Economics-2006

1. In the theory of production with one
variable input, which one of the following
will not hold when the Average Product
(AP) is at its peak?
a. Declining Total Product (TP) curve
b. Increasing Total Product (TP) curve
c. Declining Marginal Product (MP)
d. MP = AP
2.
Which one of the following is represented
by the diagram given above (where, L =
labour, K = capital, X = output)?
a. Laws of production
b. Decreasing returns to scale
c. Diminishing returns to variable factor,
labour
d. All of the above
3. Which one of the following statements is
correct?
a. A firm's long run average cost curve is
derived from a series of short run
average cost curves
b. There is no relationship between shortrun
and long-run average cost curves
c. A firm's short-run average cost curve is
derived from its long-run average costcurve
d. Long-run total cost is the sum of longrun
fixed and long-run average costs
4. Consider the following statements :
1. Explicit and implicit costs are not
included in opportunity cost.
2. Explicit and implicit costs are included
in opportunity cost.
3. The economic costs include both
explicit and implicit costs,
4. The imputed value of the
entrepreneur's own resources and
services is called explicit costs.
Which of the statements given above are
correct?
a. 1 and 2
b. 2 and 3
c. 1 and 3
d. 2 and 4
5. Which one of the following is represented
by a rectangular hyperbola?
a. Average fixed cost curve
b. Average variable cost curve
c. Production possibility curve
d. Expansion path
6. Match List - I (Type of Isoquant) with List
- II (Factor Substitutability) and select the
correct answer using the code given below
the Lists :
A. List-I
B. Linear isoquant
C. Leontief isoquant
D. Kinked isoquant
E. Smooth, convex isoquant
List-II
1. Zero substitutability
2. Continuous substitutability
3. Perfect substitutability
4. Limited substitutability
A B C D
a. 3 2 4 1
b. 4 1 3 2
c. 3 1 4 2
d. 4 2 3 1
7. In the Cobb-Douglas production function
of the form, X = b0, Lbl, kb2, which one of
the following is correct?
(X = output, L= labour and K = capital)
a. Elasticity of substitution is equal to
unity
b. Factor-intensity is measured by the
ratio, b1/b2
c. Organisational and entrepreneurial
efficiency is measured by b0
d. All the above
8. Suppose a consumer is consuming two
somewhat substitutable goods X and Y
and the price of X increases. What is the
C.S.E. Pre-2006
ECONOMICS
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nature of consumer's demand for X if he
decreases his expenditure on X?
a. Unitary elastic
b. Perfectly inelastic
c. Elastic
d. Inelastic
9. Which one of the following is not the basic
assumption of indifference curve approach
of consumer theory?
a. Consumer is able to set up preference
ranking of the combination of goods
and services.
b. Consumer is able to measure the
utility.
c. The ranking is consistent.
d. Consumer prefers more to less of a
commodity.
10. Consider the following statements :
1. Cross elasticity of demand for petrol
with respect to price of diesel is close
to zero in the short-run but it may
increase in the long run if the price
differential between these two products
remains high for long.
2. Cross elasticity of demand of X with
respect to Y would be negative if X
and Y are substitutes.
3. Cross elasticity of demand of X with
respect to Y would be positive if X and
Y are complements.
4. Cross elasticity of demand of X with
respect to Y would be close to zero
if X and Y are unrelated products.
Which of the statements given above are
correct?
a. 1, 3 and 4, only
b. 2 and 3, only
c. 1 and 4, only
d. 1, 2, 3 and 4
11. Which one of the following is the correct
statement ?
In the case of Giffen goods
a. substitution effect is negative
b. income effect is negative
c. income effect is stronger than the
substitution effect
d. All the above three
12. Which one of the following is the correct
statement? Given two parallel straight-line
demand curves, the price-elasticity of
demand in case of each curve is equal
a. at each price level
b. at each demand level
c. only at points on these demand curves
which fall on a straight line emanating
from the origin
d. in none of the above cases
13. Which of the following are the
characteristics of the kinked demand
curve?
1. Equilibrium is defined by the point of
kink.
2. Price rigidity under oligopoly.
3. The upper portion of the kinked
demand curve is highly elastic.
4. To the point right of kink, marginal
cost is larger than marginal revenue.
Select the correct answer using the code
given below:
a. 1, 2 and 3, only
b. 1 and 4, only
c. 2, 3 and 4, only
d. 1, 2, 3 and 4
14. Consider the following statements
regarding determination of factor prices :
1. The mechanism of determination of
factor prices does not differ
fundamentally from that of prices of
commodities.
2. Factor prices are determined by the
forces of demand and supply.
3. The difference lies in the determinants
of the demand and supply of
productive resources.
