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ECONOMICS

PAPER-III

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This paper is of two hundred (200) marks containing four (4) sections.
Candidates are required to attempt the questions contained in these sections
according to the detailed instructions given therein.

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NOTE:

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D-0107

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SECTION- I

"""~'
Note:

Answer the five questions from the para given below_ Each answer
should not exceed 30 words_ Each question carries five marks_
(5x5=25 marks)
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(5x5=25 ~)

Although l\1althus was by no means the first writer to speculate on demographic

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problems, he was the first to succeed in devising a theory of population growth_ Ever

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siru:e, his views have been the point of departure in every discussion of population
problems_ In his own dsy however, the theory attracted attention, not so much as a
scientific contribution to the study of demography, but as a refutation of the optimism

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of Godwin, Condercet and Owen regarding the perfectibility of human society by means
of social legislation_ More important for our purposes, ]l..fa]thus' theory had definite

analytical consequences that made it an integral part of classical economics long after
the 'vision' that prompted ]l..fa]thus had receded to the background_ By emphasizing

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the rigid dependence of population growth upon the food supply, the J\.falthusian theory
lent support to the subsistence theory of wages and prepared the way for the Ricardian

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preoccupation with the land-using bias of economic progress; by explainllig poverty in

tenns of a simple race between population and the means of subsistence, it provided

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thetouchatone for all classical thinldng about economic policy. Any one of these features
would have been enough to make ita influeru:e signilicant Putting them all together,

they fully account for ]l..fa]thus' astonishing success which, indeed, has few parallels in

the history of social scieru:e_

D-0107

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P.T.O.

iWfl<.Ri"

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Why did l\1althus' theory attract attention ?

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Why did l\1althus' theory of population become an integral part of classical

economics ?

3.

How did l\1althus's theory lend support to the subsistence theory of wages ?

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2.

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P.T.O.

4.

How did l\1althus' theory influence the classical thinldng about economic policy ?

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In what important respects did l\1althus's theory influence Ricardo?

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SECTION- II
~-II

Note:

This part has fifteen (15) definitional questions of (5) marks each to be
answered in upto (30) words_

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(5x15=75 marks)

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Defirlf< revealed preference axiom_

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P.T.O.

7.

What is elasticity of substitution of factors ?

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What is consumption ratchet?

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D-0107

9.

What is asset demand for money ?

f;g'11"S iP11

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What is Harrod-Tif<utral technical progress?

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P.T.O.

11.

Defi"" organic composition of capital and its relation to rate of profit.

<iT ~nfll<!i ~ (organic composition of capitsl)

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Distinguish between iru:ideru:e and shifting of a tax.

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13.

What does current account deficit mean?

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Distinguish between Statutory Uquidity Ratio (SLR) and Cash Reserve Ratio (Dill).

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D-0107

P.T.O.

What are the mall features of the Industrial Ucensillg Policy of 1991 ?

16.

Distinguish between stable and stationary population.

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17.

Defi"" Sen's-P measure of poverty.

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What are the measures of regional disparities in agriculture ?

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19.

Distinguish between Open Model and Closed ]l..fudels of l.eontief Input-output analysis.
When do you say the system is viable in an Open Model ?
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A finn has the following total cost and demand functions C(x) ~20 +2x +3X' and
p ~50- x. If anexcisetax of Rs. t per unit is imposed, find the tax rate that would fetch

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maximum tax revenue to the Government ?

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D-0107

SECTION- III
"UI"'rn'- III

Note:

This part has five short-essay type questions of (12) marks each to be
answered in upto (200) words_ The candidste may select one elective
and answer all five (5) questions_

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(Ux5=60 marks)

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Consider the following Regression ]l..fudels_

A

(G\11),

~263.6416-0.0056

(PGNP),-2.2316(FLR),

(0.0019)

(0.2099)

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(11.5932)

~168.3067-0.0055

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(G\11),

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(Ux5=60 ~)

(0.0018)

(0.2480)

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(32.8916)

(PGNP),-1.7680(FLR), +12.8686(TFR),

D-0107

(a)

How would you interpret the coefficient of TFR? A Priori, would you
expect a positive or nf<gative relationship between OVI and TFR ? justify
your answer_

(b)

Have the coefficients values of PGNP and FLR changed between the two
equations ? If so what may be the reasons for such a change?

