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Appendix 2009 - June Paper - 3 : General Economics

Chapter 1 : Introduction to Micro Economics [1] Which one is not the characteristic of capitalistic economy ? (a) Profit motive (b) Income inequality (c) Free employment (d) Collective ownership [2] Mixed economy means (a) All economic decisions are taken by Central Authority (b) All economic decisions are taken by private entrepreneurs (c) Economic decisions are partly taken by the state and partly by private entrepreneurs (d) None of these Chapter 2 : Theory of Demand and Supply Unit 1 : Theory of Demand [3] Demand of a commodity depends upon : (a) Price (b) Income (c) Price of related good (d) All of the above [4] In case of substitute goods, cross elasticity is _______ (a) Negative (b) Zero (c) Positive (d) None of these [5] Suppose the price of movies seen at a theatre rises from Rs. 120 per person to Rs. 200 per person. The theatre manager observed that the rise in prices has lead to a fall in attendance at a given movie from 300 persons to 200 persons. What is the price elasticity of demand for the movie ? (a) 0.5 (b) 0.8

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CPT Appendix 2009 - June

[6]

[7]

[8]

[9]

[10]

[11]

(c) 1.00 (d) None of these. The quantity demanded does not respond to price change and so the elasticity is : (a) Zero (b) One (c) Infinite (d) None The prices of a commodity were increased from Rs. 4 to Rs. 6. As a result demand decreased from 15 units to 10 units. What is the price elasticity? (a) 0.66 (b) 0.33 (c) 1.00 (d) 1.5 If demand is parallel to x axis, what will be the nature of elasticity ? (a) Perfectly elastic (b) Inelastic (c) Elastic (d) Highly elastic Unit 2 : Theory of Consumer Behaviour Indifference curve is based on : (a) Cardinal analysis (b) Quardinal analysis (c) Both (a) and (b) (d) None of above. Cardinal approach is related to : (a) Indifference curve (b) Equi-marginal utility (c) Law of diminishing returns. (d) None of these. The substitution effect of fall in the price of the commodity will lead to: (a) Upward movement in indifference curve (b) Downward movement in indifference curve (c) Movement from lower IC to a higher one (d) None.

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CPT Appendix : (Paper 3) General Economics

Unit 3 : Theory of Supply [12] Increase or decrease in supply means : (a) Change in supply due to change in its own price (b) Change in supply due to change in factors other than its own price (c) Both of above (d) None of above Chapter 3 Theory of Production and Cost Unit 1 : Theory of Production [13] If a firms output is zero, then (a) AFC will be positive (b) AVC will be zero (c) Both of (a) and (b) (d) None of (a) and (b) [14] Functions of the entrepreneur are : (a) Risk bearing (b) Initiating a business enterprise and resource co-coordinator (c) Introduced new innovations (d) All of the above [15] Law of diminishing returns is applicable in : (a) Manufacturing industry (b) Agriculture (c) Neither (a) nor (b) (d) Any economic activity at a point of time. Unit 2 : Theory of Cost [16] Which curve is never U-shaped ? (a) TFC curve (b) AVC curve (c) AFC curve (d) MC curve [17] From the following details, find out the average variable cost of 10 units: OUTPUT : 0 10 20 Total cost : Rs. 200 Rs. 400 Rs. 800 (a) Rs. 40 (b) Rs. 20 (c) Rs. 200 (d) Rs. 400

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CPT Appendix 2009 - June

[18] The total cost incurred for 10 units is Rs. 400 and 20 units is Rs. 800. Find the marginal cost. (a) Rs. 400 (b) Rs. 40 (c) Rs. 200 (d) Rs. 20 Chapter 4 Market Unit 3 : Price and Output Determination [19] In the long-run monopolist can (a) Incur losses (b) Must earn super normal profits (c) Wants to shut-down (d) Earns only normal profits. [20] The demand curve of the firm and industry will be same in which form of market : (a) Monopolistic Competition (b) Perfect Competition (c) Monopoly (d) Oligopoly. [21] Oligopoly haring identical products is : (a) Pure oligopoly (b) Imperfect oligopoly (c) Price leadership (d) Collusion. Chapter 5 Indian Economy A Profile Unit 1 : Indian Economy [22] In occupational structure of India, which sector has the lowest share ? (a) Agriculture (b) Service (c) Industry (d) Construction Unit 2 : Role on Different Sectors [23] National Bank for Agriculture and rural development is _______. (a) Co-operative bank (b) Commercial bank

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CPT Appendix : (Paper 3) General Economics

