ECONOMICS- PAGE 5
1. Consider the following statements about the Lorenz curve :
I. The degree of income inequality will be higher, farther the Lorenz curve is from the line of equal distribution.
II. The limits of Lorenz ratio (L) are : – 1 < L < 1
III. The degree income inequality will be lower, closer the Lorenz curve is to the line of equal distribution.
Select the correct answer from the codes given below :
Codes :
(1) Only I (2) I and II
(3) I and III (4) Only II
Ans: 3
2. Match List – I with List – II and select the correct answer from the codes given below the lists :
List – I (Profit Theory)
List – II (Economist)
a. Innovation i. F.H. Knight
b. Rent of Ability ii. J.A. Schumpeter
c. Risk and Uncertainty iii. G.L.S. Shackle
d. Potential Surprise iv. F.A. Walker
Codes :
a b c d
(1) i ii iii iv
(2) ii iv i iii
(3) i iii ii iv
(4) iv i iii ii
Ans: 2
3. Consider the following statements in relation to current agrarian crisis in India :
I. Indebtedness of farmers has increased.
II. Lack of adequate marketing facilities and presence of middlemen distort the agricultural prices.
III. MNREGA Scheme
Select the correct answer from the codes given below :
Codes :
(1) I and II (2) II and III
(3) II only (4) I and III
Ans: 1
4. By which year, the Central Government has planned to double the income of the farmers ?
(1) 2019 (2) 2020
(3) 2022 (4) 2024
Ans: 3
5. As per 2013 estimates, which among the following States had the least Total Fertility Rate ?
(1) Uttar Pradesh (2) Madhya Pradesh
(3) Kerala (4) West Bengal
Ans: 4
6. In which of the following approaches/theory, the rate of growth of population growth is treated as exogenous ?
I. Classical theory of development
II. Low income equilibrium trap of Nelson
III. Domar growth model
Select the answer from the codes below :
Codes :
(1) All the three above (2) Only III
(3) Only I and II (4) Only I
Ans: 3
7. Gender discrimination index of UNDP is based on which among the following components ?
I. Reproductible health
II. Empowerment
III. Labour market conditions
Select the answer from the code below :
Codes :
(1) I and II (2) II and III
(3) I and III (4) All the three above
Ans: 4
8. The target inflation rate in the monetary policy by R.B.I. is based on
(1) Consumer Price Index Number (2) Whole Price Index Number
(3) Fisher’s Ideal Index Number (4) G.D.P. Deflator
Ans: 1
9. Match the following items given in List – I with those in List – II :
List – I List – II
a. Dummy variables i. Stationarity
b. Contingency Table ii. Qualitative Variables
c. Unit Root Test iii. Rank condition
d. Identification iv. χ2-Test
Codes :
a b c d
(1) iv iii i ii
(2) iii ii i iv
(3) i iii ii iv
(4) ii iv i iii
Ans: 4
10. Match List – I with List – II and select the correct answer using the codes given below the lists :
List – I (Policy Rate as of May, 2016)
List – II (%)
a. Repo rate i. 21.25
b. Reverse Repo rate ii. 7
c. Bank Rate iii. 6
d. S.L.R. iv. 6.5
Codes :
a b c d
(1) iii ii i iv
(2) iv iii ii i
(3) iv ii iii i
(4) ii iv i iii
Ans: 3
11. The % inflation rate based on All India WPI has been negative during 2015-16, while the inflation rate based on All India CPI has been moderately positive during the same period.
This divergence can be explained by which of the following ?
(1) The two index numbers have different base years.
(2) The two index numbers have different commodities and respective weights for them.
(3) The two index numbers are released by different government departments.
(4) All of the above
Ans: 2
12. Which among the following measures increase liquidity in the economic system ?
(1) Reduction in the Cash Reserve Ratio
(2) Increase in the Repo rate
(3) Increase in the statutory liquidity ratio maintained by the banks
(4) Increase in Reverse Repo rate
Ans: 1
13. Assertion (A) : According to the Accelerator Theory of Investment, when consumption or income increases investment would also increase.
Reason (R) : The theory assumes that there is excess capacity in the economy.
Select the correct answer from the codes given below :
Codes :
(1) Both (A) and (R) are true and (R) is the correct explanation of (A).
(2) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(3) (A) is true, but (R) is false.
(4) (A) is false, but (R) is true.
Ans: 3
14. According to Friedman, on which of the following does the velocity of circulation of money depend ?
(1) Market rate of interest on Bonds (2) Rate of change in general price level
(3) Ratio of savings to income (4) Ratio of savings to investment
Ans: 2
15. Assertion (A) : According to Baumol, the transaction demand for cash balances varies with respect to the square root of the volume of transactions.
Reason (R) : Transaction demand for money is a function of income.
Select the answer from the code below :
Codes :
(1) Both (A) and (R) are true and (R) is the correct explanation of (A).
(2) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(3) (A) is true, but (R) is false.
(4) (A) is false, but (R) is true.
Ans: 2
16. The slope of the IS curve depends upon
(1) the level of government expenditure
(2) the sensitivity of demand for real money balances to the interest rate
(3) the interest sensitivity of investment
(4) None of the above
Ans: 3
17. According to Keynes, the supply of money with respect to interest rate is
(1) perfectly elastic (2) perfectly inelastic
(3) unitary elastic (4) moderately elastic
Ans: 2
18. Which of the following correctly defines the effective revenue deficit as per budget of the Central Government ?
(1) Gross Fiscal Deficit – Revenue Receipts
(2) Gross Fiscal Deficit – Capital Receipts
(3) Gross Fiscal Deficit – Interest Payments
(4) Revenue Deficit – Grants for creation of Capital Assets
Ans: 4
19. An imposition of lump sum tax on a monopolist will affect the equilibrium condition in what manner ?
(1) It’s profit will decline and so also the equilibrium output.
(2) Both equilibrium output and price will decline.
(3) Only equilibrium price will decline.
(4) Only equilibrium profit will decline.
Ans: 4
20. If the revenue from income-tax increases from 100 crore to 109 crore and nominal GDP increases from 100 crore to 112 crore, the tax buoyancy of income tax is given by which of the following ?
(1) 1.33 (2) .75
(3) 3 (4) None of the above
Ans: 2
21. Public goods are characterised by which of the following characteristics ?
I. Collective consumption II. Non-exclusion
III. Divisibility IV. Rival consumption
Select the correct answer from the codes given below :
Codes :
(1) I and II are correct (2) I and III are correct
(3) I and IV are correct (4) II and IV are correct
Ans: 1
22. If taxes are levied according to Ability to pay theory, it leads to
(1) Regressive Taxes (2) Progressive Taxes
(3) Proportional Taxes (4) Indirect Taxes
Ans: 2
23. The whole incidence of a sales tax will be on the buyers when
(1) the demand for the commodity is perfectly elastic.
(2) the demand for the commodity is moderately elastic.
(3) the demand for the commodity is perfectly inelastic.
(4) both the demand and supply for the commodity are perfectly elastic.
