Economics-2003

1. In the market for oranges, a rise in income

with other things remaining unchanged,

will lead to

a. an upward movement along the

demand curve

b. an upward movement along the supply

curve

c. an upward shift of the demand curve

d. a downward shift of the demand curve

2. In a market, if ‘A’ learns of ‘B’s’ demand

for a goods, he may be induced to demand

more of it, since everybody else is

demanding the good. The effect of this

kind of ‘keeping up with he Joneses’

psychology on individual demand is called

as

a. Social snobbery effect

b. Bandwagon effect

c. substitution effect

d. Domino effect

3. The additively of utility in the Marshallian

analysis is based on the assumptions of

a. rationality and diminishing marginal

utility

b. cardinality and independence of utility

c. constancy of marginal utility of money

and divisibility

d. consistency and transitivity

4. The price of two goods X and Y are : PX =

Rs. 6 and PY these two commodities is at a

point on the budget constraint where

MRSXY (marginal rate of substitution of X

for Y) is 3 : 1, then

a. the total utility of the consumer is

being maximized at this point

b. the total utility of the consumer will

increase if he reallocates his

expenditure leading to an increase in

the amount of X and a reduction in the

amount of Y.

c. the total utility of the consumer will

increase if he reduce his expenditure

on both the commodities

d. the total utility of the consumer will

increase if he reallocates his

expenditure leading to an increase in

the amount of Y and a reduction in the

amount of X

5. Hicks substitution effect for a fall in the

price of a commodity, other this remaining

constant, is given by,

a. a movement up a given indifference

curve

b. a movement down a given indifference

curve movement form a lower to a

higher indifference curve

c. a movement from a lower to a higher

indifference curve

d. a movement from a higher to a lower

indifference curve

6. In the case of an inferior good

a. substitution and income effect are

positive

b. positive substitution effect is equal to

the negative income effect

c. substitution effect is positive and

income effect is negative

d. substitution and income effect are

negative

7. Which one of the following is not an

assumption of the theory of revealed

preference developed by P.A. Samuelson?

a. there is transitivity in consumer’s

preferences

b. thee is consistency of choice in

consumer’s behaviour

c. Consumer always behaves rationally to

maximise his satisfaction from a given

income.

d. Consumer prefers a combination of

more goods to less in a situation.

8.Consider tow straight line demand curve

NM an RS in the given figure. Select the

correct statement from amongst the

following.

a. Price elasticity of demand will be

equal to 1 at point A and less than 1 at

point B

b. Price elasticity of demand will be

greater than 1 at point a and equal to 1

at point B

c. Price elasticity of demand will be less

than 1 at point A

d. Price elasticity of demand will be

greater than 1 at point B.

9. The production function X = L3/5 K1/2 is

homogeneous of degree.

a. greater than 1

b. 1

c. less than 1

d. zero

10. If there is a perfect substitution between

two factors of production, the shape of

isoquant is

a. non-linear

b. linear

c. right-angled

d. positively sloped

11. In a two-input situation (K and L), if one

of the inputs, say L is available free of cost

to a produce, then the factor price curve or

the producer’s budget curve is

a. horizontal

b. exponential

c. rectangular hyperbolic

d. L-shaped

12. Consider the following statements:

If all the factors of production are paid

according to their respective marginal

products, the total product would be

1. exhausted under constant returns to

scale.

2. more than exhausted under increasing

returns to scale

3. less than exhausted under decreasing

returns to scale .

Which of these statement s is/are correct?

a. 1 only

b. and 2

c. 2 and 3

d. 1, 2 and 3

13. In the perfect competition, the downward

sloping part of the marginal value

productivity curve of a factor shows

a. demand curve for the factor

b. wages of the factor

c. level of employment of the factor

d. supply of the factor.

14. Consider the following statements:

1. the increasing returns to scale imply

that the marginal product of a variable

factor will always increase.

2. The constant returns to scale imply that

the marginal product of a variable

factor will always diminish.

3. Managerial diseconomies constitute an

important cause of decreasing returns

to scale.