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(c) Apex bank of agriculture and rural development (d) Subsidiary bank of SBI. Unit 3 : National Income [24] Real National Income means national income measured at : (a) Constant Prices (b) Current Prices (c) Wholesale Prices (d) Retail Prices [25] Which one of the following is correct ? (a) NNPFC = NNPMP - NIT (b) NNPMP = NNPFC - NIT (c) NNPMP = NNPFC + Depreciation (d) NNPMP = NNPFC + Depreciation [26] The most important problem is estimating GNP is : (a) Double Counting (b) Smuggling (c) Black marketing (d) Unorganised market Unit 4 : Tax System [27] Which one is the merit of VAT ? (a) Cascading (b) Non - Cascading (c) Progressive (d) None of these [28] What is the nature of Income tax ? (a) Direct and Progressive (b) Indirect and progressive (c) Indirect and regressive (d) Direct and regressive. [29] Weakness of tax system in India : (a) Tax evasion (b) Regressive nature (c) Exemption of agriculture income (d) Brings changes in price relative index Chapter 6 Aspects of Indian Economy Unit 1 : Population [30] Which of the following state has the highest literacy ratio ? (a) Goa (b) Tamil Nadu

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CPT Appendix 2009 - June

(c) Kerala (d) Uttar Pradesh [31] Working population refers to people in the age group of : (a) Below 15 years and above 60 years (b) 15 years - 60 years (c) All of above (d) None of these Unit 2 : Poverty [32] According to the planning commission how many average daily calories per person define the poverty line in urban and rural areas. (a) 2400, 2100 (b) 2100, 2400 (c) 4100, 4200 (d) 4200, 4100 Unit 3 : Unemployment [33] The creation of Indian Postal Department happened in (a) 1837 (b) 1857 (c) 1951 (d) 1751 [34] Indias largest leading partner is _______ (a) U.S.A. (b) U.K. (c) Germany (d) China [35] _______ provides crop storage facility in India. (a) IDBI (b) ICICI (c) FCI (d) IFCI Unit 7 : Balance of Payment [36] Devaluation Means : (a) To reduce the value of home currency in other currency (b) To appreciate the value of home currency (c) To increase the value of home currency in other currency. (d) To constant the value of home currency.

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CPT Appendix : (Paper 3) General Economics

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[37] _______is a systematic record of all transactions of a country in a year. (a) Balance of payment (b) Balance of Trade (c) Current Account of Balance of Payment (d) None. [38] The current account of Balance of Payment includes trade balance and _______ (a) Settlement account (b) Capital account (c) Invisibles (d) Errors and omissions. Chapter 7 : Economic Reforms in India Unit 1 : Economic Reforms in India [39] 100% FDI was allowed in : (a) Banking (b) Insurance (c) Defence (d) None of these. Unit 2 : Liberalisation, Privatisation and Disinvestment [40] _______ is known as privatisation. (a) Divestment (b) Making a Private sector as a Public (c) Liberalisation (d) All of the above Unit 3 : Globalisation [41] Where is secretariat office of WTO ? (a) Geneva (b) New York (c) New Delhi (d) Tokyo [42] WTO replaced which organisation in 1995 ? (a) IBRD (b) GATT (c) IMF (d) None of these

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CPT Appendix 2009 - June

[43] Liberalisation and Globalisation are : (a) Regulatory (b) Complementary (c) Contradictory (d) Competitive [44] Long term loans to various countries are given by : (a) World Bank (b) WTO (c) IMF (d) None Chapter 8 Money and Banking Unit 2 : Commercial Banks [45] The nationalisation of 6 commercial banks happened in : (a) 1944 (b) 1949 (c) 1956 (d) 1980 [46] Banks not only accept deposits but also _______.savings. (a) Distribute (b) Mobilise (c) Convert (d) None of above. Unit 3 : Reserve Bank of India (RBI) [47] Who is the custodian of national reserves of international currency ? (a) SBI (b) RBI (c) ICICI (d) World Bank. [48] Which of the following is not the objective of RBI ? (a) Lendor of last resort (b) Bankers Bank (c) Leading to the public (d) Banker to the Government. [49] Rs. 10 note is issued by: (a) SBI (b) RBI (c) Government (d) Ministry of Finance

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CPT Appendix : (Paper 3) General Economics

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[50] The Quantitative measure of credit regulation by RBI is : (a) Bank Rate policy (b) Open market operations (c) Variable Reserve Ratio (d) All of the above Answer
1. 6. 11. 16. 21. 26. 31. 36. 41. 46. (d) (a) (c) (c) (a) (a) (b) (a) (a) (b) 2. 7. 12. 17. 22. 27. 32. 37. 42. 47. (c) (a) (b) (b) (c) (b) (b) (a) (b) (b) 3. 8. 13. 18. 23. 28. 33. 38. 43. 48. (d) (a) (c) (b) (c) (a) (a) (c) (b) (c) 4. 9. 14. 19. 24. 29. 34. 39. 44. 49. (c) (b) (d) (b) (a) (a) (d) (d) (a) (b) 5. 10. 15. 20. 25. 30. 35. 40. 45. 50. (a) (b) (d) (c) (a) (c) (c) (a) (d) (d)