Ans: 3
24. Who among the following is not associated with the ‘Dependency Theory’ of development ?
(1) Paul Baran (2) Samir Amin
(3) A.G. Frank (4) Gunnar Myrdal
Ans: 4
25. Match List – I with List – II and select the correct answer from the codes given below the lists :
List – I List – II
a. Balanced growth maximisation i. W.J. Baumol
b. Sales revenue maximisation ii. R.M. Cyert and J.G. March
c. Maximisation of managerial utility function iii. R. Marris
d. Satisfying rather maximising results iv. D.E. Williamson
Codes :
a b c d
(1) iii i iv ii
(2) iv i iii ii
(3) iv iii i ii
(4) ii iv iii i
Ans: 1
26. World Population Day is celebrated on 11th July because on this day in 1987 world’s population reached
(1) 4 billion people (2) 5 billion people
(3) 6 billion people (4) None of the above
Ans: 2
27. Which of the following is used by demographers as an indicator of the quality of a populations’ healthcare and standard of living ?
(1) Age specific death rate (2) Age specific birth rate
(3) Infant mortality rate (4) Crude death rate
Ans: 3
28. Match List – I with List – II and give the correct answer from the codes given below the lists :
List – I (Events)
List – II (Date)
a. Earth Day i. 3rd March
b. World Water Day ii. 22nd May
c. International Day for Biological Diversity iii. 22nd March
d. World Wild Life Day iv. 22nd April
Codes :
a b c d
(1) iv iii ii i
(2) i ii iii iv
(3) iii iv i ii
(4) iv i iii ii
Ans: 4
29. Clean Environment Cess is imposed on
(1) cutting of green trees (2) pollution of rivers
(3) production of coal (4) air pollution by factories
Ans: 3
30. Which among the following option is true for the savings behaviour according to classical economics ?
Symbols have their usual meaning.
(1) MPSwage = MPSprofit (2) MPSwage = 0 ; MPSprofit = 1
(3) MPSwage > MPSprofit (4) Both (2) and (3)
Ans: 2
31. In the classical theory of development, wage rate is determined by which among the following ?
(1) The King (2) Demand and Supply
(3) Availability of Surplus (4) Collective bargaining
Ans: 3
32. Match List – I & II by selecting the correct answer from the codes given below :
List – I (Trade cycle)
List – II (Profit)
a. Recession i. Negative
b. Boom ii. Positive
c. Recovery iii. Highest level
d. Depression iv. Low
Codes :
a b c d
(1) iii iv i ii
(2) i iii ii iv
(3) iv iii ii i
(4) i ii iii iv
Ans: 3
33. Match the following :
List – I List – II
a. Effective Demand i. Keynes’ model
b. Real Money Supply ii. M/P
c. Liquidity Trap iii. Lowest Interest Rate
d. Wage Flexibility iv. Classical Model
Select the correct answer from the codes given below :
Codes :
a b c d
(1) ii i iii iv
(2) i ii iii iv
(3) ii i iv iii
(4) iv iii ii i
Ans: 2
34. Which one of the following statements is correct ?
I. Both Ricardo and Marx visualise crisis in capitalism.
II. Technological development is ubiquitous in Ricardo’s theory of development.
Answer from the code below :
Codes :
(1) Only I is correct (2) Only II is correct
(3) Both I and II are correct (4) Neither I and II are correct
Ans: 1
35. According to Nurkse’s vicious circle of poverty in the context of an underdeveloped country, investment is limited by
(1) Size of the market (2) Policy of the Government
(3) Lack of Investment Opportunities (4) Lack of savings
Ans: 4
36. In Kaldor’s model which among the following is not the crucial variable to explain growth ?
(1) Rate of Profit
(2) Heterogeneity of Capital
(3) Lagged relationship among some explanatory variables
(4) Neutral technical progress
Ans: 4
37. The natural rate of unemployment is generally thought of as the
(1) ratio of frictional unemployment rate to cyclical unemployment rate
(2) sum of structural unemployment and cyclical unemployment
(3) sum of frictional unemployment and cyclical unemployment
(4) sum of frictional unemployment and structural unemployment
Ans: 4
38. Consider the following economists :
I. R. Rodan
II. H.W. Singer
III. A.O. Hirschman
Who among the above support the unbalanced growth approach to development ?
Select the correct answer from the codes below :
Codes :
(1) All the three above (2) Only I and III
(3) Only III (4) II and III
Ans: 4
39. Who among the following economists is not credited with the development of endogeneous growth theory ?
(1) N. Kaldor (2) Robert Lucas
(3) Paul Roamer (4) Sergio Rebelo
Ans: 1
40. Sustainable Development Goals (SDGs) adopted by U.N.O. consists of
(1) Eight Goals (2) Fifteen Goals
(3) Seventeen Goals (4) Unspecified number of Goals
Ans: 3
41. Which of the following is not true for Keynesian consumption function ?
(1) Average propensity to consume is equal to marginal propensity to consume.
(2) Average propensity to consume is greater than the marginal propensity to consume.
(3) Marginal propensity to consume is constant.
(4) Average propensity to consume declines as income increases.
Ans: 1
42. Which among the following growth/development models assume a dualistic economy ?
I. Uzawa Model II. Jorgenson Model
III. Lewis’s Model of Development IV. Swan Model
Select the answer from the code below :
Codes :
(1) III and IV (2) I, II and III
(3) II and IV (4) All the above
Ans: 2
43. Which among the following model/concept is developed to explain stagflation ?
(1) Phillips curve (2) Triangle model
(3) Cost push inflation (4) Inflationary gap
Ans: 2
44. Phelps golden rule of accumulation implies
(1) a steady level of consumption
(2) a maximum level of consumption
(3) a level of investment that allows rising consumption
(4) None of the above
Ans: 2
45. Suppose the production function is Q = f(L); this production function will reveal diminishing returns to Labour (L) in which of the following conditions ?
(1) f'(L) > 0, f"(L) > 0 (2) f'(L) > 0, f"(L) < 0
(3) f'(L) < 0, f"(L) < 0 (4) f’(L) < 0, f"(L) > 0
Ans: 2
46. Match List – I with List – II from the codes given below :
List – I List – II
a. Limit Pricing Theory i. E.H. Chamberlin
b. Selling costs ii. Robin Morris
c. Sales maximisation model iii. J.S. Bain
d. Growth maximising model
of the firm
iv. William J. Baumol
Choose from the code below :
Codes :
a b c d
(1) iii i iv ii
(2) ii iv i iii
(3) iii ii iv i
(4) iii ii i iv
Ans: 1
47. Which of the following statements about a firm which is a price taker is false ?
(1) The demand curve of the firm is horizontal.
(2) The market demand curve faced by the firm is horizontal.
(3) The firm sells its product at the going market price.
(4) The firm’s average revenue and marginal revenue curves are same.
Ans: 2
48. If after one tax is substituted by another tax and still the total tax revenue remains unchanged then such a tax incidence is called
(1) Money burden (2) Real incidence
(3) Differential tax incidence (4) Specific tax incidence
Ans: 3
49. Coefficient of determination of a regression model
(a) measures the proportion of total variations in the values of the dependent variable.
(b) it can never be negative.
(c) it explains the influence of the intercept on the dependent variable.
(d) it indicates the direction of inter-relation between the dependent and independent variables.
