Entrance Examination, February 2013
M.A. (Economics)
Time: 2 Hours Max. Marks: 100 HALL TICKET NUMBER
INSTRUCTIONS
l
I
1. Read these instructions carefully 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 instructiosn provided

there upon.
Hand over the OMR answer sheet at the end ofthe examination to the Invigilator.

4.

5.
Use of non-programmable calculators is allowed.

6.
The Question Paper has two parts -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 one mark.


8. There is negative marking. Each wrong answer carries -0.33 marks.
9. This question paper contains 16 pages excluding the cover page. In addition, two blank I
pages (pages 17 and 18) for rough work are provided at the end of the question paper marked "ROUGH WORK"


M A Entrance Examination, February 2013
School of Economics
Max. Marks 100 Time 2 Hours
Part A (Answer aD 25 Questions)
1. Rosy likes Banana but is neutral about Papaya, so the indifference curves in this case are:
A. L-shaped
B. straight lines with a negative slope
C. straight lines with a positive slope
D. vertical lines
2. A firm is using two inputs, labour and capital. What will happen if the price oflabour falls?
A. The firm's average cost curve will shift downward
B. The firm's marginal cost curve will shift downward
C. To produce an unchanged output, the firm would use more labour
D. All ofthe above
3. A payment that is made and cannot be recovered is known as:
A. variable Cost
B. quasi-fixed costs
C. sunkCost
D. opportunity Cost
4. Student discounts are the best example of:
A. first-degree price discrimination
B. second-degree price discrimination
C. third-degree price discrimination
D. None ofthe Above
5. A Pigouvian Tax:
A. moves production to the socially optimal level ofoutput
B. is the same thing as the Pigouvian subsidy
C. is measured in terms ofPigouvian rupees
D. cannot exist with externalities

B-3S­
6. Whichofthefollowingisthebestexample ofafree-riderproblem?
A. Mine owners are unable to observe iftheir workers follow safety guidelines.
B. Bee-keepers and orchard growers establish negotiation.
C. Property rights to a smoke free workplace are given to non smokers in general instead of a specific group of non-smokers.
D. Only about 10% viewers ofpublic television contribute money to pay for its costs.
7. A price floor refers to the:
A. minimum price fixed by the government
no
. r ....- ...... lll"".l1-.1.;) U,,".lv YY ........."" .....'16...-&.... ......-...........

C. price below which producers are unable to supply
D. price which is agreed by all the consumers
8. An economy can produce either Good X or Good Y. The opportunity cost of producing an extra unit Good X is the:
A. value of capital and labour used to produce Good X
B. no. of units of Good y that must be given up to produce an extra unit of Good X
C. cost of producing Good X less the cost of producing Good Y
D. amount of Good X that would have been produced in the following year. Which one of the following will cause the demand curve for a good to shift to the right?
A. A rise in the price ofthe substitute
B. A fall in the price of the good
C. A fall in the cost of producing the good
D. A rise in the price ofa complementary good
10. If, at all positive quantities, the upward sloping supply curve lies above the downward sloping demand curve, then the
A. quantity traded will be zero
B. quantity traded will be infinite
C. market mechanism has failed and the quantity traded must be determined by a central agency
D. All the above
11. Good X and Good Y are complements. Good Y and Good Z are substitutes. Therefore,
A. Good X must be a complement for Good Z
B. Good X must be a substitute for Good Z
C. if the price of Good Y increases, the demand for Good Z will rise
D. iftheprice ofGoodXincreases,thedemandforGoodYwillrise
2