Which of this statement is/are correct?

a. 1, 2 and 3

b. 1 and 3

c. 2 only

d. 2 and 3

15. To produce a given level of output, a firm

maximizes profits when the marginal rate

of technical substitution is equal to the

ratio of factor prices. This principle is

know as

a. Diminishing marginal productivity

b. increasing marginal productivity

c. Equi-marginal productivity

d. Law of diminishing returns


16. Which of the following statements is not

correct?

a. the short-run supply curve of the firm

is that portion of its marginal cost

curve which lies above its average

variable cost curve.

b. The short-run supply curve of the firm

is that portion of its marginal cost

curve which lies above its average cost

curve.

c. The short-run supply curve of the

industry cannot be downward sloping

d. the short-run supply curve of the

industry can shift upward or

downward.

17. Ridge line refers to the locus of points of

a. Isoquants where marginal product of

one of the factors is zero

b. isoquants where marginal product of

two factors is zero

c. Isoquants where marginal product of

two factors is infinity.

d. Isquants where marginal product of

two factors is one

18. If for a particular combination of labour

and capital, the marginal productivity of

capital is 4 units of outpu8t and the

marginal rate of technical substitution is 2

units of capital per unit of labour, then the

marginal productivity if labour will be

a. ½

b. 4

c. 6

d. 8

19. In which one of the following market

situations, are the firms mutually

interdependent in pricing output decisions?

a. Perfect competition

b. Monopolistic competition

c. Monopsony

d. Obligopoly

20. A queue of a large number of farmers

before a single cold storage in the area is a

case of

a. Monopoly

b. Obligopoly

c. Monopsony

d. Monopolistic competition.

21. In price discrimination under

discriminating monopoly given that the

elasticity of demand in market I is 5 and in

market II is 2. 5 measured in absolute

terms, how is the price in the two markets

related to each other?

a. Price in the market I is 2/3 of the price

in market II

b. Price in the market I is ¾ of the price

in market II

c. Price in the market I is ½ of the price

in market II

d. Price in the market I sis equal to the

price in market II

22. Which one of the following is not correct

about a perfectly competitive market?

a. In the long run, the firm always earn

only normal profit

b. The firm could incur losses in the short

run

c. The individual fir is a price taker

d. The demand curve being faced by a

firm is unit elastic

23. Fair-return-pricing in public utilities

implies

a. discriminatory pricing

b. cost-plus pricing

c. average cost pricing

d. optimal output pricing

24. Quasi-rent is

a. equal to the total profits of the firm

b. less than the total profits of the firm

c. the excess of total revenue over total

variable cost

d. the excess of total revenue over total

cost

25. The time-preference theory of interest is

mainly associated with.

a. J. M. Keynes]

b. I. fisher

c. K. Wicksell

d. M. Friedman

26. Over a period of time, an existing series of

index numbers tends to become obsolete

and it fails to include new commodities

gaining importance at a later date or to

exclude the commodities losing

significance in course of time. These

problems can be overcome by

a. Fisher’s ideal index

b. Fixed base index

c. Chain index numbers

d. Both fisher’s ideal index and fixed

base index

27. The GNP of an economy at market prices

is Rs. 10000 Ne factor income from

abroad is Rs. 1000, indirect taxes Rs. 800,

subsidies Rs. 500 and depreciation Rs.

1000. What is the GDP at market prices.

a. Rs. 9000

b. Rs. 7700

c. Rs. 11000

d. Rs. 13300

28.In respect of the diagram given above,

consider the following statements:

1. Saving (S) is autonomous

2. Investment (I) is autonomous.

3. Saving is determined by income (Y).

4. Investment (I) is not autonomous.

Which of these statements are correct?

a. 2 and 3

b. 3 and 4

c. 1 and 4

d. 1 and 2

29. Assume cosumpti9on function of an

economy to be = Rs. 30 crore + 0.8 Y.

Investment is Rs. 40 crore. The, the

equilibrium level of income is

a. Rs. 700 crore

b. Rs. 350

c. Rs. 560 crore

d. Rs. 140 crore

30. In monopolistic competition, why is

optimum capacity not reached even though

there are not abnormal profits in the

industry at equilibrium?

a. Because the demand curve of the

monopolistic firm touches the long run

average cost curve at its minimum

point.