Select the correct answer from the codes given below :
Codes :
(1) (a), (b), (c) & (d) (2) (a) & (b)
(3) (b), (c) & (d) (4) (d) & (a)
Ans: 2
50. The assumption of transitive preferences implies that indifference curves must
(1) not cross one another (2) have positive slope
(3) be ‘L’ shaped (4) be convex to the origin
Ans: 1
I. The degree of income inequality will be higher, farther the Lorenz curve is from the line of equal distribution.
II. The limits of Lorenz ratio (L) are : – 1 < L < 1
III. The degree income inequality will be lower, closer the Lorenz curve is to the line of equal distribution.
Select the correct answer from the codes given below :
Codes :
(1) Only I (2) I and II
(3) I and III (4) Only II
Ans: 3
2. Match List – I with List – II and select the correct answer from the codes given below the lists :
List – I (Profit Theory)
List – II (Economist)
a. Innovation i. F.H. Knight
b. Rent of Ability ii. J.A. Schumpeter
c. Risk and Uncertainty iii. G.L.S. Shackle
d. Potential Surprise iv. F.A. Walker
Codes :
a b c d
(1) i ii iii iv
(2) ii iv i iii
(3) i iii ii iv
(4) iv i iii ii
Ans: 2
3. Consider the following statements in relation to current agrarian crisis in India :
I. Indebtedness of farmers has increased.
II. Lack of adequate marketing facilities and presence of middlemen distort the agricultural prices.
III. MNREGA Scheme
Select the correct answer from the codes given below :
Codes :
(1) I and II (2) II and III
(3) II only (4) I and III
Ans: 1
4. By which year, the Central Government has planned to double the income of the farmers ?
(1) 2019 (2) 2020
(3) 2022 (4) 2024
Ans: 3
5. As per 2013 estimates, which among the following States had the least Total Fertility Rate ?
(1) Uttar Pradesh (2) Madhya Pradesh
(3) Kerala (4) West Bengal
Ans: 4
6. In which of the following approaches/theory, the rate of growth of population growth is treated as exogenous ?
I. Classical theory of development
II. Low income equilibrium trap of Nelson
III. Domar growth model
Select the answer from the codes below :
Codes :
(1) All the three above (2) Only III
(3) Only I and II (4) Only I
Ans: 3
7. Gender discrimination index of UNDP is based on which among the following components ?
I. Reproductible health
II. Empowerment
III. Labour market conditions
Select the answer from the code below :
Codes :
(1) I and II (2) II and III
(3) I and III (4) All the three above
Ans: 4
8. The target inflation rate in the monetary policy by R.B.I. is based on
(1) Consumer Price Index Number (2) Whole Price Index Number
(3) Fisher’s Ideal Index Number (4) G.D.P. Deflator
Ans: 1
9. Match the following items given in List – I with those in List – II :
List – I List – II
a. Dummy variables i. Stationarity
b. Contingency Table ii. Qualitative Variables
c. Unit Root Test iii. Rank condition
d. Identification iv. χ2-Test
Codes :
a b c d
(1) iv iii i ii
(2) iii ii i iv
(3) i iii ii iv
(4) ii iv i iii
Ans: 4
10. Match List – I with List – II and select the correct answer using the codes given below the lists :
List – I (Policy Rate as of May, 2016)
List – II (%)
a. Repo rate i. 21.25
b. Reverse Repo rate ii. 7
c. Bank Rate iii. 6
d. S.L.R. iv. 6.5
Codes :
a b c d
(1) iii ii i iv
(2) iv iii ii i
(3) iv ii iii i
(4) ii iv i iii
Ans: 3
11. The % inflation rate based on All India WPI has been negative during 2015-16, while the inflation rate based on All India CPI has been moderately positive during the same period.
This divergence can be explained by which of the following ?
(1) The two index numbers have different base years.
(2) The two index numbers have different commodities and respective weights for them.
(3) The two index numbers are released by different government departments.
(4) All of the above
Ans: 2
12. Which among the following measures increase liquidity in the economic system ?
(1) Reduction in the Cash Reserve Ratio
(2) Increase in the Repo rate
(3) Increase in the statutory liquidity ratio maintained by the banks
(4) Increase in Reverse Repo rate
Ans: 1
13. Assertion (A) : According to the Accelerator Theory of Investment, when consumption or income increases investment would also increase.
Reason (R) : The theory assumes that there is excess capacity in the economy.
Select the correct answer from the codes given below :
Codes :
(1) Both (A) and (R) are true and (R) is the correct explanation of (A).
(2) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(3) (A) is true, but (R) is false.
(4) (A) is false, but (R) is true.
Ans: 3
14. According to Friedman, on which of the following does the velocity of circulation of money depend ?
(1) Market rate of interest on Bonds (2) Rate of change in general price level
(3) Ratio of savings to income (4) Ratio of savings to investment
Ans: 2
15. Assertion (A) : According to Baumol, the transaction demand for cash balances varies with respect to the square root of the volume of transactions.
Reason (R) : Transaction demand for money is a function of income.
Select the answer from the code below :
Codes :
(1) Both (A) and (R) are true and (R) is the correct explanation of (A).
(2) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(3) (A) is true, but (R) is false.
(4) (A) is false, but (R) is true.
Ans: 2
16. The slope of the IS curve depends upon
(1) the level of government expenditure
(2) the sensitivity of demand for real money balances to the interest rate
(3) the interest sensitivity of investment
(4) None of the above
Ans: 3
17. According to Keynes, the supply of money with respect to interest rate is
(1) perfectly elastic (2) perfectly inelastic
(3) unitary elastic (4) moderately elastic
Ans: 2
18. Which of the following correctly defines the effective revenue deficit as per budget of the Central Government ?
(1) Gross Fiscal Deficit – Revenue Receipts
(2) Gross Fiscal Deficit – Capital Receipts
(3) Gross Fiscal Deficit – Interest Payments
(4) Revenue Deficit – Grants for creation of Capital Assets
Ans: 4
19. An imposition of lump sum tax on a monopolist will affect the equilibrium condition in what manner ?
(1) It’s profit will decline and so also the equilibrium output.
(2) Both equilibrium output and price will decline.
(3) Only equilibrium price will decline.
(4) Only equilibrium profit will decline.
Ans: 4
20. If the revenue from income-tax increases from 100 crore to 109 crore and nominal GDP increases from 100 crore to 112 crore, the tax buoyancy of income tax is given by which of the following ?
(1) 1.33 (2) .75
(3) 3 (4) None of the above
Ans: 2
21. Public goods are characterised by which of the following characteristics ?
I. Collective consumption II. Non-exclusion
III. Divisibility IV. Rival consumption
Select the correct answer from the codes given below :
Codes :
(1) I and II are correct (2) I and III are correct
(3) I and IV are correct (4) II and IV are correct
Ans: 1
22. If taxes are levied according to Ability to pay theory, it leads to
(1) Regressive Taxes (2) Progressive Taxes
(3) Proportional Taxes (4) Indirect Taxes
Ans: 2
23. The whole incidence of a sales tax will be on the buyers when
(1) the demand for the commodity is perfectly elastic.
(2) the demand for the commodity is moderately elastic.
(3) the demand for the commodity is perfectly inelastic.
(4) both the demand and supply for the commodity are perfectly elastic.
Ans: 3
24. Who among the following is not associated with the ‘Dependency Theory’ of development ?
(1) Paul Baran (2) Samir Amin
(3) A.G. Frank (4) Gunnar Myrdal
Ans: 4
25. Match List – I with List – II and select the correct answer from the codes given below the lists :
List – I List – II
a. Balanced growth maximisation i. W.J. Baumol
b. Sales revenue maximisation ii. R.M. Cyert and J.G. March
c. Maximisation of managerial utility function iii. R. Marris
d. Satisfying rather maximising results iv. D.E. Williamson
Codes :
a b c d
(1) iii i iv ii
(2) iv i iii ii
(3) iv iii i ii
(4) ii iv iii i
Ans: 1
26. World Population Day is celebrated on 11th July because on this day in 1987 world’s population reached
(1) 4 billion people (2) 5 billion people
(3) 6 billion people (4) None of the above
Ans: 2
27. Which of the following is used by demographers as an indicator of the quality of a populations’ healthcare and standard of living ?
