ECONOMICS
PAPER III

Note This paper contains seventy five objective type questions of two marks each. All questions are compulsory.
1. A recessionary gap measures the

amount by which autonomous spending is below to that needed to achieve a full employment equillibrium


amount by which aggrigate spending exceeds to that needed to achieve full employment


difference in real output between the classical model and the keynesian depression model.


Extent of paradox of thrift


2. How many countries are the members of European Union
25 28 26 15
3. Identify the factors which are likely to pose risk to India's external economic situation

U.S. Federal Reserve monetory tightening expected later this year (2015).


Viability of the Eurozone in the event of a Greek exit


Spike in oil prices


Increase in India's share in global exports.
Find the correct combination from the given codes



and and and and


4. Monetary policy in India now aims at targeting

Growth of money supply Consumer price inflation


neither nor Both and


5. Match List I with List II and show the relation between trade cycle and profit by selecting correct codes given below.
List I List II

Recession Low


Boom Positive


Recovery Highest level


Depression Negative



Codes














6. In relative income hypothesis consumption is related to

Peak past consumptions Median current consumption of peer group


Neither nor Both and



7. Monetary expansion can still be effective in getting out of liquidity trap if it's combined with

Restrictions on bank loans Increased taxes


Contractionary fiscal policy Expansionary fiscal policy


8. If a linear consumption function passes through the origin it means

APC MPC APC MPC


APC=MPC APC=MPC=0


9. According to Keynes the Aggregate suppy curve during depression

is horizontal is Vertical


tilts downward to the right tilts upward to the right


10. Identify the transfer payments in the following and answer from the codes below

Annual increment in salary


Payment of bonus to employees


Interest payment on public debt


Pension payment


Codes
and and and and
11. Technical progress is said to be Hicks Capital intensive if at constant capital labour ratio MRTSL K

remains constant decreases


increases none of and are relevant


12. In the theory of investment decisions, the most appropriate rate of return is the one which makes the

net present value the maximum gross present value the maximum


net present value zero gross present value zero


13. Correct statement of cob-web model is

St=ao+bopt Dt=-co-dopt St=ao+bopt-1 Dt=co-dopt


St=ao-bopt-1 Dt=co+dopt St=ao-bopt-1 Dt=co-dopt-1


14. 'Adverse selection' arises because of

Lack of information Wrong information


Asymmetrical information Uncertainty of future


15. Shadow prices can be called

Imputed cost Opportunity cost


both and neither or


16. Walra's general equilibrium model uses a

system of equations


system of simulteneous linear equations


system of simulteneous equations


system of linear equations



17.

18.

19.

20.

21.


Which of the following is an inferior good

Kerosine Cooking gas


Electricity Chemical fertilizers


Pareto optimality in production is gained in which of the following conditions
X Y A B
MRTS MRTS LK LK= MRS MRS XY XY=
K L MRS MRT XY XY= L K L K MP MP P P

Match List (consumer behaviour approach) with List -II (Economist with whom it is associated) and select the correct answer using the codes given below
List I List II
Cardinal Approach Von Newman Morgenstein
Indifference curve Alfred Marshell
Revealed Preference Approach J. K. Hicks
Neo-utility theory of risky choices P. A. Samuelson
Codes






Which one of the following is the correct concept of Natural rating unemployment

Frictionally and structurally unemployed


Frictionally and cyclically unemployed


Structurally and cyclically unemployed


Frictionally, cyclically and structurally unemployed

Consider the following statements


Points to the left of the IS curve indicate excess supply of goods.


Points to the right of the LM curve indicate excess demand for money.


Points to the right of the IS curve indicate excess supply of money.


Points to the right of the IS curve indicate excess supply of goods. Of these statements


and are correct and are correct


and are correct and are correct




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

C=40+0.7y LM function


I=90-6 i IS function


0.3y-20i-160=0 (iii) Consumption function


0.3y+20i-150=0 Investment function


Codes














23. In a linear programming problem, an optimum solution will be

One of the basic solutions One of the feasible solutions


One of the basic feasible solutions One of the non-basic solutions


24. Human capital formation can be accelerated by

Promoting skill development programmes


Providing medical and health facilities in both rural and urban areas.


Strengthening hardware and software industry.


and above.