b. Because the demand curve of the

monopolistic firm touched the long run

average cost curve when it is still

falling

c. Because the demand curve of the

monopolistic firm touches the long run

average cost curve at its rising portion

d. Because the demand of the

monopolistic firm touches the long run

average cost curve at its maximum

point
31. the norms of behaviour which satisfy the
requirements of social rationality of
economic activity are established by
a. Positive economics
b. Normative economics
c. Business economics
d. Mathematical economics
32. N2, money supply measure in India,
constitutes
a. M1+all post-office deposits
b. M1+ time deposits of commercial
banks
c. M1+ post-office saving deposits
d. M3+ all post-office deposits
33. Suppose a labourer works for lesser
number of hours when he receives a higher
wage rate. It implies that
a. as the wage rate rises, each labour hour
becomes less playing and the labourer
substitutes work for leisure.
b. income effect and substitution effect
operate in the same direction.
c. income effect and substitution effect
operate in opposite directions and
substitution effect dominates the
income effect.
d. income effect and substitution effect
operate in opposite directions and
income effect dominates the
substitution effect.
34. Perfectly competitive industries could be
earning only normal profits in the long run
stationary state and pure profits could be
zero, because.
a. marginal revenue equals marginal cost
b. price equals marginal cost
c. marginal cost equals average cost
d. average revenue equal marginal
revenue, marginal cost and average
cost.
35. Product exhaustion theorem provides the
solution to producer’s long run problem of
allocation of total product to each factor.
The theorem holds good when.
a. there are externalities
b. linear homogeneous production
function prevails
c. factors are competitive
d. factors of production are perfectly
indivisible
36. Canon of equity in taxation is generally
considered to be satisfied by
a. Proportional taxation
b. Progressive taxation
c. Regressive taxation
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d. Lump sum tax
37. Match List I withy List II and select the
correct answer:
List I
A. Capital consumption allowances
B. Subsidies
C. Personal taxes
D. Personal savings
List II
1. Are included in estimating national
Income at factor cost
2. Are excluded while calculating
disposable income
3. Are excluded in calculating personal
outlays
4. Are excluded in estimating Net
National Product.
Codes:
A B C D
a. 3 1 2 4
b. 4 1 2 3
c. 3 2 1 4
d. 4 2 1 3
38. In Pareto optimality analysis, convexity of
all indifference curves and concavity of
the transformation curves refer to
a. marginal conditions
b. second order conditions
c. total conditions
d. average conditions
39. Stagflation refers to
a. high inflation in periods of high
unemployment
b. deflation in periods of stagnant
employment
c. deflation in periods of high
unemployment
d. high inflation in periods of full
employment
40. The various compensation which led to the
so-called New Welfare Economics,
presented a universally valid criterion for
increase in welfare but the attempts failed,
mainly because
a. they wee based on a very broad ethical
positive view
b. they were not successful in offering a
value-free welfare criterion.
c. they did not come equipped with a kit
and a set of instructions for collecting
welfare judgments
d. they were based on the unrealistic
assumption of measuring utility
cardinally
41. If a nation’s terms of trade are 2, its trade
partner’s terms of trade will be
a. 4
b. 2
c. 1
d. 1/2
42. In Heckscher-Ohlin theory of international
trade, the most important source of
difference in relative commodity prices
between nations is a difference in
a. factor endowments’
b. technology
c. tastes
d. demand conditions
43. Match List I withy List II and select the
correct answer:
List I (Concepts)
A. Critical minimum effort
B. Unlimited supply of labour
C. Theory of balanced growth
D. Warranted growth rate
List II (Economists)
1. Rosenstein-Rodan
2. harrod-Domar
3. W.A. Lewis
4. H. Leibenstein
Codes:
A B C D
a. 1 2 4 3
b. 4 3 1 2
c. 1 3 4 2
d. 4 2 1 3
44. Panchayat Raj institutions are intended to
strengthen
a. indicative planning
b. multi-level planning
c. structural planning
d. functional planning
45. The process of economic development
refers to
a. growth of national income over time
b. growth of per capita income and
standards of living
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c. full employment of the entire
population
d. growth of national income with
structural changes in the economy