(1) Age specific death rate (2) Age specific birth rate
(3) Infant mortality rate (4) Crude death rate
Ans: 3
28. Match List – I with List – II and give the correct answer from the codes given below the lists :
List – I (Events)
List – II (Date)
a. Earth Day i. 3rd March
b. World Water Day ii. 22nd May
c. International Day for Biological Diversity iii. 22nd March
d. World Wild Life Day iv. 22nd April
Codes :
a b c d
(1) iv iii ii i
(2) i ii iii iv
(3) iii iv i ii
(4) iv i iii ii
Ans: 4
29. Clean Environment Cess is imposed on
(1) cutting of green trees (2) pollution of rivers
(3) production of coal (4) air pollution by factories
Ans: 3
30. Which among the following option is true for the savings behaviour according to classical economics ?
Symbols have their usual meaning.
(1) MPSwage = MPSprofit (2) MPSwage = 0 ; MPSprofit = 1
(3) MPSwage > MPSprofit (4) Both (2) and (3)
Ans: 2
31. In the classical theory of development, wage rate is determined by which among the following ?
(1) The King (2) Demand and Supply
(3) Availability of Surplus (4) Collective bargaining
Ans: 3
32. Match List – I & II by selecting the correct answer from the codes given below :
List – I (Trade cycle)
List – II (Profit)
a. Recession i. Negative
b. Boom ii. Positive
c. Recovery iii. Highest level
d. Depression iv. Low
Codes :
a b c d
(1) iii iv i ii
(2) i iii ii iv
(3) iv iii ii i
(4) i ii iii iv
Ans: 3
33. Match the following :
List – I List – II
a. Effective Demand i. Keynes’ model
b. Real Money Supply ii. M/P
c. Liquidity Trap iii. Lowest Interest Rate
d. Wage Flexibility iv. Classical Model
Select the correct answer from the codes given below :
Codes :
a b c d
(1) ii i iii iv
(2) i ii iii iv
(3) ii i iv iii
(4) iv iii ii i
Ans: 2
34. Which one of the following statements is correct ?
I. Both Ricardo and Marx visualise crisis in capitalism.
II. Technological development is ubiquitous in Ricardo’s theory of development.
Answer from the code below :
Codes :
(1) Only I is correct (2) Only II is correct
(3) Both I and II are correct (4) Neither I and II are correct
Ans: 1
35. According to Nurkse’s vicious circle of poverty in the context of an underdeveloped country, investment is limited by
(1) Size of the market (2) Policy of the Government
(3) Lack of Investment Opportunities (4) Lack of savings
Ans: 4
36. In Kaldor’s model which among the following is not the crucial variable to explain growth ?
(1) Rate of Profit
(2) Heterogeneity of Capital
(3) Lagged relationship among some explanatory variables
(4) Neutral technical progress
Ans: 4
37. The natural rate of unemployment is generally thought of as the
(1) ratio of frictional unemployment rate to cyclical unemployment rate
(2) sum of structural unemployment and cyclical unemployment
(3) sum of frictional unemployment and cyclical unemployment
(4) sum of frictional unemployment and structural unemployment
Ans: 4
38. Consider the following economists :
I. R. Rodan
II. H.W. Singer
III. A.O. Hirschman
Who among the above support the unbalanced growth approach to development ?
Select the correct answer from the codes below :
Codes :
(1) All the three above (2) Only I and III
(3) Only III (4) II and III
Ans: 4
39. Who among the following economists is not credited with the development of endogeneous growth theory ?
(1) N. Kaldor (2) Robert Lucas
(3) Paul Roamer (4) Sergio Rebelo
Ans: 1
40. Sustainable Development Goals (SDGs) adopted by U.N.O. consists of
(1) Eight Goals (2) Fifteen Goals
(3) Seventeen Goals (4) Unspecified number of Goals
Ans: 3
41. Which of the following is not true for Keynesian consumption function ?
(1) Average propensity to consume is equal to marginal propensity to consume.
(2) Average propensity to consume is greater than the marginal propensity to consume.
(3) Marginal propensity to consume is constant.
(4) Average propensity to consume declines as income increases.
Ans: 1
42. Which among the following growth/development models assume a dualistic economy ?
I. Uzawa Model II. Jorgenson Model
III. Lewis’s Model of Development IV. Swan Model
Select the answer from the code below :
Codes :
(1) III and IV (2) I, II and III
(3) II and IV (4) All the above
Ans: 2
43. Which among the following model/concept is developed to explain stagflation ?
(1) Phillips curve (2) Triangle model
(3) Cost push inflation (4) Inflationary gap
Ans: 2
44. Phelps golden rule of accumulation implies
(1) a steady level of consumption
(2) a maximum level of consumption
(3) a level of investment that allows rising consumption
(4) None of the above
Ans: 2
45. Suppose the production function is Q = f(L); this production function will reveal diminishing returns to Labour (L) in which of the following conditions ?
(1) f'(L) > 0, f"(L) > 0 (2) f'(L) > 0, f"(L) < 0
(3) f'(L) < 0, f"(L) < 0 (4) f’(L) < 0, f"(L) > 0
Ans: 2
46. Match List – I with List – II from the codes given below :
List – I List – II
a. Limit Pricing Theory i. E.H. Chamberlin
b. Selling costs ii. Robin Morris
c. Sales maximisation model iii. J.S. Bain
d. Growth maximising model
of the firm
iv. William J. Baumol
Choose from the code below :
Codes :
a b c d
(1) iii i iv ii
(2) ii iv i iii
(3) iii ii iv i
(4) iii ii i iv
Ans: 1
47. Which of the following statements about a firm which is a price taker is false ?
(1) The demand curve of the firm is horizontal.
(2) The market demand curve faced by the firm is horizontal.
(3) The firm sells its product at the going market price.
(4) The firm’s average revenue and marginal revenue curves are same.
Ans: 2
48. If after one tax is substituted by another tax and still the total tax revenue remains unchanged then such a tax incidence is called
(1) Money burden (2) Real incidence
(3) Differential tax incidence (4) Specific tax incidence
Ans: 3
49. Coefficient of determination of a regression model
(a) measures the proportion of total variations in the values of the dependent variable.
(b) it can never be negative.
(c) it explains the influence of the intercept on the dependent variable.
(d) it indicates the direction of inter-relation between the dependent and independent variables.
Select the correct answer from the codes given below :
Codes :
(1) (a), (b), (c) & (d) (2) (a) & (b)
(3) (b), (c) & (d) (4) (d) & (a)
Ans: 2
50. The assumption of transitive preferences implies that indifference curves must
(1) not cross one another (2) have positive slope
(3) be ‘L’ shaped (4) be convex to the origin
Ans: 1
51. With capital labour ratio remaining constant, if the marginal rate of technical substitution declines, the Hicks technical progress is said to be
(1) Labour saving (2) Labour using
(3) Neutral (4) Both (1) and (2)
Ans: 1
52. The monopolist has no supply curve because
(1) there is a single seller in the market.
