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ECONOMICS QUESTIONS
Generally, the demand curve has
a. A negative slope
b. A slope downward from left to right
c. Both (a) and (b)
d. A slope upward from left to right
The law of demand can be derived with the help of
a. Law of Diminishing marginal utility
b. Law of Equi marginal utility
c. Any of the above
d. None of above
Price leadership can be on the basis of
c. Both (a) and (b)
d. None of the above
The equilibrium is unstable and indeterminate under
a. Edgeworth model
b. Cournot model
c. Sweezy model
d. Pareto model
The equilibrium prices of duopoly model are obtained at the intersection of their
reaction curves, it is correct in case of
a. Edgeworth model
b. Sweezy model
c. Betrand model
d. None of the above
The value of elasticity of demand ranges from
a. Zero to infinity
b. One to infinity
c. Zero to one
d. None of the above
If no commodity is found, the elasticity of demand is
a. Zero or perfectly inelastic
b. Infinite or perfectly elastic
c. Both (a) and (b)
d. None of the above
Discriminating monopoly is possible if two markets have
a. Rising cost curves
b. Equal elasticities of demand
c. Different elasticities of demand
d. Rising and declining cost curves
What is the sufficient condition for equilibrium for a perfectly competitive firm?
a. MR=MC

## b. MC curve should cut the MR curve from below

c. MR = AC
d. MC curve should cut the MR curve from above
10. With a substantial change in price, there is no change in demand, then it is called
a. Unit elastic demand
b. Moderately elastic demand
c. Perfectly elastic Demand
d. Perfectly inelastic demand
11. Proportionate method of measurement of elasticity of demand is also known as
a. Arithmetic method
b. Ratio method
c. Flux method
d. All of the above
12. Consumer surplus under price discrimination is
a. Maximum
b. Minimum
c. Zero
d. Non-predictable
13. The law of variable proportion is
a. Also called law of proportionality
b. Also called law of non-proportional returns
c. Wider and includes law of increasing returns, law of decreasing returns and
law of constant return as three phases
d. All of the above
14. All money costs can be regarded as
a. Social costs
b. Opportunity costs
c. Explicit costs
d. Real costs
15. Marginal revenue will be negative if the demand is
a. Relatively elastic
b. Unitary elastic
c. Relatively inelastic
d. Perfectly elastic
16. Increasing returns imply
a. Constant average cost
b. Diminishing cost per unit of output
c. Optimum use of capital and labour
d. External economies
17. Who compared the relationship between demand and the price with see saw?
a. Lionel Robbins
b. Arthur Cecil Pigou
c. Alfred Marshal
d. Hall and Hitch

## 18. The upper portion of the kinked demand curve is relatively

a. More inelastic
b. More elastic
c. Less elastic
d. Inelastic
19. Under perfect competition, a firm will be in equilibrium when
a. MC is greater than MR
b. MC cuts MR from below
c. MC = MR
d. Both (b) and (c)
20. Decrease or fall in the price of commodity leads to increase in demand because of
a. Income effect i.e., consumer becomes better off
b. Substitution effect i.e., relatively cheaper than related goods
c. Both (a) and (b)
d. None of the above
21. Who has given four major exceptions to the law of demand?
a. Paul Anthony Samuelson
b. Fredric Bentham
c. Robert Giffen
d. J.S.Bain
22. Under monopoly and imperfect competition, MC is
a. More than the price
b. Less than the price
c. Equal to the price
d. Any of the above
23. Under perfect competition, there can be
d. Both (a) and (b)
24. When quantity demanded changes only due to change in price then it is called
a. Contraction in demand
b. Extension in demand
c. Both (a) and (b)
d. None of the above
25. When quantity demanded changes due to factors other than price, it is called
a. Decrease in demand
b. Increase in demand
c. Both (a) and (b)
d. None of the above
26. Extension of Curnot model is
a. Stackelberg model
b. Sweezy model
c. Betrand model

## d. None of the above

27. Factors responsible for creating conditions for emergence and growth of monopoly
are
a. Patents
b. Control over strategic raw materials
c. Licensing
d. All of the above
28. In case of contraction or extension in demand, the movement is along a demand curve
whereas in case of increase or decrease, the demand curve will move
a. Upward
b. Downward
c. Any of the above
d. None of the above
29. The fall in the price of one national newspaper may lead to fall in the circulation of
another national paper (assuming price of 2nd paper is not lowered). It is due to
a. Income effect
b. Substitution effect
c. Both (a) and (b)
d. None of the above
30. In case of monopolistic competition
a. MR curve cannot be defined
b. AR curve cannot be defined
c. The short run supply curve cannot be defined
d. None of the above
31. Kinked demand curve is theory of
a. Monopoly
b. Collusive oligopoly
c. Non-collusive oligopoly
d. None of the above
32. Supply of a commodity is a
a. Stock concept
b. Flow concept
c. Both (a) and (b)
d. None of the above
33. An ISO-Cost line represents
a. Combination of two inputs which yield the same amount of output
b. Combination of two inputs which cost the same amount to a firm
c. Combinations of two inputs which yields varying amounts of output
d. Combinations of two inputs which cost different amounts of outlay to a firm
34. Pure monopoly exists
a. When there is a single producer
b. When there is a single producer without any close substitutes
c. When there is a single producer with close substitutes
d. When a few producers control the industry

## 35. When AR is falling, MR will be

a. Equal to AR
b. Less than AR
c. More than AR
d. Either more or equal to AR
36. In case of the two commodities are complements cross elasticity will be
a. Positive
b. Unitary
c. Negative
d. Infinite
37. An indifference curve is always
a. Concave to the origin
b. Convex to the origin
c. A vertical straight line
d. A horizontal straight line
38. The concept of indifference curves analysis was given scientific touch by
a. Irving Fisher 1892
b. Edgeworth 1881
c. Slustsky 1915
d. Marshall 1921
39. The price which a consumer would be willing to pay for a commodity equal to his
a. Total utility
b. Marginal utility
c. Average utility
d. Does not have any relation to any one of these
40. The substitution effect works to encourage a consumer to purchase more of a product
when the price of that goods is falling because
a. The consumers real income has increased
b. The consumers real income has decreased
c. The product is now relatively less expensive than before
d. Other products are now less expensive than before
41. Gossens second law states that
a. When the income increases the money value or real income will decrease
b. The consumers consume only when px/py = Mum
c. Once a person has spent his entire income he would have maximized his total
pleasure from it only if the satisfaction gained from the last item of each
commodity bought was the same
d. None of these
42. Price effect in indifferent curve analysis arises
a. When the consumer becomes either better off or worse off because price change is
not compensated income change
b. When income and price change
c. When the consumer is better off due to a change in income and price
d. None of the above

## 43. In case of inferior goods, the income effect

a. Partially off sets the substitution effect
b. Reinforces the substitution effect
c. Is equal to the substitution effect
d. More than off sets the substitution effect
44. On an indifference map, if the income consumption curve slopes downwards to the
right it shows that
a. X is an inferior good
b. Y is an inferior good
c. Both X and Y are superior goods
d. Both X and Y are inferior goods
45. On an indifference map higher indifference curves show
a. The same lower level of satisfaction
b. The optimum level of satisfaction
c. The higher level of satisfaction
d. Levels of satisfaction among which the consumer is different
46. The concept of supply curve as it is used in economic theory is relevant only for the
case of
a. Monopoly
b. Perfect or pure competition
c. Monopolistic competition
d. Oligopoly competition
47. The short run supply curve of market always
a. Slope upward from left to right
b. Slope downward from left to right
c. Slope horizontally
d. None of the above
48. External economies are witnessed in
a. A rising supply curve
b. A rising demand curve
c. A falling supply curve
d. A falling demand curve
49. The law of increasing returns is only applicable to agriculture; according to
a. Classical school
b. Neo-classical school
c. Modern school
d. J.M.Keynes
50. ISO-Quant refers to
a. Another name of indifference curve
b. The production indifference curve
c. An equal quantity curve of a consumer
d. An equal cost curve of a producer
51. The increasing returns to scale occurs because large scale provides greater
specialization to various factors according to

a. Joan Robinson
b. Marshall
c. Edward Chamberlin
d. Paul A.Samuelson
52. Increasing returns is not caused by
b. Specialization of labor
c. Marketing economies
d. Varying factor proportions
53. The law of diminishing returns depends on the assumption that
a. Total output is constant
b. The state of technical knowledge is unchanged
c. Land is the factor kept constant
d. Average output declines faster than marginal output
54. The elasticity of substitution between two inputs in CES production function
a. Decreases continuously
b. Increases continuously
c. Remains constant
d. None of these
55. A long run analysis of production is called
a. Economies of scale
b. Law of variable proportion
c. Law of increasing returns
d. Law of returns to scale
56. Law of diminishing returns to factors is relevant to
a. Short run
b. Long period
c. Secular period
d. Both short and long periods
57. Under imperfect competition a firm can produce with
a. An optimum plant
b. An optimum output
c. Maximum profit
d. Identical products at low cost
58. Consumers are likely to get a variety of goods under
a. Perfect competition
b. Monopoly
c. Imperfect competition
d. Oligopoly
a. Monopoly
b. Monopolistic competition
c. Perfect competition
d. Oligopoly

60. The supply function, would shot downward and to the right if the MC of all the firms
in a perfectly competitive industry were to
a. Decrease
b. Increase
c. No change
d. None of these
61. The competition among buyers, each trying to get enough of the product to satisfy his
wants tend to move
a. The consumers price
b. The market price
c. The equilibrium price
d. All of the above
62. From the resource allocation view point, perfect competition is preferable because
a. The firms operate at excess capacity levels
b. There is a whole variety of output produced
c. There is no restriction on entry and exit of firms
d. There is no idle capacity
63. A perfectly competitive industry becomes a monopoly with the same cost conditions,
it will now sell
a. An unchanged output at a higher price
b. A larger output at the old price
c. A larger output at a higher price
d. A reduced output at a higher price
64. Under price discrimination, price will be higher in the market where demand is
a. Unitary elastic
b. Highly elastic
c. Less elastic
d. None of the above
65. if the firms under perfect competition have different costs, abnormal profits will be
earned in the long run only by
a. Marginal firm
b. All the firms
c. Intra-marginal firms
d. None of the firms
66. long run equilibrium price of a perfect competitive firm is always
a. Above the long run average cost
b. Below the long run average cost
c. Equal to average fixed cost
d. Equal to long run average cost
67. A firm under perfect competition faces for its product
a. A horizontal demand curve
b. A downward sloping demand curve
c. An upward rising demand curve
d. A vertical demand curve

## 68. In the long run competitive equilibrium

a. Every firm will earn economic profit
b. Every firm will incur loss
c. Every firm will earn only normal
d. The marginal firm will earn no profit
69. Economist associated with the development of indifference curve analysis are
a. Hicks and Allen
b. Hicks and Robbins
c. Marshall and Hicks
d. Hicks and Walras
70. The indifference curve technique
a. Has replaced utility technique altogether
b. Is used as an alternative to the utility technique
c. Is used along with the utility approach
d. Has become a part of the utility approach
71. Which of the following is one of the assumptions of the indifference curve analysis?
a. Cardinal utility
b. Ordinal utility
c. Independent utility
d. Constant marginal utility of money
72. Ceteris paribus, when a consumers income increases, his equilibrium points move to
a. A higher indifference curve
b. A lower indifference curve
c. Remains unchanged on the same indifference curve
d. Moves to the left hand side on the same indifferent curve
73. When the consumers income increases, the budget line on an indifferent map moves
to
a. A parallel position to the right
b. A parallel position to the left
c. A parallel position to the origin
d. None of the above
74. Marginal utility curve always
a. Rising
b. Falling
c. Parallel to X axis
d. Parallel to Y axis
75. The total utility is maximum when
a. Marginal utility is zero
b. Average utility is higher
c. Marginal utility is highest
d. Marginal utility is equal to average utility
76. The falling part of a total utility curve show
a. Increasing marginal utility
b. Decreasing marginal utility

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## c. Zero marginal utility

d. Negative marginal utility
77. Total utility curve is
a. Concave to X-axis
b. Convex to X-axis
c. Concave or convex depending on situations
d. Concave to Y-axis
78. Utils is a term used
a. By marshal in demand theory
b. By Walras to measure cardinal utility
c. To mean marginal utility
d. None of the above
79. Which of the following creates time utility?
a. Farmer
b. Carpenter
d. Driver
80. A consumers demand curve can be obtained from
a. Income consumption curve
b. Engles curve
c. Price consumption curve
d. None of these
81. Marginal utility approach was finalized by
a. J.R. Hicks
b. Alfred Marshall
c. John Stewart Mill
d. Arthur Cecil Pigou
82. Diamond water paradox concept explained by
b. Thomas Robert Malthus
c. David Ricardo
d. John Stewart Mill
83. Diamond water paradox shows that
a. Utility is related to supply
b. Utility is related to demand
c. Utility could be the cause of value
d. Utility could not be the cause of value
84. The area which lies under the demand curve for a given good measures
a. Marginal utility
b. Total utility
c. Disutility
d. Marginal cost of production
85. Total utility of a commodity can be found by
a. Multiplying the number of units by its marginal utility

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## b. Adding up the marginal utility of all units

c. Multiplying price by number of units
d. None of the above
86. In the case of an inferior commodity, the income elasticity of demand is
a. Positive
b. Unitary
c. Negative
d. Infinity
87. Income elasticity of demand will be zero when a given change in income brings about
a. A less than proportionate change in quantity demanded
b. A more than proportionate change in quantity demanded
c. The same proportionate change in quantity demanded
d. No change in demand
88. Two commodities are considered to be perfect substitutes for each other if the
elasticity of substitution is
a. Positive
b. Negative
c. Zero
d. Infinite
89. If a straight line demand curve is tangent to a curvilinear demand curve, the elasticity
of the two demand curves at the points of tangency is
a. The same
b. Different
c. Can be the same or different
d. Depends on the location of the point of tangency
90. Which of the following is the method of measuring elasticity of demand when
changes in price of a commodity is substantial
a. Percentage method
b. Point method
c. Arc method
d. None of these
91. The demand for pepper is likely to have a low price elasticity because it
a. Involves only a small proportion of consumers expenditure
b. It is single-use goods
c. Has no close substitutes
a. 1 and 2 only
b. 1 and 3 only
c. 2 and 3 only
d. 2 and 4 only
e. 2,3 and 4 only
92. Consider a demand curve which takes the form of a straight line cutting both axis
elasticity at the mid-point of the line would be
a. 0

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b. 1.0
c. 1.5
d. 2.0
93. When with a change in price the total outlay on a commodity remains constant, it is a
case
a. Perfect elasticity
b. Perfect inelasticity
c. Unit elasticity
d. Zero elasticity
94. Income elasticity of demand will be zero when a given change in income brings about
a. A less than proportionate change in quantity demanded
b. A more than proportionate change in quantity demanded
c. The same proportionate change in demand
d. No change in demand
95. One common definition of luxury goods is goods with an income elasticity
a. Greater than one
b. Equal to one
c. Less than one but more than zero
d. None of these
96. A demand curve which takes the form of a horizontal line parallel to the quantity axis
illustrates elasticity which is
a. Zero
b. Infinite
c. Less than one
d. Greater than one
97. Elasticity of demand is equal to unity while marginal revenue
a. Positive
b. Zero
c. Negative
d. Indeterminate
98. In the longer period permitting adjustment, demand is likely to be
a. Inelastic
b. Elastic
c. Unit elastic
d. Cannot be known
99. A straight line downward sloping demand curve implies that, as price falls, the
elasticity of demand
a. Increases
b. Decreases
c. Remains the same
d. Is zero
100. Which of the following does not have a uniform elasticity of demand at all points?
a. A downward sloping demand curve
b. A vertical demand curve

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## c. A rectangular hyperbola demand curve

d. A horizontal demand curve
101. In general, if the average revenue curve is a straight line, the marginal revenue curve
will be
a. U shaped
b. A straight line
c. C shaped
d. Bell shaped
102. When the law of diminishing returns begins to operate, the total variable cost begins
to
a. Fall at an increasing rate
b. Rise at a decreasing rate
c. Fall at a decreasing rate
d. Rise at an increasing rate
103. Marginal cost curve is given by
a. The slope of the Total Fixed Cost curve
b. The slope of the Total Variable Cost but not by the slope of the Total Cost curve
c. The slope of Total Curve but not by the slope of the Total Variable Cost curve
d. Either the slope of the Total Variable Cost curve or the slope of Total Cost curve
104. The slope of the ISO-Cost line measures
a. The MRTS
b. The MRS
c. The ratio of input prices
d. Optional combination of inputs
105. In short run the monopolist
a. Breaks even
b. Incurs a loss
c. Makes a profit
d. Any of these
106. The short run supply curve of the monopolist is
a. The rising portion of the marginal cost curve
b. The rising portion of the marginal cost curve above average variable cost
c. The rising portion of the marginal cost curve above average cost
d. None of these
107. Which of the following most closely approximates an oligopoly?
a. The cigarette industry
b. The barber shops in a city
c. The gasoline stations in a city
d. Wheat farmers in the village
108. The laws of returns to scale assume:
a. Techniques of production is unchanged
b. All units of factors are homogeneous
c. Returns are measured in physical terms
d. All of the above

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109. In the light of the Revealed Preference Theory, consider the following axioms, and
select the right answer from the code given below:
a. Rationality
b. Consistency
c. Transitivity
d. Non-satiation
a. (a) and (b) are correct
b. All the four axioms are correct
c. (a) and (c) are correct
d. (a), (b) and (c) are correct
110. Starting from the earliest, arrange the following concepts in terms of their
development in Demand Theory :
a. Revealed preference theory
b. Newmann and Morgenstern utility theory
c. Ordinal utility theory
d. Cardinal utility theory
111. The notion of production function implies:
a. Economic Efficiency
b. Technical Efficiency
c. Allocative Efficiency
d. All of the above
112. In the Sweezy model of Oligopoly, an increase in demand will make upper portion of
the demand curve:
a. More elastic
b. Less elastic
c. Unitary elastic
d. None of the above
113. A competitive firm achieves long-run equilibrium in the product market when:
a. AR = MR
b. MR = AC
c. MR = MC
d. Price = AR
114. Which of the following factors does not stall the entry of other firms in an
Oligopolistic industry:
a. huge advertising expenditure incurred by existing firms
b. economies of scale
c. Technology
d. Increase in demand
115. Which of the following is not an element of selling cost :
a. Salary of the salesmen
c. Transportation cost
d. Costs incurred on window displays