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Paper 3 General Economics
Chapter 1 : Introduction to Micro Economics 2009 December [1] Capitalistic Economy uses __________as principal means of allocating resources. (a) Demand (b) Supply (c) Price (d) All of the above [2] Economic Problem arises when : (a) Wants are unlimited (b) Resources are limited (c) Alternative uses of resources (d) All of the above Chapter 2 : Theory of Demand and Supply Unit 1 : Theory of Demand 2009 December [3] Other things remaining constant, if the price of the inferior goods decreases then what will be the effect? (a) Demand increases (b) Demand decreases (c) Quantity demanded increases (d) Quantity demand decreases. [4] When price falls from Rs. 6 to Rs. 4, the demand rises from 10 to 15 units. Calculate price elasticity of demand. (a) 1.5 (b) 3.5 (c) 0.5 (d) 2 [5] Crose elasticity of perfect substitutes is : (a) Zero (b) Negative (c) One (d) Infinity [6] What is Engel's Curve ? (a) Curve showing three demand curve (b) Named after Ernst Engel (c) Both (a) and (b) (d) None [7] A consumer spends Rs. 80 on purchasing a commodity when its price is Re. 1 per unit and spends Rs. 96 when the price is Rs. 2 per unit. Calculate the price elasticity of demand. (a) 0.2 (b) 0.3 (c) 0.4 (d) 0.5 [8] When the price of cylinder rises from Rs. 120 to Rs. 200, the demand falls from 300 to 200. Calculate price elasticity of demand.

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(a) 1.00 (b) 0.50 (c) 5.00 (d) None [9] If the price is decreased from Rs. 10 to Rs. 8 of a commodity but the quantity demanded remains the same price elasticity is ______. (a) 1 (b) 0 (c) (d) None

Chapter 3 : Theory of Production and Cost Unit 1 : Theory of Production 2009 December [10] Labour force wants more_________. (a) Facility (b) Leisure (c) Benefit (d) All of the above [11] Production activity in the short run is analysed by (a) Returns to scale (b) Economies of scale (c) Law of variable proportion (d) None of these [12] Increasing returns to scale occurs due to: (a) Economies of scale (b) Specialization (c) Indivisibility of factors (d) All of these Unit 2 : Theory of Cost 2009 December [13] Which one of the following is correct? (a) AFC = AVC% ATC (b) ATC = AFC - AVC (c) AVC = AFC + ATC (d) AFC = ATC - AVC. [14] Calculate AFC of 3 units from the following data: Unit 0 1 2 3 Total Cost 30 40 50 60 (a) 30 (b) 15 (c) 10 (d) 5 [15] Find AFC of 3 units : Unit 0 1 2 3 Total Cost 15 25 35 45 (a) 5 (b) 10 (c) 15 (d) 25

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CPT Abridged Scanner : (Paper 3) General Economics [24] AGMARK is related to : (a) Industrial Production (b) Service Sector (c) Agricultural production (d) Egg Production. Unit 3 : National Income 2009 December [25] Green Revolution was started in__________. (a) 1996 (b) 1966 (c) 1977 (d) 1965 [26] GDP + _______ = GNP (a) Depreciation (b) N.F.I.A (c) N.I.T. (d) None of the above. [27] Which of the following represents National Income? (a) G D P at factor cost (b) N D P at factor cost (c) N N P at market price (d) N N P at factor cost. Unit 4 : Tax system 2009 December [28] Fringe Benefit Tax came in__________. (a) 1994-95 (b) 1995-96 (c) 2001-02 (d) 2005-06 [29] When was Patent Infringement Act passed? (a) 2005 (b) 2006 (c) 2007 (d) 2008.

Chapter 4 : Market Unit 3 : Price and Output Determination 2009 December [16] The demand curve of oligopoly is : (a) Horizontal (b) Vertical (c) Kinked (d) Rising left to right [17] Demand curve is equal to M. R. curve in which market? (a) Oligopoly (b) Monopoly (c) Monopolistic Competition (d) Perfect Competition [18] Kinked demand hypothesis is designed to explain______ in context of oligopoly. (a) Price and Output Determination (b) Price Rigidity (c) Collusion between Firm (d) All of the above [19] Price discrimination can take place only in_______. (a) Monopolistic Competition (b) Oligopoly (c) Perfect competition (d) Monopoly Chapter 5 : Indian Economy- A Profile Unit 1 : Indian Economy 2009 December [20] Over the years, per capita income is: (a) Increasing (b) Decreasing (c) Constant (d) Galloping. Unit 2 : Role on Different Sectors 2009 December [21] Animal husbandry comes under which sector? (a) Primary sector (b) Secondary sector (c) Tertiary sector (d) None of the above [22] Basic and capital goods industries are in_______ plan. (a) First (b) Second (c) Third (d) None [23] In which plan, maximum development took place in the industrial sector ? (a) First plan (b) Second plan (c) Third plan (d) Fourth plan.