(2) the relationship between price and quantity depends on both marginal cost and average cost.
(3) the monopolist’s marginal cost curve changes considerably over time.
(4) the quantity supplied at any particular price depends on the monopolist’s demand curve.
Ans: 4
53. If the Consumer Price Index Number for April 2015 was 120 and in April 2016, the same increased to 126, then the percentage rate of inflation will be
(1) 5 (2) 6
(3) 12.6 (4) 10.5
Ans: 1
54. Assertion (A) : Many developing countries contend that labour standards constitute a barrier to free trade.
Reason (R) : Their competitive advantage in the global economy is cheap labour.
Select the correct answer from the codes given below :
Codes :
(1) Both (A) and (R) are true but (R) is not the correct explanation of (A).
(2) Both (A) and (R) are true and (R) is the correct explanation of (A).
(3) (A) is false, but (R) is true.
(4) (A) is true, but (R) is false.
Ans: 1
55. Which of the following is/are included in Agreement on Agriculture of the WTO ?
I. Domestic support
II. Market access
III. Export subsidies
Select the correct answer using the codes below :
Codes :
(1) Only II (2) I and III
(3) II and III (4) All of the above
Ans: 4
56. According to the purchasing power parity theory of exchange rate determination, the currency of country X would appreciate against that of country Y if :
(1) the inflation rate in country Y is less than that in country X
(2) the country X gets more foreign direct investment than country Y
(3) the inflation rate in country X is less than that in country Y
(4) the rate of growth of Gross Domestic Product in country X is greater than that in country Y
Ans: 3
57. Consider the following statements :
I. India-Japan Comprehensive Economic Partnership Agreement (CEPA) is the India’s third CEPA after Singapore and Korea.
II. India-Japan Comprehensive Economic Partnership Agreement (CEPA) is the India’s first with a developed country.
Which of the statement(s) given above is/are correct ?
Select the correct answer from the codes given below :
Codes :
(1) Only I (2) Only II
(3) Both I and II (4) Neither I nor II
Ans: 3
58. Who among the following is credited with first drawing attention to trade creation and trade diversion effects ?
(1) Bella Ballsa (2) Jacob Viner
(3) Paul Samuelson (4) G. Heberler
Ans: 2
59. International trade is based on the idea that
(1) Exports exceed imports
(2) Imports exceed exports
(3) Resources are more easily mobile internationally than goods
(4) Resources are less mobile internationally than the goods
Ans: 4
60. Which among the following statements are true for the New Trade Theory (NTT) to explain the basis of trade among nations ?
I. This theory explains the trade among ‘similar nations’.
II. This theory exploits the occurrence of increasing returns in production.
III. Paul Krugman is associated with this theory.
Choose the answer from the code below :
Codes :
(1) All the three (2) Only I and II
(3) Only II and III (4) Only III
Ans: 1
61. Which of the following statements regarding Standup India programme are correct ?
I. It is for SC and ST entrepreneurs
II. Investment limit is between 1 and 10 crores
III. It will cover minorities
IV. It will promote entrepreneurship among women
Answer from the code below :
Codes :
(1) I and IV (2) I and II
(3) II, III and IV (4) All the above
Ans: 1
62. Consider the following actions that the Government can take :
I. Devaluation of the currency
II. Increase export subsidy
III. Encouraging FDI
Of the above statements, which can help reduce the current account deficit ?
Select the correct answer from the codes given below :
Codes :
(1) I and II (2) II and III
(3) III only (4) All the three
Ans: 1
63. In the context of simultaneous equations econometric models, consider the following statements :
I. Identification problem is to be dealt with before estimation.
II. Two stage least squares method gives consistent estimators if equation is overidentified.
III. Under indirect least squares method, least squares method is applied to the reduced form equations.
IV. Order condition is both necessary as well as sufficient condition of identification.
Use the following codes to answer the question :
Codes :
(1) I and II are correct, but III and IV are incorrect.
(2) I, II and II are correct but IV is incorrect.
(3) I, II, III and IV are correct.
(4) I, II and IV are correct, but III is incorrect.
Ans: 2
64. Assertion (A) : There is an inter-locking of product and factor markets in Indian agriculture.
Reason (R) : India’s agricultural economy has become market oriented.
Select correct answer from the codes given below :
Codes :
(1) Both (A) and (R) are true and (R) is the correct explanation of (A).
(2) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(3) (A) is true, but (R) is false.
(4) (A) is false, but (R) is true.
Ans: 2
65. Which one of the following denotes the size of an operational holding in Indian Agriculture ?
(1) Own Land
(2) Own land + leased – in – land
(3) Own land + leased – in – leased – out land
(4) Own land – leased – out land
Ans: 3
66. In an open economy input-output model if (I – A) is technology matrix, the viability condition to be satisfied is
(1) |I – A| < 0
(2) |I – A| > 0
(3) |I – A| = 0
(4) All principal minors of the matrix (I – A) must be positive
Ans: 4
67. Which one of following pairs is not correctly matched ?
(1) Durbin’s h Test – Autocorrelation in autoregressive models
(2) Dicky-Fuller Test – Heteroscedasticity
(3) F-Test – Overall significance of regression
(4) Distributed Lag Model – Koyck Approach
Ans: 2
(1) Labour saving (2) Labour using
(3) Neutral (4) Both (1) and (2)
Ans: 1
52. The monopolist has no supply curve because
(1) there is a single seller in the market.
(2) the relationship between price and quantity depends on both marginal cost and average cost.
(3) the monopolist’s marginal cost curve changes considerably over time.
(4) the quantity supplied at any particular price depends on the monopolist’s demand curve.
Ans: 4
53. If the Consumer Price Index Number for April 2015 was 120 and in April 2016, the same increased to 126, then the percentage rate of inflation will be
(1) 5 (2) 6
(3) 12.6 (4) 10.5
Ans: 1
54. Assertion (A) : Many developing countries contend that labour standards constitute a barrier to free trade.
Reason (R) : Their competitive advantage in the global economy is cheap labour.
Select the correct answer from the codes given below :
Codes :
(1) Both (A) and (R) are true but (R) is not the correct explanation of (A).
(2) Both (A) and (R) are true and (R) is the correct explanation of (A).
(3) (A) is false, but (R) is true.
(4) (A) is true, but (R) is false.
Ans: 1
55. Which of the following is/are included in Agreement on Agriculture of the WTO ?
I. Domestic support
II. Market access
III. Export subsidies
Select the correct answer using the codes below :
Codes :
(1) Only II (2) I and III
(3) II and III (4) All of the above
Ans: 4
56. According to the purchasing power parity theory of exchange rate determination, the currency of country X would appreciate against that of country Y if :
(1) the inflation rate in country Y is less than that in country X
(2) the country X gets more foreign direct investment than country Y
(3) the inflation rate in country X is less than that in country Y
(4) the rate of growth of Gross Domestic Product in country X is greater than that in country Y
Ans: 3
57. Consider the following statements :
I. India-Japan Comprehensive Economic Partnership Agreement (CEPA) is the India’s third CEPA after Singapore and Korea.
II. India-Japan Comprehensive Economic Partnership Agreement (CEPA) is the India’s first with a developed country.
Which of the statement(s) given above is/are correct ?