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## 116. If specific sales tax is imposed on monopolist output

a. Will maintain the initial equilibrium position and price will not change in the short
run
b. Greater the tax burden to the consumer if market supply is less elastic
c. Shifts the Marginal Cost curve to the left leading to smaller equilibrium quantity
d. Will not affect the Marginal Cost curve of monopolist
117. A rational consumer will operate in the stage where
a. There is an increase in the productivity of fixed and variable factors
b. Productivity of variable factor diminishes with positive marginal product
c. The quantity of variable factor is more than the quantity of fixed factor
d. There is increasing average returns to the factors of production
118. At higher wage rate, the supply curve of labour is
a. Always positively sloped
b. Forward bending because substitution effect is stronger than income effect
c. Backward bending because substitution effect is weaker than income effect
d. Both substitution effect and income effect are equally stronger
119. The long run supply curve of a constant cost industry is
a. Downward sloping
b. Vertical
c. Positively sloped
d. Perfectly elastic
120. By joining the points of producer equilibrium we get
a. Expansion Path
b. Ridge lines
c. Producer Indifference Curves
d. ISO-Cost Line
121. From the industries listed below, which is the best available example for perfect
competition?
a. Tea industry
b. Telephone industry
c. Food grains
d. Automobile industry
122. Marginal Cost always refers to
a. Cost of adding one unit
b. Gain in reducing one unit
c. Change in total cost due to addition or deletion of one unit
d. Increment in cost
123. Cobb Douglas production function is homogenous function of degree
a. Zero
b. One
c. Greater than one
d. Less than one
124. A producer of two commodities X and Y using two factors L and K reaches general
equilibrium of production whenever

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## a. MRTSLK in the production of X is equal to the MRTSLK in the production of Y

b. MRTSLK in the production of X is less than MRTSLK in the production of Y
c. MRTSLK in the production of X is greater than MRTSLK in the production of Y
d. None of these
125. A curve representing different combinations of two inputs that produce the same level
of output is called
a. Indifference Curve
b. Isoquant
c. Budget Line
d. ISO-Cost Curve
126. Marginal utility theory was given by
a. Alfred Marshall
b. J.R.Hicks
c. R.G.D.Allen
d. Paul Samuelson
127. In which of the following kind of goods, law of demand does not operate
a. Normal goods
b. Giffen goods
c. Veblen goods
d. Both (b) and (c)
128. Which of the following is not the assumption of Marshallian approach to demand
analysis?
a. Rationality
b. Cardinal utility
c. Constant marginal utility of money
d. Ordinal utility
129. Area under the demand curve and above the price line measures
a. Consumer surplus
b. Producer surplus
c. Total revenue
d. Total expenditure
130. Contraction in demand occurs when
a. Price increases and demand decreases
b. Price increases and demand also increases
c. Price remains constant but demand falls down
d. Price falls down but demand remains constant
131. When the law of demand operates, the demand curve
a. Slopes downward
b. Slopes upward
c. Become horizontal
d. Becomes vertical
132. When the demand curve is rectangular hyperbola, it represents
a. Perfectly elastic demand
b. Relatively inelastic demand

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## c. Unitary elastic demand

d. Perfectly inelastic demand
133. Revealed preference theory was formulated by
a. Paul Samuelson
b. J.R.Hicks
c. Joseph Stiglitz
d. John Maynard Keynes
134. If demand curve is horizontal, then ep is equal to
a. One
b. Two
c. Zero
d. Infinite
135. In case of Veblen goods, demand curve will slope
a. Upward
b. Downward
c. Horizontal
d. Vertical
136. Indifference curves are usually
a. Convex
b. Concave
c. L-Shaped
d. Vertical
137. All Giffen goods are inferior, but all inferior goods are not Giffen goods. The
statement is
a. False
b. True
c. Sometimes true
d. None of the above
138. Consumer reaches a saturation point for a commodity when marginal utility is
a. Positive
b. Zero
c. Negative
d. None of these
139. Cross elasticity between complementary goods will be
a. Positive
b. Negative
c. Zero
d. Infinity
140. Which of the following commodities has the lowest elasticity of demand?
a. Car
b. Books
c. House
d. Salt
141. If the price elasticity is zero, demand curve will be

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a. Horizontal
b. Upward sloping
c. Vertical
d. Downward sloping
142. Demand curve can be derived from
a. Engle curve
b. Price consumption curve
c. Marginal utility curve
d. Both (b) and (c)
143. According to Marshall, the law of diminishing marginal utility:
a. Applies on money in the manner it applies on the other commodities
b. Does not apply on money except bank money
c. Does not apply on bank money but applies on bank money
d. Applies on all the commodities except on money
144. If the marginal utility is divided by the price of the commodity; the resultant figure is
called
a. Comparative marginal utility
b. Weighted marginal utility
c. Partial marginal utility
d. The coefficient of marginal utility
145. Marginal cost is the cost
a. Of the last unit production
b. Of marginal unit
c. Of marginal efficient units
d. Of the average units of production
146. In the perfect competition, there is a process of
a. Free entry and restricted exit of the firms
b. Free entry and free exit of the firms
c. Restricted entry and exit of the firms
d. Semi-free exit but absolute free entry
147. The marginal productivity theory is
a. Normative only
b. Positive and normative both
c. Positive and not normative
d. More positive and less normative
148. According to Ricardo actual amount of rent is
a. True surplus left and which is divided among all the factors of production
including the rent
b. True surplus left to be distributed among the factors of production
c. True surplus left after paying all the factors of production
d. None of the above
149. Quasi rent is the rent
a. Earned by the instrument of production besides land
b. Which is earned by the land falling under the quasi category

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c. Earned with the quasi efforts of the land owners and the user
d. Which is half rent and half wages
150. In general the level of wages is equal to the
a. Point where demand and supply curves cut each other
b. Amount fixed up by the trade union
c. Amount demanded by the labour
d. Amount determined by the demand forces
151. Who has written the economics of welfare?
a. A.C.Pigou
b. Nicholas Kaldor
c. Vilfredo Pareto
d. Lionnel Robbins
152. Which of the following statements is correct?
a. An increase in the national income diminishes economic welfare
b. An increase in the national income increases economic welfare
c. An increase in the national income keeps economic welfare constant
d. An increase in national income does not affect economic welfare.
153. The concept of elasticity of demand was evolved by
a. Alfred Marshall
b. Bohm Bawerk
c. Fredic Benham
d. Jermy Bentham
154. Who evolved the point method for measuring price elasticity of demand?
a. J.S.Mill
b. Marshall
c. Stiglar
d. Bain
155. Who is the author of the work Theory of Price.
a. Hicks
b. Samuelson
c. G.J. Stiglar
d. D.H. Robertson
156. The concept of price expectation elasticity was evolved by
a. Edward Chamberlin
b. Edwin Cannon
c. Joan Robinson
d. J.R.Hicks
157. Who evolved the concept of consumer surplus?
a. I.M.D.Little
b. Alfred Marshall
c. Paul Anthony Samuelson
d. J.R.Hicks
158. Who was the author of value and Capital?
a. R.G.D.Allen

20

b. Edwin Cannon
c. Irving Fisher
d. J.R.Hicks
159. Who was the first economist to use indifference curve analysis?
a. J.R.Hicks
b. H.H.Gossen
c. Joan Robinson
d. Samuelson
160. The equilibrium of a firm under monopoly is possible only when
a. Two conditions are fulfilled
b. Three conditions are fulfilled
c. Four conditions are fulfilled
d. Five conditions are fulfilled
161. Under perfect competition, there can be
162. Name of the economist who dynamised the theory of pricing for the first time?
a. Jermy Bentham
b. Alfred Marshall
c. David Ricardo
d. John Stuart Mill
163. An industry is said to be in equilibrium when there is no tendency for it to expand or
contract is the statement of
a. Kenneth E Boulding
b. E.A.G Robinson
c. Edwin Cannon
d. Edward Shapiro
164. For the short run equilibrium to industry to be established:
a. Five conditions must be satisfied
b. Four conditions must be satisfied
c. Three conditions must be satisfied
d. Two conditions must be satisfied
165. Who is the author of the book Price theory and its uses?
a. K.E.Boulding
b. D.S.Waston
c. Daniel Bernouli
d. J.R.Hicks
166. Price discrimination under monopoly is of
a. One type
b. Two types
c. Three types
d. Four types

21

## 167. Which of the followings is not viewed as national debt?

a. LIC policies
b. Long term government bonds
c. National savings certificates
d. Provident fund
168. Who propounded the wage theory of profit?
a. Thomas Robert Malthus
b. David Ricardo
c. F. Taussig
d. Carver
169. What is the sum total of incomes
a. It is virtually, the national income
b. Budget estimates
c. Governments annual revenue
d. Other revenues
170. Who gave the first scientific treatment of general equilibrium analysis?
a. Leon Walras
b. John Baptist Say
c. Edward Chamberlin
d. Kenneth E Boulding
171. Who was the founder of the input-output analysis?
a. Wassily Leontief
b. J.R.Hicks
c. D.S.Watson
d. Leon Walras
172. Name the economist who has attempted to test the validity of the kinked demand
curve theory?
a. G.J.Stiglar
b. Samuelson
c. Baldwin
d. Frederic Bentham
173. Name the economist who evolved the kinked demand curve
a. Paul M.Sweezy
b. G.J.Stiglar
c. Fritz Machlup
d. Albert Meyer
174. Who fixes the price under price leadership form of the oligopoly pricing?
a. The average firm
b. The smallest firm
c. The largest firm
d. None of the above
175. Who coined the term selling cost?
a. Edward Chamberlin
b. Alfred Marshall

22

c. Joan Robinson
d. Samuelson
176. The abstinence theory was bitterly criticized on the ground that:
a. If the poor people save they are involved in abstinence
b. If the rich people and the poor save alike; none of them is involved in abstinence
c. If the poor people save they are not involved in abstinence
d. Nothing like abstinence can affect the individual.
177. Which theory is called the neo-classical theory of rate of interest?
a. The keynesian theory
b. Liquidity preference theory
c. The time preference theory
d. Loanable fund theory
178. Net profit stands for
a. Total revenue (total cost + depreciation)
b. Gross profit implicit cost
c. Gross profit explicit cost
d. None of the above
179. Which of the following is essential characteristic of money?
a. Money is stamped with seal of the issuing authority
b. Money has no particular shape, design or colur
c. Money is homogenous in spite of the differences of the nations
d. Money does not differ from country to country
180. Token coins means
a. The coin whose face value is more than the value of the metal
b. The coin issued as a token of deposited money
c. The coin issued for the deposit of the standard coins
d. The coin issued by some authority for the mere sake of representation
181. Gravitious means
a. The system in which metals are used in less amount
b. The system, where gravity measures the value of the metal
c. The system in which the coinage is free of minting charge
d. None of the above
182. Monometalism means
a. The coin made of a kind of metal known as mono
b. The coin made of a single metal
c. The circulation of metallic monograms
d. None of the above
183. When there is inflation due to increase in the credit money, it is called as
a. Devaluation inflation
b. Over investment inflation
c. Credit inflation
d. Semi inflation
184. When price rises rapidly, it is called as
a. Worst inflation

23

b. Creeping inflation
c. Hyper inflation
d. Demand full inflation
185. High rate of investment may
a. Reduce the amount of credit creation
b. Create better chances for the credit creation
c. Not affect the amount of credit in any way
d. Lead to any of the above mentioned occurences
186. Trade balance of a county is equal to
a. Balance of payments
b. BOP + net invisibilities
c. BOP net invisibilities
d. Export - import
187. A hot money or the refugees capital is the capital:
a. Which is transferred from one centre to another for greater safety
b. Earned by a refugee
c. Deposited by a refugee who is taking refuge in the country
d. None of these
188. Production refers to
a. Creation of utility
b. Manufacture of goods
c. Creation of value and utility
d. Creation of value
189. National product includes
a. All goods whether exchanged or not
b. Only goods exchanged in markets
c. Good exchanged in markets but not those consumed by producers
d. Both goods exchanged in markets and retained by producers for selfconsumption
190. An international product is a product sold by one business unit to another:
a. For use
b. For sale
c. For further processing
d. For storing to sell at a further date
191. In the case of giffen goods like brinjal a fall in its price tends to .
a. Make the demand remain constant
b. Reduce the demand
c. Increase the demand
d. Change demand in an abnormal way
192. Which of the following pairs of commodities is an example of substitutes
a. Coffee and milk
b. Diamond and cow
c. Pen and ink
d. Mustard oil and coconut oil

24

193. For most of consumers apples and oranges are substitutes goods. Therefore, we would
expect a rise in the price of apples to lead to
a. A rightward shift in the supply curve of orange
b. A leftward shift in the supply curve of apples
c. An upward change in the demand curve of oranges
d. A fall in the price of oranges
194. A fall in the relative price of fruit would:
a. Increase the demand for fruit
b. Increase the quantity of seeds demand
c. Have no effect on the demand for fruit
d. None of these
195. A change in climatic conditions resulting in hot weather, price remaining the same,
would cause a consumer of cold drinks:
a. To move a higher demand curve
b. To move up the same demand curve DD
c. To move lower down the curve DD
d. To move to a lower demand curve
196. If we wanted to show the effect on the amount demanded of oranges when the price
of grape fruit (which is substitute good) rises, we:
a. Must resort to higher mathematics
b. Could show this is as a shift to the right in the whole demand schedule for
oranges
c. Must try to find a way to depict the simultaneous effect of a change in the price of
both oranges and grape fruit on the quantity of oranges demanded
d. Should abandon the analysis
197. If two good complements, this means that a rise in the price of one commodity will
include:
a. An upward shift in demand for the other commodity
b. A rise in the price of the other commodity
c. A downward shift in demand for the other commodity
d. No shift in demand for the other commodity
198. A fall in price of a commodity, holding everything else constant, result sin and is
referred to as:
a. An increase in demand
b. A decrease in demand
c. An increase in the quantity demanded
d. A decrease in the quantity demanded
199. When an individuals income rises, ceteris paribus, his demand for a normal goods:
a. Rises
b. Falls
c. Remains the same
d. Any of the above
200. When an individual income falls, ceteris paribus, his demand for inferior goods:
a. Increases

25

b. Decreases
c. Remains unchanged
d. None of the above
201. When the price of a substitute of commodity X falls, the demand for X:
a. Rises
b. Falls
c. Remains unchanged
d. Any of the above
202. When both the price of a substitute and the price of a complement of commodity X
rises, the demand for X
a. Rises
b. Falls
c. Remains unchanged
d. All of the above are possible
203. If more is demanded at the same price or same quantity at a higher price, this fact of
demand is known as:
a. Extension of demand
b. Increase of demand
c. Contraction of demand
d. Decrease in demand
204. There is increase in demand when:
a. Less is demanded at the same price
b. More is demanded at a lower price
c. Less is demanded at a higher price
d. None of the above
205. Other things being equal an increase in the number of houses demanded at prevailing
prices is likely to result from:
a. An increase in the number of marriages and a rise in real income
b. An increase in the number of marriages and a rise in the rate of interest charged to
borrowers by building societies
c. An increase in the number of marriages and a fall in the population
d. A rise in the real income and a decrease in the population
206. Ceteris paribus, a decrease in demand can be caused by
a. A rise in the price of the commodity
b. A rise in the income of the consumer
c. A fall in the price of the commodity
d. None of the above
207. The elasticity of demand describes
a. The distinction between changes in demand and changes in amount demanded
b. A change in the incomes of the buyers in response to change in the price of product
they sell
c. The responsiveness of price to changes in the quantity demanded
d. The responsiveness of quantity demanded to changes in prices
208. The elasticity of demand for a product will be higher

26

## a. The more that product is concerned a necessity by its buyers

b. The more is buyers demand loyalty
c. The more substitutes are available for that product
d. The less important a part of total expenditures that product represents
e. All of the above
209. Demand for a good is elastic if:
a. Demand for that good increases when price falls
b. A price fall produces a decrease in total expenditure on that goods
c. A price fall produces a less than proportionate rise in the quantity
d. As a result of a rise in price total expenditure on the good decreases
210. If the percentage increase in the quantity of a commodity demanded is smaller than
the percentage fall in its price, the coefficient of price elasticity of demand is
a. Greater than one
b. Equal to one
c. Less than one
d. Zero
211. If the quantity of a commodity demanded remains unchaged as its price changes, the
coefficient of price elasticity of demand is:
a. Greater than one
b. Less than one
c. Equal to one
d. Zero
212. In general, if demand is elastic, then:
a. A price decrease increases total revenue and a price increase decreases total
revenue
b. A price decrease decreases total revenue, and a price increase increases total
revenue
c. A price increase increases total revenue, and a price decrease increases total
revenue
d. A price increase leaves total revenue unchanged, and so does a price decrease
213. If total consumer expenditure on a good falls as its price falls this indicates that:
a. It is an inferior good
b. Its price elasticity of demand is less than one
c. It is being produced under conditions of decreasing cost
d. Taste for it is declining
e. Producers are experiencing economies of large scale
214. Which of the following statements about elasticity of demand is true?
a. We can tell which products have close substitutes by their higher elasticity of
demand
b. We can say that necessities have a very low demand elasticity but we say it largely
because we define necessities by their very low demand elasticity
c. Products sold along with other products are likely to have less elastic demands than
products sold alone