Which of the statements given above are
correct?
a. 1, 2 and 3
b. 1 and 2, only
c. 2 and 3, only
d. 1 and 3, only
15. Which one of the following is the correct
statement? The demand for labour is a
derived demand because it depends on
a. the elasticity of labour supply
b. the demand for other factors of
production
c. the wage rate
d. the demand for goods and services
produced by labour

16. Consider the following statements
regarding Pareto-optimality in
consumption (two commodities & two
individuals case) :
1. Each point in the Edgeworth Box,
in this case, specifies six variables.
2. Each point on the contract curve
represents a Pareto-optimal
distribution.
3. Each point on the contract curve
depicts a situation of general
equilibrium in consumption.
Which of the statements given above are
correct?
a. 1, 2 and 3
b. 1 and 2, only
c. 2 and 3, only
d. 1 and 3, only
17. What does the Coase's theorem deal with?
a. Internalisation of externalities
b. Pricing of public goods
c. Solution to the problem of externalities
of terms of well-defined and
exchangeable property rights
d. None of the above
18. Which one of the following is the correct
statement? Consumer surplus is largest in
a. discriminating monopoly
b. monopolistic competition
c. single-price monopoly
d. perfect competition
19. Consider the following statements relating
to consumer surplus:
1. Boulding renamed consumer surplus as
buyer surplus.
2. Hicks explained consumer surplus
through indifference curves.
3. There is direct relationship between
price and consumer surplus.
4. Consumer surplus is nothing but the
difference between the price that 'one
is willing to pay' and the price' one
actually pays for a particular product'.
Which of the statements given above are
correct?
a. 1, 2 and 4
b. 2, 3 and 4
c. 1, 3 and 4
d. 1, 2 and 4
20. Which one of the following is not included
in Net National Product (NNP) at factor
cost?
a. Undistributed profits
b. Rent
c. Consumption of fixed capital
d. Interest
21. If utensils worth Rs. 1000/- are
produced with copper worth Rs. 500/-,
wages paid are Rs. 100/-, other material
purchased is worth Rs. 100/- and
depreciation of machinery is zero, then
what is the value added in the process ?
a. Rs. 1000/-
b. Rs. 500/-
c. Rs. 400/-
d. Rs. 300/-
22. Consider the following statements :
1. GDP at current prices and GDP at
constant prices are identical in the base
year.
2. GDP at current prices is the economy's
final output valued at the base year's
prices.
3. GDP at constant prices is the
economy's final output valued at the
base year's prices.
4. GDP at current prices and GDP at
constant prices are identical at the
current year.
Which of the statements given above are
correct ?
a. 1 and 3
b. 1 and 2
c. 3 and 4
d. 2 and 4
23.
Based on the above graph, match List - I
(Variable) with List - II (Identified in the
Graph) and select the correct answer using
the code given below the Lists:
List -1
A. Aggregate Demand
B. Aggregate Supply
C. Consumption at zero level of income
D. Level of Investment
List II
1. C+I
2. C+S
3. ab
4. n
5. m
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A B C D
a. 1 5 4 3
b. 3 2 5 1
c. 1 2 5 3
d. 3 5 4 1
24. Suppose in two economies A and B, both
of which are closed, Y = C + G (Y = real
income, C = real consumption and G =
real govt. expenditure).
Assume that both economies have
identical consumption function C = 200 +
0-25 Y.
Further, assume G = 200 units. Finally in
economy A, G is spent on building roads
and bridges while in economy B, G is
spent on running cars and air-conditioners
for public servants.
What will be the equilibrium level of Y in
economies A and B?
a. A : 400; B : 400
b. A : 800; B : 600
c. A : 1600; B : 800
d. A : 1600; B : 1600
25. Consider the following :
There will be a change in the level of
national income with the following
changes :
1. Government spending and taxes
increased by amount x.
2. Government spending & taxes
decreased by amount x.
3. Only Government spending increased
by amount x.
4. Only Government spending decreased
by amount x.
What is the correct sequence of the
changes in level of national income in
descending order?
a. 2-4-3-1
b. 3-1-2-4
c. 2-1-3-4
d. 3-4-1-2
26. Which one of the following statements is
correct? Investment increases with
a. an increase of output and a decrease in
capital stock
b. a decrease of output and an increase in
capital stock
c. an increase in both output and capital
stock
d. a decrease in both output and capital
stock
27. Compared with monopolist charging
single price, a monopolist adopting
discriminatory practices would not end up
with which one of the following?
a. Larger revenue and larger profit
b. Larger output and larger revenue
c. Larger profit and larger output
d. Shorter output but larger profit
28. Which one of the following is the correct
statement? Price of a commodity does not
go down when
a. only supply curve move rightward
b. only supply curve moves leftward
c. only demand curve moves leftward
d. supply curve moves rightward and
demand curve moves leftward
29. Which one of the following statements is
correct?
