Entrance Examination, June 2011
M.A. (Economics)
Time: 2 Hours Maximum Marks: 100

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INSTRUCTIONS
1.
Read tbese instructions ""rerally before answering.

2.
Enter your Hall Ticket Number on this page and also on the OMR


answer sheet.
3.
Answers are to be marked on the OMR answer sheet following the instructions provided there upon.

4.
Handover.!!2!h the question paper booklet and the OMR answer sheet at the end ofthe examination.

5.
Use of non-programmable calculators is allowed.

6.
The Question P8perhas two part!-PART-A and PART-B. There are 100 questions in this paper: 25 questions in PART-A and 75 questions in PART-B. Marks obtained in PART-A will determine the merit rank in case of a tie in the total number of marks obtained.

7.
Each correct answer carries 2M mark

8.
Tbere is negative markiall. Eacb wronll an...er carriel-O.33 marks.

9.
This question paper contains I g pages excluding the cover page.



J-2...4-

M.A. Eatraace Eumiaatioa
Departmeat or Ecoaomicl Mas. 100 o...tioD: 2 Hoan
Part·A (An....r all 25 Q.estio.s)
I. An increase in aggregate demand is more Iik.ly to lead to demand pull inflation if: Aggregate supply is perfectly elastic Aggregate supply is perfectly inelastic Aggregate supply has unil8r)' elasticity Aggregate supply is relatively elastic
2.
Which ofthe following is not involved with fiscal policy'? Income tax National insurance VAT Interest rates

3.
An outward shift in the Marginal Efficiency of Capital should: Decrease consumption Increase aggregate demand Reduce aggregate supply Slow economic growth

4.
A profit maximizing firm will invest up to the level of investment where: The cost of borrowing equals the marginal efficiency of capital Thecostofborrowingisgreaterthanthemarginalefficiency ofcapita! The cost of borrowing is less than the marginal efficiency of capital The cost of borrowing equals the marginal propensity to consume


S. The standard of living is often measured by: Real GOP per capita Real GOP Real GOP multiplied by population Real GOP plus depreciation
6.
To adjust GOP from market prices to factor cost: Add indirect taxes Subtract subsidies Deduct indirect taxes and subsidies Deduct indirect taxes and add subsidies

7.
Who among the following was a Physicxnt? Adam Smith William Petty Leon Walras Quesnay

8.
In the presence ofhetcroscadAsticity, the OLS estimators are: unbiased efficient non-linear highly significant

9.
Consider the following two linear equations: 2x -5y O.5z and


1
- 0.33 x 2.4 Y 3z II. This system of equations possesses:
no solutions
one solution
two solutions
infmilcly many solutions

10. Two studcntsjoined Ph 0 programme in ethical economics. Atlcast one ofthe50 students is from Hyderabad. What is the probability that both ofthe50 students are from Hyderabad? is equally likely for a student to be from Hydcrabad and to be not from Hyderabad).
1/4
1/3
1/2
2/3

II. A commodity is available in fixed supply. Demand is downward sloping with respcclto own price. It is found that in equilibrium configuration, there is excess supply observed for this commodity at zero price. Then this represents a case of:
unique equilibrium price
multiple equilibria
a commodity that is a free good
all ofthe above

12.
A sufficient statistic implies that: it contains all relevant infonnation available in a sample it contains all relevant infonnation nceded to solve the research problem it contains same amount ofinfonnation irrespective ofthe sample chosen it contains all information ofthe population

13.
Consider an investor contemplating new investment. Suppose that she becomes less sure


about future prospects ofgains from such investment. Then it is most likely that, her rate ofdiscount goes up and expected value offuture returns also goes up her rate ofdiscount goes up and expected value of future rclUrns goes down her rale ofdiscount goes down and expected value of future returns also goes down
her rate of discount goes down and expected value of future returns goes up
14. According to the first fundamental theorem of welfare economics, a competitive general·
equilibrium is Pareto optimal when,
economic agents pursue their own self-interest some economic agents may pursue their self-interest but some are motivated by
altruistic behaviour All economic agents are motivated by altruistic behaviour government offers minimum support price in production and enforces price ceiling
for goods sold to consumers
15. Let consumption function be: C 35 0.7 where Y is disposable income and C is consumption. Let APC be average propensity to consume and MPC marginal propensity to
consume.
APC is same at all levels of disposable income
APC is equal to MPC at all levels ofdisposable income
MPC is same at all levels of disposable income
APC is less than MPC at all levels ofdisposable income