46. Prof. a. C. Pigou believed that the
divergence between private and social
costs and benefits can be reduced
a. automatically in a free enterprise
economy
b. by the market mechanism that comes
to play
c. by appropriate assignment of property
rights
d. by State interference
47. Consider the following statements:
1. Consider the following statements:
2. At the time of rising prices, NNP at
current prices is higher than NNP at
constant prices.
3. NNP at current prices and NNP at
constant prices are always same
irrespective of changes in prices.
4. NNP at current prices is equal to NNP
at constant prices at the time of stable
prices.
Which of these statements are correct?
a. 1 and 2
b. 1 and 3
c. 2 and 3
d. 2 and 4
48. Assume that between 1985 and 1995, GNP
increased from Rs. 1000 crore to Rs. 1500
crore and the index of prices increased
from 100 to 200. Which one of the
following expresses GNP for 1995 in
terms of 1985 prices?
a. Rs. 1000 crore
b. Rs. 750 crore
c. 1500 crore
d. Rs. 500 crore
49. Which one of the following statements
relating to transfer payments, capital gains
and illegal activities is correct?
a. Market transactions such as transfer
payments, capital gains are included
and illegal activities are omitted in
national product
b. market transactions such as transfer
payments, capital gains and illegal
activities are omitted in national
product
c. Market transactions such as transfer
payments are included but capital gains
and illegal activities are omitted in
national product.
d. all the three market transactions should
be included in national product.
50. To which one of the following, does the
liquidity trap correspond?
a. Consumption function
b. Production function
c. Money demand function
d. Labour demand function
51. Which of the following does not form a
part of the foreign exchange reserves of
India?
a. Gold
b. SDRs
c. Foreign currency assets
d. Foreign currency and securities held by
the banks and corporate bodies
52. Consider the following statement :
To be effective, an international monetary
system must be able to provide
1. a system of exchange rate between
national currencies
2. an adjustment mechanism capable of
removing payment imbalances
3. a quantum of international reserves to
finance payment deficits
4. a set of financial aid facilities to help
resolve the problems of indebtedness
of the developing countries
Which of these statements are correct?
a. 1, 2, 3, and 4
b. 1, 3 and 4
c. 3 and 4
d. 1 and 2
53. Which on of the following is a possible
compromise between the fixed and the
flexible exchange rate systems?
a. Adjustable peg system
b. Crawling peg system
c. Managed floating system
d. All the above three
54. the major purpose of price index is to
measure change in the
a. standard of living
b. god content of money
c. buying power of money
d. capacity to produce
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55. Which one of the following pairs is not
correctly matched in the Indian context?
a. Cash reserve Ratio : Monetary Policy
b. Non-performing Assets: Profitability
of commercial banks
c. Market- determined rate of interest :
Post Office deposits
d. Administered rate of interest : Public
Provident Fund
56. The speculative demand for money,
according to Keynes, is a function of
a. Rate of interest
b. Level of income
c. Level of savings
d. Level of output
57. Match List I with List II and select the
correct answer:
List I (Institution)
A. IMF
B. UNCTAD
C. World Bank
D. WTO
List II (main Objective)
1. To promote viable and durable
multilateral trading system
2. To promote harmony between
developed and developing countries on
trade-related developmental issues
3. To promote socio-economic
development of the member-countries
4. To reduce the degree of balance of
payments disequilibrium of the
member-countries
Codes:
A B C D
a. 4 3 2 1
b. 1 2 3 4
c. 4 2 3 1
d. 1 3 2 4
58. The value added tax differs from a
turnover tax in that the VAT.
a. has costs of materials deduced from
the tax base
b. is collected at the final stage of
production is of lower rate than the
turnover tax
c. All the above three are true
59. The policy of surplus-budgeting may be
resorted to when economy is confronted
with
a. inflation and is experiencing economic
boom
b. deflation and unemployment
c. recession and underemployment
d. depression and low investment
60. Which one of the following pairs is not
correctly matched?
a. Frictional: Movement of people along
jobs unemployment
b. Structural unemployment : Mismatch
between the characteristics of demand
for labour and the characteristics of its
supply
c. Cyclical unemployment: The amount
of frictional and structural
unemployment that exists when
national income is at its potential level
d. Induced unemployment: Increasing
complexity and interaction of the tax,
welfare and regulatory policies of the
government
61. Consider the following statements:
Under the Gold Standard System, god
represented
1. common unit value
2. international means of payment
3. a store of value