27

d. Products that are relatively unimportant in terms of total expenditure are likely to
have relatively low elasticities of demand
e. All of the above statement are true
215. Elasticity of demand indicates:
a. Change in quantity demanded
b. Rate of change in quantity demanded
c. Change in prices
d. Changes in income
216. The subject matter of price theory is
a. Behaviour of industrys decision making
b. Economic behaviour of the entire country
c. Economic behaviour of individual decision making units
d. Behaviour of all decision making units taken together
217. The Engel curve shows
a. The amount of a commodity that the consumer would purchase per unit of time at
various levels of total income
b. The amount of a commodity that the consumer would sell at a given level of
income
c. The amount of consumer durables that the consumer would purchase per unit of
time at various levels of total income
d. The amount of consumer non- durables that the consumer would purchase per unit
of time at various levels of income
218. Hicksian substitution effect refers to
a. The change in the quantity demanded of a commodity resulting from a change in
its price, while holding real income constant by keeping the consumer on the
same indifference curve before and after the price change
b. The change in the quantity supplied of a commodity resulting from a change in
its price, while holding real income constant by keeping the consumer on the
same indifference curve
c. The change in the quantity demanded of a commodity from a change in its price,
while holding absolute income constant by keeping the consumer on the same
indifference curve before and after price change
d. The change in the quantity demanded of a commodity resulting from a change in
its price, while holding income constant by keeping the consumer on the same
indifference curve before and after the price change
219. Transitivity assumption in Revealed Preference theorem states that
a. If the consumer is observed to prefer basket A to B, then this consumer will
never prefer B to A
b. The consumer can be induced to purchase any basket of goods
c. If A is preferred to B, and B to C, then A is preferred to C
d. A consumers preferences can be inferred
220. The Learning Curve is
a. Positively sloped
b. Negatively sloped and convex to the origin

28

c. Right angled
d. A horizontal straight line parallel to X axis
221. A market structure which satisfies three conditions of Pareto Optimality
i. Monopolistic Competition
ii. Perfect Competition
iii. Oligopoly
iv. Monopoly
222. The approach of Revealed Preference Theorem is
a. Psychological
b. Introspective
c. Behaviorist
d. Deductive
223. If specific sales tax is imposed on monopolist output
a. Will maintain the initial equilibrium position and price will not change in the
short run
b. Greater the tax burden to the consumer if market supply is less elastic
c. Shifts the Marginal Cost curve to the left leading to smaller equilibrium
quantity
d. Will not affect the Marginal Cost curve of monopolist
224. A rational consumer will operate in the stage where
a. There is an increase in the productivity of fixed and variable factors
b. Productivity of variable factor diminishes with positive marginal product
c. The quantity of variable factor is more than the quantity of fixed factor
d. There is increasing average returns to the factors of production
225. At higher wage rate, the supply curve of labour is
a. Always positively sloped
b. Forward bending because substitution effect is stronger than income effect
c. Backward bending because substitution effect is weaker than income effect
d. Both substitution effect and income effect are equally stronger
226. The long run supply curve of a constant cost industry is
i. Downward sloping
ii. Vertical
iii. Positively sloped
iv. Perfectly elastic
227. By joining the points of producer equilibrium we get
i. Expansion Path
ii. Ridge lines
iii. Producer Indifference Curves
iv. ISO-Cost Line
228. From the industries listed below, which is the best available example for perfect
competition?
i. Tea industry
ii. Telephone industry
iii. Food grains

29

## iv. Automobile industry

229. Marginal Cost always refers to
a. Cost of adding one unit
b. Gain in reducing one unit
c. Change in total cost due to addition or deletion of one unit
d. Increment in cost
230. Cobb Douglas production function is homogenous function of degree
i. Zero
ii. One
iii. Greater than one
iv. Less than one
231. A producer of two commodities X and Y using two factors L and K reaches general
equilibrium of production whenever
a. MRTSLK in the production of X is equal to the MRTSLK in the production of
Y
b. MRTSLK in the production of X is less than MRTSLK in the production of Y
c. MRTSLK in the production of X is greater than MRTSLK in the production of
Y
d. None of these
232. The concept of full cost includes
a. Business cost and opportunity cost
b. Opportunity cost and marketing cost
c. Opportunity cost and normal profit
d. Business cost, opportunity cost and normal profit
233. A curve representing different combinations of two inputs that produce the same level
of output is called
a. Indifference Curve
b. Isoquant
c. Budget Line
d. Iso Cost Curve
234. Quasi Rent is
a. Equal to the firms total profit
b. Greater than the firms total profit
c. Less than the firms total profit
d. Cannot be compared with the firms total profit
235. Social Welfare Function shows
a. The various combinations of marginal utilities of two social groups that give
the society the same level of satisfaction or welfare
b. The various combinations of utilities of two individuals that give the society
the same level of satisfaction or welfare
c. The various combinations of sacrifice of all individuals that give the society an
improved level of social welfare
d. None of the above

30

## 236. Macroeconomics does not study

a. Interrelationships between macro variables
b. Performance of the entire economy
c. Determination of the levels of aggregate economic activities
d. Price and output determination of a commodity
237. In macroeconomic framework, Aggregate Supply refers to
a. Total value of goods produced and supplied in an economy
b. Total value of goods and services supplied in an economy
c. Total value of goods and services produced and supplied in an economy
d. Total value of goods produced in an economy
238. According to Permanent Income Hypothesis
a. There exists a non-proportional relationship between consumption and
permanent income
b. Transitory income is positive for lower income households
c. Consumer behaviour is based on the theory of inter temporal choice
d. Average Propensity to Consume and Marginal Propensity to Consume are
equal for all levels of disposable income
239. Given a neo-classical aggregate supply schedule, a decrease in autonomous
a. A fall in output, while price level remains the same
b. A fall in both price and level of output
c. An increase in price and level of output
d. A fall in price, but no effect on level of output
240. Static Multiplier assumes
a. That the change in investment and the resulting change in income are
simultaneous
b. That the change in savings and the resulting change in consumption are
simultaneous
c. That the change in investment and the resulting change in consumption are
simultaneous
d. That the technology remains constant
241. Who among the following is a neo Keynesian?
a. Lucas
b. Sargent
c. Muth
d. Mankiw
242. Among the following, which is the best definition of national income?
a. National Income is the money value of all final goods and services produced
in a country during a period of one year
b. National Income is the money value of all final goods produced in a country
during a period of one year
c. National Income is the value of all final goods produced in a country during a
period of one year

31

## d. National Income is the outcome of all production activities of a nation valued

in terms of money
243. The ratio of the investment to the change in the national income is called
i. Accelerator
ii. Multiplier
iii. Marginal Propensity to Consume
iv. Marginal Propensity to Invest
244. Nash Equilibrium is one
a. Which every player can improve their pay off given the strategy of the other
players
b. Which some players can improve their pay off given the strategy of the other
players
c. Which none of the players can improve their pay off
d. Which none of the players can improve their pay off given the strategy of the
other players
245. The following can be considered as an objective of monetary policy
a. Achieve monetary stability
b. Avoid conflicts between the internal and external interests of the economy
c. Control government expenditure
d. Create conditions for an efficient utilization of labour and other productive
resources as far as possible
246. GNP deflator is defined as
a. Ratio of nominal GNP in a year to the real GNP of that year
b. Ratio of GNP in a year to the GDP of that year
c. Ratio of nominal GNP in a year to the nominal GDP of that year
d. Ratio of GNP to the nominal GDP of that year
247. Export surplus is desirable when there is
i. Excess demand
ii. No demand
iii. Deficient demand
iv. All of the above
248. Money whose intrinsic value is equal to its face value is called
i. Token money
ii. High Valued money
iii. Representative money
iv. Full Bodied money
249. According to monetary approach to balance of payments, all payment deficits are the
result of
a. Disequilibrium in the balance of payments
b. Floating exchange rate system
c. Excess supply of money in the home country
d. Speculation
250. If C = 100 + 0.75Y, where C = Consumption and Y = Income, then multiplier is
i. 0.6

32

ii. 0.4
iii. 2
iv. 4
251. If an individual is to receive Rs1100 in one year and the market rate of interest is 10
per cent, its present value is
a. 800
b. 900
c. 1100
d. 1000
252. The name of the economist with whom the Real Balance Effect is associated
a. Patinkin
b. Keynes
c. Arrow
d. Friedman
253. Aggregate demand in a two sector model refers to
i. C + I + Y
ii. C + I
iii. C
iv. C + I Y +X M
254. Laffer Curve analysis mainly deals with..economics
i. Demand
ii. Supply
iii. Fiscal
iv. Monetary
255. Ratchet Effect is associated to
i. James Duesenberry
ii. J M Keynes
iii. Milton Friedman
iv. Arrow and Modigilani
256. The derivative of a constant is
i. 1
ii. 0
iii. Negative
iv. Logarithm of that constant
257. The relationship among price elasticity of demand, average revenue and marginal
revenue is
a. Average revenue/(average revenue - marginal revenue)
b. Marginal revenue/(marginal revenue - average revenue)
c. Average revenue/(marginal revenue - average revenue)
d. Average revenue - marginal revenue/average revenue
258. If P = a - bq represents the demand equation, then marginal revenue is
i. a 2bq
ii. a bq

33

iii. aq bq2
iv. a + 2bq
259. If the utility function U = F(x), the utility is maximum when
i. du/dx = 0
ii. d2u/dx2 >0
iii. du/dx = 0 and d2u/dx2 <0
iv. d2u/dx2 < 0
260. Which of the following is a property of transpose of a matrix?
a. Transpose of the sum of matrices is the difference of the transposes of the
individual matrices
b. Transpose of transpose of a matrix is the original matrix
c. Transpose of a product of matrices is the product of the transpose of the
matrices
d. Transposes of the matrices are not comparable
261. A matrix which has same elements in the arrangement on both sides of the diagonal
running from north west to south east is called.
i. Diagonal Matrix
ii. Identity Matrix
iii. Symmetric Matrix
iv. Triangular Matrix
262. Definite integral is defined as
a. The value of the integral at the upper limit less its value at the lower limit
b. The value of the integral at the upper limit plus its value at the lower limit
c. The value of the integral at the lower limit less its value at the upper limit
d. The value of the integral at the upper limit multiplied by its value at the upper
limit
263. Who is more associated with the development of input output analysis?
i. Leontiff
ii. Danzing
iii. Walras
iv. Pareto
264. In the case of a small sample, the sample size will be
i. Equal to 30
ii. Less than 20
iii. Less than 29
iv. Depends on population
265. When population under investigation is infinite, we should use
a. Sample method
b. Census method
c. Either sample or census method
d. None of these
266. Sampling errors are present only in

34

## a. Complete enumeration survey

b. Sample survey
c. Both census and sample surveys
d. Neither sample or census survey
267. Geographical classification means, classification of data according to
i. Time
ii. Location
iii. Attributes
iv. Class intervals
268. The geometric mean of two numbers 8 and 18 is
i. 12
ii. 13
iii. 15
iv. 11.07
269. The correlation coefficient r = 0, implies
a. Perfect positive correlation
b. Perfect negative correlation
c. No correlation
d. Insignificant correlation
270. If the regression coefficients are 0.9 and 0.4, the value of the correlation coefficient is
i. 0.36
ii. 0.60
iii. 0.81
iv. 0.16
271. A bag contains 30 balls numbered from 1 to 30. One ball is drawn at random. Find
the probability that the number of the ball drawn will be a multiple of 5 or seven
i. 1/3
ii. 1/5
iii. 1/6
iv. 1/2
272. Dr Ambedkars contributions to Indian Economic Thought is remarkably found in
i. The problem of the rupee
ii. Economics of caste
iv. Deciding foreign exchange rate
273. The growth rate of the Indian economy during 2009-10, according to the Economic
Survey 2009-10
i. 5.3 per cent
ii. 6.7 per cent
iii. 7.8 per cent
iv. 9.1 per cent
274. In India, M3 is otherwise stated as
i. Reserve money
ii. Narrow money

35

iv. Plastic money
275. The Prime Ministers Employment Generation Programme (PMEGP), has been
launched by merging Rural Employment Generation Programme and
a. National Programme of Mid-day meals
b. Swarnjayanti Gram Swarozger Yojana
c. Swarna Jayanti Shahari Rozgar Yojana
d. Prime Ministers Rozgar Yojana
276. National Rural Employment Guarantee Scheme (NREGS) was launched in the year
i. 2005
ii. 2006
iii. 2007
iv. 2008
277. Which Article of the Indian Constitution empowers the appointment of Finance
Commissions?
i. 280
ii. 180
iii. 279
iv. 179
278. The significance of 73rd Constitution Amendment (1993)
a. Enactment relating to social welfare
b. Enactment relating to panchayats
c. Enactment relating to anti-corruption
d. Enactment relating to women empowerment
279. Current Daily Status is a concept used in measuring
a. Daily average stock of money supply
b. Daily average stock of Foreign Exchange Reserves
c. Rate of inflation
d. Employment and unemployment
280. The main objective of Bharat Nirman (2005) programme is
a. Developing skill oriented youth
b. Providing basic amenities in rural areas
c. Providing sanitation facilities in rural and urban areas
d. Encouraging the birth of girl child
281. The Unorganised Workers Social Security Act was passed in the year
i. 2008
ii. 2009
iii. 2007
iv. 2006
282. The Head Quarters of Small Industries Development Bank of India is located at
i. Mumbai
ii. New Delhi
iii. Lucknow

36

iv. Chennai
283. The time period of the 11th Five Year Plan
i. 2009-14
ii. 2008-13
iii. 2006-11
iv. 2007-12
284. In India, Five Year Plans are approved by the
a. Planning Commission
b. Parliament
c. National Development Council
d. President of India
285. According to the neo classical model, the rate of economic growth depends on
a. Capital Stock
b. Capital Stock and Labour Supply
c. Capital Stock, Labour Supply and Technological Progress
d. Technological progress
286. The new growth theory assumes technology as
i. Endogenous
ii. Exogenous
iii. Constant
iv. Neutral
287. One of the major contributions of Arthur Lewis to the theory of economic growth is
a. The concept of full employment
b. The concept of employment
c. The concept of frictional unemployment
d. The concept of disguised unemployment
288. The Critical Minimum Effort theory of development was advanced by
i. Nurkse
ii. Nelson
iii. Leibenstein
iv. Kaldor
289. Ricardian analysis of rent is based on the following principle
i. Law of diminishing returns
iii. Fertility of the land
iv. Law of increasing returns
290. Which committee looked into the problem of tax evasion and suggested measures
(1971)
i. Tyagi Committee
ii. Boothalingam Committee
iii. Jha Committee
iv. Wanchoo Committee
291.
The statement A country is poor because it is poor is associated with the
name of

37

a.
b.
c.
d.
292.
i.
ii.
iii.
iv.
293.
a.
b.
c.
d.
294.
i.
ii.
iii.
iv.
295.
i.
ii.
iii.
iv.

Nrukse
Hicks
Smith
Myrdal
Stockholm Conference on Human Environment was held in the year
1987
1972
1992
1991
The environmental Kuznets Curve Hypothesis proposes that
There is an inverted U shape relation between quality of environment and per
capita income
There is a linear relation between quality of environment and per capita
income
There is a negative relation between quality of environment and per capita
income
There is a L shape relation between quality of environment and per capita
income
Among the following, which term is more associated to environmental issues?
Public utilities
Gross profit
Market price
Among the following, which is the best example for international public good?
Western Ghats
River Nile
Silent Valley
Biological Diversity
Among the following, which agency is more associated to environmental

296.
issues?
a. UNO
c. UNDP
297.
National Environment Policy was declared in the year
i. 2005
ii. 2004
iii. 2006
iv. 2007
298.
According to Harrod, the equilibrium between G and Gw is
i. Stable
ii. Knife edge
iii. Under employment
iv. Fluctuating

38

299.
wages
i.
ii.
iii.
iv.
300.
i.
ii.
iii.
iv.
301.
a.
b.
c.
d.

According to Kaldor, when savings out of profit is less than savings out of

## Prices will increase

Cumulative fall in prices
Increase in consumption
Increase in production
The person behind the concept Industrial Reserve Army
David Ricardo
Malthus
Karl Marx
The rate of exchange can be defined as
The rate at which the currency of one country is converted into US Dollars
The rate at which Indian rupee is converted into any other currency
The rate at which one currency is converted into another currency
The rate declared by the Reserve Bank of India for the conversion of Indian
rupee into US Dollars
302.
Under fixed exchange system, the rate of exchange is determined by
i. New York Stock Exchange
ii. Central Bank of a country
iii. Planning Commission
iv. Ministry of Finance
303.
The account which shows all transactions to trade in goods, services and
unilateral transfers is called
i. Capital Account
ii. Current Account
iii. Revenue Account
iv. None of these
304.
Find odd man out
i. Value of shipping services
ii. Value of marine products exported
iii. Value of tea exported
iv. Value of pepper exported
305.
If the value of the currency increases in terms of some other foreign currency
by the market mechanism, it is called
i. Devaluation
ii. Appreciation
iii. Depreciation
iv. Dumping
306.
Foreign Direct Investment (FDI) comes under
a. Current Account
b. Official Reserve Account
c. Capital Account
d. Revenue Account

39

307.

## Among the following which is the best advantage of international trade?

a. Benefit of price stability
b. Benefit of demand and supply equilibrium for commodities
c. Benefit of achieving equilibrium in foreign exchange reserves
d. Benefit of specialization
308.
countries is desirable
a. If one has absolute advantage in the production of both the commodities and
the other absolute disadvantage in production of both the commodities
b. If one has absolute advantage in the production of at least one commodity and
the other absolute disadvantage in production of both the commodities
c. If one has absolute advantage in the production of both the commodities and
the other absolute disadvantage in production of at least one commodity
d. If one has comparative advantage in the production of both the commodities,
without considering the status of the other country
309.
Terms of Trade can be defined as
a. Quantity of domestic goods that must be given in exchange for one unit of
imported goods
b. Quantity of goods to be exported to balance the deficit in the foreign exchange
reserves with respect to a country
c. Quantity of goods to be imported in exchange of one unit of exported goods
d. Ratio between goods exported and goods imported in a given year
310.
Forward market refers to
a. Foreign exchange deals for sale and purchases of foreign currency at some
future date
b. Foreign exchange deals for sale of foreign currency at some future date
c. Foreign exchange deals for purchase of foreign currency at some future date
d. Foreign exchange deals for sale and purchase for foreign currency at spot
311.
Remittances of the nationals working aboard come under
i. Current Account
ii. Capital Account
iii. Official Reserve Account
312. Net Factor Income from abroad is defined as
a. Total income from abroad factor income
b. Factor income from abroad factor income
c. Factor income from abroad personal income
d. Total income from abroad personal income
313. World Trade Organisation (WTO) came into force on
i. 1-1-1995
ii. 1-1-1994
iii. 1-1-1996
iv. 1-1-1991
314. Doha Agreement is associated to

40

315.

316.

317.

318.

319.

320.

321.

