Economics-2004

1. Which one of the following statements
about the National Agricultural Insurance
Scheme (NAIS) is not correct?
a. it was introduced from Rabi 2000-2001
season
b. it replaced the Comprehensive Crop
Insurance Scheme (CCIS) which was
in operation since 1985.
c. it envisages coverae4 of all the food
crops, oilseeds and annual commercial
horticultural crops in respect of which
past yield data is available for adequate
number of years
d. Among the commercial horticultural
crops, eleven crops are currently
covered under the scheme.
2. Given the total investment expenditure, an
increase in the propensity to save will lead
to a
a. fall in the rate of interest
b. Fall in income
c. rise in interest rate
d. Rise in income
3. Which one of the following statements is
not correct?
a. Transaction demand for money is a
function of income
b. Speculative demand for money is a
function of the rate of interest.
c. Speculative demand for money is a
function of income
d. Transaction demand for money is not a
function of the rate of interest.
4. Tied loans are generally objected to on
which of the following grounds?
a. They have adverse effects on the
balance of payments of a country.
b. The make the currency of the
borrowing country overvalued
c. They depart from the welfaremaximising
principle which calls for
borrowing in the cheapest market for
capital and buying in the cheapest for
goods
d. They are at higher rates of interest and,
therefore, involve higher d3btservicing
charge.
5. Tobin’s q-theory of investment indicates
that firms add to their stock of capital
when.
a. the replacement value of their assets
exceeds the market value of their
financial assets.
b. the market value of their financial
assets exceeds the replacement value
of their real assets.
c. The market value of their real assets
exceeds the book value of their
financial assets.
d. the market value of their financial
assets exceeds the book value of their
real assets.
6. Match List I (Type of market/Competition)
with List II (Products) and select the
correct answer using the codes given
below the Lists.
List I
A. Perfect competition
B. Monopolistic competition
C. Oligopoly market
D. Monopoly market
List II
1. Homogeneous product
2. Unique (with no substitutes) product
3. Homogeneouor differentiated product
4. Differentiated product
Codes:
A B C D
a. 3 4 1 2
b. 1 2 3 4
c. 3 2 1 4
d. 1 4 3 2
7. Rostow distinguishes five different stages
of economic growth, which are:
1. pre-condition for take-off
2. Drive to maturity
3. Stage of high mass consumption
C.S.E. Pre-2004
ECONOMIC
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4. Traditional society
5. Take-off
Which one of the following is the correct
sequence of these stages?
a. 1- 2- 3- 4- 5
b. 2- 1- 3- 4- 5
c. 4- 1- 2- 3- 5
d. 4- 1- 5- 2- 3
8. Which one of the following Public sector
Undertaking is not included in the nine
units- “Navratnas” recognized by the
Government of India?
9. The Phillips curve deals with relationship
between which of the following?
a. Wages and price level
b. Price level and unemployment
c. Unemplo7yment and inflation
d. Wages and deflation.
Select the correct answer using the codes
given below:
1. 1, 2 and 3
2. 2 and 3
3. 3 only
4. 4 only
10. Consider the following statements: The
credit items in the balance of payments
account are:
1. merchandise imports
2. Merchandise exports
3. Investment income
4. payment for services rendered by
foreigners.
Which of the statements given above are
correct?
a. 1 and 2 a
b. 2 and 3
c. 3 and 4
d. 1, 2 and 3
11. A firm in monopolistic competition differs
from a perfectly competitive firm in that
the former
a. is relatively smaller in size
b. produces differentiated goods as
compared to his competitors.
c. has relatively more freedom to enter
and exit
d. spends less on advertisement
12. To which one of the following phenomena
does the statement- “that a circular
constellation of forces tends to act and
‘react upon one another in such a ways
that a poor country remains poor” relate?
a. Stagnation
b. vicious circle of poverty
c. Self-perpetuating growth
d. virtuous circle of development
13. The Rupees was made convertible on the
current account of the balance of payments
in
a. July, 1991
b. april, 1992
c. August, 1994
d. April, 1995
14. Consider the following theories of interest:
1. Liquidity Preference Theory
2. Loan able Funds theory
3. classical Theory
4. LM-IS Theory
The correct chronological order of the
above theories is
a. 1- 4 -3- 2
b. 3- 2- 1- 4
c. 1- 2- 3 -4
d. 3- 4- 1- 2
15. Fiscal deficit in the budget means
a. Revenue deficit plus the net
borrowings of the government
b. Primary deficit minus capital deficit
c. Budgetary deficit plus the net
borrowing of the government
d. Capital deficit plus the revenue deficit

16. Which one of the following methods is
being adopted by the Reserve Band of
India to neutralize the impact of increasing
foreign exchange reserves on inflation in
India?
a. Contracting the supply of money
through sale of securities.
b. Purchasing foreign exchange from the
authorize dealers and sterilizing the
impact of increase in M3 through the
sale of securities.
c. Importing larger quantities of goods
and services
d. Depositing foreign exchange with the
IMF


17. The figure shown above is associated with
which of the following?