25. What is the correct sequence for the evolution of society according to Karl Marx
Socialism Slavery Feudalism Capitalism

Codes

and and


and and


26. The unbalanced growth strategy is based on

External and Internal economies


Spread and backwash effects


Increasing and constant returns to scale


Backward and forward linkages


27. Financial dualism theory was developed by
B. Higgins H. Myint W. A. Lewis R. Nurkse



28. Which among the following production function will exhibit both Hicks and Harrod technical progress

Leontieff production functions


Cobb -Douglas production functions


ACMS production functions


None of the above


29. The concept of .-efficiency was formulated by
H. Singer H. Leibenstein R. Rodan C. Kindleberger
30. Which among the following items has the largest value of exports in India during 2013-15

Engineering goods


Garments


Gems and Jewellary


Agro-processing exports.


31. Which among the following is not correctly matched

Golden age Mrs. Joan Robinson


Golden rule of
accumulation Edmund Phelfs



Steady state growth Robert Solow


Low income
equillibrium trap T. R. Malthus



32. Who among the following economists is not associated with the Dependency Theory

S. Amin P. Baron


Raul Prebisch A. G. Frank


33. Which one of the following is not a feature of neoclassical economics

Flexible wages and interest rates


Capital in physical and financial form


Perfect Competetion


Neutrality of money


34. Renewed focus to control increasing population is required from the viewpoint of women because

Family planning programme needs to be reoriented keeping in view the reproductive health rights of women.


Increased budget needed to provide quality services to women.


Increased number of women councellers needed for health and youth friendly services.


All of the above.




35. Match List I with List -II and select the correct answer List I List II

Supply side of international trade David Ricardo


Demand side of international trade Bastable and Alfred Marshall


Opportunity cost of international trade G. Haberler


Real cost theory of International trade Alfred Marshall and Edgeworth


Codes


(iii)





(iii)





36. Justice in taxation is best ensured by applying the principle of

Equal marginal sacrifice Equal proportional sacrifice


Equal absolute sacrifice None of the above.


37. All the funds which belong to Government go to

Public Account Consolidated fund


Contigency fund Revenue Account


38. During the period 2004 and 2013, India's share in global exports increased from

0.8 percent to 1.7 percent 1.0 percent to 2.5 percent


1.0 percent to 1.5 percent 1.2 percent to 2.1 percent


39. 'Gender budgeting' means

a seperate budget for women a tool for gender empowerment


a tool for gender discrimination a seperate budget for men and women.


40. Which sector in India has developed breaking the Colin Clark sequence of development

Export Sector Primary Sector


Secondary Sector Service Sector


41. Match List I with List II by selecting correct codes given below List I List II

Liquidity trap M. Friedman


Demonstration effect A. C. Pigou


Permanent Income Hypothesis J. Duesenberry


Wealth Effect J. M. Keynes



Codes





(iii)


(iii)






42. An over-valued currency will have which of the following effects

Make exports and imports equally costly


Make exports and imports equally cheaper


Make imports relatively more costly


Make imports relatively cheaper.


43. According to Pribisch-Singer thesis which of the following is true

International trade has increased international inequalities and has retarded the development of developing countries.


The strategy of import substitution has resulted in misallocation of resources within a

developing country.
Codes



Both and are true. Only is true.


Only is true Both and are not true.


44. Assertion Marshall-Lerner condition should be fulfilled if devaluation is to be
successful.
.eason Devaluation makes exports costly and imports cheaper.
Codes


Both and are correct


Both and are not correct


is correct but is not correct explaination of


is correct and is the correct reason of


45. Productivity changes in domestic export industry are incorporated in which types of terms of trade

Income terms of trade Single factoral terms of trade


Gross barter terms of trade None of the above.


46. The proposed GST bill will subsume

Entertainment tax Value-added tax


Union excise duty All of the above.


47. Select the pair of economists, who first gave the canons of taxation and public expenditure

R. N. Bhargav and R. A. Musgrave


Adam Smith and Findlay Shirras


A. C. Pigou and David Ricardo


A. R. Prest and Ursula K Hicks


48. Following are some of the effects of parallel economy in India

Loss of revenue to the Government


Greater burden on honest tax-payers


Results in equitable distribution of wealth and income


Encouragement to non-essential items of conspicuous consumption.
Find the correct combination from the codes given below



and and and and




49. Reference period for the Neonatal Mortality Rate in India is

Three months after birth One month after birth


28 days after birth None of the above.


50. Recently launched .Indradhanush. programme is related with

Production of medicines


Vaccination against fatal diseases


Multivocational training for adolscent girls.


None of the above.