322.

a. Industry
b. Agriculture
d. Banking
Which agency is more associated to world trade?
c. UNO
d. EEC
The Third World War will start from.(Paul Roberts)
a. Struggle for food
b. Struggle for water
c. Struggle for gender empowerment
d. Struggle for sanitation facilities
Who is more associated to optimality in allocations?
a. Wicksell
b. Pareto
c. Tiebout
d. Bowen
b. Raja J Chelliah
c. Indirect Tax Enquiry Committee
d. Nicholas Kaldor
Which of the following is a local tax?
a. Turnover tax
c. Sales tax
d. Capital gains tax
A standard framework introduced in 1969 for disbursing plan assistance to the States
i. Kelkar Formula
iii. Population area ratio
iv. Density area ratio
Treasury bills are instruments in
i. Capital market
ii. Money market
iii. Goods market
iv. Foreign Exchange market
a. Tax on total value of the goods sold
b. Tax on the value added by the last seller
c. Tax on the value added by all the intermediaries
d. None of the above

41

## 323. Pick odd man out

i. Fiscal Deficit
ii. Revenue Deficit
iii. Budget Deficit
iv. Deficit Financing
324. Expenditure that does not create any asset is called
i. Revenue Expenditure
ii. Capital Expenditure
iii. Plan Expenditure
iv. Non Plan Expenditure
325. Property of persons who die without heirs is called
i. Forfeiture
ii. Special assessment
iii. Escheats
326. Who was the Chairman of the Tax Reform Committee, 1991?
i. Rangarajan
ii. Talwar
iii. Raja Chelliah
iv. Narashimham
327. Expenditure tax was abolished in India in the year
i. 1962
ii. 1963
iii. 1964
iv. 1965
328. Excess of fiscal deficit over interest payments is
i. Monetised deficit
ii. Budget deficit
iii. Primary deficit
iv. Secondary deficit
329. Penalty imposed by the court for breaking of contract is called
i. Escheats
ii. Forfeiture
iii. Fine
iv. None of these
330. Among the following, which is the best explanation for disinvestment?
a. Selling of shares
b. Selling of shares of government in the public enterprises
c. Selling of shares of government in the public enterprises to the private
companies
d. Selling of shares of government in the public enterprises to the Multi-National
Companies
331. Spillover effects refer to
a. Direct effects which flow from the production to the other parties

42

## b. Economic effects due to externalities

c. Economic effects which flow from the production or use of the good to final
users only
d. Effects which flow from the production or use of the good to final users only
332. Who coined the term Merit goods?
i. Dalton
ii. Musgrave
iii. Marshall
iv. Lerner
333. The goods which are non-rival in consumption are called :
a. Private goods
b. Free goods
c. Public goods
d. Non-economic goods
334. A competitive firm achieves long-run equilibrium in the product market when :
a. AR = MR
b. MR = AC
c. MR = MC
d. Price = AR
335. In the Sweezy model of Oligopoly, an increase in demand will make upper portion
of the demand curve :
a. Unitary elastic
b. More elastic
c. Less elastic
d. None of the above
336. The statement that the compensation principle of welfare economics is capable of
giving contradictory results is associated with the name of :
a. T. Scitovsky
b. Pareto
c. Bergson
d. P.A. Samuelson
337. Which of the following factors does not stall the entry of other firms in an
Oligopolistic industry :
a. huge advertising expenditure incurred by existing firms
b. economies of scale
c. technology
d. increase in demand
338. A rational consumer choosing between uncertain events will make a choice on
the basis of :
a. expected monetary benefits
b. expected utility
c. expected prices
d. expected incomes in future
339. Which of the following is not an element of selling cost :

43

## a. salary of the salesmen

c. transportation cost
d. costs incurred on window displays
340. The most comprehensive measure of the aggregate price level is the :
a. consumer price index
b. producer price index
c. GNP deflator
d. wholesale price index
341. Keynesian economics lays more emphasis on :
a. monetary policy
b. fiscal policy
c. interest-rate determination
d. free market mechanism
342. High-powered money is produced by:
a. Commercial banks
b. Co-operative banks
c. Ministry of Finance
d. Reserve Bank of India
343. A person who left the job to find another job would be classified as :
a. fractionally unemployed
b. structurally unemployed
c. cyclically unemployed
d. no longer in the labour force
344. Which of the following statements would Milton Friedman disagree with?
a. Monetary policy has few short-run effects on the real economy
b. In the long-run, changes in the money supply primarily affect the price level
c. There is little scope for using monetary policy actively to smooth out
d. The Reserve Bank cannot be relied on to effectively smooth out business cycles
345. The money multiplier is the multiplicative inverse of the required reserve ratio as
long as :
a. currency leakages into circulation and/or foreign markets do not occur
b. banks do not maintain excess reserves
c. the required reserve ratio is far in excess of the reserves that banks think
are prudent given the deposits that they hold
d. all the above
346. The trade-off between inflation and unemployment remains stable only :
a. during periods of stagflation
b. when the inertial rate of inflation remain unchanged
c. during the periods of slack demand
d. in the long-run
347. Vicious Circle of Poverty was proposed by :
a. A. Marshall

44

b. J.M. Keynes
c. Ragner Nurkse
d. M. Friedman
348. Second Five Year plan was based on a model developed by :
a. C.H. Hanumantha Rao
b. P.C. Mahalanobis
c. A.K. Sen
d. K.N. Raj
349. The theory of unlimited supply of labour was proposed by :
a. Arthur Lewis
b. Roy Harrod
c. Samuelson
d. Robert Solow
350. In Harrod-Domar model, if the growth rate of income is 5% and capital-output ratio
is 3, then saving rate must be :
a. 5 per cent
b. 3 per cent
c. 8 per cent
d. 15 per cent
351. Capital per person decreases if net investment per person :
a. is less than the population growth rate
b. exceeds the population growth rate
c. exceeds savings per person
d. is less than savings per person
352. In the neo-classical growth model, an increase in the marginal propensity to save :
a. increases the steady-state growth rate of output
b. increases steady state output per person
c. increases steady-state capital per person
d. both (A) and (C)
353. The Tenth Five Year Plan aims at reducing poverty by :
a. 2 per cent
b. 5 per cent
c. 8 per cent
d. 9 per cent
354. Union Excise Duties are a part of Central Government's :
a. Non-tax Revenue
b. Tax revenue
c. Capital receipts
d. None of the above
355. 'Pump priming' should be resorted to at a time of :
a. Inflation
b. Deflation
c. Reflation
d. None of the above

45

## 356. VAT is imposed :

a. on final stage of production
b. on first stage of production
c. directly on consumers
d. at every stage between production and consumption
357. A temporary increase in marginal tax rate will :
a. increase employment
b. increase output
c. raise the deficit
d. lower output
358. Tax on inherited property is an example of :
a. Sales Tax
b. Income Tax
c. Wealth Tax
d. VAT
359. When government expenditure exceeds total government receipts, the budget
deficit is :
a. positive
b. negative
c. zero
d. indeterminate
360. The Laffer curve demonstrates the relationship between :
a. inflation and the nominal interest rate
b. tax rate and total tax revenues
c. the real interest rate and investment demand
d. none of the above
361. If the Rupees per US Dollar exchange rate changes from Rs. 44 to Rs. 46 in a year by the
market forces, it implies :
a. Appreciation of the Rupee
b. Depreciation of the Rupee
c. Exchange rate remains more or less the same
d. Devaluation of the Rupee
362. Infant industry argument was put forward by
b. Von Haberler
c. Fredriek List
d. Heckscher Ohlin
363. Factor price equalization theorem advocated by
b. Von Haberler
c. Fredriek List
d. Heckscher Ohlin
364. Opportunity cost theory concerned with

46

b. Von Haberler
c. Fredriek List
d. Heckscher Ohlin
365. Absolute cost advantage theory proposed by
b. Von Haberler
c. David Ricardo
d. Heckscher Ohlin
366. Devaluation, other things remaining the same, will make the balance of payments of
a country worse if the elasticity of exports and elasticity of imports of a developing
country will be :
a. greater than 1
b. less than 1
c. equal to 1
d. none of the above
367. The secular deterioration of terms of trade hypothesis initially was advanced by :
a. Raul Prebisch
b. J.M. Keynes
d. J.S. Mill
368. The Bretton-woods system finally collapsed at the global level in the year :
a. 1970
b. 1971
c. 1972
d. 1973
369. Heckscher Ohlin theory of international trade explains the emergence of trade, among
the partners based on :
b. Imperfect competition
d. Changes in tastes and technology
370. According to Planning Commission estimates of poverty ratio in India in (19992000) was :
a. 26.9 percent
b. 30 per cent
c. 40 per cent
d. 28.9 percent
371. New Agricultural Strategy (Green Revolution) was introduced in India in the year:
a. 1969
b. 1966
c. 1970
d. 1960
372. Which among the following heads has the highest allocation in the Xth plan outlay?
a. Energy

47

b. Transport
c. Rural Development
d. Social Services
373. New Economic Policy in India was introduced in :
a. 1981
b. 1971
c. 1991
d. 2001
374. Gross Capital Formation percentage of Gross Domestic Products as per Economic Survey
in 1995-98 was :
a. 21 per cent
b. 30 per cent
c. 24 percent
d. 28.7 percent
375. The target of Disinvestment in Public Sector undertakings in India during the
2002- 2003 was :
a. Rs.16,000 crore
b. Rs.20,000 crore
c. Rs.12,000 crore
d. Rs.15,000 crore
376. Domestic Savings Rate during the IX plan period was:
a. 23.31 per cent
b. 30.31 per cent
c. 25.31 per cent
d. 26.41 per cent
377. Money supply in terms of broad money (M3) in India increased during 2001-02 by:
a. 6.8 per cent
b. 5.6 per cent
c. 14.2 per cent
d. 19.3 per cent
378. Based on a sample of 100 observations, the correlation coefficient between x and y is
found to be nearly zero. Then,
a. x and y are definitely unrelated
b. x and y are linearly related to each other
c. x and y may be non-linearly related to each other
d. there is spurious correlation between x and y
379. Under simple random sampling, as the size of sample is increased :
a. systematic errors increase but sampling errors decrease
b. systematic errors decrease but sampling errors increase
c. both systematic and sampling errors decrease
d. both systematic and sampling errors increase
380. Implicit GDP deflator is a :
a. current year weighted index

48

b.
c.
d.
381. Events
a.
b.

## base year weighted index

arithmetic mean of (A) and (B)
geometric mean of (A) and (B)
A and B are mutually exclusive consider the following:
P(A B) = P(A) + P(B)
P(A B) = P(A) x P(B)
c. P(A B) = 0
d. A and B are independent events.
Choose the correct code:
a. only (a) and (b) are true
b. only (b) and (c) are true
c. only (c) and (d) are true
d. only (a) and (c) are true
382. Random variable is :
a. an independent variable
b. an endogenous variable
c. a randomly choosen value
d. a function of states of nature
383. Consider the following distributions:
1. z-distribution
2. t-distribution
3. binomial distribution
4. F-distribution
Which among the above are not sampling distributions?
a. only (a)
b. only (c)
c. both (a) and (c)
d. both (a) and (d)
384. The laws of returns to scale assume :
a. Techniques of production is unchanged
b. All units of factors are homogeneous
c. Returns are measured in physical terms
d. All of the above
385. Payment of interest as a factor reward is explained by :
a. Productivity theory
b. Abstinence theory
c. Time preference theory
d. All of the above
386. Starting from the earliest, arrange the following concepts in terms of their development
in Demand Theory :
a. Revealed preference theory
b. Newmann and Morgenstern utility theory
c. Ordinal utility theory

49

## d. Cardinal utility theory

387. The notion of production function implies :
a. Economic Efficiency
b. Technical Efficiency
c. Allocative Efficiency
d. All of the above
388. The 'core' of an economy contains :
a. All Pareto optimal allocations
b. All Competitive allocations
c. All Pareto improving allocations of the initial endowments
d. All the feasible allocations
389. Demand for consumer durables and human capital forms part of the consumption
demand model developed by which economist?
a. Friedman
b. Tobin
c. Rosenstein Rodan
d. Baumol
390. Money multiplier determines :
a. Total supply of money in the economy
b. High powered money
c. Components of money supply
d. Employment and output in the economy
391. According to Friedman, the consumption of a household depends on :
a. Transitory Income
b. Permanent Income
c. Both permanent and transitory Incomes
d. Relative Income
392. Consider the following statements and select the right answer from the code given
below:
Assertion (A): At lower rate of interest, there is greater inducement to invest, according to
Keynes
Reasoning (R): At lower rate of interest, supply price of capital is low
Codes:
a. Both (A) and (R) are true and (R) is the correct explanation of (A)
b. Both (A) and (R) are true, but (R) is not the correct explanation of (A)
c. (A) is true, but (R) is false
d. (A) is false, but (R) is true.
393. What is the shape of the long - run Phillips curve?
a. Horizontal Straight line
b. Vertical Straight line
c. Upward Sloping
d. Downward Sloping
394. Which of the following does NOT affect the volume of money supply in the economy :
a. Household cash holdings

50

## b. Bank's deposits with the Central Bank

c. Cash reserve ratio
d. Bank reserves
395. Point - out the correct order in which the following measures of development were
introduced :
a. Per-capita Income, HDI, PQLI
b. PQLI, HDI, Per-capita Income
c. HDI, Per-capita Income, PQLI
d. Per-capita Income, PQLI, HDI
396. Which of the following equation satisfies the condition of stable growth in HarrodDomar model :
a. Actual growth rate=Warranted rate of growth
b. Actual growth rate=Natural rate of growth
c. Warranted rate of growth=Natural rate of growth
d. Actual rate of growth=Warranted rate of growth=Natural rate of growth
397. Which is NOT a correct explanation for the need of social cost - benefit approach :
a. There is a divergence between private benefits and public benefit
b. There is a divergence between private cost and social cost
c. Market prices do not reflect opportunity cost of factors
d. Both public and private sectors coexist in the economy.
398. Consumption sub-model was introduced in Indian Planning for the first time in
preparing which plan :
a. Third Plan
b. Fourth Plan
c. Fifth Plan
d. Sixth Plan
399. Consider the following statements and select correct answer from the code given below:
Assertion (A) : Free trade among nations will increase world output and income
Reason (R) : Less developed countries do not share equally in the gains from trade.
Code:
a. Both (A) and (R) are correct and (R) is the reason for (A)
b. Both (A) and (R) are correct but (R) is not the reason for (A)
c. Statement (A) is correct but (R) is wrong
d. Statement (R) is correct but (A) is wrong
400. The following is a list of activities in an economy :
Allocation
Production
Distribution
Stabilization
Which one of the above falls in the domain of government according to Musgrave :
a. (i) and (ii)
b. (i), (ii) and (iii)
c. (i), (iii) and (iv)
d. All the four

51

## 401. The shape of Laffer Curve is :

a. U-shaped
b. Inverted U-shaped
c. L-shaped
d. S-shaped
402. Public good is NOT characterised by :
a. Non-rivalness
b. Non-excludability
c. Contestability
d. Free-riding
403. Considering the following statements and select the correct answer from the codes
given below
Assertion (A): National defence is a public good
Reason (R):
People want to be defended against external aggression
Codes:
a. Both (A) and (R) are true and (R) is the correct explanation of (A)
b. Both (A) and (R) are true but (R) is not the correct explanation of (A)
c. (A) is true but (R) is false
d. (A) is false but (R) is true
404. Match the following and select correct answer from the codes given below :
Group - I
Group - II
(a)
Revenue deficit
(i)
Government Borrowing from the RBI
(b)
Fiscal deficit
(ii)
Revenue expenditure minus Revenue receipts
(c)
Primary deficit
(iii) Fiscal deficit minus interest payments
(d)
Monetized deficit
(iv)
Total expenditure minus non-debt receipts.
Codes:
(ii)
(iv)
(iii) (i)
(i)
(ii)
(iv)
(iii)
(ii)
(iii) (iv)
(i)
(iii) (i)
(ii)
(iv)
405. If the elasticity of demand for a good is greater than elasticity of supply for the good,
then :
a. The burden of tax on buyers would be higher than that on sellers
b. The burden of tax on buyers would be lower than that on sellers
c. The burden of tax on buyers would be equal to that on sellers
d. Incidence cannot be shifted
406. When Marginal propensity to consume is 0.75, the value of the balanced budget
multiplier is :
a. 1
b. 2
c. 3
d. 4
407. Consider the following statements and select the correct code:

52

Assertion (A): A rise in income terms of trade only indicates that the country can obtain
a larger volume of imports from the sale of exports.
Reason (R): A change in income terms of trade index cannot be interpreted as a
Codes:
a. Both (A) and (R) are true, and (R) is the correct explanation of (A)
b. Both (A) and (R) are true, but (R) is not the correct explanation of (A)
c. Statement (A) is true but (R) is false
d. Statement (A) is false, but (R) is true
408. According to Leontief's study :
a. USA's exports consisted of capital intensive goods
b. USA's exports consisted of labour intensive goods
c. USA's imports consisted of labour intensive goods
d. None of the above
409. Consider the following statements and select the correct code:
According to the theory of Optimum tariff:
(i)
The higher a country's share of foreign trade, the larger is the scope for its
optimal tariffs.
(ii)
Larger the charge in relative prices on demand and supply, lower the country
should set its optimal tariff
(iii) If second country's price elasticity is high, the first country will not gain much by
changing its tariff
(iv) As long as the foreign country's offer curve elasticity is less than or equal to
unity, the home country can improve or increase tariff
Codes:
a. (i) and (ii) are correct
b. (i), (ii) and (iii) are correct
c. (i), (iii) and (iv) are correct
d. All the four are correct

## 410. Match the following and select the correct code :

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

Group I
Centre - periphery thesis
Factor proportion theorem
Reciprocal demand
Vent for surplus theory

Codes:
(iii)
(i)
(ii)
(v)

(ii)
(ii)
(i)
(iv)

(i)
(iv)
(iii)

(v)
(v)
(iii)
(ii)

(iv)

Group II
(i)
Marshall
(ii)
Heckscher-Ohlin
(iii) Raul Prebisch
(iv)
Ellsework
(v) Jacob Viner