1. Competitive Equilibrium
2. Monopoly Equilibrium
3. Monopolistic Competition Equilibrium
4. Monopolistic Competition Equilibrium
Select the correct answer from the codes
given below:
a. 1 and 2
b. 2, 3 and 4
c. 1 only
d. 3 and 4
18. Which one of the following gives the
correct relationships between marginal
revenue (MR), price elasticity (e), and
price (P)
a. MR =
1
P
e -
b. MR e 1
P e
-
= =
c. P e 1
MR e
-
=
d. MR = P 1
e
-
19. The Government of India reduced the peak
rate of customs duty in the financial year
2002-2003
a. 30%
b. 25%
c. 20%
d. 15%
20. Match List I with List II and select the
correct answer using the codes given
below the Lists:
List I
A. Points to the right of IS curve
B. Points to the left of IS curve
C. Points above the LM curve
D. Points below the LM curve
List II
1. excess demand for money
2. Excess demand for goods
3. Excess supply of goods
4. Excess supply of money
Codes:
A B C D
a. 4 2 3 1
b. 3 1 4 2
c. 4 1 3 2
d. 3 2 4 1
21. Which one of the following pairs is not
correctly matched?
A. Revenue Receipts: Tax Revenue +
Non – Tax Revenue
B. Total Receipts : Revenue Receipts +
capital Receipts
C. Revenue Expenditure: Revenue Deficit
+ Revenue Receipts
D. Primary Deficit : Revenue Deficit –
Interest Payments.
22. The Human Development Index (HDI)
measures the overall achievements in a
country in three basic dimensions of
human development which of the
following is/are not among them?
1. Longevity and health
2. Education and Knowledge
3. Women and child development
4. Decent standard of living
Select the correct answer using the codes
given below:
a. 5 only
b. 3 and 4
c. 2 and 3
d. 1 and 4
23. Consider the following exchange rate
regimes:
1. par value system
2. Flexible and the market determined
exchange rate system
3. Basket pegged regime
4. Liberalised exchange rate managed
system
The correct sequence of these in India is
a. 2 – 3 – 4 - 1
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b. 1 – 2 – 3 - 4
c. 1 – 3 – 2 - 4
d. 1 – 3 – 4 - 2
24. By which year, would the multi-fibre
agreement be completely phased out under
WTO agreement?
a. 2006
b. 2005
c. 2004
d. 2007
25. What happens to the LM curve in a
situation where the money supply rises?
a. The LM curve does not change at all
b. The LM curve shifts to the left
c. The LM curve shifts to the right
d. The LM curve becomes parallel to the
horizontal axis
26. As per medium term Export Strategy
(MTES) for 2002-2007 India targets to
achieve which one of the following share
of global trade by 2007
a. 35
b. 2%
c. 1%
d. 4%
27.
In the diagram, the exchange rate between
US dollar and Indian Rupees is shown on
the Y-axis, while the amount of foreign
exchange is shown on X-axis.
DD represents demand curve for foreign
exchange.
SS represents supply curve of foreign
exchange. Equilibrium exchange rate is
given by ‘Or’ at Rs. 45 for $1.
A shift in the demand curve to the right to
D1 D1 leads to which of the following ?
1. Establishment of a new equilibrium
exchange rate.
2. New amount of foreign exchange
demanded and supplied
3. Fall in the value of India Rupee
Select the correct answe4r using the codes
given below:
a. 1 and 2
b. 2 and 3
c. 1 and 3
d. 1, 2 and 3
28. For which of the following purposes are
S.D. Rs used by a country?
1. to achieve factor – price equalization
2. To acquire foreign exchange to cover
deficits
3. To repurchase its own currency from
other countries
Select the correct answer using the codes
given below:
a. 1, 2 and 2
b. 1 and 2
c. 2 and 3
d. 1 and 3
29. Match List (Investment Criteria) with List
II (Economists) and select the correct
answer using the codes
List I
A. The SMP criterion
B. The marginal per capita reinvestment
criterion
C. The marginal growth contribution
criterion
D. The time series criterion
List II
1. Elasticity of substitution
2. Spatial competition
3. quasi rent
4. monopolistic
5. Monopolistic competition
Codes:
A B C D
a. 2 3 4 1
b. 4 1 2 3
c. 2 1 4 3
d. 4 3 2 1
30. Match List I with List II and select the
correct answer using the codes given
below the List:
List I
A. Elasticity of substitution
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B. Spatial competition
C. quasi rent
D. Monopolistic competition
List II
1. Hotelling
2. Hicks
3. Chamberlin
4. Marshall
5. Edgeworth
Codes:
A B C D
a. 2 4 5 3
b. 3 1 4 2
c. 2 1 4 3
d. 3 4 5 2
31. If sales tax on a commodity is raised, but
the revenue earned through its sale
decreases sharply, which one of the
following statements about the nature of
this commodity would be correct?
a. price elasticity of demand for its is
high
b. it must be an essential good
c. Price elasticity of demand for it is low
d. Price elasticity of demand for it is
unity.