Which of these statements are correct?
a. 1 and 2
b. 1 and 3
c. 2 and 3
d. 1, 2 and 3
62. Match List I with List II and select the
correct answer:
List I
A. Forward exchange
B. Hedging
C. Arbitrage
D. Specie points
List II
1. A device of covering exchange risk
against the price rise of foreign
currency.
2. A contract to buy and sell foreign
exchange against another currency at
some fixed rate in the future at a price
agreed upon now
3. the movement of exchange rate
between two limits set by the cost of
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moving gold from one country to
another
4. a mechanism which makes two
markets that are physically separate,
into a single
Codes:
A B C D
a. 4 3 2 1
b. 2 1 4 3
c. 4 1 2 3
d. 2 3 4 1
63. Anticipation of an increase in the rat of
inflation will
a. cause the short run Phillips curve to
shift upward to the right
b. cause an increase in the real rate of
interest
c. reduce the normal rate of
unemployment in the long run
d. cause the rate of inflation to slow
down, other things remaining constant
64. consider the following statements:
1. An increase in marginal propensity to
import increases the value of the
multipliers.
2. An increase in autonomous tax
revenues, ceteris paribus, brings a
downward shift in the aggregate
spending schedule.
3. A increase in autonomous net exports,
ceteris peribus, shifts the aggregate
spending schedule upwards.
Which of these statements are correct?
a. 1, 2 and 3
b. 1 and 2
c. 1 and 3
d. 2 and 3
65. From a monetarist point of view, which
one of the following statements about
inflation is not correct?
a. Inflation is a direct outgrowth of the
attempts of greedy business
entrepreneurs and unscrupulous unions
to raise their prices and wages
b. Inflation is a monetary phenomenon in
all economies
c. If an experience of inflation caused an
increases in the expected rate of
inflation, those expectations of more
inflations would tend to be selffulfilling
d. although union may protect the high
prices of union-made goods, only
macro-policy markers and normally
responsible for perpetuating inflation.
66. Fisher’s quantity theory of money has
mainly been criticised because
a. it does not tell us as to how the
changes in the quantity of money
influence the price level
b. it overemphasizes the demand for
money by assuming supply of money
as being constant
c. it analyses short term variations in the
value of money
d. it emphasizes too much on the price
level
67. Gresham’s law explains that
a. two grams of silver is equal to half
gram gold for conversion.
b. good money chases bad money out
c. velocity of circulation of money
fluctuates rapidly
d. bad money drives good money out of
circulation
68. Which of the following instruments for
quantitative control of credit are used by
reserve Bank of India
1. Cash requirement ratio
2. Statutory liquidity ratio
3. Open market operations
4. margin requirements
Select the correct answer using the codes
given below:
a. 1 and 2
b. 2 and 4
c. 1, 2 and 3
d. 3 and 4
69. Which one of the following is the correct
measurement of fiscal deficit in India?
a. excess of revenue expenditure over
revenue receipts
b. Difference between revenue receipts
plus non-debt capital receipts and the
total expenditure.
c. Total expenditure of the Government
less interest payments.
d. Difference between revenue receipts
and capital expenditure
70. The arithmetic mean of marks scored by
girls in a classis 70 while that of the boys
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is 60. If the arithmetic mean of marks
scored by students is 63, then the
percentage of girls in the class of girls in
the class
a. is less than that of the boys
b. is equal to that of the boys
c. is more than that of the boys
d. cannot be computed because of
insufficient data
71. consider the following indicators:
1. High birth rate and low death rate
2. Low birth rate and low death rate
3. High birth rate and high death rate
The correct sequence of these in the course
of economic development is
a. 3, 2, 1
b. 1, 3, 2
c. 2, 3, 1
d. 3, 1, 2
72. A rolling plan refers to a plan which
a. does not change its targets every year
b. changes its allocations every year
c. changes its allocations and targets
every year
d. changes only its targets every year
73. If the price index of shares declines by
10% on Tuesday but rises by 10% on
Wednesday, then the index on Wednesday
in relation to the index on Monday will be
a. lower
b. same
c. higher
d. dependent on the level of index on
Monday
74. Which one of the following is a non-debt
flow of capital between different
countries?
a. Commercial borrowings
b. Portfolio investment
c. short-term borrowings from IMF
d. Sale and purchase of bonds in the
capital markets
75. Consider the following statements:
1. reallocation of labour and capital
among different sectors of the
economy.
2. growth of exports and capital inflows
to the economy
3. improvement in the quality of labour.
Which of these statements are correct?
a. 1, 2 and 3
b. 1 and 3
c. 2 and 3
d. 1 and 2