53

411. If M.P.C. is 0.8, and marginal propensity to import is 0.3, an autonomous increase in
exports of Rs 100 will lead to an increase in national income by :
a. Rs.100
b. Rs.200
c. Rs.300
d. Rs.400
412. In Mundell model, a country should :
a. Use monetary policy to achieve external balance
b. Use monetary policy to achieve internal balance
c. Use fiscal policy to achieve external balance
d. Should use exchange control and not monetary or fiscal policy
413. The budget 2002-03 has brought down the peak level of customs duties to :
a. 20 per cent
b. 25 per cent
c. 30 per cent
d. 35 per cent
414. The share of the services sector in GDP in India is :
a. Around 40 per cent
b. Around 45 per cent
c. Around 50 per cent
d. Around 55 per cent
415. Which of the following statements about green revolution is correct?
a. Green Revolution was due to land reforms
b. Green Revolution was due to the introduction of HYV seeds
c. Green Revolution was due to increased use of fertilizer
d. All of the above
416. Consider the following statements and select the correct answer from among the
codes given:
Assertion (A): Inter-state disparities have increased in India in post-reform period.
Reason (R): Industrial Licensing which restricted concentration of industries in
richer states has been abolished.
Codes:
a. Both (A) and (R) are correct, and (R) is the correct explanation of (A)
b. Both (A) and (R) are correct, but (R) is not the correct explanation of (A)
c. (A) is correct but (R) is wrong
d. (R) is correct, but (A) is wrong
417. Match the following and select the correct answer from the code given :
Set I
Set - II
(a)
Rangarajan Committee
(i)
tax reforms
(b)
Narasimhan Committee
(ii)
insurance reforms
(c)
Kelkar Committee
(iii) Disinvestment
(d)
Malhotra Committee
(iv)
Financial sector reforms
Codes:
(iii) (iv)
(i)
(ii)

54

(i)
(iii) (ii)
(iv)
(i)
(ii)
(iii) (iv)
(ii)
(i)
(iv)
(iii)
418. In which of the following years did India have a surplus on current account (BOP)?
a. 1998-1999
b. 1999-2000
c. 2000-2001
d. None of the above
419. With which of the following countries did India have trade surplus during the last
three years?
a. USA
b. Russia
c. UK
d. Japan
Code:
1. a and b
2. a and c
3. b and c
4. c and d
420. What is the current share of direct taxes in total tax revenue of the Central Government?
a. Around 17%
b. Around 27%
c. Around 33%
d. Around 37%
421. Interest payment as percent of revenue expenditure of Central Government is currently :
a. Around 15%
b. Around 25%
c. Around 30%
d. Around 35%
422. When the fluctuations of two time-series are negatively correlated, then :
a. The trends may be in the same direction
b. The trends may be in the opposite direction
c. There is no trend at all
d. It is difficult to estimate a meaningful trend
423. Select the correct code
Assertion (A): For large samples, mean can be tested using standard normal
distribution.
Reasoning (R): When original population has normal distribution, mean of a
sample from this population has t-distribution.
Codes:
a. Both (A) and (R) true and (R) is the correct explanation
b. Both (A) and (R) are true but (R) is not the correct explanation
c. (A) is true but (R) is false
d. (A) is false but (R) is true

55

424. Two alternatives X and Y have equal expected value but Y has higher variance than X.
A person choosing Y over X is a :
a. Risk-lover
b. Risk-averse
c. Risk-neutral
d. Speculator
425. Which among the following is NOT a sampling distribution :
a. Standard Normal Distribution
b. Poisson Distribution
c. t-distribution
d. chi-square distribution
426. For two events A and B, P(A or B)=P (A)+P(B), when :
a. A and B are independent events
b. A and B can occur simultaneously
c. A and B are mutually exclusive events
d. None of the above
427. Match the items in group I with those of group II and select the right answer from the
codes given below :
Group - I
Group - II
(a)
Mean's test with small sample
(i)
chi-square statistic
(b)
Mean's test with large sample
(ii)
t-statistic
(c)
Test of independence
(iii) F-statistic
(d)
Test comparing variances
(iv)
z-statistic
428. In case of inferior good:
Income effect is negative.
Substitution effect is positive.
a. I is correct but not II
b. II is correct but not I
c. Both I and II are correct
d. Both I and II are wrong
429. The negative slope of the indifference curve is due to the assumption of :
a. Transitivity
b. non-satiety
c. Diminishing Marginal Rate of Substitution
d. Diminishing Marginal Utility
430. If factors of production are close substitutes
in the process of production then the
1
isoquants would be :
a. Convex to the origin but steeper
b. Convex to the origin but flatter
c. Straight line
d. L-shaped
431. Statement 1: A monopolist practising first degree price discrimination produces
efficient output.
Statement 2: Duopolist in Cournot model produces inefficient output.

56

## a. I is correct but not II

b. II is correct but not I
c. Both I and II are correct
d. Both I and II are wrong
432. Sylos-Libini model is a model of :
a. Cartels
b. Limit pricing
c. Monopsony
d. Non-collusive oligopoly
433. Value of aggregate excess demand is identically zero is the :
a. Samuelsons law
b. Arrow law
c. Walras law
d. Kaldors law
434. In the classical theory an increase in marginal productivity of labour
a. Fall in real wage rate
b. Rise in real wage rate
c. Rise in money supply
d. Fall in employment
435. Hypothesis which states that individuals save in young age and dissave in the age of
retirement is known as :
a. Life cycle hypothesis
b. Permanent income hypothesis
c. Relative income hypothesis
d. Absolute income hypothesis
436. The square root rule states :
a. Demand for money increases with cost of transactions
b. Demand for money decreases with cost of transactions
c. Demand for money remains constant with cost of transactions
d. Demand for money does not depend on cost of transactions
437. If the currency-deposit ratio (cu) = 0.2, reserve ratio (re) = 0.4, the value of money
multiplier is :
a. 1.5
b. 2.5
c. 2
d. 4
438. In the long run:
Philips curve is vertical at the natural rate of unemployment.
Changes in money supply do not influence employment.
a. I is true but not II
b. II is true but not I
c. Both I and II are correct
d. Both I and II are wrong
439. In the standard IS-LM model, if unemployment occurs in equilibrium, then :

57

## a. Taxes must be reduced.

b. Reserve ratio must be raised.
c. Statement I is correct and II is wrong
d. Statement I is wrong and II is correct
e. Both statements I and II are correct
f. Both statements I and II are wrong
440. Incomes of the poor increase in an economy such that the poor move closer to the
poverty line. Which of the following poverty measures will show a decrease?
b. The poverty gap ratio
c. Both the head count ratio and the poverty gap
d. Neither the head count ratio nor the poverty gap
441. Industry is considered to be important to agriculture in economic development as :
a. A source of raw material
b. A reservoir of labour
c. A source of savings for investment
d. A source of demand for agricultural output
442. The predominant framework used in the Second Five Year Plan of India was based
on:
a. One sector model of the Harrod- Domar type
b. Sectoral model of the Feldman type
c. Multi-sector input-output model
d. A linear programming model involving inter-temporal optimization
443. The Kahn-Chenery social marginal productivity investment criterion involved :
a. Maximization of the Social Marginal Productivity (SMP) of capital in all uses
b. Minimization of the SMP of capital in all uses
c. Equalization of the SMP of capital in different uses
d. Investing capital up to a point where the SMP of capital is zero
444. In cost-benefit analysis, the higher the rate of discount, the lower will be the net
present value (NPV) of a project. At a certain rate of discount the NPV will be zero.
This rate of discount is called the :
a. External rate of return
b. Internal rate of return
c. Incremental rate of return
d. Forward rate of return
445. In the Solow-Swan model of growth without technical progress, the rate of growth of
national output is not equal to :
a. The rate of growth of population
b. The rate of growth of capital stock
c. The rate of growth of consumption
d. The rate of growth of taxes
446. Trade can act as an engine of growth due to :
a. Higher economies of scale reaped by large scale production for exports
b. Lower availability of critical imported capital and intermediate goods made

58

## possible by larger export revenues

c. Decreased efficiency in domestic production due to opening up of the economy to
foreign competition
d. Lower level of skill formation
447. The Balanced Budget Multiplier increases income by :
a. Zero
b. One
c. The amount of the tax increase
d. The amount of expenditure increase
448. Distance of states estimated per capita revenue from estimated per capita revenue of
Haryana is referred to as :
a. Fiscal Discipline
b. Tax Efforts
c. Fiscal capacity distance
d. Per capita income distance
449. Tax expenditure in financial year 2010-11 is higher in respect of :
a. Corporate income tax
b. Personal income tax
c. Excise duty
d. Customs duty
450. The special Central Government Securities issued to National Small Saving Fund
constitute a part of :
a. External Debt of India
b. Internal Debt of India
c. Non-debt capital receipts of centre
d. Revenue receipts of centre
451. Central Sales Tax is a state level tax based on :
a. Destination principle
b. Origin principle
c. Ability to pay principle
d. Benefit principle
452. The distribution of Grants in aid under Article 275 of the constitution depends upon
the inter-se distribution of tax proceeds under Article :
a. 270
b. 269(A)
c. 271
d. 268
453. Excess of non-plan revenue expenditure over revenue receipts is referred to as :
b. Balance from current revenue
c. Primary Balance
d. Fiscal Balance
454. Export Pessimism is :

59

a. The feeling that the developing countries exports to developed countries cannot
grow rapidly because of the latters increased protectionism.
b. The feeling that the developing countries will always have imports higher than
exports.
c. The feeling that the rate of growth of the developing countries exports will
always be lower than the rate of growth of their imports.
d. The feeling that the developing countries will always be exporting primary
products.
455. The Absolute Purchasing Power Parity theory postulates that :
a. The equilibrium exchange rate between two currencies is equal to the ratio of
relative price levels in the two nations.
b. The equilibrium exchange rate between two currencies is equal to the ratio of the
price levels in the two nations.
c. The equilibrium exchange rate between two currencies is equal to the ratio of
price levels of services in the two nations.
d. The equilibrium exchange rate between the two currencies is equal to the ratio of
factor prices in the two nations.
456. Export oriented industrialization :
a. Overcomes the disadvantages of smallness of the domestic market
b. Implies domestic industry protection
c. Implies imposing heavy export duties
d. Implies industrialization of backward areas
a. An exception to the Stopler-Samuelson theorem
b. An exception to the Leontif paradox
c. An exception to Mundell-Fleming model
d. An exception to Marshall- Lerner condition
458. Freely floating exchange rate system means :
a. The flexible exchange rate system
under which the exchange
rate is
always determined by the market forces.
b. The exchange rate system under which the exchange rate is determined by the
exporting country.
c. The exchange rate system under which the exchange rate is mutually determined
d. The flexible exchange rate system
under which the exchange
rate is
always determined by the relative change in factor prices.
459. When a countrys currency depreciates:
a. The Countrys Exports and Imports both will rise
b. The Countrys Exports and Imports both will fall
c. The Countrys Exports will rise and Imports will fall
d. The Countrys Exports will fall and Imports will rise
460. The J curve effect is :
a. Net worsening of countrys trade balance resulting from a depreciation.
b. Deterioration before a net improvement in a Countrys trade balance resulting

60

from a depreciation.
c. Fall in demand for exports.
d. Improvement before a deterioration in a Countrys trade balance resulting from a
fall in demand for exports.
461. Pertaining to Indias current Food Policy, which of the following statements are true?
It aims at averting of famines by maintaining a buffer stock of food grains.
It ensures remunerative prices for food grains.
It encourages surplus production for more exports.
It aims at maintaining general price level.
a. 1, 2 and 4
b. 1, 3 and 4
c. 2 and 3
d. 2 and 4

## 462. Assertion (a) and reason (r) given below :

Assertion (a): Non-performing Assets are a matter of major concern to Indias Banking
Sector.
Reason (r): All banks have been focusing on lending to large business houses in recent
times.
a. (a) is correct but (r) is incorrect
(a) is incorrect but (r) is correct
Both (a) and (r) are correct and (r) is the correct explanation of (a)
Both (a) and (r) are correct but (r) is not the correct explanation of (a)
463. In the context of finance, what is the correct meaning of the term bear :
a. A person who expects a rise in price of a security.
b. A person who is a non-voting shareholder of a joint stock company.
c. A person who expects a fall in price of a security.
d. A person who wants to borrow for purchasing shares and bonds.
464. An artificial currency is denoted by which of the following?
b. SDR
c. GDR
465. In the inclusive growth program of the 11th Five Year Plan of India, which of the
following was not included?
a. Reduction in gender inequality
b. Strengthening of capital market
c. Expanding employment opportunities
d. Reduction in poverty
466. When the RBI raises the Cash Reserve Ratio, it implies that :
a. The RBI shall have less money to lend
b. The commercial banks shall have less money to lend
c. The union government shall have less money to lend
d. The government shall print less money
467. There are 25 students in a class. In the paper of Economics each one has secured 49
marks. What is the value of standard deviation in this case?
a. 7/5
b. 5/7
c. One
d. zero
468. The mean and variance of a Binomial distribution is equal to :
In case of Normal Distribution mean (X), mode (Mo) and Median (M) are related as
follows:
a. Mo > X > M
61

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

b. Mo < X < M
c. Mo = X = M
d. X < Mo < M
469. Suppose it is calculated that the intercept (a) is 4 and the slope (b) is 2 for a particular
estimating line with one independent variable. If the independent variable has a value of 2,
what value should be expected for the dependent variable?
a. 8
b. 10
c. 1
d. 0
470. A Chi-square value can never be negative because :
a. Difference between expected and observed frequencies are squared.
b. A negative value would mean that the observed frequencies were negative.
c. The absolute value of the differences is computed.
d. It has symmetrical distribution.
471. Laspeyres Index has:
a. upward bias
b. downward bias
c. no bias
d. variations in weights
472. Which of the following is not the advantage of sampling?
a. saving time
b. saving cost
c. creating a normative order for population parameters
d. having estimates for population parameters
473. How many years of data one can use for a 3 year moving average for a total period of 10
years?
a. 10
b. 9
c. 8
d. 7
474. ---------------effect is an example of a network externality in which a consumer wishes to
own an exclusive or unique good
a. Bandwagon
b. Snob
c. Veblen
d. None of the above
475. The implication of asymmetric information about product quality was first analysed by
a. Kenneth lehn
b. Michael Spence
62

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

c. George Akerlof
d. Harvey Libenstein
476. The difference between positive economics and normative economics is
a. Positive economics describes the positive effects of economic decisions while
normative economics describes both positive and normative effects of economic
decision
b. Positive economics describes the facts of an economy while normative economics
prescribes solutions
c. Positive economics describes demand and supply theories of individual markets and
firms while normative economics describes the total world economy as a whole
d. Normative economics describes demand and supply theories of individual markets
and firms while positive economics describes the world markets
477. Which of the following has the lowest elasticity of supply?
a. Luxury items
b. Necessities
c. Perishable goods
d. None of the above
478. For complimentary goods, the cross elasticity of demand will be
a. Zero
b. Infinity
c. Positive but less than infinity
d. Negative
479. Market period refers to
a. The period in which the producers of the good cannot change the quantity produced
in response to a change in price
b. The period in which the producers of the good can change the quantity produced in
response to a change in price
c. The time it takes for market to attain equilibrium stable
d. The time it takes for consumers to respond to change in the price
480. The difference between total utility derived from the consumption of a certain amount of
a given good and the amount of money actually paid for it is called
a. Marginal Utility
b. Average utility
c. Producers surplus
d. Consumer surplus
481. If the price of good X exceeds the price of good Y in consumer equilibrium, it may be
true that
a. The demand for both X and Y has begun to decline
b. The marginal utility of X exceeds the marginal utility of Y
c. The marginal utility of X equals the marginal utility of Y
63

## d. The marginal utility of Y exceeds the marginal utility of X

482. Average product is defined as
a. Total cost divided by total units of input
b. Total output divided by total units of input
c. Total cost divided by total output
d. Total output divided by total cost of input
483. Isoquant for two inputs which are used in fixed proportion
a. Convex to the origin
b. L Shaped
c. Straight line with negative slope
d. Concave to the origin
484. A firm will break even when
a. TR = TC
b. MR = MC
c. AR = AC
d. P = MC
485. Which of the following curves resembles supply curve under perfect competition in the
short run?
a. AC curve above breakeven point
b. MC curve above shut down point
c. MC curve
d. AVC curve
486. In which of the following models of oligopoly it is assumed that firms believe their rivals
will continue to produce the same output irrespective of the output produced by the firm
a. Kinked demand curve model
b. Cournots model
d. Cartel formation
487. Which of the following does not indicate Lerner index of monopoly power?
a. L = P MC/P
b. L = P MR/P
c. L = P e/1
d. L = P 1/e
488. The Economics of Imperfect Competition is authored by
a. Edward Chamberlin
b. Joan Robinson
c. P.Sraffa
d. None of the above
489. In a two commodity (X and Y) two individual (A and B) economy, the maximum social
welfare is reached at
64

a.
b.
c.
d.