32. In the liquidity trap, the interest elasticity
of the demand for money is
a. zero
b. unity
c. infinity
d. between zero and unity
33. Marginal revenue will be zero if elasticity
of demand is
a. less than one
b. equal to one
c. greater than one
d. zero
34. Which one of the following significant
changes was introduced in India in March,
1993?
a. Dual exchange rate was introduced
b. Dual exchange rate system came to an
end and a uniform market came into
being, with exchange rate being
determined by the forc3es of demand
and supply
c. Bank rate was raised from 11% to 12%
d. Rupee was devalued.
35. The discrepancy between the values of
marginal product and marginal revenue
product of a factor of production cannot
arise if
a. AR = MR
b. AC – MC
c. TC = TR
d. AC = AR
36. Shadow prices are particularly useful in
a. Consumer’s purchase decisions
b. Firm’s sale decision’
c. Project evaluation and cost-benefit
analysis
d. Black market operations
37. Consider the following measure:
1. changing the bank rate
2. Open-market operations
3. Increasing the cash-reserve ratio
Which of the measures given above are
taken by the Reserve Bank of India to
control inflation in India?
a. 1 and 2
b. 2 and 3
c. 1 and 3
d. 1, 2 and 3
38. Consider the following statements about
deadweight loss:
1. it is the loss in producer and consumer
surplus due to an inefficient level of
production
2. it is used by economists to measure the
size of the waste to society of
deviations from the competitive
equilibrium.
3. by calculating deadweight loss,
economists can estimate the benefits
and costs of many government
programmes
Which of the statements given above are
correct?
a. 1 and 2
b. and 3
c. 1 and 3
d. 1, 2 and 3
39. Union budget 2002-03 had extended
service tax to ten new services,
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subsequently which of these was/were
exempted from service tax?
a. cable operation and dry cleaning
b. Light agricultural products and cold
storage
c. Inland cargo handling’
d. Life insurance.
40. Qualitative credit control by a Central
Bank exercised by which of the following
measure
1. Credit rationing
2. consumers credit regulation
3. changes in margin requirement on
security loans
4. Variable reserve ratio.
Select the correct answer using the codes
given below:
a. 1, 2 and 4
b. 2, 3 and 4
c. 1, 3 and 4
d. 1, 2 and 3
41. Match List I with List II and select the
correct answer using the codes given
below the Lists:
List I
A. Money illusion
B. Liquidity trap
C. life cycle hypothesis
D. Ratchet effect
List II
1. Modigliani
2. Pigou
3. Keynes
4. Duesenberry
Codes:
A B C D
a. 2 3 1 4
b. 4 1 3 2
c. 2 1 3 4
d. 4 3 1 2
42. For a commodity with a unitary elastic
demand curve, if the price of the
commodity rises, then the consumer’s total
expenditure on this commodity would
a. Increase
b. decrease
c. remain constant
d. either increase or decrease
43. Match List I with List II and select the
correct answer using the codes given
below the Lists:
List I
A. Stationary state
B. Unlimited supplies of labour
C. Knife-edge equilibrium
D. Theory of cumulative causation.
List II
1. W.A. Lewis
2. G. Myrdal
3. Harrod-Domar
4. A. smith
Codes:
A B C D
a. 2 1 3 4
b. 4 3 1 2
c. 2 3 1 4
d. 4 1 3 2
44. Capital account in the balance of payments
of a country does not include which one of
the following?
a. Foreign investment
b. External assistance
c. Investment income
d. NRI deposits
45. The Reserve Bank of India acts as the
“bankers’ bank” in the sense that
a. the scheduled banks can borrow from
the RBI in time of need
b. the RBI fixes the conditions of cash
reserve requirement which the
scheduled banks have to follow.
c. the RBI controls the credit operations
of the scheduled banks.
d. the RBI controls the banking system
through the system of licensing.

46. The Primary objective of selective credit
control is
a. to raise the cost of credit for all
purposes
b. to decreases the total supply of credit
in the economy
c. to regulate total bank credit and
general level of interest rates
d. to influence allocation of credit among
different borrowers and uses.