76. Which one of the following is not a
component UNDP’s Human Development
Index?
a. Per capita GDP
b. Life expectancy at birth
c. Combind primary, secondary and
tertiary gross enrolment ratio
d. Percentage of babies born with low
birth weight
77. Arithmetic mean of earning of 42 workers
in a factory is Rs. 1200 per month. On
account of price rise, the workers managed
to get 10% hike in their earnings. In
addition to this, the management paid Rs.
100 per month to each employee as bonus.
The arithmetic means of total earning of
the workers after this change will be.
a. Rs. 1300
b. Rs. 1320
c. Rs. 1420
d. Rs. 1510.
78. if the Karl Pearson coefficient of
correlation between x and y is 0.3, then the
coefficient of correlation between – x and
2 y is.
a. -0.6
b. -0.3
c. 0.3
d. 0.5
79. Which one of the following is not a
function of the National Development
Council?
a. Review of the progress of the five-year
plans
b. Examination of the important socioeconmic
policies
c. Decision on budgetary allocation
among the States
d. Improvement of the efficiency of
administrative services required for
plan implementation
80.
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In respect of the production possibility
curve under increasing opportunity costs
given above, consider the following
statements:
1. The production possibility curve is not
identical with price curve as in the case
of constant costs.
2. There would be complete
specialization of a country in a single
commodity in a two-commodities and
two countries model.
Which of these statements is/ are correct?
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2
81. Gains in trade results from
a. exporting as much as possible and
receiving gold
b. reallocation of existing goods between
the two countries
c. the fact that exchange brings both
specialization and reallocation of
greater output and the increased
welfare in each country.
d. one country receiving both imports and
gold
82. The diagram shows the demand and
supply DD and SS, curves respectively, for
fertilisers in India.
Opi = price of fertilisers in India, before
trade
OwP = price of fertilisers in world market.
Consider the following statements:
Under free trade
1. prices of fertilizers will be lowered
compared to world prices.
2. consumption of fertilizers will
increase.
3. import of fertilizers will be zero.
Which of these statements are correct?
Which of these statements are correct?
a. 1 and 2
b. 1 and 3
c. 2 and 3
d. 1, 2 and 3
83. A high birth rate of population along with
a declining death rate in a thickly
populated country like India leads to
a. balanced population growth in the long
run
b. an increase in the economically active
population
c. rapid economic development
d. an increase in the dependency load
84. Indian economy has experienced different
annual average growth rates of NNP at
constant price (1993-94 taken as price
level 100). The correct sequence of Fifth,
sixth, Seventh and Eighth plans in
descending order of these annual growth
rates is
a. Fifth-Sixth-Seventh-Eighth
b. Eighth-Seventh-Fifth-Fifth
c. Eighth-Sixth-Fifth-Seventh
d. Seventh-Eighth-Fifth-Sixth
85. Which one of the following is not a feature
of India’s economic planning?
a. Imperative planning
b. Limited centralization
c. Democratic socialism
d. Indicative planning
86. Decentralised planning on the basis of
Panchayati Raj Institutions was
recommended by
a. Balwant Raj Mehta committee
b. Mahalanobis Committee
c. Ashok Mehta Committee
d. Gadgil committee
87. Consider the following programmes:
1. IRDP
2. TRYSEM
3. MWS
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4. DWCRA
Which of these programmes are included
in ‘Swarna Jayanti Gram Swarojgar
Yojna’?
a. 1 and 2
b. 1, 2 and 4
c. 3 and 4
d. 1, 2 3 and 4
88.
The above graph shows different effects of
tariffs in partial equilibrium. Which one of
the following indicates the revenue effect
of tariff equal to PP’ per unit?
a. Area represented by ‘a’
b. Area represented by ‘b’
c. Area represented by ‘c’
d. Area represented by ‘d’
89. Which of the following statements is not
correct in respect of the balance of
payments of a country?
a. The current account of balance of
payments consists of export and import
of goods and capital accounts consists
of export and import of service
borrowings and leadings.
b. The surplus on current account in the
balance of payments must be equal to