Chapter 6 : Aspects of Indian Economy Unit 1 : Population 2009 December [30] Sex Ratio is measured in number of females per _________males. (a) 100 (b) 1,000 (c) 10,000 (d) 10 [31] Population explosion occurs due to: (a) High Birth Rate (b) Low Birth Rate (c) High Birth Rate as well as Low Death Rate (d) High Death Rate. [32] Birth rate and death rate refer to number of births and deaths per ______ of population. (a) 1,000 (b) 100 (c) 10 (d) 10,000

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Unit 3 : Unemployment 2009 December [33] The unemployment caused due to introduction of new machinery, improvement in methods of production, Labour saving devices, etc. (a) Structural unemployment (b) Cyclical unemployment (c) Disguised unemployment (d) Technological unemployment Unit 4 : Infrastructural Challenges 2009 December [34] When was Personal Identification Number (PIN) introduced: (a) 1970 (b) 1972 (c) 1974 (d) 1976 [35] Major form of energy supply in India is (a) Hydro power (b) Nuclear power (c) Thermal power (d) Solar - power. Unit 5 : Inflation 2009 December [36] Inflation occurs when : (a) Money supply increases (b) Increase in public expenditure (c) Both (a) and (b) (d) None. [37] In India, inflation is measured by : (a) Consumer price index (b) Agriculture index (c) Industrial index (d) Whole sale price index. [38] When there is inflation i.e. increase in general price level, due to increase in cost of production, such inflation is called. (a) Stagflation (b) Demand - pull inflation (c) Cost - push inflation (d) None of these. Unit 6 : Inflation 2009 December [39] ______ refers to public revenue, expenditure and allied matters. (a) Fiscal policy (b) Monetary policy (c) Economic policy (d) None of these. Unit 7 : Balance of Payment 2009 December [40] Balance of payment deficit can be removed through: (a) Devaluation of currency

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CPT Abridged Scanner : (Paper 3) General Economics (b) Vigorous export promotion (c) Import substitution (d) All of the above. 11

Chapter 7 : Economic Reforms in India Unit 1 : Economic Reforms in India 2009 December [41] At present, licensing is compulsory for how many industries ? (a) 6 (b) 8 (c) 20 (d) 23 Unit 2 : Liberalisation, Privatisation and Disinvestment 2009 December [42] ______ refers to disposal of public sector equity in the market. (a) Globalization (b) Privitization (c) Disinvestment (d) Liberalization. Unit 3 : Globalisation 2009 December [43] Which of the following is a short term credit institution ? (a) W T O (b) I M F (c) World Bank (d) None of these. [44] Which of the following does not facilate the process of Globalization? (a) W. T.O. (b) I .M. F. (c) U .N. (d) I .B. R. D. [45] Three economic pillars do not include (a) World Bank (b) I M F (c) W T O (d) U N. Chapter 8 : Money and Banking Unit 1 : Money 2009 December [46] The difference between broad money and narrow money is: (a) Post office deposits (b) Time deposits (c) Savings (d) Currency. [47] M1 = __________ + Deposits with public (a) Currency (b) Term deposits

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12 (c) Post office savings (d) None of these. [48] Which of the following is money proper ? (a) Bonds (b) Government securities (c) Time deposits (d) Currency notes and demand deposits. Unit 3 : Reserve Bank of India (RBI) 2009 December [49] Which system of issue of currency note is followed by RBI ? (a) Fixed Fiduciary System (b) Proportional Reserve System (c) Percentage Reserve System (d) Minimum Reserve System

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CPT Abridged Scanner : (Paper 3) General Economics [50] ______ controls affects indiscriminately all sectors of the economy ? (a) Selective credit control (b) Quantitative control (c) Margin requirement (d) None of these.

1. 5. 9. 13. 17. 21. 25. 29. 33. 37. 41. 45. 49.

(c) (d) (b) (d) (d) (a) (b) (b) (b) (d) (a) (d) (d)

2. 6. 10. 14. 18. 22. 26. 30. 34. 38. 42. 46. 50.

(d) (c) (b) (c) (d) (b) (b) (b) (b) (c) (c) (b) (b)

Answer 3. 7. 11. 15. 19. 23. 27. 31. 35. 39. 43. 47.

(d) (c) (c) (a) (d) (b) (d) (c) (c) (a) (b) (a)

4. 8. 12. 16. 20. 24. 28. 32. 36. 40. 44. 48.

(a) (b) (a) (c) (a) (c) (d) (a) (c) (d) (c) (d)

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