^tf'ntt'

INDIAN INSTITUTE OF ENGINEERING SCIENCE AND TECHNOLOGY,

SHIBPUR

B.TECH-M.TECH DUAL DEGREE sth SEMESTER (Civi1, Mechanical,

Metailurgr, Mining, Aerospace) EXAMINATION, 2016

ECONOMTCS (HU s603)

FULL MARKS:,35 TIME: 2 hours

A. Answer any 5: (5 x2: 10)

1. Do externalities imply an under-estimation of GNP? Explain

your answer.
2. What is the Purchasing Power Parity method of estimating
GDP? Do you think it is a more correct estimate of GDp
compared to one that uses loca1 prices?
3. Is GDP/GNP the sole measure of 'development' of a country?
what are some of the other factors that need to be taken into
account?
4. Why is Import Demand subtracted from Aggregate Demand?
5. What is the difference in product coverage between the
Consumer Price Index and the GDP Deflator?
6. Is it true that expecting inflation to occur actually causes
inflation, when otherwise it would not have occurred? Could
you explain how that happens?
7. What causes Stagflation?

B. Answer any 3: (3 x 4 : L2)

1. Show why being 'thrifty' per se is not good for the economy.

2. why is Investment a function of interest rates? If the RBI

increases interest rates, how is investment aJfected? what
impact would a one-tim.e increase in interest rates have on
equilibrium GNP (Ye) in the simple Income Determination
model?

3. Determine the multiplier in an economy that does not have a

government but does have a foreign trade sector.

4. what is the role of the supply function in Demand pull

Inflation? What are the emergency as weli as more
wholesome policy measures for controlling inflation?
C. Answer any two: (2x3:6)
1. Why would a firm continue to run when it is making a loss?
2. What is the nature of the competition that Oligopolists indulge
in?
3. The tqrm Monopolistic' means like Monopoly'. How is
Monopolistic Competition like Monopoly? How is it unlike
Monopoly?

D. Explain the difference between (any one) (3)

1. short run and long run equilibrium of a Monopoly industry

2. Decreasing Returns to Scale and Diminishing Returns to One
Input

E. In the last 15 years there has been a spurt in the number of

Airlines companies. How has this affected equilibrium in the
Airlines industry, and in turn what kind of impact would there be
on Railways? How does the discussion change when the population
is growing? You know the common sense answer, but explain the
process using Supply and Demand functions. (41