## Any point on the grant utility possibility curve

Any point on the social welfare function
The point where marginal rate of transformation equals marginal rate of substitution
The point of tangency of grand utility possibility curve with a social welfare function

## 490. Monopolistic exploitation of labour occurs when

a. Wages equals Marginal Revenue Product
b. Wages are greater than Marginal Revenue Product
c. Wages equals Value of Marginal Product
d. Wages are less than Marginal Revenue Product
491. If Production Possibility Curve is concave to the origin, it shows
a. Increasing opportunity cost of production
b. Decreasing opportunity cost of production
c. Constant opportunity cost of production
d. None of the above
492. According to Karl Marx, organic composition of capital is
a. C+V
b. C/(C+V)
c. S/(C+V)
d. S/V
493. A good is ------------- if for any given level of production, the Marginal Cost of providing
it to an additional consumer is zero
a. Non-excludable
b. Exclusive
c. Non-rival
d. Rival
494. Which of the following variable(s) will come under stock variable(s)?
a. Consumer Price Index
b. GDP
c. Money Supply
d. Both A and C
495. Which of the following method(s) is/are used for measuring national income in India?
a. Output method
b. Expenditure method
c. Income method
d. All the above
496. The demand for money is
a. Positively related to output and interest rate
b. Negatively related to output and interest rate
c. Negatively related to output and positively related to interest rate
65

## d. Positively related to output and negatively related to interest rate

497. In which of the following situation will an increase in supply have no effect upon output?
a. LM is steeply sloped and IS is relatively flat
b. LM is vertical and IS is steeply sloped
c. LM is steeply sloped and IS is vertical
d. LM is relatively flat as is IS
498. The user cost of capital is
a. The real interest rate
b. The nominal interest rate
c. The real interest rate plus the rate of depreciation
d. The nominal interest rate plus the rate of depreciation
499. An economy which is functioning at the full employment level wishes to maintain the
existing rate of growth. Keynes theory of rate of interest suggest that government should
a. Decrease the supply of money over time
b. Increase the supply of money over time
c. Leave the supply of money unchanged
d. Encourage households and firms to increase their holdings of idle balances
500. A tax will have an automatic stabilizing effect on the economy if its yield
a. Increases with a fall in income
b. Decreases with a rise in income
c. Decreases with a decrease in income
d. Remains constant as income rises
501. The Keynesian theory of the rate of interest suggest that the monetary authorities will
lose their power to lower interest rates by varying the money supply when
a. Interest rates are rising
b. Interest rates are falling
c. Interest rates are not expected to fall any lower
d. Interest rates are not expected to rise any higher
502. The LM curve becomes vertical at high rates of interest because
a. The speculative demand for money disappears
b. National Income falls as the rate of interest rises
c. The transaction and precautionary demand for money vanishes
d. Investment diminishes as the rate of interest rises
503. Which one of the following is most likely to lead to an increase in the level of
investment?
a. A small rise in the rate of interest
b. An increase in the level of unemployment
c. Improved profit expectation of entrepreneurs
d. A fall in the general level of prices
504. Gross National expenditure less indirect taxes, plus subsidies equals
66

## a. GNP at market price

b. GNP at factor cost
c. National income
d. Personal disposable income
505. Insider- outsider model is a feature of
a. New Keynesian Economics
b. New Classical Economics
c. Post Keynesian Economics
d. Monetarism
506. In the equation C=Co+cY, Co is
a. The autonomous part of consumption, independent of the level of income, Y
b. The behavioral coefficient
c. The dependent variable
d. A parameter whose value depends on the level of disposable income
507. Permanent income hypothesis is associated with
a. Keynes
b. Friedman
c. Modigliani
d. Dussenberry
508. Stagflation is a period of
a. High inflation and high unemployment
b. Low inflation and low unemployment
c. High inflation and low unemployment
d. Low inflation and high unemployment
509. The Philips Curve shows
a. The inverse relationship between the rate of inflation and the rate of unemployment
b. A positive relationship between nominal wage and rate of unemployment
c. A positive relationship between rate of inflation and nominal wage
d. The inverse relationship between real and nominal wage
510. According to Life Cycle hypothesis, consumption is related to
a. Current income
b. Past peak income
c. Expected life time income
d. Price expectation over life time
511. When the MPC is 0.8, the MPS is
a. 0.2
b. 0.02
c. 2
d. 1
512. --------------emphasise the direct role of money in influencing aggregate spending and are
67

## against discretionary policy action

a. Monetarists
b. Supply side economists
c. Keynesians
d. None of the above
513. In an open economy with flexible exchange rate and perfect capital mobility, an
expansionary monetary policy
a. Causes domestic currency to appreciate
b. Is very effective in affecting output
c. Increases capital flows into the country
d. Is ineffective
514. If Y=3x2-2x+1, then the value of dy/dx at x=2 will be equal to
a. 34
b. 10
c. 1
d. 36
515. Which of the following is a positional average?
a. Arithmetic mean
b. Geometric mean
c. Harmonic mean
d. Mode
516. For a normal curve, which of the following is true?
a. 75% of the observations are contained within 2 standard deviation of the mean
b. 68.27% of the observations are contained at within 3 standard deviation of the mean
c. 73% of the observations are contained at within 3 standard deviation of the mean
d. None of the above
517. If one event is unaffected by the outcome of another event, the two events are said to be
a. Dependent
b. Independent
c. Mutually exclusive
d. Both (B) and (C)
518. In a sampling technique, the first element is randomly selected and there after all other
elements are selected based on a predetermined plan, this sampling technique can be
described as
a. Simple random sampling
b. Stratified random sampling
c. Systematic sampling
d. Judgement sampling
519. If the null hypothesis is rejected in spite of it being true, then it results in a
a. Type I error
68

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

b. Type II error
c. Type III error
d. Type IV error
520. In a regression line Y=A+BX, if B=0, then the regression line will
a. Pass through the origin
b. Be parallel to X axis
c. Be parallel to Y axis
d. None of the above
521. For a given correlation coefficient, the coefficient of determination
a. Is always negative
b. Is always positive
c. Has the same sign as correlation coefficient
d. Is always higher in magnitude of the coefficient of correlation
522. A square matrix which has one for every element on the principal diagonal from left to
right and zero everywhere is called
a. Identity matrix
b. Symmetric matrix
c. Null matrix
d. Triangular matrix
523. Which of the following is not true relating to determinants?
a. If two rows or columns are identical, the determinant is equal to one
b. If all the elements of any row or column are zero, the determinant is zero
c. Multiplying the element of any row or column by a constant will cause the
determinant to be multiplied by the constant
d. Adding or subtracting any non-zero multiple of one row (or column) from another
row (or column) will have no effect on the determinant
524. The overall significance of regression is tested using
a. Z test
b. F test
c. Chi-Square test
d. T test
525. Multiplication of two matrices requires that
a. The number of columns in first matrix (lead matrix) equals the number of rows in the
second matrix (lag matrix)
b. The number of rows in first matrix (lead matrix) equals the number of columns in the
second matrix (lag matrix)
c. The number of columns in first matrix (lead matrix) equals the number of columns in
the second matrix (lag matrix)
d. The number of rows in first matrix (lead matrix) equals the number of rows in the
second matrix (lag matrix)
69

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

526. Ogive is a
a. Frequency polygon
b. Cumulative frequency curve
c. Measure of central tendency
d. None of the above
527. Graph of variables having linear relation will be
a. Curved
b. Hyperbola
c. Straight line
d. None of the above
528. The derivative of a constant is equal to
a. Zero
b. One
c. -1
d. A positive number if the constant is positive
529. Lack of symmetry is
a. Kurtosis
b. Skewness
c. Moments
d. Mean
530. The Unique Identification Project to give the residents of India a unique identification
number has been renamed as
b. Sasam
c. Bharat Nirman
d. None of the above
531. The 2010 Nobel Prize for economics was awarded to Peter Diamond, Dale Mortensen
and Christopher Pissarides for the work related to
a. Labour market
b. Money market
c. Capital market
d. Bond market
532. The period of first five year plan of India
a. 1951-56
b. 1956-61
c. 1953-56
d. 1960-65
533. The law which states that the portion of income spend on food diminishes as income
increases is called
a. Engles law
70

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

b. Grashams law
c. Keynes law
d. None of the above
534. According to 2001 census, urban- rural population rate in India is
a. 35:65
b. 32:68
c. 28:72
d. 40:60
535. National Seed Policy is based on the recommendation of
a. Kelkar Committee
b. M.V.Rao committee
c. Y.B. Reddy Committee
d. Abhijit Sen Committee
536. As per Tendulkar Committee report --------------- is the poorest State in India having
72% of BPL people
a. Bihar
b. Chandigarh
537. World population Day is on
a. July 11
b. July 12
c. September 12
d. December 11
538. India is the --------------largest producer of tea in the world
a. First
b. Second
c. Third
d. Fourth
539. Blue revolution refers to revolution in
a. Oil seeds
b. Fertiliser
c. Egg
d. Fish Production
540. RBI was established in the year
a. 1935
b. 1940
c. 1930
d. 1945
541. The Committee constituted by RBI for recommendations for consumer service
71

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

improvements in banks
a. M.N. Goiporia Committee
b. Narasimham Committee
c. Raja Chellaiah Committee
d. Tendulkar Committee
542. The PQLI combines three indicators. They are
a. Infant mortality rate , life expectancy rate and adult literacy rate
b. School enrolment rate, clean environment, and quality of housing
c. Health, education and environment
d. Air pollution rate, water pollution rate and sanitation
543. As economic development proceeds, income inequality tends to follow-------curve
a. Convex
b. Inverted U shape
c. U shaped
d. S shaped
544. The Harrod- Damor growth model suggests that growth is
a. Directly related to saving and inversely related to capital output ratio
b. Directly related to capital output ratio and inversely related to saving
c. Indirectly related to saving and capital output ratio
d. Directly related to saving and capital output ratio
545. The Protestant Ethic and the Spirit of Capitalism is written by
b. Max Weber
c. Joseph Schumpeter
d. William Baumol
546. If Gini ratio is equal to zero, income distribution is
a. Perfectly equal
b. Perfectly unequal
c. Relatively equal
d. Relatively unequal
547. The classical economist who gives importance to effective demand
a. Smith
b. J.B.Say
c. Ricardo
d. Malthus
548. Dutch disease refers to
a. A boom in a traded good sector leading to a boom in other traded good sector
b. A boom in a traded good sector leading to a decline in other traded good sector
c. A recession in a traded good sector leading to a recession in other traded good sector
d. A recession in a traded good sector leading to a boom in other traded good sector
72

## 549. The full form of UNFPA

a. United Nations Fund for Population Activities
b. United Nations Fertility Planning Association
c. United Nations Family Planning Association
d. United Nations Fund for Poverty Alleviation
550. Census day in India is observed on
a. February 9
b. July 10
c. June 15
d. March 10
551. The term Intermediate Technology is firstly introduced by
a. J.R.Hicks
b. E.F.Schumacher
c. R.F.Harrod
d. A.Lewis
552. Which of the following is an example of tragedy of commons?
a. Over fishing
b. Smoking in public place
c. Excessive rain
d. Common use of public toilet
553. The government levying taxes on polluters or charging a surcharge for pesticide use are
a. Examples of Coase theorem
b. Internalisation of negative spillover effects
c. Marginal abatement cost
d. Examples of a free rider
554. According to Coase theorem, when property rights are well defined and legally
enforceable and transaction costs are not prohibitive
a. Population growth leads to rigid land rights
b. Participants will organize their transaction voluntarily to achieve efficient outcome
c. Violence, displacement, erosion and poverty are minimized
d. Individuals overuse of the biosphere is curtailed
555. According to Myrdal, the main cause of regional inequalities is
a. A strong backwash effect
c. A strong backwash effect and a weak spread effect
d. A weak backwash effect and a strong spread effect
556. Wage good strategy has been developed by
a. Wagner
b. Mahalanobis
c. Vakil and Brahmananda
73

## d. Rao and Brahmananda

557. The stability condition in the Kaldor model is
a. Sp<Sw
b. Sp>Sw
c. Sp=Sw
d. Sp Sw
558. Dirty float refers to
a. Freely floating exchange rate system
b. Fixed exchange rate system
c. Managed floating exchange rate system
d. Gold standard system
559. Balance of current account includes
b. Balance of invisibles
c. Balance of unilateral
d. All the above
560. SDR is the currency of
a. IBRD
b. WTO
c. IMF
561. According to Schumpeter economic development is
b. Sudden and discontinuous change
c. Sudden and continuous change
d. Continuous and expansion of the system
562. Under floating exchange rate system and perfect capital mobility
a. Only fiscal policy is effective
b. Both monetary and fiscal policies are effective
c. Only monetary policy is effective
d. Both monetary and fiscal policies are ineffective
563. Soft loan stands for
a. Loan from international agencies
b. Loan to poor countries
c. Loan with no rate of interest
d. Loan backed by no securities
564. Consider the following statements: The effect of devaluation is that it
Changes the relative price
Increases the foreign value of the domestic currency
Increases the competitiveness of the domestic exports in the foreign markets
74

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

Improves the trade balance provided that domestic demand for import is highly inelastic.
Of these statements
a. 1,3,and 4 are correct
b. 2 and 4 correct
c. 1 and 3 are correct
d. 2 and 3 are correct
565. When the foreign offer curve has an elasticity equal to unity, the optimum tariff will be
a. unity
b. infinity
c. zero
d. less than unity
566. The Organisation of Petroleum Exporting Countries (OPEC) is a ---------------- whose
members have agreed to limit output and fix prices
a. Duopoly
b. Genaralised system of tariff preferences
c. Cartel
567. The terms of trade are defined as
a. The degree of competition existing in international trade
b. The differences between exports and imports
c. The differences in value between exports and imports
d. The rate at which exports exchange for imports
568. The extent to which a change in exchange rate leads to changes in import and export
prices is known as
a. J Curve effect
b. Marshall-Lerner effect
c. Absorption effect
d. Pass through effect
569. To be considered a good candidate for an export cartel, a commodity should
a. Be a manufactured good
b. Be a primary product
c. Have a high price elasticity of demand
d. Have a low price elasticity of demand
570. Duty or other charges levied on an item on the basis of its value and not on the basis of its
quantity, size or weight is:
b. Compound tariff
c. Effective tariff
d. None of the above
571. The product cycle theory of trade is essentially a
75

## a. Static short run trade theory

b. Dynamic, long run trade theory
c. Zero sum theory of trade
d. Negative sum theory of trade
572. If the international terms of trade settle at a level that is between each countrys
opportunity cost
a. There is no basis for gainful trade for either country
b. Both countries gain from the trade
c. Only one country gains from the trade
d. One country gains and the other country looses from the trade
573. If no imported inputs go into the domestic production of a final product, the
a. Nominal tariff rate on the final product equals the effective rate on the product
b. Nominal tariff rate on the final product is greater than the effective rate on the
product
c. Nominal tariff rate on the final product is less than the effective rate on the product
d. None of the above
574. Which of the following is an NBFI?
a. SBI
b. LIC of India
c. State co-operative bank
d. RRB
575. Agricultural income tax is levied by
a. Central government
b. Local bodies
c. State government
d. All the above
576. In India the fiscal year is
a. From January 1 to December 31
b. From March 1 to February 28
c. From June 1 to May 31
d. From April 1 to March 31
577. Which one of the following is not a canon of taxation propounded by Adam Smith?
a. Canon of Ability
b. Canon of Certainty
c. Canon of Economy
d. Canon of Productivity
578. Zero base budgeting was first adopted by
a. France
b. England
c. USA
76

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

d. Germany
579. Which one of the following is a feature of club good?
a. The exclusion principle is possible
b. It is shared by public
c. It is an intermediate between public good and private good
d. All the above
580. When a specified selective tax per unit of a commodity is imposed the effect on the
amount exchanged will be greater if
a. Demand is elastic, supply is elastic
b. Demand is elastic, supply is inelastic
c. Demand is inelastic, supply is elastic
d. Demand is inelastic, supply is inelastic
581. Taxes which may be shifted from the person upon whom they are originally imposed, to
another person
a. Specific taxes
b. Double taxes
c. Proportionate taxes
d. Indirect taxes
582. Budget deficit may be defined as
a. Revenue expenditure minus revenue receipts
b. Total expenditure minus total receipts
c. Total expenditure minus total receipts minus capital receipts
d. Fiscal deficit minus interest payments
583. The concept of functional finance was developed by
a. Fisher
b. Dalton
c. Bastable
d. Lerner
584. Which of the following committees examined and suggested tax reforms?
a. Malhotra Committee
b. Narasimham Committee
c. Chelliah Committee
d. Rangarajan Committee
585. The Wanchoo Committee (1971) probed into
a. Direct taxes
b. Indirect taxes
c. Agricultural holding tax
d. Non-tax revenue
586. The zero based budgeting approach has been adopted from
a. April 1, 1998
77

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

b. April 1, 1987
c. April 1, 1986
d. April 31, 1987
587. The type of note issue system followed in India is
a. Maximum Fiduciary system
b. Minimum reserve system
c. Proportional Fiduciary System
d. Fixed Fiduciary System
588. The thirteenth Finance Commission has recommended the vertical share of tax
devolution to the tune of
a. 32 per cent
b. 30.5 per cent
c. 31 per cent
d. 33.5 per cent
589. Chamberlin introduced the concept of cost known as :
a. Fixed cost
b. Floating cost
c. Selling cost
d. Variable cost
590. If commodities are perfect substitutes indifference curve becomes a :
a. Downward sloping curve
b. Straight line with negative slope
c. Right angle
d. Rectangular hyperbola
591. CES Production function is associated with the name of one of the following :
a. Joan Robinson
b. B. S. Minhas
c. Manmohan Singh
d. A. K. Sen
592. Psychological law of consumption is given by :
a. Milton Friedman
b. Pigou
c. Tobin
d. Keynes
593. When interest elasticity of demand for money is zero the L - M curve is :
a. Vertical Parallel to Y-axis
b. Horizontal Parallel to X-axis
c. Positive Sloping straight line
d. Negative Sloping straight line
594. Natural rate of unemployment is the rate of unemployment at which :
78

## a. Rate of inflation is stable

b. Rate of inflation is unstable
c. Rate of inflation is falling
d. Rate of inflation is rising
595. Knife edge problem arises in
a. Solow model
b. Kaldor model
c. Joan Robinson model
d. Harrod-Domar model
596. Who has propounded the theory of Unbalanced growth?
a. E. Domar
b. A. K. Sen
c. A.O. Hirshman
d. W. A. Lewis
597. Social factors in under developed countries :
a. Retard growth
b. Promote growth
c. Maximize growth
598. Exclusion principle is not applicable to :
a. Merit goods
b. Social goods
c. Private goods
d. All goods
599. To avoid the excess burden of tax, we should have :
a. Low marginal tax rate
b. Zero marginal tax rate
c. Moderate marginal tax rate
d. Reasonable Marginal tax rate
600. Redemption of Public Debt means :
a. Repayment of Public Debt
b. Refusal to pay Public debt
c. Redefining of Public debt in terms of foreign currency
d. Linking Public debt with inflation rate
601. The stable exchange rate system prevailed in the world trading during the period :
a. 1919 1939
b. 1919 1971
c. 1946 1971
d. 1971 onwards
602. As per the WT0 agreement, India should import food-grains out of its total imports to the
79