51. Who suggested to Government of India to introduce expenditure tax
N. Kalder J. R. Hicks B Hanson Ursula Hicks
52. Which of the following new financing agency provide finance to micro and small business
S I D B I M U D R A N A B A R D K C C
53. Who said, .Inflation is unjust and defletion is inexpedient.
A. K. Sen J. R. Hicks A. C. Pigou J. M. Keynes
54. Consider the following reasons of continuous decline in average land holding rise in India. Answer from the code given below

Law of Inheritance Consolidation


Farm Mechanization Desire for land ownership


Codes

and and


and and


55. Central Governments' situation is likely to be stressed because of

Implementation of the recommandations of the Seventh Central Pay Commission


Larger devolution to the states arrising out of recommandations of the Fourteenth Finance Commission.


Compensation to the states on implementation of GST


All of the above.


56. Which tax is imposed solely by the Government of India
Sales Tax Excise Tax Custom duty Octroi duty
57. GST in India will be characterised by which of the following features Choose the correct answer from the codes given below

There will be a dual GST with Centre and the state.


It would be a destination based tax as against the origin based tax.


It would apply to all goods and services excluding alcohol for human consumption.



Codes

All the above are correct. Only is true.


Both and are true. Only and are true.



58. Consider the following

Interest rate on bonds


Rate of inflation


Ratio of savings to investment


The velocity of money according to Friedman depends upon which of the above factors Choose the code to answer.
Codes
and and and Only
59. Which country introduced paper currency system first in World
England USA India Sweden
60. The 2014 Nobel Prize in Economics was awarded to

Lars Peter Hansen Jean Triole


Alvin E. Roth Paul Krugman


61. In environmental economics Herman Daly has formulated

Step up approach Space utilisation approach


Ecological approach Steady -state approach


62. High powered panel to select the non-executive chairman of public sector banks has been constituted by Government under the chairmanship of

C. Rangarajan Raghuram Rajan


Bimal Jalan .. V. Reddy


63. Assertion The share of women in decision making process is gradually increasing. .easonin. Greater inclusion of women involves greater share of gender budget in
general budget.
Of the above statements, which one is correct


Both and are correct and is correct explaination of


Both and are correct and is not the correct explaination of


is true but is false


is true but is false.


64. India's 'Green Actions' can be made effective by

Increase in excise duty on petrol and diesel


Translating coal cess into a 'carbon tax'.


Significantely promoting the renewable sources of energy.


All of the above.


65.

66.

67.

68.

69.

70.

71.


Which of the following are the conditions of economic viability and technological feasibilty of Leontief's static model

Kuhn Tucker conditions


Hawkins Simon conditions


Klein -Rubin conditions


Von Neumann -Mogenstern conditions


1
Given the demand function as p q2 consumer's surplus at q=25 is
4

1.12 1.25 1 0.5

Given the demand function as the average and marginal revenue at q=3 are respectively


6 and 12 7 and 12 8 and 14 11 and 15

Which of the following is true in the context of statistical tests of hypotheses for two variable linear regression model


t2 F t2 F t2=F t=F


Which is the correct form of model to test the stationarity of a time series through
Dicky-Fuller test
.t=A.t-1+µt .t =.t-1+Aµt
t1+µt
The term in the best linear unbiased estimators (BLUE) implies
Maximum variance of the estimators
Minimum variance of the estimators
Average variance of the estimators
Unbiased variance of the estimators

Match the following and answer from codes given below

..t=A.t-1+µt
List I

Durbin's h test


Goldfeld-Quandt test


F Test


Dicky Fuller test


Codes






List II
Heteroscedasticity
Overall significance of a regression
Stationarity of a series
Auto correlation in auto-regressive models

71.
72.
73.

74.

75.


In a simultaneous equations system for an over-identified equation the appropriate method of estimation is

Ordinary Least squares Method


Indirect Least Squares Method


Two-stage Least Squares Method


Limited information maximum Likelyhood Method

Which of the following statements are true concerning a recursive system


The parameters can be validly estimated using seperate application of OLS to each equation


The independent variables may be correlated with the error terms in other equations.


An application of 2SLS would lead to unbiased but unefficient parameter estimates.


The independent variables may be correlated with error terms in the equations in which they appear as independent variables.


and only and only


and only and

In a multiple regression the regression coefficients are to be tested. Which test would be used


F test . 2 (Chi-square)test d test t test


In CES production function

Q =A..aX1 X2 .. P
Where Q is output and .1 and .2 are labour and capital, choose the correct alternative from given codes.

Efficiency Parameter µ


Distribution Parameter p


Substitution Parameter O


Returns to scale parameter A


Codes