A monopolist charging different prices in
two different markets will charge a higher
price in the market in which the price
elasticity of
a. demand is greater
b. supply is greater
c. demand is smaller
d. supply is smaller
30. Which one of the following statements is
correct?
A firm under perfect competition will be in
stable equilibrium in the long run if the
price is equal to
a. marginal revenue
b. marginal cost
c. average fixed cost
d. average variable cost
31. Between two periods, in a closed
economy, the savings propensity triples
while the level of investment remains
unchanged. As a result of this, which one
of the following is correct?
a. Savings triple
b. National Income triples
c. National Income remains unchanged
d. Savings remain unchanged
32. If money supply rises, then in the IS-LM
framework which one of the following
statements is correct?
a. LM curve shifts to the right
b. IS curve shifts to the right
c. IS and LM curves both shift to the
right
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d. LM curve does not undergo any
change
33. Reserve Bank of India calculates four
components of money supply, M1, M2,
M3, M4. Which one of the following
statements is correct?
a. M1 = currency with public + demand
deposits with banks
b. M2 = M1 + post office savings deposit
c. M3= M1+ M2
d. M4 = M3 + total post office deposits
34. Which one of the following factors does
not influence velocity of circulation of
money?
a. Quantity of money
b. Selling costs of business firms
c. Credit facilities
d. Business conditions
35. Slutsky's decomposition of price effect is
not possible without a prior knowledge of
which one of the following ?
a. Income-elasticity of demand
b. Price elasticity of demand
c. Substitution-elasticity
d. Cross-elasticity of demand
36. Which one of the following statements is
correct?
In India, estimates of National Income are
based on:
a. net income method only
b. net output method only
c. net income, net output and net
expenditure methods
d. net expenditure method only
37. Consider the following statements :
1. Whenever a bank grants a loan, it
creates a deposit or a liability against
itself.
2. Deposits of the bank circulate as
money, the creation of such deposits
lead to a net increase in the money
stock.
3. Whenever a bank grants a loan, it
creates a loan.
Which of the statement(s) given above is/
are correct ?
a. 1 only
b. 2 and 3
c. 3 only
d. 1 and 2
38. Which one of the following statements is
correct?
The money multiplier in an economy
increases with
a. improvement in banking habit of the
population
b. increase in statutory liquidity ratio
c. increase in the case reserve ratio
d. increase in the population of the
country
39. Match List-I (Activity of bank) with List-
II (Function performed) and select the
correct answer using the codes given
below the lists—
List-I
(Activity of bank)
A. Bank of Issue
B. Custodian of foreign balances of the
country
C. Lender of last resort
D. Controller of credit
List-II
(Function performed)
1. It is the provision of extra liquidity to
an illiquid but presumably solvent
bank by the central bank
2. Government delegates the right to print
currency notes
3. It maintains both gold and foreign
currencies as reserves against note
issue
4. It controls credit operation of
commercial banks
Codes:
a. A-1, B-3, C-2, D-4
b. A-2, B-4, C-1, D-3
c. A-1, B-4, C-2, D-3
d. A-2, B-3, C-1, D-4
40. How can the inflationary gap at full
employment be wiped out?
1. By rise in voluntary saving of the
community.
2. By imposition of tax to mop up the
surplus.
3. By increasing output to absorb excess
demand.
4. Through increase in money supply.
Select the correct answer using the codes
given below :
a. 1 only
b. 1, 2 and 3
c. 2, 3 and 4
d. 1 and 2
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41. In which one of the following sequences
the change in quantity of money leads to
change in price level in the Keynesian
models ?