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

extent of :
a. 5 per cent
b. 10 per cent
c. 15 per cent
d. 30 per cent
603. The ongoing strengthening of rupee against U.S. dollar :
a. Indian exports to America will increase
b. Indian exports to America will decrease
c. Imports from America to India will remain constant
d. Indian exports to America will remain constant
604. Industrial licencing policy enquiry committee was set up in 1967 under the Chairmanship of:
a. R.K. Hazari
b. P.C. Mahalanobis
c. S. Dutt
d. V.K.R.V. Rao
605. The term of Hindu rate of growth was coined by :
b. Chakravarty
c. Bhagwati
d. Raj Krishna
606. The two regression coefficients are given by (- 0.45) and (-0.8), then the coefficient of
correlation :
a. 0.6
b. 0.36
c. -0.6
d. -0.36
607. Which of the following does satisfy Factor Reversal test?
a. Laspeyne's index No.
b. Marshell - Edgeworth index No.
c. Fisher's index No.
d. Paache's index No.
Consider the following statements and select correct answer from the codes given below
for questions 20 to 30. (Assertion and Reasoning type item)
608. Assertion (A): An individual values mean return on investment, but dislikes variance.
Reason (R): Individuals are generally averse to risk.
a. Both (A) and (R) are true and (R) is the reason
b. Both (A) and (R) are true but (R) is not the reason
c. (A) is true, but (R) is false
d. (A) is false but (R) is true
80

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

609. Assertion (A): In competitive equilibrium entire output gets exhausted in factor
payments.
Reason (R): In competitive conditions returns to scale are constant.
a. Both (A) and (R) true, (R) is the explanation
b. (A) is true, but (R) is false
c. Both (A) and (R) are false
d. Both (A) and (R) are true but (R) is not the reason
610. Assertion (A): Neo-classical models of growth predict steady state growth.
Reason (R) : Saving investment equality is assumed.
a. Both (A) and (R) are true and (R) is the reason
b. Both (A) and (R) are false
c. Both (A) and (R) are true but (R) is not the reason
d. (A) is true but (R) is false
611. Assertion (A) : Sen's P-measure is preferred both to Head Count ratio and the poverty
gap ratio.
Reason (R) : Sen won the 'Noble prize'.
a. Both (A) and (R) are true and (R) is the explanation
b. Both (A) and (R) are true but (R) is not the explanation of (A)
c. (A) is false, but (R) is true
d. Both (A) and (R) are false
612. Assertion (A) : Indifference curve are convex to origin.
Reason (R) : The Law of diminishing marginal utility is excepted in the discipline of
Economics.
a. Both (A) and (R) are true but (R) is not the explanation
b. Both (A) and (R) are false
c. Both (A) and (R) are true and (R) is the reason
d. (A) is false, but (R) is true
613. Assertion (A) : Global income inequality has shown an increase in trend.
Reason (R) : PREBISCH-SINGER propounded a secular decline in the terms of trade
for primary producers and exporters.
a. (A) is false, but (R) is true
b. Both (A) and (R) are false
c. Both (A) and (R) are true and (R) is the reason
d. Both (A) and (R) are true but (R) is not the explanation
614. Assertion (A) : An Elongated s shaped supply curve of labour is observed for the
professionals.
Reason (R) : Work gives disutility, therefore income compensation is required.
a. (A) is false, but (R) is true
b. Both (A) and (R) are true but (R) is not the explanation
c. Both (A) and (R) are true and (R) is the explanation
81

## d. (A) is true, but (R) is false

615. Assertion (A): Price leadership is tacit.
Reason (R): 0pen collective agreements are illegal in most countries.
a. Both (A) and (R) are true but (R) is not the correct explanation
b. Both (A) and (R) are true and (R) is the correct explanation
c. (A) is true, but (R) is false
d. (A) is false, but (R) is true
616. Assertion (A): For large sample size all distributions tend to normal distribution.
Reason (R): The basic assumption in all the exact sample tests the parent population
from which samples are drawn is not normal.
a. Both (A) and (R) are true and (R) is the correct explanation
b. Both (A) and (R) are true but (R) is the not the correct explanation
c. (A) is true, but (R) is false
d. (A) is false, but (R) is true
617. Assertion (A) : Jharkhand, Chattisgarh, 0rissa are poverty ridden states of India.
Reason (R) : These states are rich in mineral resources.
a. (A) is false, but (R) is true
b. Both (A) and (R) are true and (R) is the explanation
c. Both (A) and (R) are true but (R) is not the correct explanation
d. (A) is true and (R) is false
For Questions No. 31 to 38tick (/) mark the option having the right chronological order.
618. (i) Commission on agricultural costs and prices
(ii) State trading of food grain
(iii) Food grain policy committee
(iv) The food grain enquiry committee
Codes
a. (i), (ii), (iii), (iv)
b. (iv), (iii), (ii), (i)
c. (iii), (ii), (i), (iv)
d. (iv), (ii), (iii), (i)
619. (i) General theory of employment, interests and money:
(ii) Affluent society
(iii) Wealth of nations.
(iv) Principles of Economics
Codes
a. (i), (ii), (iii), (iv)
b. (iv), (iii), (ii), (i)
c. (iii), (ii), (i), (iv)
d. (iv), (ii), (iii), (i)
620. (i) Von-Newmann
82

## (ii) Kenneth Arrow

(iii) Robert Lucas
(iv) Robert Solow
Codes
a. (i), (ii), (iii), (iv)
b. (iv), (iii), (ii), (i)
c. (iii), (ii), (i), (iv)
d. (iv), (ii), (iii), (i)
621. (i) Peacock-Wiseman Hypothesis
(ii) Voluntary exchange
(iii)Laffer curve
(iv) Canons of taxation
Codes
a. (i), (ii), (iii), (iv)
b. (iv), (iii), (ii), (i)
c. (iii), (ii), (i), (iv)
d. (iv), (ii), (iii), (i)
622. (i) Bi-Metallic system
(ii) Gold exchange standard system
(iii) Gold standard system
(iv) Dollar standard system
Codes
a. (ii), (iv), (i), (iii)
b. (iv), (i), (ii), (iii)
c. (i), (iii), (ii), (iv)
d. (i), (ii), (iii), (iv)
623. Explanations of Investment
(i) On rate of investment
(ii) On level of Profit
(iii) Marginal efficiency of capital
(iv) Levels of savings
Codes
a. (i), (ii), (iii), (iv)
b. (iii), (iv), (i), (ii)
c. (iv), (i), (iii), (ii)
d. (ii), (iii), (iv), (i)
624. (i) Milton Friedmans Approach
(ii) Fishers Approach
(iii) Stock Balance Approach
(iv) Keynes approach
83

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

Codes
a. (ii), (iii), (iv), (i)
b. (i), (ii), (iii), (iv)
c. (iii), (i), (ii), (iv)
d. (iv), (iii), (i), (ii)
625. (i) Permanent land revenue settlement
(ii) Integrated Rural Development Programme
(iii) Grow more food campaign
(iv) Green Revolution
Codes
a. (ii), (i), (iii), (iv)
b. (iv), (iii), (ii), (i)
c. (i), (iii), (iv), (ii)
d. (iii), (ii), (i), (iv)
626. The Cobb-Douglas Production Function assumes that the elasticity of substitution is :
a. One
b. Two
c. Three
d. Four
627. A consumer attains his/her equilibrium at the point where :
a. Total Utility=Price
b. Marginal Utility > Price
c. Marginal Utility < Price
d. Marginal Utility=Price
628. Pareto Optimality can take place at any point on :
a. Laffer Curve
b. Engel Curve
c. Contract Curve
d. Lorenz Curve
629. According to Say's Law, unemployment can be removed by :
a. Rise in wages
b. Fall in wages
c. Taxing wages
d. Subsidising wages
630. Which of the following is generally referred to as a 'broader measure of money supply' ?
a. Ml
b. M2
c. M3
d. M4
631. In case of proportional relation between consumption and income :
84

## a. APC > MPC

b. APC=MPC
c. APC < MPC
d. APC=MPS
632. Indicative Planning is :
a. Rigid
b. Comprehensive
c. Autocratic
d. Flexible
633. The major difference between Harrod-Domar and Solow models of growth lies in :
a. Substitutability between labour and capital
b. Returns to Scale
c. Returns to variable factor
d. Growth of income
634. In Nurksian formulation of the thesis of the 'vicious circle of poverty' in the context of an
underdeveloped country, the inducement to invest is limited by :
a. Lack of savings
b. Lack of investment opportunities
c. Size of the market
d. The policy of the government
635. Taxes raised are credited into :
a. Consolidated Fund
b. Contingency Fund
c. Public Accounts
d. Private Accounts
636. Items which are of recurring nature are covered under :
a. Capital Budget
b. Revenue Budget
c. Cash Budget
d. Unified Budget
637. The difference between total revenue and total expenditure is called :
a. Capital deficit
b. Revenue deficit
c. Fiscal deficit
d. Budgetary deficit
638. Borrowings from foreigners are known as :
a. export of goods
b. unrequited receipts
c. capital goods
d. current receipts
85

## 639. Quantitative restrictions on imports by a country will lead to :

a. Decreased demand for imported products
b. Increased demand for imported products
c. Increased supply of imported products
d. Decreased supply of imported products
640. According to Economic survey 2007-08, Indias exports as per cent to GDP in 2006-07
stood at:
a. 11.0
b. 14.0
c. 16.0
d. 19.0
641. The fiscal deficit of the Central Government in India as percentage of GDP in 2006- 2007
stood at :
a. 1.4
b. 3.4
c. 5.4
d. 4.1
642. As per the UNDP's Global Human Development Report 2007, India's relative ranking out
of 177 countries in respect of HDI was :
a. 123
b. 131
c. 128
d. 125
643. Gross Domestic Savings as percent of GDP at current market prices in India in 20062007 was :
a. 30.8
b. 34.8
c. 37.7
d. 39.2
644. Which of the following averages is known as 'root-mean square'?
b. Harmonic Mean
c. Geometric Mean
d. Combined Mean
Consider the following statements and select the correct answer from the codes given below for
questions 21 to 30 (Assertion and Reasoning type item).
645. Assertion (A): Under oligopoly, all firms are aware of their inter-dependence.
Reason (R): Personal rivalries do not exist among firms under oligopoly.
a. Both (A) and (R) are false
b. Both (A) and (R) are true but (R) is not the explanation of (A)
86

## c. (A) is true, but (R) is false

d. (A) is false, but (R) is true
646. Assertion (A) : Giffen goods have a positively sloped demand curve.
Reason (R): The positive substitution effect in their case is more than offset by negative
income effect.
a. Both (A) and (R) are true and (R) is the correct explanation of (A)
b. (A) is true, but (R) is false
c. Both (A) and (R) are false
d. Both (A) and (R) are true, but (R) is not the correct explanation of (A)
647. Assertion (A): According to Hicks, trade cycle occurs due to the interaction between
multiplier, and accelerator.
Reason (R): In Hicksian business cycle theory, accelerator is impotent in the
depression phase.
a. Both (A) and (R) are true and (R) is the correct explanation of (A)
b. Both (A) and (R) are true, but (R) is not the correct explanation of (A)
c. Both (A) and (R) are false
d. (A) is true, but (R) is false
648. Assertion (A): Duesenberry hypothesised that consumption - income relationship is
irreversible.
Reason (R): Consumption depends not only on current income but also on previous
peak income.
a. Both (A) and (R) are true, but (R) is not the correct explanation of (A)
b. Both (A) and (R) are true, and (R) is the correct explanation of (A)
c. (A) is true, but (R) is false
d. Both (A) and (R) are false
649. Assertion (A): Backwash effects imply an unfavourable situation arising in
underdeveloped countries.
Reason (R): Undue emphasis on exports of raw-materials at the expense of the growth
of domestic manufacturing.
a. (A) is true, but (R) is false
b. Both (A) and (R) are false
c. Both (A) and (R) are true and (R) is the correct explanation of (A)
d. Both (A) and (R) are true, but (R) is not the correct explanation of (A)
650. Assertion (A): Low levels of labour productivity exist in underdeveloped countries.
Reason (R): It is due to the lack of physical capital.
a. Both (A) and (R) are false
b. (A) is true, but (R) is false
c. Both (A) and (R) are true and (R) is the correct explanation of (A)
d. Both (A) and (R) are true, but (R) is not the correct explanation of (A)
651. Assertion (A): In India, more and more farmers are getting pushed out of agriculture.
87

## Reason (R): Their land base is becoming smaller.

a. (A) is true, but (R) is false
b. Both (A) and (R) are false
c. Both (A) and (R) are true, and (R) is the correct explanation of (A)
d. Both (A) and (R) are true, but (R) is not the correct explanation of (A)
652. Assertion (A): Jagdish Bhagwati stated that a country, in its growth process, would
experience 'immiserizing growth' and deterioration of 'terms of trade'.
Reason (R): Income elasticity of demand for the country's exports is high.
a. Both (A) and (R) are true
b. (A) is false, but (R) is true
c. Both (A) and (R) are true and (R) is the correct explanation of (A)
d. (A) is true, but (R) is false
653. Assertion (A): Coefficient of Concurrent Deviations is calculated between the direction
of deviations and not their magnitudes.
Reason (R): If it is desired to study the correlation between two series in a very casual
manner.
a. (A) is false, but (R) is true
b. (A) is true, but (R) is false
c. Both (A) and (R) are true, but (R) is not the correct explanation.
d. Both (A) and (R) are true and (R) is the correct explanation.
654. Assertion (A): James Buchanan viewed that primary burden of public debt is shifted to
posterity.
Reason (R): Public debt is paid by taxing the posterity.
a. (A) is true, but (R) is false
b. (A) is false, but (R) is true
c. Both (A) and (R) are false
d. Both (A) and (R) are true and (R) is the correct explanation of (A).
655. If two commodities are good substitutes, indifference curve will :
a. be a straight line
b. approach a right angle
c. approach a straight line
d. slope upwards
656. The firms in the modern world, use reserve capacity to :
a. ensure greater flexibility in operations
b. reduce costs
c. reduce wages
d. reduce taxes
657. If the firms are behaving on the basis of average cost principle, orderly coordination is
often attained by :
88

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

b. Price cutting
c. High cost firm
d. None of the above
658. For any given individual preferences, which are reflexive, transitive and complete,
majority rule based social preferences are :
i.
Reflexive
ii.
Transitive
iii.
Complete
Select correct code:
Code:
All above are true
Only (i) and (iii) are true
Only (i) and (ii) are true
Only (ii) and (iii) are true
659. If demand curve assumes the shape of a rectangular hyperbola, price elasticity is equal to:
a. Zero
b. less than one
c. greater than one
d. one
660. Let the consumption function be C=Rs. 30+0.80 and investment spending be
I=Rs. 702 i, where i is the rate of interest. Then an increase in autonomous investment by
Rs. 30 would shift the IS curve :
a. To the left by Rs. 150
b. To the right by Rs. 150
c. To the right by Rs. 30
d. To the left by Rs. 30
661. According to Milton Friedman, quantity theory of Money deals with :
a. Prices
b. Income
c. Supply of money
d. Demand for money
662. The concept of Multiplier was introduced for the first time by :
a. R.F. Kahn
b. J.M. Keynes
c. R.F. Harrod
d. V.K.R.V. Rao
663. Sustainable development addresses to :
a. The needs of the present generation.
b. The needs of the future generation.
c. The needs of the present generation without compromising the needs of the future
89

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

generations.
d. The needs of the future generations, without compromising on the needs of the
present generation.
664. Sens measure of poverty includes :
b. The Head Count ratio and the poverty-gap ratio.
c. The poverty-gap ratio and the distribution of income among the poor.
d. The Head Count ratio, the poverty-gap ratio, and the distribution of income among
the poor.
665. For a planner, in the context of choice of techniques, the propriety of a technique is
dictated by :
a. The factor endowments
b. The level of development
c. The character of technical progress
d. The plan objectives
666. Mode of production refers to :
a. Forces of production
b. Methods of production
c. Relations of production
d. The duality of Forces of Production and Relations of Production
667. Unlimited supply of labour presumes :
a. Inelastic supply of labour
b. Infinitely elastic supply of labour
c. Redundancy of labour
d. Disguised unemployment
668. Who among the following gave the law of increasing State Activities?
a. Musgrave
b. Wiseman Peacock
c. Wagner
d. Dalton
669. Which of the following is not a development expenditure of the State?
a. Medical and Health
b. Education
c. Debt Services
d. Development of Agriculture
670. According to Dalton, the total social advantage becomes maximum when taxation and
expenditure are carried to a point where, :
a. Marginal Social Sacrifice (MSS) > Marginal Social Benefit (MSB)
b. Marginal Social Sacrifice (MSS) < Marginal Social Benefit (MSB)
c. Marginal Social Sacrifice (MSS)=Marginal Social Benefit (MSB)
90

## d. None of the above

671. Devaluation, will improve the balance of payment deficit, if sum of elasticity of exports
and imports of the devaluing country is :
a. greater than one
b. less than one
c. equal to zero
d. negative
672. From April 1999, Jawahar Rojgar Yojana has been renamed as :
a. Jawahar Gram Samriddhi Yojana
b. Jawahar Swarna Jayanthi Yojana
c. Jawahar Samriddhi Yojana
d. Jawahar Rural Development Yojana
673. In the year 2000 - 2001 External Debt GDP ratio in India was :
a. 15.3 per cent
b. 9.1 per cent
c. 7.1 per cent
d. 5.4 per cent
674. Which of the following is not a measure of dispersion ?
a. Mean of deviations
b. Variance
c. Range
d. Inter-quartile range
675. GDP deflator is an index of type :
a. Paasche index
b. Laspyres index
c. Fisher index
d. Divisia index
676. There are 50 students in a class. Their mean weight, =55 kg and standard deviation,
=17 kg. Two students from the class whose weights are 47 kg and 58 kg respectively
leave the school and two new students with weights of 50 kg and 55 kg respectively join
the class. Then the new mean weight 1 and s.d., 1 (in kgs) are :
a. 1=55, 1=17
b. 1=55, 1 < 17
c. 1 < 55, 1 > 17
d. 1 > 55, 1=17
677. Starting with the earliest, arrange the following in the chronological order of
development of general theory of equilibrium :
a. R. Cantillon
b. F. Quesnay
c. L. Walras
91