(c)

How would you choose between ]l..fudels 1 and 2 ? Which ststistical test
would you use_ Show the necessary calculations_ Can you find the s_e_ of
the coefficient of TFR_

CM:

Cl-tild Mortality

PGNP

Per Capits GNP

HR

Totsl Fertility Rate

HR

Female Uteracy Rate

P.T.O.

(G\11),

~263.6416-0.0056

se~

(11.5932)

(PGNP),-2.2316(FLR),

(0.0019)

(0.2099)

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2

se

~168.3067-0.0055

(32.8916)

(PGNP),-1.7680(FLR), +12.S686(TFR),

(0.0018)

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(G\11),

(0.2480)

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2

iW'T TFR

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if'l1 FGNP

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Explain the nature of Heteroscedastidty. What are its consequences. Explain Gold
Feld-Quarndt test for detecting heteroscedasticity.
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What is structural instability in a Regression Model ? How do you test it by using

DlJJ\.1JI..fY VARIABLES ?

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Discuss the situation of ]l..fulticoll:irlf<arity in Regression Models and its consequeru:es_

What are the &.medial measures_

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Discuss the tenns "SPURIOUS REGRESSION" and "COINTEGRATION"_ Hence define

Dickey-Fullar test_

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E:xplam the three fonns of price leadership.

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How do you convert a two-person-zero-sum game into a linear programming

problem ? Illustrate with example_

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Explain the model of the interaction of the accelerator and multipler constructed by
Paul Samuelson_

24.

E:xplam how stability of equilibrium is attained in Tlf<O classical growth model.

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Examine the operation of the present managed floating exchange rate system_ What
are the problems with present exchange rate arrangements ?

21.

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E:xplam the role of aggregate demand in the detennination of income in the Ke~sian
system_

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Briefly outline the evolution of the present international trading system_

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23.

What are foreign exchange markets ? What are its various fonns ? What are the
different levels of participation in foreign exchange markets ?
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Explain the differeru:e between eurocurrendes and eurobonds.

25.

What caused the international debt problem of the developing nations in the 1980s?
Why did it threaten the stsbility of international banking system ?

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Comment on the factors holding back the development of Indian agriculture in the
post-refonns era.

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Elective- IV

How the entry of retsil-chains would affect the price-spread between the fanner and
the urban consumer ?

22.

23.

Describe the salient features of rural-urban migration in India and, in brief, spell out its
impact on rural labour markets.

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Evaluate the role of NABARD in monitoring the flow of credit to the agricultural sector
in Jndia.
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State the 'J\.farket access' provisions under VIITO agreement How would these affect
the Indian agriculturists ?
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Describe the change in the role of P1aruUng in India in the wake of economic policy
shift since 1991.

22.

Comment on the performance of the organized industrial sector in India in the past
two and a half decades, particularly with respect to employment geTif<ration.
R1,Y.1 ~

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Is there a virtuous circle linking infrastructure development and growth ? Substantiate

your answer.

24.

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Outline the trends in social sector spending in India. How far it is right to say that
Government is abdicating its social responsibility in the Tlf<W policy regime?

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25.

Enlist the compoTif<nts of GEM. How does it vary with the movement of HDI ?
GEM #;"~

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SECTION- IV

"UI"'rn'- I V
This part has OTif< question of (40) marks to be answered in upto 1000
words_
(40x1=40 marks)
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Outlirlf< the various dimensions of the growing environmental concerns_

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How far the existing paradigm of development is responsible for the environmental
crisis, if any ?

(10, 20, 10)

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What steps should be taken to salvage the situation?

(10, 20, 10)

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Comnt on the empirical relation between the movement of real per capita iru:ome
and iru:ome inequality_
How far the inverted-U shaped curve hypothesis stands supported ?

In this context, how would you explain the 'Augmented Ku=ets' curve?
(15, 15, 10)

(15, 15, 10)

D-0107

FOR OFFICE USE ONLY

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Total l\1arks Obtamed (in words) _

(in figures) _
Signature & Name of the Coordinator _
(Evaluation)

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Marks Obtained