Reg.No.. Name.

HSE-II February 2011 Part III ECONOMICS Maximum score:80

Time: 2 hrs 30 mts Cool off time: 15 mts

1. Classify the following into micro economics & macro economics. (demand analysis, consumption function, income determination, investment function, pricing of factors of production,saving) score 2 2. Complete the missing title. Economics as a ---------------------Economics as a ---------------------. real facts .norms of facts .positive issues. .normative issues .what is .what ought to be Score 1 3. If P1 is the price of good x1 , P2 the price of good x2 & M is the money income of consumer. a) Write the budget constraint. b) What is the budget line? Score 2 4. Suppose a consumer can afford to buy 6units of good1 and 8units of good 2, if he spends his entire income when the prices of goods are Rs.6 and Rs.8 respectively. How much is the entire income. Score 1 5. Suppose your friend is indifferent to bundles (5,6) and (6,6). Are the preferences of your friend monotonic? Score2 6. If the price of good X increases by 10% and quantity demanded decreases by 10% a) Calculate the price elasticity of demand. b)Name the shape of the diagram score 3 7. Correct the following sentences. a) Demand for life saving medicine is elastic. b) increase in demand & expansion of demand are one and the same. Score 2 8. Following are the information collected from a field visit Qty. TFC TVC TC AFC AVC 0 120 120 1 180 2 200 3 210 4 225 5 260 6 330 a)Complete the table b)plot TFC,TVC,TC,AFC,AVC,AC,MC AC MC

score:8

9. A firm is a price taker. a) Connect the statement to a market situation b) mention the features of the market. c) Why the firm is called as price taker. Score 5

10. Compute the TR, MR, AR schedules. Market price of each unit of good is Rs 10 Output (Q) TR AR MR 0 1 2 3 4 5 6 Score3 11. The price of good x increases from 20 to 30.then quantity supplied increases from 1000 to 2000. Calculate price elasticity of supply. Score2

12. Suppose the demand & supply curve of a commodity x in a perfectly competitive market is given by qD=700-p, qS=500+3p ( a) Find equilibrium price.(b)What will be the equilibrium quantity at the equilibrium price score 4 13 When supply of commodity x increases, its demand remains the same. What will be the effect of this on equilibrium price & quantity score1 14.complete the table. . Features No.of sellers Demand curve Nature of product Entry & Exit Score 4 15. The subject macro economics has got importance after the great depression of 1930s. Do you agree? Substantiate. Score2 16. Point out a major macro economic issue. Score1 17. Classify the following goods into capital goods & consumer goods. Machinery, bread, buildings, pencil, tools. Score2 18.GDP cannot be taken as a good measure of welfare. Do you agree? Substantiate. Score3 19. Categorize the following variables & give them appropriate titles. Wealth, spending of money capital formation, income, water in a reservoir, water in a river, capital. Score 3 20. Fill up the missing part. NNPmp =GNPmp minus ---------------21. Complete the chart. Measures of money supply . M1 M2 M1+. M3 M4 . score1

Perfect competition

Monopoly

Monopolistic competition

Oligopoly

Score4

22. Construct a sample balance sheet of a commercial bank. score3 23. Find the odd man out. SBI, RBI, Canara Bank score 1 24.The consumption function of an economy is C=30+.9y and investment is Rs.50.What will be the equilibrium level of income.? Score3 25. Complete the table & prove that as mpc increases the value of multiplier also increases. mpc Value of multiplier (k) 0.2 0.4 0.5 0.8 Score 5 26. Classify the following expenditures into revenue expenditure & capital expenditure. Grants to states, salaries and pensions, interest payments, loans to foreign governments, subsidies, capital projects of central plans. Score 3 27. Keynes suggested a deficit budget for a developing economy but classical economists supported a surplus budget. Differentiate the two concepts of budget. Score 2 28. The value of visible exports of a country is Rs.3526 crores, the value of visible import is Rs.2570crores a) Find the difference between them? b)By which name this difference is known? Score3 29. If C = 40 +.6y is the consumption function and if M = 20+.2y is the import function. Find out a)the open economy multiplier b)closed economy multiplier. Score 4

Prepared by : Sheeba John Benod Mathew J M H S S VAKATHANAM. KOTTAYAM CLUSTER