic infrastructure

Codes
a b c d ii i iii iv i ii iv iii iii iv i ii ii iv iii i

44. A deficit in balance of payments can be corrected by a reduction in interest rate discouraging capital inflows an increase in interest rate restricting remittances

45. In the terminology of WTO, which among the following is not an amber box subsidy Minimum support price of cereals Subsidy on seeds Subsidy on irrigation rates Cost of government pest control and management

46. The weight of manufacturing in old IIP (base 1993-94) was 76.36% which has now been changed in the new IIP (base 2004-05) at 75.53% Unchanged at 76.36% 78.22% 79.39%

47. Which of the following agricultural holdings have largest percentage in India

(1) Marginal Holdings Small Holdings Large Holdings Semi-Medium Holdings

48. First two States/Regions in India having highest yield of rice in 2013-14 were National Capital Territory of Delhi and Punjab Punjab and West-Bengal Andhra Pradesh and Haryana Punjab and Uttar Pradesh

49. Which among the following rates is independently determined in India Repo rate Reverse repo rate Both and Neither nor

50. The main objectives of the 12th Five Year Plan are inclusive growth and poverty reduction inclusive and sustainable growth Faster, sustainable and more inclusive growth Sustainable and inclusive growth to reduce poverty and unemployment

51. Match List – I and List – II and select the correct answer from the codes given below

List – I List – II
(Index) (Base Year)

a. BSE Sensex i. 2012

b. NIFTY ii. 2011-12

c. CPI iii. 1978-79

d. GDP iv. 1995

Codes
a b c d
(1)iii iv i ii
(2)iv iii i ii
(3)iv i ii iii
(4)iii ii iv i

52. As per 2013 information, arrange the following States in the decreasing order of infant mortality rate

I. Uttar Pradesh II. Rajasthan

III. Madhya Pradesh IV. Odisha

Answer from the code below III, IV, II IV, III, II, I II, III, IV III, II, IV


53. Which of the following are not considered as flow variables in economic analysis Supply and demand Saving and investment Money supply and public debt Exports and imports

54. If the Reserve Bank of India wishes to decrease the money supply, it should raise statutory liquidity ratio buy treasury bills in the open market raise the discount rate lower the reserve requirements

55. Which of the following is included in M1 Savings deposits Demand deposits Gold stock Assets under money market mutual funds

56. Arrange the following committees appointed in India in the chronological order

I. Urjit Patel Committee II. Goipuria Committee

III. Narsimhan Committee IV. Chakravarti Committee

Answer from the codes given below

Codes II, III, IV IV, II, III, I III, II, IV II, IV, III

57. For the following policy rates (as on 30.9.2016) of the RBI, arrange them in the descending order of their magnitude and select the answer from the codes given below

I. Bank rate II. Repo rate

III. SLR IV. Reverse Repo rate

Codes III, II, IV, I III, IV, II II, III, IV III, II, IV

58. Arrange the following climate events in chronological order

I. Kyoto Protocol

II. Earth Summit

III. Bali Summit

Answer from the codes below

Codes II, III II, III, I III, II II, III

59. The single window system in the Cooperative Sector coordinates Supply of rural credit Supply of agricultural inputs Extension of marketing facilities Creation of warehousing facilities

Select the correct answer from the codes given below

60. Consider the following reasons of continuous decline in average land holding size in India Farm mechanisation Consolidation Desire of land ownership Law of inheritance

Select the correct answer from the codes given below

Codes c c