SECTION A
1. Answer the following in about 150 words each 12x5=60
"Validity of Marshall's equi marginal utility
depends on the assumption of unitary elasticity of
the marginal utility curves of the commodities
under the budget." Clearly explain this assertion.
"For most developing nations fighting persistent
balance of payments crisis and inflationary crisis,
monetary contraction is a better option." Do you
agree?
Show how price output decision is taken by
duopolists, taking into account, their mutual
reaction. Under what condition will the duopolistic
market be in equilibrium
"If firms produce differentiated products it is
neither possible to identify the industry nor
possible to draw its supply curve." Discuss and
show how Chamberlin handles the problem.
"Agriculture is not just a sector contributing a
small proportion of GDP, it is a way of life for the
Indians." Discuss.

2. Mention the different components of supply of
money as specified by tbe Reserve Bank of India.
In what sense is the narrow money 20
Why is under-employment equilibrium possible in
Kcyncsian economics, but not possible in Classical
economics Give reasons.
Is rent a surplus? Give reasons in support of your
assertion and point out the difference between
and 'quasi-rent'.
3. What is the difference between private and social
cost-benefit? Which one of the two is more
relevant to government investment decision and why? 20
Explain why money supply remains unaffected if
budget deficit is met by borrowing from the
public. 20
Is there any significant difference between Value
added tax and Sales tax? If so, what is that? 20

4. "Industrial development and environmental
degradation arc highly correlated." If it is true
what should be, in your opinion, the policy options
for industrialization process vis-a-vis pollution
control 20

Discuss the role of multinationals in employment
creation, income generation and transfer of
technology. 20
For optimal allocation of resources, which of the
options market forces, planning exercise or a
combination of both should be suitable for the
third world countries Defend your stand. 20

SECTION B
5. Answer the following in about 150 words each
"The assumption of fixed coefficient production
function is at the root of Harrod's instability."
Discuss and explain whether giving up the
assumption really helps.
Derive Marshall's welfare economics from his
concept of consumer surplus after explaining
consumer's surplus along with the underlying
assumptions.
What is prisoner's dilemma How is it related to a
strictly dominant industry?
Show different stages of product life cycle. How do
the shortcomings of diffusion lag of new
technologies in recent years cause a time
compression of the cycle?
Distinguish between Currency Board Arrangement
and dollarisation. Why would a nation adopt one or
the other?
6. What do yon mean by money multiplier? What are
the factors that determine the value of the
multiplier?
(bl Why docs the point of intersection of IS and LM
curves coincide with two markets
What are the fiscal and monetary implications of
vertical IS and vertical LM curves
20
20
20

7. Discuss the impact of FDI on level of output and
employment of the host country. Why do we need
some precaution in allowing FDI in retail sector in
India?
"Transaction demand for money is interest rate
elastic." Explain in reference to the post Keynesian
theories of demand for money.
Why are trading blocks formed Explain the
welfare impact of such trading blocks for
non-member countries.
8. Distinguish between backwash and spread effects
of Myrdal. How do they operate in backward
economies
(bl "The solution of long term development needs of
India lies in promoting public-private partnership."
Discuss.
Examine Kalecki's model of distribution. Do you
consider it a correct explanation of distribution? 20