47. Consider the following:
Companies (Second Amendment) Act,
2002 provides for the constitution of a
national Company Law Tribunal (NCLT).
The NCLT will now be the common forum
for companies replacing which of the
following existing forums?
1. Company Law Board (dispute
resolution and compliance with certain
provisions of the companies Act,
1956).
2. Board for industrial and financial
reconstruction (review and
rehabilitation of sick companies).
3. High Courts (winding up of
companies)
Select the correct answer using the
codes given below
a. 1, 2 and 3
b. 1 and 2
c. 2 and 3
d. None of the above
48. If the consumer has with him only one
commodity (Y) and has nothing of its
pr3fect substitute (X), he may if he so
likes, give up Y for each additional and
successive unit of X.
a. at a constant marginal rate because the
commodities being perfectly
substitutable he is indifferent between
heir respective stocks with him.
b. at a decreasing marginal rate because
with every exchange, the stock of Y
with him decreases and that of X
increases
c. at increasing marginal rate because
with every exchange he gets the
opportunity of increasing his stock of
relatively scarcer commodity I.E. X.
d. initially at an increasing and eventually
at a decreasing marginal rate because
with every exchange his stock of Y
decreases and eventually Y becomes
relatively scarcer to X in his stock
49. Consider the following statements about
imposition of taxes:
1. Turnover tax is levied as a proportion
of the price of a commodity on each
sale in the distribution chain.
2. Tax potential of an economy depends
on level of per capita income.
3. Tax potential of an economy depends
on degree of inequality in the
distribution of income.
Which of the statements given above is/are
correct?
a. 1, 2 and 3
b. 1 only
c. 2 and 3
d. 3 only
50. An integration between the theory of
money and the theory of value through his
well-known theoretical formulation viz.
‘Real balance Effect’ was attempted by
a. j. M. Keynes
b. D.H. Robertson
c. A. H. Honsen
d. Don Patinkin
51. The following is laid down as a condition
for improving the balance of payment of a
country: the sum of elasticities of the
demand at home for countries’ imports and
the demand abroad for its exports be
greater than one, if depreciation is to
improve its balance of payments. the
above condition is laid down by which one
of the following economist/economists?
a. heckscher-Ohlin
b. J.S. Mill
c. Marshall-Lerner
d. Haberler
52. Consider the following statement: the
function of International Monetary fund is
to
1. provide development finance
2. strengthen international liquidity
3. maintain exchange rate stability
Which of the statement given above are
correct?
a. 1 and 2
b. 2 and 3
c. 1 and 3
d. 1, 2 and 3
53. If the government sells bonds to finance
the deficit, the result will generally be
a. less expansionary than if it had printed
new money
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b. same as if it had printed new money
c. More expansionary than if it had
printed new money
d. there will be no change in income of
the economy
54.
In the Lorenz cure diagram of country ‘A’,
the Gini coefficient is measured by
a. Area X /area Y
b. Area X / Areas OBDC
c. Area X/ Area (X+Y)
d. Area Y / Area X
55. Mahabub-ul Haq developed the concept of
a. Problem of capital formation
b. Human development index
c. Principles of population studies
d. balanced growth
56. Equity in taxation can best be achieved by
applying the principle of
a. Benefit
b. Equal absolute sacrifice
c. Equal proportional sacrifice
d. Equal marginal sacrifice
57. Consider the following statements:
A milestone in reforms in the Indian
Petroleum sector was the dismantling of
the ‘Administered Pricing Mechanism’
(APM). Under the new regime,
1. the Pricing of indigenous crude oil and
petroleum products, except for PDS
kerosene and domestic LPG, is market
determined
2. subsides on PDS kerosene and
domestic LPG are on a specified flat
rate basis and are borne by the
Consolidated Fund of India
3. there is a freight subsidy for far-flung
areas for PDS kerosene and domestic
LPG and is borne by the consolidated
Fund of India
Which of the statements given above are
correct?
a. 1 and 2
b. 2 and 3
c. 1 and 3
d. 1 , 2 and 3
58. Consider the following statements with
regard to the features of the India money
market:
1. It finds avenue for profitable
investment for short-term surpluses.
2. If provides short-term funds for banks
3. It opens the door for the commercial
banks to occupy a strategic position in
regulating money market.
4. It makes discount rate act as the main
instrument.
Which of the statements given above is/are
correct?
a. 1 only
b. 1 and 2
c. 1,2 and 3
d. 2, 3 and 4
59. Consider the following statements:
1. If the MC curve is below the AC
curve, then the AC curve must be
rising.
2. When MC curve is above AC, then the
AC curve must be falling.
3. MC curve cuts the AC curve at the
minimum average cost.