12. Ifthe income elasticity ofdemand for Good X is 1.5, a increase in consumer income will increase the quantity demanded ofGood X by
A. 2.50%
B. 2.67%
C. 5.50%
D. 6.00%
13. The short-run marginal cost curve will eventually slope upwards because ofthe law of:
A. diminishing marginal utility
B. diminishing marginal returns
C. increasing marginal utinty
D. increasing marginal returns
14. Imperfect competition is the collective name for:
A. perfect competition and monopolistic competition
B. perfect competition and monopoly
C. oligopoly and monopoly
D. oligopoly and monopolistic competition
15. The kinked demand curve theory ofoligopoly implies that the oligopolist:
A. will seek to make only satisfactory rather than maximum profits
B. has a discontinuity in his marginal revenue curve
C. has a discontinuity in his marginal cost curve
D. has a discontinuity in his average revenue curve
16. A market in which firms produce differentiated products and enjoy normal profits could be described as:
A. a monopoly
B. an oligopoly
C. monopolistically competitive
D. perfectly competitive.
17. Ifthe marginal social benefit exceeds the marginal social cost, then:
A. an increase in output will increase welfare
B. a decrease in output will increase welfare
C. welfare cannot be increased
D. it is difficult to say what will happen to welfare without further information.
18. The potential aim of supply side policy is:
A. to reduce unemployment and to reduce inflation
B. to reduce unemployment and to reduce output
C. to reduce unemployment only
D. to reduce inflation only
3
Whichofthe following is not a feature ofmonopolistic competition?
A. Non-price competition
B. Dependent actions
C. Selling costs
D. New fInns can enter in the industry in the long run
20. distinguishing characteristic ofthe long run period is that:
A. all costs are fIxed costs
B. all costs are variable costs
C. fIxed costs tend to be greater than variable costs.
D. fIxed cost tend to be less than variable costs
21. A transfer payment is defined as
A. payment made by the governments·
B. payment made to prevent a factor ofproduction moving to another industry
C. payment that redistributes wealth from the rich to the poor
D. payment made without any service or good being provided in return
22. A merit good:
A. is provided free ofcharge by the governments
B. provides benefIts that are not fully appreciated by the prospective user
C. has strong negative externalities
D. cannot be supplied by the market
23. The author of 'Principles ofPolitical Economy and Taxation' is:
A. David Ricardo
B. Karl Marx
C. Adam Smith
D. John Maynard Keynes
24. Heckscher-Ohlin theory oftrade states that trade between nations emerges because of differences in:.
A. labour productivity
B. factor endowments
C. production functions
D. None ofthe above
25. Foodgrains production in India in 2011-12 was about:
A. 250 mt
B. 230 mt
C. 200mt
D. 290mt
· Part B (Answer all 75 Questions)
26. Which of the following is called paper-gold?
A. Dollar
B. Pound Sterling
C. SDRs
D. None ofthe above
27. Currentaccount ofbalanceofpaymentscomprises of:
A. visible trade
B. invisible trade
C. visible and invisible trade
D. None ofthe above
28. In gold-exchange standard, foreign exchange reserves comprise of:
A. gold
B. convertible currencies
C. gold convertible currencies
D. None of the above
29. Reciprocal demand schedule indicates:
A. quantities demanded at different prices
B. various quantities of exports offered for various imports at different terms of trade
C. quantities supplied at different prices
D. None of the above
30. Paul Krugman trade theory emphasizes on:
A. economies of scale
B. technology
C. factor productivity
D. human capital
31. LeontiefParadox refers to empirical verification of:
A. H-O theorem
B. Theory of unequal exchange
C. Classical theory oftrade
D. Opportunity cost theory of trade
Commodity term of trade is defined as the ratio of:

A. price index of exports to price index of imports
B. price index of imports to price index of exports
C. volume index of exports to volume index of imports
D. None ofthe above

33.
34.

35.

36.

37.

38.

39.


Prohibitive tariff refers to a situation wherein there are:
A. no imports
B. more imports
C. less imports
D. None ofthe above.
When a country has a comparative advantage in the production ofa good, it means that the country:
A. can produce the good in fewer man hours than other countries
B. has the lower opportunity costin the production ofthe good than other
countries
a-l..ul"'#LLl'r an nnnr1 than nthPT

l...". _.... ........--.....

D. uses better technology to produce the good than other countries Whichofthe following is not a reason to restrict international trade?
A. To protect infant industries
B. To reduce reliance on goods with little dynamic potential
C. To prevent dumping ofgoods at artificially low prices
D. To increase the speed at which outdated industries decline
A devaluation would be most effective in curing the BoP deficit when price elasticity ofdemand for:
A. exports is high and imports low
B. exports is high and imports high
C. exports is low and imports low
D. exports is low and imports high 'Octroi' is levied and controlled by:
A. Centre
B. State governments
C. local bodies
D. market yards To obtain a measure ofnet national income from gross national income, it is necessary to:
A. deduct any transfer payments made by the government to households
B. deduct the value ofcapital used up in the production ofcurrent output
C. deduct any indirect taxes paid by firms
D. add net incomes from abroad
Equilibrium in the Keynesian model occurs when:

A. planned injections planned withdrawals
B. aggregate demand GDP
C. Cd+I=Y
D. All the above
6

40. Oneway ofreducingtheequilibrium(natural)rate ofunemploymentwouldbeto:
A. increase taxes
B. increase information on job availability
c.
reduce government expenditure

D.
reduce interest rates


41. A rise in unemployment caused by a fall in the demand for products of some industries is known as:
A. frictional unemployment
B. structural unemployment
c. technological unemployment
T rl.......antl tl..fil'lpnt nnp1llnlnvmp.nt

.AJ. -............... -... ........ -........_ ..........r--.J

42. The aggregate supply schedule tells us that an increase in the average price level will encourage firms to:
A. increase output and employment
B. reduce output and employment
C. increase output and reduce unemployment·
D. reduce output and increase employment
43. Ifthecapital-outputratiois4andtheproportion ofnationalincomethatisinvestedis 100,10, the country's growth rate is:
A. 2.5%
B.4.0%
C.25%
D.40%

44. The opportunity cost ofholding money is the:
A. real rate of interest
B. inflation rate
C. expected inflation rate
D. nominal interest rate
45. Inthequantitytheory ofmoney,which ofthefollowingisassumed?
A. Fallingvelocity ofcirculationofmoney,andconstantrealoutput
B. Rising real otput, and constant velocity of circulation ofmoney
C. Constantrealoutput,andconstantvelocity ofcirculationofmoney
D. Fallingrealoutput,andrisingvelocity ofcirculationofmoney
7


B-3S­
46. When national income is at less than full employment"llational income, by how much must aggregate demand be increased to achieve full employment?
A. The amount by which the equilibrium level of national income falls short of the full employment level
B. The amount by which injections exceed withdrawals at the full employment level of output
C. The amount by which national income exceeds aggregate demand at full
employment level of national income ThesizeofBoPdeficitsatits fullemploymentlevel ofnationalincome
47. The Pillips curve shows:
A. the influence of fiscal policy on the level of inflation and unemployment
B. the influence of monetary policy on the level of inflation and unemployment
C. a positive relationship between rate of inflation and rate of unemployment
D. an inverse relation between inflation and rate of unemployment
48. The acceleration principle implies that:
A. investment is increased when interest rates fall
B. an increase in consumer demand leads to a more than proportionate increase in the level ofinvestment
C. an increase in investment will lead to a more than proportionate increase in output
D. therate ofchangeofinvestmentaffects therateofchangeofoutput
49. Which of the following is not a 'crowding out' effect resulting from a fiscal expansion?
A. A fall in investment due to the associated rise in the interest rate
B. A fall in consumer demand due to fear of higher future taxes
C. Reduced import expenditure due to increased demand for domestically produced goods
D. A fall in demand for exports due to an exchange rate appreciation caused by the associated rise in the interest rate
50. The purchase of short term bills from the general public by the central bank will:
A. decrease bank reserves
B. increase the interest rate
C. decrease the supply of money
D. increase the the supply of money
51. In which year for the first time population census was conducted in India?
A. 1881
B. 1891
C. 1901
D. 1911
52. Who determines the minimum support price for agricultural products in India?
A. Association of Indian Farmers
B. Government of India
C. Planning Commission
D. Agricultural Costs and Prices Commission
53. The Chairman ofthe 14th Finance Commission is:
A. Dr A M Khusro
B. Dr C Rangarajan
C. Dr Vijay Kelkar
D. DrYVReddy
54. RBI is formed on the recommendation of:
A. Hilton-Young Commission
B. Royal Commission on Indian Banks
C. Keynes Commission
D. None of the above 55 Who holds 15% of share capital of Regional Rural Banks in India?
A. Sponsored Banks
B. NABARD
C. State governments
D. Government of India
56. Banks borrow funds from the RBI and pay:
A. Base rate
B. Repo rate
C. Bankrate
D. Reverse repo rate 57 "Yellow revolution' in India relates to:
A. pharmaceuticals
B. milk
C. oil seeds
D. None ofthe above
58. The book "The Price of Inequality" is authored by:
A. Joseph E Stiglitz
B. Jim Yong Kim
C. Amartya Sen
D. Suresh Tendulkar
9
59. The wages ofa worker were increased by 20% and then reduced by 15%. What was the net change in his wage?
A. increase
B. increase
C. decrease
D. decrease
60. Which ofthe following is known as plastic money?
A. Dema..'1d Draft
B. Credit card
C. Debit card
D. B. and C. above
T.. .1-" • ... • • rl .h
b1. !:SanKS ill mala arc rcquueu LO maiiltain a portiOn tuCir uema.'1... an... tIme the RBI. This portion is called:
A. Cash reserve ratio
B. Statutory liquidity ratio
C. Cash deposit ratio
D. Deposit currency ratio
62. Which ofthe following does not come under the sector?
A. Crude oil
B. Automobiles
C. Coal and electricity
D. Natural Gas
63. Which ofthe following is implemented in all the districts ofIndia for providing employment?
A. Swarna Jayanti Gram Swarozgar Yojana
B. Pradhan Mantri Gram Sadak Yojana
C. Mahatma Gandhi National Rural Employment Guarantee Act
D. Bharat Nirman Programme
64. Which paper currency note in India has the greatest circulation?
A. Rs 100
B. Rs50
C. Rs10
D. Rs20
65. A bill ofexchange drawn in a local language as per the custom ofthe place is called:
A. Hundi
B. Clot
C. Trade credit
D. Parole
10
r