16. Under pennanenl income hypothesis, ifpermanent income increases, then
transient income decreases
transient consumption increases
permanent consumption increases
transient consumption decreases

17.
Type I error occurs due to acceptance of a false null hypothesis rejection ofa true null hypothesis inability to sct up null hypothesis correctly inability to test validity of a null hypothesis altogether

18.
Consider an economy with full employment and having a vertical aggregate supply function.


An increase in taxes on income willicad to,
a decrease in price level and an increase in real output
an increase in price level and a decrease in real output
an increase in price level and no change in real output
a decrease in price level and no change in real output

19.
For a normal distribution it is true that all its odd central moments are zero all its even central moments are zero all its central moments are zero all its raw moments are zero

20.
We are given the following two samples. Sample A has the following observations: 13, 13,21,29,29; and sample B has the following observations: 113, 117, 121, 125, and 129.


Then,
variance of A is greater than variance ofB
varianceofAissmallerthanvariance ofB
variances of A and B are equal
variances of A and B are not comparable

21. Suppose that the price elasticity of demand for honey has been estimated at -2. If quantity
demanded increased by 10 percent, price must have changed by 5 percent lower 5 percent higher 10 percent lower 10 percent higher
22.
Along any straight-line, negatively sloped demand curve, the price elasticity and slope vary. the price elasticity varies, but the slope remains the same. the slope varies, but the price elasticity remains the same. the price elasticity and slope remain the same.

23.
If consumers spend $15 million a month on CDs, regardless of whether the price they pay goes up or down, that implies that their price elasticity of demand for CDs is


0
1

Infinite
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24. A firm is employing 100 units oflabor and 50 units of capital to produce 200 widgets. Labor costs $10 per unit and capital per unit. For the quantities of inputs employed. MP L 2 and MP K 5. In this situation, the firm
is producing the maximum output possible given the prices and relative
productivities of the inputs. could lower its production costs by using more labor and less capital. could increase its output at no extra cost by using more capital and less labor. should use more ofboth inputs in equal proportions.
25. If a firm is producing where its short-run marginal cost is equal to price and the long­run marginal cost is less than long-run average cost then it would do bener in the long-run by
increasing output with its existing plant until LMC equals price.
increasing plant size until LMC and SMC are identical and equal to price.
decreasing plant size until LAC, SAC, and price arc equal.
doiog nothing because it is already at the long-run profit maximizing point.

Part-R (Aa...er all 75 Queotloaa)
26. Mahalonobis model of Second five year plan placed emphasis on: Export sector Financial Sector Basic and Heavy Industry sectors Small Scale sector
27. India's current savings rate is 27.6% 37.4% 47.3 52.8
28.
The supply curve for 8 monopolist is equal to the marginal cost curve above the average variable cost curve. is equal to the marginal cost curve above the average cost curve. Cannot be uniquely determined. is equal to the average variable cost curve above the marginal cost curve.

29.
Tax reform committee headed by Rajah Chelliah suggested a reduction of income tax to three slabs. uniform rate for custom duties. that estate duties be abolished. all the above.