Which of the statements given above is/are
correct?
a. 3 only
b. 1 and 2
c. 2 and 3
d. 1, 2 and 3
60. Which one of the following is not correct?
a. National Income = NNP at factor cost
b. NNP= GNP minus depreciation
c. NDP at market prices = NDP at factor
cost + (indirect taxes less subsidies)
d. GNP = GDP – net factor income from
abroad
61. The average annual a rate of growth in
agriculture during the Ninth Five Year
Plan was approximately.
a. 18%
b. 2.1%
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c. 3.2%
d. 4.6%
62. Consider the following statements:
Marginal utility analysis of demand
1. assumes that utility is cardinally
measurable
2. Assumes that utilities are
interdependent
3. assumes that marginal utility of money
is not constant
Which of the statements given above is/are
correct?
a. 1 only
b. 1 and 2
c. 2 and 3
d. 1 and 3
63. consider the following statements about
the natural unemployment rate:
1. Long-run Phillips curve is vertical at
the natural unemployment rate
2. At the natural rate of unemployment,
the actual rate of inflation is not stable
Which of the statements given above is/are
correct?
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2
64. Assertion (A): The classical theory of
comparative advantage given an answer to
the question: What products will be
exported and imported, at what pric3es,
and who will gain from the trade? but its is
not a complete and realistic theory of
international trade.
Reason (R): The tastes, factor endowments
and technology change over time. all these
changes render the classical theory
unrealistic.
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
65. Assertion (A): consumption in the current
year does not fall proportionately as
income of the people falls from the
previous peak level.
Reason (R): people try to maintain in
general, their consumption levels to which
they are used to in the past.
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
66. Assertion (A): Pessimistic attitude of the
investors will reduce the planned
investment at each interest rate.
Reason: Investment plans are affected by
the expectations of future profit.
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
67. Assertion (A): In the early phase of
development, labour migration from rural
areas to the urban areas occurs on large
areas.
Reason (R): The migration is due to the
disparity of the earning capacity of an
individual in the rural and urban areas.
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
68. Assertion (A): Neo-classical growth theory
always insists upon full employments
stability.
Reason (R): Substitution between labour
and capital makes this stability possible.
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
69. Assertion (A): The main object of
economic policy under the Gold Standard
was to keep the balance of payments in
equilibrium.
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Reason (R): Gold Standard had no
mechanism for adjustment.
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
70. Near money is defined as an
a. asset which is not usable as a medium
of exchange but has a store of value
b. asset that serves as a temporary
medium of exchange but has store of
value
c. Asset which adequately fulfils the store
– of a value function and is readily
convertible into a medium of exchange
but is not itself a medium of exchange
d. asset which has a store of value and
100% liquidity
71. Which one of the following pairs is
correctly matched?
A. Equilibrium interest rate : Karl Marx
B. Dynamic theory of profit: J.B. Clark
C. Monopoly Theory of profit: Hicks-
Hansen Synthesis
D. Theory of surplus value: Kalecki
72. Under which one of the following
conditions, would it not be possible for a
monopolist to shift the burden of a tax to
the consumer?
a. When the supply of the commodity is
highly elastic an demand is less elastic
b. When the production of the commodity
takes place under the low of
diminishing returns.
c. When marginal revenue equals
marginal cost
d. When the tax is independent of the size
of output, or is a lumpsum tax in the
form of a certain percentage of
monopoly net revenue.
73. Which of the following are the causes of
inflation in Indian?
1. Low growth of agricultural products
2. Increasing non-developmental
expenditure
3. Increase in money supply
4. Increase burden of exports
Select the correct answer using the codes
given below:
a. 1, 2 and 3
b. 3 and 4
c. 1 and 4
d. 2 and 4
74. Match List I (Organizations) with List II
(Activities) and select the correct answer
using the codes given below:
List I
A. World Bank
B. I.M.F.
C. I.D.A.
D. I.F.C.
1. Balance of Payments assistance
2. Development loans at Commercial
rates
3. of interest
4. Development loans at confessional
rates of interest
Codes:
A A C D
a. 2 1 4 3
b. 4 3 2 1
c. 2 3 4 1
d. 4 1 2 3
75. Indicative planning is based on the
principle of
a. Centralization in operation and
execution.
b. Decentralization in operation and
execution
c. Details of sectoral output
d. Planning by the people

76. A welfare notch is a situation in which
there is
a. decrease in total income for families
when they increase the amount they
work.
b. increase in total income for families
when they increase the amount they
work.
c. decrease in total income for families
when they decrease the amount they
work.
d. increase in total income for families
when they decrease the amount they
work.