66. Disinvestment means:
A. private shareholders purchasing shares in PSUs
B. Government permitting the private sector to invest in PSUs
e.
allowing the foreign banks to buy all the shares in PSUs

D.
Government withdrawing its share in PSUs


67. Which of the following countries is not a member of the European Union?
A. Austria
B. France
e.
Belgium

D.
Switzerland


68 The aim ofthe Twelfth Five Year Plan (2012-17) is:
A. development of industries and agriculture
B. poverty alleviation
e.
integrated and sustainable growth of rural areas

D.
faster, sustainable and more inclusive growth


69. The 'Aam Admi Bhima Yojana' (2008) is administerd by:
A. LIe
B. Government ofIndia
e.
State governments

D.
State Bank of India


70. Which of the following is not a direct tax?
A. Income Tax
B. Corporate Tax
C. Sales Tax
D. Wealth Tax
71. If interest payment is deducted from the fiscal deficit, then the balance is called:
A. Primary deficit
B. Budgetary deficit
C. Revenue deficit
D. Monetary deficit
72. Which of the following is the largest significant factor of revenue expenditure of Central Government?
A. Defence Expenditure
B. Subsidy
e.
Interest Payments

D.
Salary




73. In its latest move, CSO has shifted the base year for national income estimates:
A. from 1990-91 to 1999-2000
B. from 1993-94 to 2004-2005
•
C. from to 2004-05

D.
from 1999-2000 to 2004-05


74. Government has issued an ordinance announcing ULIPs as 'Insurance Product'. The regulations ofULIPs will now be done by:
A. SEBIonly
B. IRDAonly
C. Both SEBI and IRDA
D. Government itseif
75. Goods and Services Tax levied at the States' level aims at:
A. eliminating cascading effect of some taxes
B. rationalize the cost structure and to reduce transactions and payment costs
C. reduce the effective tax rates on most goods
D. All the above
76. According to the Budget estimates for the year 2012-13, which ofthe following sectors receives the the maximum subsidy from the central government?
A. Food
B. Fertilizer
C. Petroleum
D. Interest
77. The 'Rachet Effect' is the situation where households find it:
A. .difficult to adjust to rising incomes than falling incomes
B. easier to adjust to rising incomes than falling incomes
C. difficult to save due to low incomes.
D. None ofthe above
78. In the standard IS-LM model which of the following is true, if the government raises tax rate and the central bank decides to hold money supply constant?
A. IS curve shifts to the right
B. LM curve shifts to the left
C. interest rate falls
D. None ofthe above
79. A sum ofmoney will become Rs 4600 in 5 years and Rs 4960 in 8 years at a certain rate of simple interest. The rate ofinterest is:
A.
B.
C.8%
D.4%