the deficit on capital account and vice
versa
c. if in the actual balance of payments,
the credit and debit do not balance, the
balance is usually achieved by adding
one item errors and omissions”
The balance of payments of a country must
always balance in the accounting sense
90. Table : Balance of Payments of India
(Million US$)
Year Exports Imports
1999-2000 37,542 55,383
2000-01 44,9894 59,264
2001-02 21,558 27,812
(April – Sept.)
Based on the above table, the deficit in the
balance of trade in India, during the period
1999-2000 to 2001-02 sh
91. The flexible exchange rate has a number of
advantages. Which one of the following is
not to be considered as such an advantage?
a. The exchange rate moves in a free
market to equate demand and supply
so that the market does not face the
problem of scarcity or surplus of
foreign currency.
b. It permits a continued existence of free
trade and convertible currencies
c. it permits a country to follow
independent monetary and fiscal
policies
d. There is not need for keeping official
foreign exchange reserves
92. Which one of the following pairs is not
correctly matched?
a. Exchange depreciation: Market
mechanism
b. Devaluation : Policy action of the
Government
c. Deflation: Cheap money policy
d. Exchange control : foreign exchange
rationing
93. The arithmetic mean of series ‘A’ is twice
that of series ‘B’ and the standard
deviation of series ‘B’ is twice that of
series ‘A’. The coefficient of variation of
series ‘A’ in relation to that of series ‘B’
will be
1. ¼
2. ½
3. same
4. twice
94. In India, the main source of national
income is
a. primary sector
b. secondary sector
c. tertiary sector
d. foreign sector
95. Which of the following has not shown a
faster rate increase in the country during
the last five years?
a. Rate of growth of the economy
b. Rate of inflation
12 of 14
c. budgetary deficit
d. Volume of money supply
96. During the Ninth Five-year Plan, which
one of the following sectors registered the
highest growth rate in India?
a. Agriculture and allied sectors
b. manufacturing
c. Construction
d. Services
97. Consider the following States:
1. Kerala
2. Mizoram
3. Goa
4. Maharashtra
The correct sequence of these Stats in the
descending order of literacy rate as per the
figures of Census 2001 is
a. 1, 2, 3, 4
b. 3, 2, 4, 1
c. 1, 3, 4, 2
d. 3, 4, 1, 2
98. Which one of the following not an element
of Industrial Policy of India since 1991?
a. Removal of entry barriers
b. Reservation of areas reserved
exclusively for the public sector.
c. Public sector monopoly for power
development
d. Liberalization of foreign investment
policy
99. Rate of interest s begin reduced in India
a. to reduce the burden of public debt
b. to create easy credit facilities
c. to align the interest rate structure with
world interest rate
d. to accomplish all the above three.
100. Match List I with List and select the
correct answer:
List I
(Year)
a. 1947
b. 1957
c. 1964
d. 1970
List II
(Event)
1. Bretton Woods Agreement
2. Creation of SDRs by IMF
3. Signing of GATT
4. Establishment of EEC
5. Establishment of UNCTAD
Codes:
A B C D
a. 5 1 3 4
b. 3 4 5 2
c. 5 4 3 2
d. 3 1 5 4
101. Which one of the following statements is
not correct is respect of subsidies?
a. Subsidies are similar to indirect taxes
is that they open a gap between the
cost of production and distribution and
the price paid by the subsidized buyer
b. subsidies disturb the pattern of
consumption
c. The indirect cost of subsidies is much
greater than the direct cost of
budgetary subsidies
d. subsidies are anti-inflationary
102. Match List I with List and select the
correct answer:
List I
a. Keynes
b. Modigliani
c. Hicks
d. Pigou
List II
1. Money illusion
2. IS-curve
3. Life cycle hypothesis
4. Liquidity trap
Codes:
A B C D
a. 4 1 2 3
b. 2 3 4 1
c. 4 3 2 1
d. 2 1 4 3
103. Which one of the following pairs is not
correct matched?
a. Gross barter terms of trade: Trussing
b. Purchasing power parity theory : J.S.
Mill
c. Offer curve: A. Marshall
d. Factor-endowment model: Heckscher-
Ohlin
104. Which one of the following taxes yielded
lowest revenue to the Central Government
during the financial year 2001-02?
13 of 14
a. Personal income tax
b. Corporation tax
c. Customs
d. Union excise duty
105. Which one of the following Finance
commission s has recommended 29.5%
share from the total central tax revenue to
the states?
a. VIII
b. IX
c. X
d. XI