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77. During the nineties, which of the following
sectors registered highest growth rate in
India?
a. Agriculture and allied activities
b. Manufacturing]
c. Construction
d. Services
78. The backlog of unempoyment as a
percentage of the labour force in India at
the beginning of Tenth Five Year Plane a
was
a. 14%
b. 9%
c. 27%
d. 3%
79. Consider the following two situation:
1. Situation 1 has an income tax system
2. Situation 2 has an no income tax
system
Then the investment multiplier in situation
2
a. becomes smaller
b. becomes negative
c. becomes larger
d. remains unaffected
80. According to Milton Friedman’s
Permanent Income Hypothesis, all
increases in
a. permanent income are saved
b. permanent income are consumed
c. transitory income are saved
d. transitory income are consumed
81. A progressive tax system corresponds to
a. horizontal equity
b. Vertical equity
c. Uniform equity
d. None of the above three
82. Which one of the following statements
about foreign Direct Investment (FDI) in
India is not correct?
a. FDI up to 100 percent permitted under
the automatic route in the advertising
sector
b. FDI is print media sector is allowed up
to 26 percent of paid up equity capital
of India entities publishing periodicals
and newspapers dealing with new and
current affairs.
c. FDI up to 100 percent is allowed in tea
sector including tea plantation, subject
to compulsory Indian partner within a
period of five years and prior approval
of the State government in case of any
future land use change.
d. FDIup to 100 percent permitted with
prior approval of the government for
development of integrated township,
commercial premises, hotels, resorts
and regional level urban infrastructure
facilities
83. Consider the following statement about
Rural Infrastructure Development Fund
(RIDF):
1. RIDF was set up in NABARD in 1995-
96
2. It provides loans to State governments
and State owned corporations for
expeditious completion of on-going
rural infrastructure project
3. Under its scheme, domestic
commercial banks contribute to the
Fund on the basis of their shortfall in
their lending to the priority sectors/
agriculture.
4. Panchayati institutions are eligible to
implement RIDF projects
Which of the statements given above are
correct?
a. 1 and 4
b. 2, 3 and 4
c. 1, 2 and 3
d. 1, 2, 3 and 4
84. Consider the following statement about
Pareto optimality:
1. pareto Optimality in an economy is
ensured if marginal rate of substitution
between two goods is same for all
individuals.
2. Pareto Optimality is ensured when the
marginal rate of technical substitution
is equal to input price ratio.
3. There is a link between the conditions
of attainment of Pareto Optimality and
those of attainment of the general
equilibrium.
4. Pareto Optimality is neutral about
income distribution
Which of the statements given above
are correct?
12 of 16
a. 1 and 2
b. 2 and 3
c. 1 and 4
d. 3 and 4
85. The sum of squares of deviation of a set of
values is minimum when deviation is
taken about.
a. Arithmetic Mean
b. Median
c. Mode
d. harmonic Mean
86. If the distribution is positively skewed,
then
a. Mean > Median > Mode
b. Mean < Median< Mode
c. Mean < Mode> Median
d. Median87. Given the following data:
No. of observations = 100
Arithmetic mean = 1000
Variance = 256.0
The co-efficient of variance will be equal
to
a. 1.6%
b. 2.5%
c. 3.5%
d. 4.5%
88. consider the following statements about
consumer’s surplus and public finance:
1. Where the consumers are enjoying
surplus, there is scope for taxation, for
people are willing to pay more
2. In the case of constant return, the
consumer’s surplus will be diminished
by more than the gross receipts of the
State.
3. In the case of diminishing return, the
gross receipts from the tax may be
greater than the resulting loss of
consumer’s surplus.
4. In the case of increasing return, a tax
will increase consumer’s surplus more
than it brings to the State
Which of the statements given above is/are
correct?
a. 1 only
b. 1, 2 and 3
c. 2 and 4
d. 1, 2, 3 and 4
89. If the co-efficient of correlation is unity,
the relation between the two variables X
and Y is
a. Y is directly proportional to X
b. Y is inversely proportional to X
c. Y is equal to X2
d. None of the above
90. Fisher’s idea index number satisfies
a. Time reversal test only
b. Factor reversal test only
c. Both time and Factor reversal test
d. Circular test only


91. Consider the following statements:
1. Market economy is an economy
characterized by freely determined
prices and the free exchange of goods
and services in market.
2. Centrally planned economy is a
economy in which big monopoly firms
determine prices and production
3. Normative economics is about
economic analysis that explains what
happens in the economy and why, and
positive economics is about economic
analysis that makes recommendations
about economic policy.
Which of the statements given above is/are
correct?
a. 1 and 2
b. 2 and 3
c. 1 only
d. 1 and 3
92. Which of the following statements is not
correct?
a. The production possibility curve under
increasing costs in concave to the
origin.
b. Under increasing costs, there would be
complete specialization of a country in
a single commodity.
c. Under increasing costs, the production
possibility curve is not identical with
price curve, as in the case of constant
costs.
d. A straight line production possibility
curve indicates constant opportunity
cost.