30.
A increase in the price causes no change in the total revenue that a firm earns ceteris­


paribus. This implies that demand is price inelastic demand is perfectly price elastic demand has unitary price elasticity nothing can be said about the demand.
31.
Stability ofoligopolistic prices can be explained by Cumotbehaviourofthefirmsinquestion theory of product differentiation the kinked demand curve theory when firmS act as Stackelberg leaders

32.
India is less affec1ed by the financial crisis of 2008 because we did not implement Securitization Labour reforms Full capital convertibility Financial sector reforms

33.
Which ofthe following variable will come under Stock variable? gross domestic product money supply exports imports

34.
(fGNP deflator is raised by 40% then which ofthe following statement is correct? Nominal GNP increases by 40% Real GNP will increase by 40% Both nominal and real GNP will increase by 40% Nominal GNP increases by 40"10 and real GNP decreases by 40"10

35.
The ratio ofthe chlUlge in equilibrium output to the change in autonomous spending that

causes change in output is called marginal propensity to consume marginal propensity to save average propensity to consume multiplier

36.
An expansionary monetary and fiscal policy shifts aggregate demand to the left aggregate demand to the right aggregate supply to the right aggregate supply to the left

37.
Rate ofunemployment can be calculated as percentage number of unemployed to total population percentage number of unemployed to Labour force percentage number of unemployed to skilled population none ofthe above

38.
The value of Gini coefficient ranges from -lto+1 Oto I C)Otoloo -100 to +100

39.
Total cost of production for a firm to produce 100 units is Rs.I,Soo and to produce ISO units


is Rs.2000. Assuming the average variable cost to be constant, fixed cost for the firm is Rs.loo Rs.Soo Rs.lOOO Rs.ISOO
40. For an """nomy consumption-income ratio is given to be 0.72. The inctemental capital­Output ratio is 4. Given that the population is growing at p.L what will be the growth rate of per capita income?
9"10




41. The values of X and Y that maximize the function'" IIOX -2XY 140Y such
that XN 2 are X=IO,Y-IO Y=20 Y=50 X 20, Y 10
42.
The Se<:Dnd own partial derivatives of the function: Z -9XY 6Xand-Igy 10Xand-lgy 6X and Igy 6X and lOY

43.
The bordered Hessian determinant for the problem: Maximize U XV subject to. 6X


2Y =110 is Negative defmite Positive definite Negative semi-definite Indefinite
44.Giventhedemandfunction,p= 25-q',theconsumersurplus for4units ofqis equal to 42 50 32.67 42.67
45.
Limit ofthe function, as x is equal to 1/16

46.
Which ofthe following statements is true? Per """ita net availability offood grains has been declining since 1991. Savings rate in India has been declining. Gross capital formation in agriculture is declining since 1991. The population growth rate in India has been increasing.

47.
Fiscal deficit in an economy is fundamentally sustainable as long as: Revenue growth is faster than inflation. CUl!Olltaccount deficit grows slower than fiscal deficit Capital expenditure grows faster than revenue expenditure. Nominal growth rate of GDP is higher than the interest rate.

48.
Positive economics does not depend on market interactions. only looks at the best parts ofthe economy. examines how the economy actually worl<s (as opposed to how it should work). is very subjective.

49.
A pure private good is nonrival in consumption and subject to exclusion. rival in consumption and subject to exclusion. ri val in consumption and not subject to exclusion. all of the above

50.
The slope of the production possibilities curve is the marginal rate of substitution. conlnlcl curve. marginal rate oftransfonnation. ofTer curve.

51.
Which one of the following statements is false? The null set is a subset of all sets. IfSisaset,then SunionSisequal10S. If M is a set with four elements, then M intersection M is equal to M. If V is an empty set, then V has one zero element, i.e., 0

52.
IfRisamatrixof8x9, Qismatrix oforder4x8 andPismatrixoforder3x4,then

the order ofthe new matrix PQR is
9x3
3x9
9x3
3x3


53.
Given a consumption function C 510 O. 9Y what is the value ofthe multiplier? 0.1 0.09 10.0 9.0

54.
The speculative demand for money depends on interest rate profits


output income
55. Which ofthefollowingis NOTincluded intheestimation ofnationalincome through income
method?
Rental income
Undistributed Profits
Mixed income
Pen.ions
56. If aX, then dy/dx is equal 10
aXlna
aX
x a,·1
None of the above
57.1f A B=rO then must be equal to
rl
-IJ4