Select the correct answer from the codes given below :
Codes :
(1) Only I (2) Only II
(3) Both I and II (4) Neither I nor II
Ans: 3
58. Who among the following is credited with first drawing attention to trade creation and trade diversion effects ?
(1) Bella Ballsa (2) Jacob Viner
(3) Paul Samuelson (4) G. Heberler
Ans: 2
59. International trade is based on the idea that
(1) Exports exceed imports
(2) Imports exceed exports
(3) Resources are more easily mobile internationally than goods
(4) Resources are less mobile internationally than the goods
Ans: 4
60. Which among the following statements are true for the New Trade Theory (NTT) to explain the basis of trade among nations ?
I. This theory explains the trade among ‘similar nations’.
II. This theory exploits the occurrence of increasing returns in production.
III. Paul Krugman is associated with this theory.
Choose the answer from the code below :
Codes :
(1) All the three (2) Only I and II
(3) Only II and III (4) Only III
Ans: 1
61. Which of the following statements regarding Standup India programme are correct ?
I. It is for SC and ST entrepreneurs
II. Investment limit is between 1 and 10 crores
III. It will cover minorities
IV. It will promote entrepreneurship among women
Answer from the code below :
Codes :
(1) I and IV (2) I and II
(3) II, III and IV (4) All the above
Ans: 1
62. Consider the following actions that the Government can take :
I. Devaluation of the currency
II. Increase export subsidy
III. Encouraging FDI
Of the above statements, which can help reduce the current account deficit ?
Select the correct answer from the codes given below :
Codes :
(1) I and II (2) II and III
(3) III only (4) All the three
Ans: 1
63. In the context of simultaneous equations econometric models, consider the following statements :
I. Identification problem is to be dealt with before estimation.
II. Two stage least squares method gives consistent estimators if equation is overidentified.
III. Under indirect least squares method, least squares method is applied to the reduced form equations.
IV. Order condition is both necessary as well as sufficient condition of identification.
Use the following codes to answer the question :
Codes :
(1) I and II are correct, but III and IV are incorrect.
(2) I, II and II are correct but IV is incorrect.
(3) I, II, III and IV are correct.
(4) I, II and IV are correct, but III is incorrect.
Ans: 2
64. Assertion (A) : There is an inter-locking of product and factor markets in Indian agriculture.
Reason (R) : India’s agricultural economy has become market oriented.
Select correct answer from the codes given below :
Codes :
(1) Both (A) and (R) are true and (R) is the correct explanation of (A).
(2) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(3) (A) is true, but (R) is false.
(4) (A) is false, but (R) is true.
Ans: 2
65. Which one of the following denotes the size of an operational holding in Indian Agriculture ?
(1) Own Land
(2) Own land + leased – in – land
(3) Own land + leased – in – leased – out land
(4) Own land – leased – out land
Ans: 3
66. In an open economy input-output model if (I – A) is technology matrix, the viability condition to be satisfied is
(1) |I – A| < 0
(2) |I – A| > 0
(3) |I – A| = 0
(4) All principal minors of the matrix (I – A) must be positive
Ans: 4
67. Which one of following pairs is not correctly matched ?
(1) Durbin’s h Test – Autocorrelation in autoregressive models
(2) Dicky-Fuller Test – Heteroscedasticity
(3) F-Test – Overall significance of regression
(4) Distributed Lag Model – Koyck Approach
Ans: 2
68. Match the items given in List – I with those in List – II :
List – I List – II
a. Swarm-likeclusters 1. Brundtland Report
b. Organic composition of capital 2. Ragner Nurkse
c. Sustainable Development 3. Schumpeter
d. Vicious circle of poverty 4. Karl Marx
Codes :
a b c d
(A) 4 2 3 1
(B) 3 4 1 2
(C) 1 3 2 4
(D) 2 1 4 3
Ans: B
69. The cost incurred by the firm in hiring labour is called as
(A) Explicit Cost
(B) Implicit Cost
(C) Marginal Cost
(D) Total Cost
Ans: A
70. The locus of Pareto Optimality in Production and Consumption is given by
(A) The Social Welfare Function
(B) The Utility Possibility Curve
(C) The Transformation Curve
(D) The Grand Utility Possibility Curve
Ans: B
71. List – I List – II
a. Tea and Coffee 1. Veblen goods
b. Car and Petrol 2. Substitutes
c. Gold and Diamonds 3. Giffen goods
d. Ragi and Bajra 4. Complementary
Codes :
a b c d
(A) 2 1 3 4
(B) 2 4 1 3
(C) 4 1 2 3
(D) 4 3 1 2
Ans: B
72. Assertion (A) : In the short run under perfect competition, given the market demand and market supply the industry is in equilibrium at that price which clears the market.
Reason (R) : In the long run all the firms in the industry earn profit.
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.
Ans: C
73. Put the following in chronological order on the basis of development :
i. Law of Demand
ii. Revealed Preference Analysis
iii. Indifference Curve Analysis
iv. Law of Diminishing Marginal Utility
(A) i iii ii iv
(B) i iv iii ii
(C) i ii iv iii
(D) i iii iv ii
Ans: B
74. If the monopolist incurs loss in the short run, then in the long run
a. he will go out of business
b. he will stay in business
c. he will break even
d. any of the above is possible
(A) a and b (B) a and c
(C) a only (D) d only
Ans: D
75. The condition of Pareto Optimality holds correct under
(A) Perfect Competition
(B) Monopolistic Competition
(C) Oligopoly
(D) Monopoly
Ans: A
76. Assertion (A) : Compared to the individual supply curve, the aggregate supply curve is more elastic.
Reason (R) : There is the possibility of moving between being out of the labour force and being in the labour force.
Choose amongst the following the correct answer.
Codes :
(A) (A) is correct, but (R) is not the correct explanation of (A).
(B) (A) is correct and (R) is the correct explanation of (A).
(C) (A) is correct, but (R) is incorrect.
(D) (A) is incorrect, but (R) is correct.
Ans: B
77. Assuming life cycle hypothesis, let a person starts working when he is 20 years old, works until the age of 60 and expects to die at the age of 70. If this person earns, say ` 1.50 lac annually when he is 20-30 years, ` 2 lac annually when he is 30-45 years, and ` 3 lac annually when he is 40-60 years, then his life time average propensity to consume is
(A) 0.60
(B) 0.70
(C) 0.80
(D) 0.90
Ans: C
78. With reference to demand for money, match List – I with List – II :
List – I List – II
a. Demand for money is stable 1. J.M. Keynes
b. Liquidity Preference as behaviour towards risk 2. W. Baumol
c. Inventory Theoretic Approach 3. James Tobin
d. No portfolio diversification 4. Milton Friedman
Codes :
a b c d
(A) 4 3 1 2
(B) 3 4 1 2
(C) 2 1 3 4
(D) 4 3 2 1
Ans: D
79. The negative relationship between the gap between actual GDP and its trend value and the difference between actual unemployment rate and its equilibrium value is called
(A) The Aggregate Supply Curve
(B) The Phillips Curve
(C) The Natural Rate of Unemployment Hypothesis
(D) Okun’s Law
Ans: D
80. It is often true that as the economy begins to recover from a recession, the unemployment rate rises because
(A) as the economy initially recovers from a recession the demand for goods and services falls, so the demand for workers falls.
(B) as the economy begins to recover from a recession, workers who were previously discouraged about their chances of finding a job begin
to look for work again.