13 of 16
93. IT exports are included in which of the
following categories?
1. Merchandise exports
2. Invisibles
3. Current account
4. transfer payments
Select the correct answer using the codes
given below?
a. 1, 2 and 3
b. 2 and 3
c. 3 and 4
d. 1, 2 and 4
94. Who has given the well-known ‘Diamond-
Water’ paradox?
a. Adam Smith
b. J.M. Keynes
c. Alfred Marshall
d. F.Y. Edgeworth
95. Match List with List II and select the
correct answer using the codes given
below:
A. State Government
B. Levied by the Union but collected and
appropriate by the states
C. Levied and collected by the Unions but
are assigned to the states within which
they are used
D. Levied and collected by the Union but
are distributed between the Union and
the States in a prescribed manner
A B C D
1. 1 3 2 4
2. 2 4 1 3
3. 1 4 2 3
4. 2 3 1 4
96. Unbalanced growth hypothesis is
formulated on the assumption
a. that expansion takes place
simultaneously on several fronts
b. That supplies of capital and labour are
limited
c. of unlimited supplies of labour and
capital
d. of limited supply of labour but
unlimited supply of capital
97. Match List I (concept and Feature) with
List II (Related Concept/Condition) and
select the correct answer using the codes
given below:
List I
A. Straight line isoquants
B. Right angled isoquants
C. Isoquants convex to the origin
D. Isoquants concave to the origin
List II
1. Diminishing marginal rate of
substitution.
2. Increasing marginal rate of substitution
3. Factors are perfect substitutes
4. Factors are perfect
A B C D
a. 2 4 1 3
b. 3 1 4 2
c. 2 1 4 3
d. 3 4 1 2
98. The aggregate of transaction demand and
precautionary demand for money is
generally considered as
a. The total demand for money
b. Active cash balances
c. Idele case balances
d. Asset demand for money
99. Let c = MPC, and t = rate of tax on
income. Then the expression of investment
multiplier is
a. 1
1- c
b. 1
1- c(c + t)
c. 1
1+ c(1-t)
d. 1
1- c(1- t)
100. The two-gap theory as applied to
development planning refers to
a. inflationary gap and foreign exchange
constraint
b. Savings gap and income constraint.
c. foreign exchange gap and recessionary
gap
d. Savings constraint and foreign
exchange constraint
14 of 16
101. Since all the means of production are
scarce and alternatively useable,
opportunity cost of production of a unit of
a commodity, say X, equal the
a. Output sacrificed in any other
alternative uses of the resources in the
production of a unit X
b. Output sacrificed in the least
productive use of all alternative uses of
these resources
c. Average output of all other alternative
productive uses of the resources uses
in the production of a unit of X
d. Output sacrificed in the next best use
of the resources used in the production
of a unit of X
102. Which one of the following is not an
assumption of Heckscher- Onlin theorem
of international trade?
a. differences in factor endowments of
two countries
b. products in the two countries are
differentiated
c. Production functions are identical
d. Commodity prices determine factor
prices
103. The ability of a commercial bank to
increase its loans and investment depends
on its
a. holding of government securities
b. cash position
c. excess cash reserves
d. outstanding loans and investments
104. Match List I (Economists) with List II
(Views) and select the correct answer
using the codes given below:
List I
A. J. M. Keynes
B. J.B. Say
C. A.C. Pigou
D. I. Fisher
List II
1. Wage rate cut is the solution to
unemployment
2. Unemployment
3. Public expenditure is the cure for
depression
4. Supply creates its own demand
A B C D
a. 3 4 1 2
b. 1 2 3 4
c. 3 2 1 4
d. 1 4 3 2
105. Consider the following statements about
Co-operative Collective Farming societies:
1. Individual ownership of land
disappears
2. In addition to land, all other resources
of the members are also pooled
together.
3. The system is akin to ‘Kolkhoz’
system in the former Soviet Union and
other communist countries.
4. The farm income is divided among the
members only according to the work
done by each of them.