106. Assertions (A): Long run equilibrium of
the industry in a perfectly competitive
market occurs at the point where price
equals minimum long run average cost.
Reason (R): It this position of zero
economic profit, there is not tendency on
the part of an existing firm to stage an exit,
and no potential entrant wants to enter the
industry.
a. Both A and R are individually true and
R is the correct explanation of A
b. Both A and R are individually 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


107. Assertion (A): If the government
expenditure and taxation are increased by
an equal amount, the equilibrium income
of the economy will remain the same,
ceteris peribus.
Reason (R):a given change in the
government expenditure affects aggregate
spending more than an equal amount of
tax.
a. Both A and R are individually true and
R is the correct explanation of A
b. Both A and R are individually 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
108. Assertion (A): In India, monetary policy
along cannot eliminate inflation.
Reason (R): There are structural factors
which make price rigid in the downward
direction but flexible in the upward
direction.
a. Both A and R are individually true and
R is the correct explanation of A
b. Both A and R are individually 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
109. Assertion (A): Variance is always greater
than the standard deviation.
Reason (A) Variance is the square of the
standard deviation.
a. Both A and R are individually true and
R is the correct explanation of A
b. Both A and R are individually 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
110. Assertion (A): Devaluation leads to
expenditure switching.
Reason (R): Devaluation a make imports
relatively costlier than domestic goods.
a. Both A and R are individually true and
R is the correct explanation of A
b. Both A and R are individually 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
111. Assertion (A): Indirect taxes are generally
regressive in character.
Reason (R): They are imposed uniformly
on all taxpayers irrespective of their
incomes.
a. Both A and R are individually true and
R is the correct explanation of A
b. Both A and R are individually 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
112. Assertion (A): There does not seem to be
any clear cut evidence that growth rates of
income or income per capita are positively
correlated with the resources used through
planning in a mixed economy.
Reason (R): Planning models are
inconsistent unless they use linear
programming techniques.
a. Both A and R are individually true and
R is the correct explanation of A
b. Both A and R are individually 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
14 of 14
113. Assertion (A): This is mostly due to the
market failures in the less developed
countries caused by a variety of
imperfections existing in such economies.
Reason (A): This is mostly due to the
market failures in the less developed
countries caused by a variety of
imperfections existing in such economies.
a. Both A and R are individually true and
R is the correct explanation of A
b. Both A and R are individually 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
114. Assertion (A): There has been a large
accretion to the foreign exchange reserves
of India since 1991 – 92.
Reason (R): Except for 1995-96, the
capital account in the balance of payments
of India has shown surplus in relation to
the corresponding current account deficit
in each of the last 10 years.
a. Both A and R are individually true and
R is the correct explanation of A
b. Both A and R are individually 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
115. Assertion (A): Special Drawing Rights
(SDRs) have the characteristics of an
international currency.
Reason (R): SDRs wee introduced to
increase international liquidity.
a. Both A and R are individually true and
R is the correct explanation of A
b. Both A and R are individually 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
116. Assertion (A): The gains from trade are
determined by the terms of trade.
Reason (R): The gains from trade depend
on the difference in comparative cost
ratios.
a. Both A and R are individually true and
R is the correct explanation of A
b. Both A and R are individually 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
117. Assertion (A): India’s external debts
situation has improved significantly in
recent years.
Reason (R): there has been effective
external debt management by the
Government.
a. Both A and R are individually true and
R is the correct explanation of A
b. Both A and R are individually 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
118. Assertion (A): Revenue deficit of the
Central Government has been increasing
with the passage of time
Reason (R): Increasing interest payments
are the most important cause of increasing
revenue deficit.
a. Both A and R are individually true and
R is the correct explanation of A
b. Both A and R are individually 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
119. Assertion (A): Annual rate of inflation in
terms of wholesale Price Index (WPI)
increased from 3.3% in 1999-2000 to 7.1%
in 2000-01.
Reason (R): There was substantial rise in
administered prices of petroleum products.
a. Both A and R are individually true and
R is the correct explanation of A
b. Both A and R are individually 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
120. Assertion (A) There was negative growth
rate of agriculture in 2000-01
Reason (R): this was primarily due to a
decline in the production of coarse cereals
and livestock.
a. Both A and R are individually true and
R is the correct explanation of A
b. Both A and R are individually 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