(C) as the economy begins to recover from a recession because of the errors in the way the data are collected.
(D) as the economy initially recovers from a recession, firms do not immediately increase the number of workers they hire. Firms wait to hire more individuals until they are convinced that the recovery is strong.
Ans: B
81. When additional government expenditure is financed by selling government securities, then what will be the nature of crowding out effect, given in List – I in the context of the situation given in List – II ?
List – I Crowding out effect
List – II Situation
a. Full 1. Keynesian Range
b. Partial 2. Classical Range
c. Nil 3. Intermediate Range
Codes :
a b c
(A) 2 3 1
(B) 3 1 2
(C) 1 3 2
(D) 1 2 3
Ans: A
82. Match items given in List – I with those in List – II :
List – I List – II
a. Equation of Exchange 1. J.M. Keynes
b. Cash Balances Approach 2. Irving Fisher
c. Regressive Expectation model of Demand for Money 3. W.J. Baumol
d. Square Root Formula of Demand for Money 4. A.C. Pigou and Alfred Marshall
Codes :
a b c d
(A) 2 4 1 3
(B) 3 2 4 1
(C) 4 3 1 2
(D) 1 3 2 4
Ans: A
83. The premise, that benefit of economic growth will reach all sections of population is called
(A) Trickle up effect
(B) Trickle down effect
(C) Take-off effect
(D) Backlash effect
Ans: B
84. In whose growth model, entrepreneur’s significance is pivotal ?
(A) Keynes
(B) Schumpeter
(C) Harrod
(D) Domar
Ans: B
85. The classical model of economic development emphasises
(A) Laissez-Faire Policy
(B) Capital Accumulation
(C) Both (A) and (B)
(D) None of these
Ans: C
86. Which one of the following pairs is not correctly matched ?
Author -Book
(A) Simon Kuznets -Asian Drama
(B) J. Robinson -Essays in the Theory of Economic Growth
(C) Karl Marx- Das Kapital
(D) A.W. Lewis -Theory of Economic Growth
Ans: A
87. What does change in economic growth ?
(A) Structure of economy
(B) Mindsets of people
(C) National Income
(D) None of these
Ans: C
List – I List – II
a. Swarm-likeclusters 1. Brundtland Report
b. Organic composition of capital 2. Ragner Nurkse
c. Sustainable Development 3. Schumpeter
d. Vicious circle of poverty 4. Karl Marx
Codes :
a b c d
(A) 4 2 3 1
(B) 3 4 1 2
(C) 1 3 2 4
(D) 2 1 4 3
Ans: B
69. The cost incurred by the firm in hiring labour is called as
(A) Explicit Cost
(B) Implicit Cost
(C) Marginal Cost
(D) Total Cost
Ans: A
70. The locus of Pareto Optimality in Production and Consumption is given by
(A) The Social Welfare Function
(B) The Utility Possibility Curve
(C) The Transformation Curve
(D) The Grand Utility Possibility Curve
Ans: B
71. List – I List – II
a. Tea and Coffee 1. Veblen goods
b. Car and Petrol 2. Substitutes
c. Gold and Diamonds 3. Giffen goods
d. Ragi and Bajra 4. Complementary
Codes :
a b c d
(A) 2 1 3 4
(B) 2 4 1 3
(C) 4 1 2 3
(D) 4 3 1 2
Ans: B
72. Assertion (A) : In the short run under perfect competition, given the market demand and market supply the industry is in equilibrium at that price which clears the market.
Reason (R) : In the long run all the firms in the industry earn profit.
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.
Ans: C
73. Put the following in chronological order on the basis of development :
i. Law of Demand
ii. Revealed Preference Analysis
iii. Indifference Curve Analysis
iv. Law of Diminishing Marginal Utility
(A) i iii ii iv
(B) i iv iii ii
(C) i ii iv iii
(D) i iii iv ii
Ans: B
74. If the monopolist incurs loss in the short run, then in the long run
a. he will go out of business
b. he will stay in business
c. he will break even
d. any of the above is possible
(A) a and b (B) a and c
(C) a only (D) d only
Ans: D
75. The condition of Pareto Optimality holds correct under
(A) Perfect Competition
(B) Monopolistic Competition
(C) Oligopoly
(D) Monopoly
Ans: A
76. Assertion (A) : Compared to the individual supply curve, the aggregate supply curve is more elastic.
Reason (R) : There is the possibility of moving between being out of the labour force and being in the labour force.
Choose amongst the following the correct answer.
Codes :
(A) (A) is correct, but (R) is not the correct explanation of (A).
(B) (A) is correct and (R) is the correct explanation of (A).
(C) (A) is correct, but (R) is incorrect.
(D) (A) is incorrect, but (R) is correct.
Ans: B
77. Assuming life cycle hypothesis, let a person starts working when he is 20 years old, works until the age of 60 and expects to die at the age of 70. If this person earns, say ` 1.50 lac annually when he is 20-30 years, ` 2 lac annually when he is 30-45 years, and ` 3 lac annually when he is 40-60 years, then his life time average propensity to consume is
(A) 0.60
(B) 0.70
(C) 0.80
(D) 0.90
Ans: C
78. With reference to demand for money, match List – I with List – II :
List – I List – II
a. Demand for money is stable 1. J.M. Keynes
b. Liquidity Preference as behaviour towards risk 2. W. Baumol
c. Inventory Theoretic Approach 3. James Tobin
d. No portfolio diversification 4. Milton Friedman
Codes :
a b c d
(A) 4 3 1 2
(B) 3 4 1 2
(C) 2 1 3 4
(D) 4 3 2 1
Ans: D
79. The negative relationship between the gap between actual GDP and its trend value and the difference between actual unemployment rate and its equilibrium value is called
(A) The Aggregate Supply Curve
(B) The Phillips Curve
(C) The Natural Rate of Unemployment Hypothesis
(D) Okun’s Law
Ans: D
80. It is often true that as the economy begins to recover from a recession, the unemployment rate rises because
(A) as the economy initially recovers from a recession the demand for goods and services falls, so the demand for workers falls.
(B) as the economy begins to recover from a recession, workers who were previously discouraged about their chances of finding a job begin
to look for work again.
(C) as the economy begins to recover from a recession because of the errors in the way the data are collected.
(D) as the economy initially recovers from a recession, firms do not immediately increase the number of workers they hire. Firms wait to hire more individuals until they are convinced that the recovery is strong.
Ans: B
81. When additional government expenditure is financed by selling government securities, then what will be the nature of crowding out effect, given in List – I in the context of the situation given in List – II ?