106. Match List I with List II and select the
correct answer using the codes given
below:
A. W.W. Rostow
B. R.F. Harrod
C. R. Nurkse
D. A. O. Hirschman
List II
1. Warranted Rate of Growth
2. take-off stage
3. Unbalanced growth
4. Balanced Growth
A B C D
a. 3 1 4 2
b. 2 4 1 3
c. 2 1 4 3
d. 3 4 1 2
107. International trade n commodities acts as a
substitute for international mobility of
factors of production. Free trade in goods
will bring about an equalization of both
absolute and relative prices of all factors
production between countries engaged in
trade”. This theory is known as
a. Factor proportion theorem
15 of 16
b. Factor – price equalization theorem
c. Factor endowment theorem
d. Factor remuneration theorem
108. assuming some degree of factor
substitution, an isoquant refers to
a. various quantities of a commodity that
can be produced with a given quantity
of two factors of production.
b. A given quantity of a commodity that
can result from various quantities of
two factors of production.
c. various quantities of a a commodity
that can be produced with a varying
quantities of two factors of production
d. a given quantity of a commodity that
can be produced by a given quantity of
two factors of production.
109. Which one of the following statements is
not correct?
a. Commercial bank reserves held by, the
RBI are an asset of commercial banks
b. Commercial banks decrease the
supploy of money when they purchase
government bonds from households or
business.
c. Actual reserves do not necessrily
always exceed required reserves.
d. The supply of money increase when
the RBI buys government securities
from households or businesses
110. Match List I (Committee) with List II
(Purpose) and select the correct answer
using the codes given below :
List I
A. Dantwala committee
B. P.L. Tandon committee
C. Vaghul committee
D. Tarapoore committee
List II
1. To examine the feasibility of
introducing full convertibility to rupee
on capital account of the balance of
payment.
2. To examine the possibilities of
enlarging the scope of the money
market and to recommend specific
measures for evolving money market
instruments.
3. To review the working of Regional
Rural Banks.
4. To make recommendation for
appropriate export strategy for the
eighties.
5. To review the operation of licensing
under the Industries (Development and
Regulation) Act, 1951.
A B C D
a. 3 4 2 1
b. 2 1 5 4
c. 3 1 2 4
d. 2 4 5 1
111. Consider the following statements:
Input-output analysis helps development
planning by.
1. providi9ng a simplified picture of the
economy
2. examining the consistency and
feasibility of the plans
3. giving input requirements for a
particular sector
Which of the statements given above is/are
correct?
a. 1 only
b. 1,2 and 3
c. 2 only
d. 3 only
112. The Mahalanobis strategy of planning
adopted during the Second Five Year Plan
emphasized investment in
a. heavy industries
b. agriculture
c. consumer goods industries
d. export industries
113. Consider the following statements:
The competition Act, 2002 passed by the
Indian Parliament aims at
1. prohibition of anti-competitive
practices
2. stopping abuse of dominance by firms
3. encouraging exports
16 of 16
4. encouraging large Indian firms to
operate in International markets.
Which of the statements given above are
correct?
a. 1 and 3
b. 2 and 3
c. 1 and 2
d. 1, 2 and 3
114. Which one of the following is correct in
respect of the concept of specie flow price
mechanism?
a. It is a mechanism evolved by Haberler
to restore equilibrium in balance of
payments
b. It is a mechanism for purchasing gold
from aboard
c. It is a mechanism devised by Marshall-
Lerner to check fluctuations in
exchange rates.
d. It is propounded by David Hume to
disregard the mercantilists who
believed it useful to accumulate gold in
the country as war ches.
115. Which of the following statements is/are
not correct?
1. The quantum of consumer’s surplus
reflects the state of social welfare.
2. Consumer’s surplous may serve as a
convenient measure of aggregate gains
from trade.
3. Consumer’s surplus is independent of
prices of the commodities in an
economy.
4. If market demand curves are horizontal
there will be no consumer’s surplus.
Select the correct answer using the codes
given below:
a. 1 and 2
b. 3 only
c. 1 and 3
d. 3 and 4
116. To achieve a high rate of growth of capital
formation, Mahalanobis suggested that
allocation of investment to capital goods
sector should be.
a. 40%
b. 33.3%
c. 66.5%
d. 50%
117. Consider the following statements:
Publich borrowing leads to
1. increase in defence expenditure
2. transfer of purchasing power from one
section of the society to another.
3. decrease in investment by private firms
4. reduction in transfer payments
Which of the statements given above are
correct?
a. 1 and 2
b. 2 and 3
c. 3 and 4
d. 1 and 4
118. Foreign Institutional Investors have been
allowed to invest since 1991 in which of
the following securities?
a. Pension fund
b. Mutual funds
c. Investment trusts
d. All of the above
119. Which of the following foreign exchange
functions are performed by commercial
banks?
1. Transfer purchasing power through
telegraphic transfers
2. Provides credit for foreign trade.
3. Furnish facilities for hedging foreign
exchange risks.
Select the correct answer using the codes
given below:
a. 1, 2 and 3
b. 1 and 2
c. 2 and 3
d. 1 and 3
120. The incremental capital output ration
(ICOR) during the IX Plan of India was:
a. 5.02
b. 3.04
c. 4.53
d. 6.37