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

d. W. Leontief
Code:
a. (iv), (i), (ii), (iii)
b. (iii), (iv), (i), (ii)
c. (i), (ii), (iii), (iv)
d. (ii), (iii), (iv), (i)
678. Starting with the earliest, arrange the following authors in the chronological order of their
contribution to welfare economics :
a. J. Bentham
b. Y. Pareto
c. M. Marshall
d. J. Hicks
Code:
a. (iii), (ii), (iv), (i)
b. (i), (iii), (ii), (iv)
c. (iv), (i), (iii), (ii)
d. (ii), (iv), (i), (iii)
679. Arrange the following in descending order of their share in Global FDI receipts in 2002:
a. Hong Kong
b. China
c. India
d. Korea
Code:
a. (ii), (i), (iii), (iv)
b. (iv), (ii), (i), (iii)
c. (iii), (iv), (ii), (i)
d. (i), (iii), (iv), (ii)
680. Arrange the following in descending order of their share in world exports in 2004 :
a. China
b. Hong Kong
c. Indonesia
d. Malaysia
Code:
a. (iii), (iv), (ii), (i)
b. (i), (ii), (iv), (iii)
c. (iv), (i), (iii), (ii)
d. (ii), (iii), (i), (iv)
681. Starting with the earliest, arrange the following authors chronologically in the context of
development of theory of Oligopoly :
a. E. Stackelberg
92

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

b. P. Sweezy
c. J. Bertrand
d. A. Cournot
Code:
a. (ii), (i), (iii), (iv)
b. (iv), (iii), (ii), (i)
c. (i), (ii), (iv), (iii)
d. (iii), (iv), (i), (ii)
682. Arrange the following States in the descending order of state-wise literacy rates in India,
2001:
a. Kerala
b. Mizoram
d. Goa
Code:
a. (iv), (iii), (i), (ii)
b. (i), (ii), (iii), (iv)
c. (ii), (i), (iv), (iii)
d. (iii), (iv), (ii), (i)
683. In the context of the development of theory of consumer behaviour, arrange the following
chronologically, starting with the earliest:
a. Revision of demand theory
b. Revealed preference theory
c. Indifference curves analysis
d. Marshallian theory of consumer behavior
Code:
a. (iii), (iv), (i), (ii)
b. (i), (ii), (iii), (iv)
c. (ii), (i), (iv), (iii)
d. (iv), (iii), (ii), (i)
684. Starting with the earliest, arrange the following schemes chronologically :
a. Prime Ministers Rozgar Yojana
b. Rural Employment Generation Programme
c. Sampoorna Grameena Rozgar Yojana
d. National Food for Work Programme
Code:
a. (i), (ii), (iii), (iv)
b. (iv), (ii), (iii), (i)
c. (iii), (iv), (ii), (i)
d. (i), (iii), (ii), (iv)
93

## 685. The revealed preference theory of consumers behaviour is based on

a. Consistency
b. Strong Ordering
c. Positive income elasticity of demand
d. All the above
686. An individuals supply curve for labour will bend backwards when
a. The substitution effect of wage rate increase is higher than income effect.
b. The income effect of wage rate increase is negative and higher than the substitution
effect.
c. Leisure is a Giffen good.
d. The substitution and income effect of wage rate increase reinforce each other.
687. The short run supply curve of a firm under perfect competition is the same as the
a. marginal cost curve
b. marginal cost curve above the average variable cost curve
c. average variable cost curve
d. average total cost curve
688. The difference between the value of marginal product and the marginal revenue product
arises only if
a. Average revenue is not equal to marginal revenue.
b. Average cost is not equal to marginal cost.
c. Total revenue is not equal to total cost.
d. Average cost is not equal to average revenue.
689. Assertion (A): In the short run, a producer operates in only stage II of the law of
diminishing returns where average product of the variable factor is declining.
Reason (R): In stage I and stage III the marginal products of the fixed and the variable
factors respectively are negative.
a. (A) is true and (R) is false.
b. Both (A) and (R) are true and (R) is the correct explanation of (A).
c. Both (A) and (R) are true, but (R) is not the correct explanation of (A).
d. (A) is false and (R) is true.
690. Assertion (A): In monopolistic competition, a firm earns only normal profit in the long
run.
Reason (R): A firm in monopolistic competition produces a commodity which has no
close substitutes.
a. Both (A) and (R) are true and is the correct explanation of (A).
b. Both (A) and (R) are true, but is not the correct explanation of (A).
c. (A) is true, but (R) is false.
d. (A) is false, but (R) is true.
691. Assertion (A) : Devaluation in general is resorted to increase the exports.
Reason (R) : It makes exports cheaper.
94

## a. Both (A) and (R) are correct.

b. (A) is correct, but (R) is not correct.
c. Both (A) and (R) are incorrect.
d. (A) is incorrect, but (R) is correct.
692. Assertion (A): The role of monetary policy in a developing economy in general is to
achieve growth with stability.
Reason (R): It makes availability of credit to public at cheaper rate of interest.
a. (A) is correct but (R) is not the explanation of (A).
b. Both (A) and (R) are incorrect.
c. (A) is incorrect but (R) is correct
d. Both (A) and (R) are correct.
693. Assertion (A): The average and the spread of indirect taxes have been lowered in India
Reason (R): Tax-GDP ratio in India has declined during this period.
a. Both (A) and (R) are true and is the correct explanation of (A).
b. Both (A) and (R) are true, but is not the correct explanation of (A).
c. (A) is true, but (R) is false.
d. (A) is false, but (R) is true.
694. The classical analysis of determination of output and employment is characterised as a
a. Static Analysis
b. Comparative Static Analysis
c. Dynamic Analysis
d. All of the above
695. Consumption is irreversible is implicit in which of the following hypothesis?
a. Absolute Income Hypothesis
b. Relative Income Hypothesis
c. Life Cycle Hypothesis
d. Permanent Income Hypothesis
696. Inventory-theoretic approach to transactions demand for money has been given by
a. J. M. Keynes
b. Milton Friedman
c. Don Patinkin
d. W.J. Baumol
697. Liquidity trap is a situation when demand for money is
a. Zero elastic
b. Unit elastic
698. Which statements in case of Kaldor model of trade cycle is incorrect?
a. Its foundation can be found in Keynes theory of income determination.
b. It assumes that both saving and investment function (or at least one of the two) are
non-linear.
95

## c. It makes use of investment multiplier interaction

d. It is based on capital Stock Adjustment principle.
699. Which of the following is not an indicator of Globalization?
a. Opening of the economy for unrestricted imports and exports.
b. Allowing free capital movement among nations.
c. Free movement of technology among nations.
d. Achieving exchange rate stability.
700. Which one of the following is an indicator of poverty?
b. Poverty-gap ratio
c. Poverty-square gap ratio
d. All of the above
701. The unbalanced growth strategy was propounded by
a. Ragnar Nurkse
b. H. Leibenstein
c. A.O. Hirschman
d. R. Rodan
702. Opportunity cost theory of international trade is given by
a. Haberler
c. Ricardo
d. Heckschor-Ohlin
703. The concept of intra-industry trade is given by
a. Balassa
c. Jagdish Bhagwati
d. J.S. Mill
704. Which one of the following is considered as non-debt creating foreign investment inflow?
a. External assistance
b. Foreign direct investment
c. Borrowing from I.M.F.
d. Commercial borrowings
705. Various trade reforms after 1991 in India were implemented by
a. Manmohan Singh
b. C.N. Vakil
c. P.R. Brahmananda
d. Jagdish Bhagwati
706. In 1971, collapse of Brettonwood system was largely due to
a. Fall of gold standard
b. Rise in the value of gold
96

## c. Failure to manage international liquidity

d. Surplus countries did not revalue and deficit countries did
not
devalue
their currencies
707. Purchasing power parity theory was given by
a. Haberler
b. J.S. Mill
d. Gustav Cassell
708. When was minimum reserve system of note issue adopted in India?
a. 1947
b. 1953
c. 1956
d. 1960
709. Which one of the following is not the objective of monetary policy in India ?
a. To accelerate economic development
b. To achieve price stability
d. To stabilise exchange rate
710. The continuous deficit in the balance of payments of India is due to
a. Continued rise in imports
b. Slow rise in exports
c. Exchange rate volatility
d. All of the above
711. Currency War during the present recession is concerned with
a. Under valuation of currency
b. Over valuation of currency
c. Neutral valuation of currency
d. None of the above
712. Who is the Chairman of the Economic Advisory Council of the Prime Minister of India?
a. Suresh Tendulkar
b. Jagdish Bhagwati
c. C. Rangarajan
d. Vijay Kelkar
713. The distribution for which mean and variance are equal is
a. Poission
b. Binominal
c. Normal
d. Gamma
714. The sum of the squares of deviations of the given set of observations is minimum when
taken from
97

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

a. Mode
b. Median
c. Variance
d. Mean
715. Factor reversal test is satisfied by
a. Laspayers Index
b. Fischers Index
c. Marshall-Edgworth Index
d. Pasches Index
716. Type I error is defined as
a. Reject null-hypothesis when it is false.
b. Reject null-hypothesis when it is true.
c. Accept null-hypothesis when it is true.
d. Accept null-hypothesis when it is false.
717. An increase in the marginal propensity to import
a. has the same effect upon the multiplier as an increase in the MPC
b. has no effect upon the multiplier
c. will increase the value of the multiplier
d. 1 < 2
718. Golden Age hypothesis is concerned with
a. Natural rate of growth > warranted rate of growth
b. Actual rate of growth > warranted growth rate
c. Warranted rate of growth > natural rate of growth
d. Warranted rate of growth = natural rate of growth
719. A term financial liberalisation is concerned with
a. Control by the RBI
b. Decontrol and Deregulation of financial system in an economy
c. Only decontrolling interest rate structure
d. Asset-liability efficient management of nationalized banks
720. Which of the following economist developed the concept of immiserzing growth?
a. Jagdish Bhagwati
b. Samuelson
c. Mrs. Joan Robinson
d. Harrod-Domer
721. The gap between domestic product and national product is significant for a country with
a. Small foreign investment
b. Huge foreign investment
c. Practically no foreign investment
d. None of these
722. Imports into a country generate income for
a. Foreign producers
b. Domestic manufactures
98

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

d. Government
723. National income total reveals
a. The production side
b. The spending side
c. The distributive side
d. The investment side
724. A deflator is a technique for
a. Adjusting for change in commodity
b. Accordance for higher increase of GNP
c. Accordance for decline of GNP
d. Adjusting for changes in price level
725. Trade between two countries takes place on account of:
a. Comparative difference in costs
b. Need for export
c. Difference in costs
d. Scarcity of goods
726. The purpose of international trade is
a. To encourage exports
b. Need for exports
c. To increase the income of participating countries
d. To promote international understanding
727. The exchange rate is kept the same in all parts of the market by
a. Speculation
b. Interest arbitrage
c. Exchange arbitrage
d. None of the above
728. The power of banks to create credit depends on:
a. Amount of cash with them only
b. Safe ratio only
c. Amount of cash with them and the safe ratio
d. None of the above
729. The money the bank creates is
a. His asset
b. His liability
c. Both his asset and liability
d. None of these
730. If all the banks in an economy are nationalized and converted into a monopoly banks,
total deposit creation:
a. Will decrease
b. Will increase
99

## c. Will neither increase nor decrease

d. None of the above
731. Which of the following would cause interest rates to rise?
a. The value of money
b. The demand for money
c. The general level of prices
d. Aggregate monetary demand
732. The difference between GNP and NNP equals
a. Depreciation
c. A statistical discrepancy
d. None of the above
733. In economies marginal land means that land on which:
a. Normal rent accrues
b. High rent is charged
c. No rent accrues
d. None of the above
734. The principal aim of the first plan were:
a. To solve food problem
b. To rehabilitate Indian economy
c. To check prices
d. All of the above
735. Planning commission was established in
a. 1950
b. 1947
c. 1948
d. 1949
736. Which of the following group of items within the total of balance of payments?
a. The merchandise balance
b. Basic balance
c. Current account balance
d. All of the above
737. Mark the correct statement
a. No equilibrium can be attained without intervention
b. Equilibrium is a state of the balance of payments which can be sustained
without intervention
c. Equilibrium is a state of the balance of payments which can be sustained only
through intervention
d. None of the above
738. The upward shift of the demand curve for exports, expressed in local currency:
100

## a. Raises the local currency value of imports

b. Shifts the total currency of values to exports to infinitive position
c. Decreases the local currency value exports
d. Raises the local currency value of exports
739. If the elasticity of demand for imports is less than unity:
a. The value of exports will increase
b. Nothing will happen
c. The value of imports will increase
d. The value of imports will remain constant
740. It is argued that even if there is local unstable equilibrium, the market by and large is
a. Unstable
b. Stable
c. In declining condition
d. In increasing condition
741. The achievement of gains from trade:
d. Requires comparative as well as absolute advantage
742. The public sector enterprise which is not one of the top profit making enterprises is:
a. National fertilizers
b. Eastern coalfields
d. Indian pertro-chemical corporation
743. The most promising non-conventional source of energy in india is:
a. Wind power
b. Tidal power
c. Geo-thermal energy
d. Solar energy
744. Which state has the largest drought prone areas?
b. Gujarat
c. Karnataka
d. Rajasthan
745. Growing frequency of flood in A.P, Maharastra, Gujarat and Rajasthan is largely due to:
a. Earthquakes
b. Land slides
c. Deforestration
d. None of the above
746. Consumption can be defined as
101

## a. The use of goods and services to satisfy current wants

b. Any activity directed to the satisfaction of wants
c. The use of goods for satisfaction of wants in future
d. The wearing out of physical assets
e. Making additions to the stock of assets
747. Consumer wants refer to:
a. All those things a consumer would like to have
b. The goods and services necessary to maintain the consumers standard of living
c. The goods and services for which a consumer is able and willing to pay
d. All those goods required by a consumer to sustain existence
e. All the items within a consumers purchasing powers
748. In economics demand means
a. The ability of the society to purchase all that is on the market at a given period of
time
b. The desire and willingness of the individual for all the goods and services for his
standard of living
c. At a given price per unit of time the desirability and willingness of an
individual to purchase goods and services
d. None of the above
749. Demand means
a. Willingness and ability of an individual to buy goods and services at a given
price and time
b. Ability of a society to buy all that is on the market at a given time
c. Desire of an individual of goods and services needed by him to keep up standard
of living
d. The desire and ability of the society to buy certain necessities at a given price per
unit of time
750. The law of demand states that when:
a. Income rises demand rises
b. When price rises demand rises
c. When price falls demand rises
d. When income and price rise demand rises
751. The term paper gold is associated with
a. Deficit financing
b. Currencies still in gold standard
c. Special drawing rights of the RAF
d. Special facility of the world bank
752. A fall in price of a commodity leads to:
a. A shift in demand
b. A fall in demand
102

## c. A rise in consumers real income

d. A fall in the consumers real income
753. Demand curve for giffen goods will be:
a. Upwards to the right
b. Downwards to the right
c. Upwards to the left
d. Horizontally
754. The second French economist who received Nobel prize was
a. Maurice Allias
b. Maria Pearson
c. Pierre
d. None of the above
755. Kenneth Arrow shared Nobel Prize in 1972 alongwith
a. Peter Diamond
b. J.R.Hicks
c. Samuelson
d. Ronald Coase
756. Impossibility theorem developed by
a. Kaldor
b. Abraham Bergson
c. J.R.Hicks
d. Kenneth Arrow
757. The book The bread of our forefathers is written by
a. W.J.Ashley
b. J.S.Mill
c. Karl Marx
d. Oliver Willamson
758. Asimakopulous is a
a. Micro Economist
b. Macro Economist
c. Fiscal Economist
d. World bank Economist
759. The concept infinite number of agents developed by
a. Robert J.Aumann
b. F.W.Taussig
c. Gautav Gassal
d. Robert Triffin
760. Bargaining set concept introduced by
a. Fredric list
b. Machlup
103

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

c. Walras
d. Aumann
761. Marketing clearing approach concerned with
a. Asimakopolous
b. Koutsiyannis
c. Robert J.Barro
d. Samuelson
762. Contestable market concepts related with
a. W.J.Baumol
b. Marshall
c. Hicks
d. Samuelson
763. The term principle of scarcity associated with
a. Lionel Robbins
b. Alfred Marshall
c. Paul Anthony Samuelson
d. Gutsav Cassal
764. The static state model first developed by
a. Samuelson
b. J.B.Clark
c. J.B.Say
d. J.S.Mill
765. ARCH model of time series analysis developed by
a. Damodar Gujarati
b. L.R.Klein
c. William H.Greene
d. Ragner Frisch
766. Decision models was developed by
a. Ragner Frisch
b. Marshall
c. Samuelson
d. Hicks
767. The first economist who applied axiomatic approach in utility analysis was
a. Marshall
b. Leon walras
c. Ranger Frisch
d. Von Newmann and Morgenstern
768. The cointegration approach was developed by
a. Ragner Frisch
b. Clive Granger
104

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

c. Klein
d. Marshall
769. Cobb-webb theorem is concerned with
a. Nicholar Kaldor
b. Cobb-Douglas
c. Marshall
d. Leon walras
a. J.M.Keynes
b. Arthur Smithies
c. Kaldor
d. Musgrave
771. Compensation of the losers test proposed by
a. Bergson
b. Hicks
c. Kaldor
d. Arrow
772. Verdoon law states
a. The relationship between the growth of manufacturing productivity and
output growth
b. The relationship between growth of agricultural productivity and output growth
c. The relationship between growth of export and GDP growth
d. None of the above
773. Who used the term long waves in business cycle analysis
a. Kondratieff
b. Sraffa
c. Hicks
d. Marshall
774. The concept X-efficiency was developed by
a. Harvey leibenstein
b. Marshall
c. Solow
d. Harrod
775. The first table of input-output model, for 1919 and 1929, represented a ---------- model
a. Open model
b. Closed model
c. Both (a) and (b)
d. None of these
776. Input-output table created in 1947 represented a ----------- model
a. Closed model
105

## Dr.S.Saravanan /Economics questions for Paper 2 & 3

b. Open model
c. Both (a) and (b)
d. None of these
777. The book Economics of control is written by
a. J.S.Mill
b. Davenport
c. Carl Menger
d. Appa P.Lerner
778. Rational expectation hypothesis is concerned with
a. Samuelson
b. Robert Solow
c. John Luke
d. John Muth
779. The first economist who applied the hypothesis of rational expectation in the study of
cyclical fluctuations of economic activity
a. Philips
b. Schultz
c. Hicks
d. Robert Lucas

106