List – I Crowding out effect
List – II Situation
a. Full 1. Keynesian Range
b. Partial 2. Classical Range
c. Nil 3. Intermediate Range
Codes :
a b c
(A) 2 3 1
(B) 3 1 2
(C) 1 3 2
(D) 1 2 3
Ans: A
82. Match items given in List – I with those in List – II :
List – I List – II
a. Equation of Exchange 1. J.M. Keynes
b. Cash Balances Approach 2. Irving Fisher
c. Regressive Expectation model of Demand for Money 3. W.J. Baumol
d. Square Root Formula of Demand for Money 4. A.C. Pigou and Alfred Marshall
Codes :
a b c d
(A) 2 4 1 3
(B) 3 2 4 1
(C) 4 3 1 2
(D) 1 3 2 4
Ans: A
83. The premise, that benefit of economic growth will reach all sections of population is called
(A) Trickle up effect
(B) Trickle down effect
(C) Take-off effect
(D) Backlash effect
Ans: B
84. In whose growth model, entrepreneur’s significance is pivotal ?
(A) Keynes
(B) Schumpeter
(C) Harrod
(D) Domar
Ans: B
85. The classical model of economic development emphasises
(A) Laissez-Faire Policy
(B) Capital Accumulation
(C) Both (A) and (B)
(D) None of these
Ans: C
86. Which one of the following pairs is not correctly matched ?
Author -Book
(A) Simon Kuznets -Asian Drama
(B) J. Robinson -Essays in the Theory of Economic Growth
(C) Karl Marx- Das Kapital
(D) A.W. Lewis -Theory of Economic Growth
Ans: A
87. What does change in economic growth ?
(A) Structure of economy
(B) Mindsets of people
(C) National Income
(D) None of these
Ans: C
88. Which States/U.Ts. have been placed at first three places in Gender Development Index List 2006 made by the Government of India ?
(A) Kerala, Chandigarh, Goa
(B) Kerala, Goa, Chandigarh
(C) Chandigarh, Goa, Kerala
(D) Goa, Kerala, Chandigarh
Ans: A
89. Assertion (A) : There is no incentive for a profit maximizing producer to supply the public goods.
Reason (R) : If he produces it he is unable to exclude people from consuming it and hence he cannot charge a price.
Codes :
(A) (A) is true, but (R) is false.
(B) Both (A) and (R) are false.
(C) (A) is not correct, but (R) is correct
(D) Both (A) and (R) are correct and (R) is the correct explanation of (A).
Ans: D
90. The distribution of the burden of paying a tax is called
(A) Sharing of tax burden
(B) Shifting of the tax
(C) Incidence of a tax
(D) Tax capitalization
Ans: B
91. Which one of the following is short period debt meant to meet current needs, that is filling temporary gap in budgets ?
(A) Funded debt
(B) Unfunded debt
(C) Redeemable debt
(D) Irredeemable debt
Ans: B
92. Monetised deficit means
(A) Fiscal deficit less interest payments
(B) Government expenditure which is financed through the sale of adhoc treasury bills.
(C) Increase in RBI credit to Central Government.
(D) Fiscal deficit less loans and advances.
Ans: C
93. A proportionate increase in tax revenue to a proportionate increase in the tax base is called
(A) Elasticity of a tax
(B) Buoyancy of a tax
(C) Neutrality of a tax
(D) None of the above
Ans: B
94.‘Vent for surplus approach’ is applicable to
(A) Rich countries
(B) Underdeveloped countries
(C) Oil exporting countries
(D) None of the above
Ans: B
95. According to monetary approach, a revaluation of a nation’s currency
(A) increases the nation’s demand for money.
(B) increases the nation’s supply of money
(C) reduces the nation’s demand for money
(D) reduces the nation’s supply of money
Ans: C
96. The Bretton Woods System was based on
(A) a gold standard
(B) a flexible exchange rate system
(C) a gold exchange standard
(D) none of the above
Ans: C
97. The imposition of an import tariff by a large nation
(A) usually improves the nation’s terms of trade and increases the volume of trade.
(B) worsens the nation’s terms of trade but increases the volume of trade
(C) worsens the nation’s terms of trade and reduces the volume of trade.
(D) usually improves the nation’s terms of trade but reduces the volume of trade.
Ans: D
98. The value of foreign trade multiplier will be high under the condition when
(A) marginal propensity to save is high
(B) marginal propensity to import is high
(C) there is increase in exports
(D) marginal propensity to consume domestic goods is high
Ans: C
99. Match the weight of different industry groups between List-I & List-II :
List – I List – II
a. Basic goods industries 1. 45.7
b. Capital goods industries 2. 8.8
c. Intermediate goods industries 3. 15.7
d. Consumer goods industries 4. 29.8
Codes :
a b c d
(A) 1 2 3 4
(B) 2 4 3 1
(C) 3 2 1 4
(D) 1 3 4 2
Ans: A
100. Plant load factor of thermal power stations in India in recent years has been around
(A) 50 percent
(B) 60 percent
(C) 70 percent
(D) 80 percent
Ans: C
(A) Kerala, Chandigarh, Goa
(B) Kerala, Goa, Chandigarh
(C) Chandigarh, Goa, Kerala
(D) Goa, Kerala, Chandigarh
Ans: A
89. Assertion (A) : There is no incentive for a profit maximizing producer to supply the public goods.
Reason (R) : If he produces it he is unable to exclude people from consuming it and hence he cannot charge a price.
Codes :
(A) (A) is true, but (R) is false.
(B) Both (A) and (R) are false.
(C) (A) is not correct, but (R) is correct
(D) Both (A) and (R) are correct and (R) is the correct explanation of (A).
Ans: D
90. The distribution of the burden of paying a tax is called
(A) Sharing of tax burden
(B) Shifting of the tax
(C) Incidence of a tax
(D) Tax capitalization
Ans: B
91. Which one of the following is short period debt meant to meet current needs, that is filling temporary gap in budgets ?
(A) Funded debt
(B) Unfunded debt
(C) Redeemable debt
(D) Irredeemable debt
Ans: B
92. Monetised deficit means
(A) Fiscal deficit less interest payments
(B) Government expenditure which is financed through the sale of adhoc treasury bills.
(C) Increase in RBI credit to Central Government.
(D) Fiscal deficit less loans and advances.
Ans: C
93. A proportionate increase in tax revenue to a proportionate increase in the tax base is called
(A) Elasticity of a tax
(B) Buoyancy of a tax
(C) Neutrality of a tax
(D) None of the above
Ans: B
94.‘Vent for surplus approach’ is applicable to
(A) Rich countries
(B) Underdeveloped countries
(C) Oil exporting countries
(D) None of the above
Ans: B
95. According to monetary approach, a revaluation of a nation’s currency
(A) increases the nation’s demand for money.
(B) increases the nation’s supply of money
(C) reduces the nation’s demand for money
(D) reduces the nation’s supply of money
Ans: C
96. The Bretton Woods System was based on
(A) a gold standard
(B) a flexible exchange rate system
(C) a gold exchange standard
(D) none of the above
Ans: C
97. The imposition of an import tariff by a large nation
(A) usually improves the nation’s terms of trade and increases the volume of trade.
(B) worsens the nation’s terms of trade but increases the volume of trade
(C) worsens the nation’s terms of trade and reduces the volume of trade.
(D) usually improves the nation’s terms of trade but reduces the volume of trade.
Ans: D
98. The value of foreign trade multiplier will be high under the condition when
(A) marginal propensity to save is high
(B) marginal propensity to import is high
(C) there is increase in exports
(D) marginal propensity to consume domestic goods is high
Ans: C
99. Match the weight of different industry groups between List-I & List-II :
List – I List – II
a. Basic goods industries 1. 45.7
b. Capital goods industries 2. 8.8
c. Intermediate goods industries 3. 15.7
d. Consumer goods industries 4. 29.8
Codes :
a b c d
(A) 1 2 3 4
(B) 2 4 3 1
(C) 3 2 1 4
(D) 1 3 4 2
Ans: A
100. Plant load factor of thermal power stations in India in recent years has been around
(A) 50 percent
(B) 60 percent
(C) 70 percent
(D) 80 percent
Ans: C