B-3S­
80. Given observations z and positive real numbers which are not identical, then the following is true for the corresponding GM (geometric mean) and AM (Arithmetic mean):
A. GM is greater than or equal to AM
B. GM is greater than AM
C. GM is less than AM
D. GM is equal to AM
81. A pair of dice is thrown. Assuming that all the sides of the dice have equal chance of showing up, what is the probability that the sum ofnumbers is
A. 9/12
B. 9/36
C. 1/12
D. 1/9
82. Draw a card randomly (with replacement) n times .from a deck ofcards well shuffled before each draw. Let X number oftimes an Ace is drawn. Then X foHows the following distribution:
A. Uniform
B. Binomial
C. Bemouli
D. Poisson
83. Number ofstudents who opted for econometrics course or game theory course is equal to
45. It is found that 25 students have taken both the courses and 30 students are doing game theory. How many students are doing econometrics?
A. 45
B. 40
C. 35
D.30
84. 4 first year and 3 second year students are to be seated in a row for their respective examinations in a manner that no two students .from the same class are together (on adjacent seats). How many distinct seating arrangements are possible?
A. 5040
B. 2520
C. 144
D.72
85. Let z be such that z 2x 5 and correlation between x and y is 0.36. Further, the mean ofx is 25 and the standard deviation ofx is 15. Then correlation between y and z is:
A. 0.18
B. 0.36
C. 0.72
D.0.80
13


...

86. There are two batteries in a UPS and both must be working for the battery to function. Probability that a battery will fail on a given day is 0.1 and the battery failures are independent events. What is the probability that the UPS will work without failure on a given day?
A. 0.99
B. 0.9
C. 0.8
D. 0.81
87. Which of the following distributions is appropriate for modelling the frequency of rare events in a large number oftrials?
A. Normal
B. Uniform
C. Binomial
D. Poisson
88. If a matrix P has m rows and n columns, then the rank of the matrix is generally defined as:
A. Rank m
B. Rank n
C. Rank minimum of
D. Rank =m2
3
89. Given the function x-22x2+ 55x the value ofthe first derivative of the function at x 0 is equal to:
A. 22
B. zero
C. 55
D. 9
90. At what level of output the average cost will be minimum when the AC function is given by AC q2 -5q 8 (Hint: Apply mathematical method of minimization)
A. 8 units
B. 2.50 units
C. 2q-5units
D. None of the above
91 Given the function f(XI X2) Xl3 -6XIX2 the second order own partial derivative is equal to:
A.
B.
C. 6XI
D. 6XI-2X2

92 Given the function y integration ofy with respect to x is:
9
A. x constant
B. x8 constant
C. 8x constant
D.72x

93. IfMC =2-OAq 3q2 is the marginal cost function of a firm where q is the
level of output, the total variable cost at q 10 units will be (Hint: Apply integration method):
A. 1000 units
B. zero
C. 100
D. Difficult to calculate from the given data
94. Theinversedemandfunctionisgiven asP=35-2x_x2where xistheamount of commodity demanded. Calculate consumer's surplus amount at x 3 units. (Hint: Apply integration method)
A.60
B. 9
C. 35
D.27
95. Total revenue and total cost functions ofa simple monopolist are assumed to beTR=1OOq-3q2and TC 4q2+ 10q respectively. At what level of output the total profit of the monopolist will be maximum? (Hint: Apply mathematical method of maximization)
A. 6.4
B. 289
C. 14
D. 100
96 If the total utility function X2 Xl X2 is maximized subject to the budget constraint Xl X2 the total utility will be maximum when Xl and X2 units are consumed (Hint: Apply mathematical method of maximization)
A. Xl= X2= 3units
B. Xl=3and X2 9 units
C. Xl= 6and X2= 9units
D. XI X2 9 units
97. Which one is the correct solution for Xin the quadratic equation 2x2 8x =10
A. 1and 5
B. 5and3
C. 2and7
D. 1 and-5
15

98. If the inverse of a matrix N is then,
A. the matrix N is a square matrix
B. the matrix N is a non-singular matrix
C. NM =MN I where I is the identity matrix
D. All ofthe above
99. Interchanging ofrows and columns of a given determinant Q
A. will change the value ofthe determinant Q
B. will not change the value ofthe determinant Q
C. will change the sign, value ofthe determinant Qremaining the same
D. will change both the sign and value ofthe determinant Q
100 IfM is a matrix such that M where Q and R are conformabie matrices, then the transpose of M is equal to
A. P'QR+RP
B. RQP+PR
C.
D. None ofthe above