58. The mean of a binomial distribution with 20, p 0.5, where n is sample size and
p is the probability ofsuccess, is 10 5 4
I
59.
The regression lines of yon and x on y intersect at the origin at infinity at the point of mean of x and mean of y none ofthe above

60.
IfA and B are two distinct sets, then AnB is a null set, if A and B have at least one common element A and B have equal number ofelements A and B have non-zero elements A and B have no common elements

61.
Given TC 3lf' 7q 12 quantity; TC total cost), the marginal cost


and average cost at q 3 are MC=25;AC=20 MC=20;AC=25 MC-5;AC 16
None ofthe above
62. The mean and standard deviation ofthe weights of20 school children are recorded to be 30 kg. and 3 kg. respeetively.lfeach ofthe children is asked to hold a school bag weighing one kg and weights are measwed again, then the new mean and standard deviation ofweights of children respectively are:
30 kg., 3 kg.
30 kg., Hg.
31 kg., 3 kg.
31 kg., 4 kg.

63 A basket contains 5 red and 4 white balls. Iftwo balls are drawn at random, the probability
of getting one red and one white ball is:
A)O.s
0.4

C)0.9
None ofthe above

64. IfY= log then dy/dx is equal to:


65. Verify the propelt( of the following matrix:
2..
·312 ·1 J
Negative definite
Positive definite
Indefinite
Semi-definite

66. Let A be the set ofpositive integers whose square is less than or equal to nine. Let B be
theset ofallevenintegers. Then,which ofthefollowing istrue?
A is a subset ofB
B is a subset ofA
Inter.;ection of A and B is a null set
Inter.;ection ofA and B is a singleton set

67.
lfa frequency distribution is positively skewed,the mean will be located to the left ofthe mode to the right of the mode coincides with the mode either to the right or left of the mode

68.
When the intrinsic value ofmoney and its face value are equal il is called Token money Quasi-money Fiat money None of the above

69.
Whal is the empirically filted relationship between the ralc of change of money wages and rate of unemployment, known as? Baumol Hypothesis Liquidity preference theory Friedman model Philips curve

70.
Who is Ihe first women to win the Nobel prize in Economics? Joan Robinson Ursula Hicks Edilh Penrose Elinor Ostrom

71.
The proportion of Indian workforce employed in the unorganized sector is around: 92% 82% 42% 32%

72.
Cropping pattern refers 10 area under a patticular crop at a given point oftime ratio ofarea under one 10 another relativedistribulion ofcroppedareaunderdifferenlcrops atagivenpoinloftime ralio of nel sown area 10 total cropped area

73.
The Narasimham committee I deall with: Banking seclor reforms Insurance sector reforms Capital market reforms Non-banking institulions reforms

74.
Which of the following is nol included in the invisibles on currenl accounl oftbe balance of paymenls of India? Foreign travel Transportalion Insurance Loans from foreign banks

75.
Which ofthe following is III example ofa positive extema.Iity?

A fum emit pollution into the air, banning members ofsociety. An autr body shop makes a lot of noise, reducing the property values of nearby homes. A coastal diary farmer' 5 undeveloped IlIId offers unimpeded views of ocean for a nearby neighborhood. You go to a shop IIId pay Rs 5 for a candy bar that you then eat.

76.
According to Marxilll dialectics, what drives economic IIId social chlllge in a society? Commodity fetishism Simple reproduction Contradictions in society None ofthe above

77.
According to ManUlII political economy, which ofthe following statements is true? Fixed capitalllld constant capital are the same. Variable capital and circulating capital are the same. Fixed capital is only a component ofconstant capital. Constant capital is made up ofconstant wages.

78.
The supply curve of labour to industry is horizontal if there is surplus labour in agriculture. This persists as long as The marginal product of labour is less than the average product of labour in

agriculture.
The MPL in agriculture is less the MPL in industry.
The MPL is subject to diminishing returns in agriculture.
The MPL in agriculture is zero.


79.
Which of the following statements best reflects Hirschman's theory of unbalanced growth? A country should focus on industrial development because agriculture is not a


11
dynamic sector. Saving rates need to be increased. Once certain industries develop, linkages effects will induce the development of
other new industries.
All the above.

80.
Which ofthe following is a backward linkage effect from automobile industry? Stimulating steel production for use as an input in making autos. Generating higher incomes from workers employed in auto production. Stimulating development of the transport service industry. All the above.

81.
A neutral tax is one that generates no excess burden.


affects government saving and private sector investment decisions equally.
Ballll1COS the government budget.
relies, as far as possible on uniform tax rates.

82.
The text book definition ofdisguised rmelllploymenJ includes workers who

pretend to worIr. while lICtually having no job.
seek jobs in the infonnal-sector.
stay in school rather than try to look for work.
have ajob, but one with very low productivity and very low pay.


83.
The efficiency wage hypothesis helps to explain

why rural wages are SO low. why wages in the urban informal sector generally exceeds wages in the rural markets. why low income countries have a comparative advantage in products that involve labour intensive technologies. why wages may exceed market clearing levels in the urban fonnal sector, even in the absence of wage control.

84.
Agricultural growth in India after the eighties was largely due to


an expansion in area under cultivation
an increase in yield of crops grown
both and
none ofthe above.

g5. The product exhaustion theorem is valid only if
the production function is homogenous of degree one,
finns make nonnal profits in a competitive market
there are economiesofscale with respect to the production ofthe output.
there are economies of scope

86.
The first time the Indian rupee was devaluated in the post Independence period was in 1951 1966 1978 OJ 1991

87.
Indian industry witnessed a stagnation in the period 1950 to 1965 1965 to 1980 1980 to 1990 1990 to 2004

88.
In the Ricanlian model the growth process is ultimalely limited by capital shortage. Falling natural price of labour. pessimistic expectations ofthe investors. The greater difficulty of growing com.

89.
The primary differeoce between excise and sales taxes is that only excise taxes are imposed enumerated items paid by the consumer rather than the seller progressive revenue elastic

90.
Assumin8 an industrial growth rate of 6 percentage, what is its contribution to the


13
country'sGOPgrowth iftheshare ofindustrialsector toGOPis25percent?
3 percent

2 percent
1.5 percent
2.5 percent

91.
Most ofthe successful cases ofland reforms have involved little or no compensation for confiscated assets. full compensation for landlords for confiscated assets. Consolidation ofsmall farms into large collective farms. strict enforcement ofshon term land rental contracts.

92.
Which of the following is a forward linkage effect of expanding the tractor industry? The potential increase in agricultural output made possible by having more


tractors available.
Loss ofjob in agriculture caused by mechanization.
Increased income for worl<ers in the tractors industry.
Increased demand for tractor motors.

93. Sunk costs are defined as those which vary with output do not vary with output cannot be recovered none ofthe above
94. IfA and B are two events with probabilities ofoccurrence as
peA) 0.6, 0.4, and P(ArlB) 0.2, then P(AIB) is




1/3
1/2
C)l
0
95. What is the probability of a sum of numbers in two throws of a dice being 1/36 IIlg 119
116
96.
The CPI has increased from 300 to 330 and money wages for agricultunlJ labour have increased from Rs. 40 to Rs. 47 per day. Which ofthe following is necessarily true?

Agricultural wage employment has increased.
Real wages have increased.
Proponion of persons below poverty line has declined.
Labour productivity has increased.


97.
In the Harrod model, a country can increase its rate of growth of output if it restricts its population rate of growth. it increases its rate of investmenL increases its capital output ratio. all of the above.

98.
The regression line necessarily represents the correlation between variables. causality between variables.

an economic identity.
a quantitative relationship between variables.


99.
Monetarist believes that expanding money supply will always increase prices always increase output always increase employment all of the above

100.
Keynesian theory is based on micro economic foundations. observed quantities. accounting identities. all of the above.


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