a. Change in quantity of money-change
in investment-change in employment
and output-change in rate of interestchange
in price level
b. Change in quantity of money-change
in employment and output-change in
investment-change in rate of interestchange
in price level
c. Change in quantity of money-change
in investment-change in rate of
interest-change in employment and
output-change in price level
d. Change in quantity of money-change
in rate of interest-change in
investment-change in employment and
output-change in price level
42. 39. Match List-I (Type of Inflation)
with List – II (Characteristic) and select
the correct answer using the codes given
below the lists—
List-I
(Type of inflation)
A. Demand-pull Inflation
B. Cost-push Inflation
C. Suppressed Inflation
D. Creeping Inflation
List-II
(Characteristic)
1. Initially price rises
2. Price-rise controlled by rationing and
other means
3. Inflation in which prices increase as a
result of increased production costs, as
labour and raw materials, even when
demand remains the same
4. Inflation in which rising demand
results in a rise in prices
5. Fall in price of raw materials
Codes:
a. A-4, B-1, C-2, D-5
b. A-2, B-3, C-4, D-1
c. A-4, B-3, C-2, D-1
d. A-2, B-1, C-4, D-5
43. Match List-I (Nature of price change) with
List-II (Linked phenomenon) and select
the correct answer using the codes given
below the lists—
List-I
(Nature of price change)
A. Relation between a monetary and a
real variable
B. Price rise at full employment
C. Reflation
D. Stagflation
List-II
(Linked phenomenon)
1. Inflation deliberately undertaken to
relieve a depression
2. Relationship between money wage
increase and level of
unemployment
3. Rise in prices with little change in
output
4. Continuous inflation
Codes:
a. A-3, B-4, C-1, D-2
b. A-2, B-1, C-4, D-3
c. A-3, B-1, C-4, D-2
d. A-2, B-4, C-1, D-3


44. Match List-I (Economic function) with
List-II (Used for) and select the correct
answer using the codes given below the
lists
List-I
(Economic function)
A. Allocation function
B. Distribution function
C. Stabilisation function
D. Management of public debt
List-II
(Used for)
1. Manage government borrowing
2. Control of economic fluctuation
3. Efficient public distribution
4. Efficient provision of government fund
for various uses
5. To reduce inequality in the Society
Codes:
a. A-4, B-1, C-2, D-5
b. A-2, B-5, C-3, D-1
c. A-4, B-5, C-2, D-1
d. A-2, B-1, C-3, D-5
45. What is the excess burden of a Lumpsum
tax ?
a. 1.0
b. 0.0
c. 2.0
d. >5

46. On which one of the following is the
benefits received principle of taxation to
achieve optimality based ?
a. Marginal benefit received
b. Total benefit received
c. Average benefit received
d. Ability to pay for the benefit
47. Match List-I (Relative elasticity) with List-
II (Burden of tax) and select the correct
answer using the codes given below the
lists-
List-I
(Relative elasticity)
A. es > ed
B. es < ed
C. es = ed
D. es = ¥, ed = 0
List-II
(Burden of tax)
1. The proportion of tax burden on buyer
is less than upon the seller
2. The proportion of tax burden on buyer
is equal to seller
3. The entire burden of tax will be on the
seller
4. The proportion of tax burden on buyer
is higher than upon the seller
5. The entire burden of tax will be upon
the buyer
Codes:
a. A-4, B-5, C-2, D-1
b. A-2, B-1, C-3, D-5
c. A-2, B-5, C-3, D-1
d. A-4, B-1, C-2, D-5
48. Which one of the following is the correct
statement ?
In industries displaying increasing returns
to scale and operated by the public sector
to achieve optimality, there has to be
a. a subsidy to the consumer only
b. a tax on the industry
c. a tax on the consumer and subsidy to
the producer
d. a subsidy to the consumer and a tax on
the producer
49. If the fiscal deficit of the Union
Government is Rs. 75,000 crores relending
to States is Rs. 25,000 crores, interest
payments are Rs. 25,000 crores, what is
the amount of the primary deficit?
a. Rs. 50,000 crores
b. Rs. 25,000 crores
c. Rs. 1,00,000 crores
d. Rs. 1,25,000 crores
50. Which one of the following phenomenon
explains the free rider problem in public
finance?
a. Ticketless travel in the Indian
Railways
b. Economics of horse racing and the
breeding of horses
c. Economics of all types of pure public
goods
d. Preference non-revelation in the case
of goods where consumption is joint
51. Consider the following statements :
The Heckscher-Ohlin theory of the trade is
based on the assumption that
1. Factors are mobile within the country.
2. Factors are immobile within the
country.
3. Factors are mobile internationally.
4. Factors are immobile internationally.
Which of the statements given above are
correct?
a. 1 and 3
b. 1 and 4
c. 2 and 3
d. 2 and 4
52. Which one of the following is the correct
statement? The factor price equalisation
theorem is a corollary of—
a. the Ricardian trade theorem
b. the Heckscher-Ohlin theorem
c. imperfect competition model of trade
d. None of the above
53. Consider the following statements :
The dynamic gains from trade include
1. Gains based on the law of comparative
advantage.
2. Widening of the total market for a
country's producers.
3. Gains to take advantage of the
relatively favorable price ratio.
4. Acquisition of new knowledge, arrival
of new ideas and the dissemination of
technical knowledge etc.
Which of the statements given above are
correct?
a. 1, 3 and 4
b. 2 and 4
c. 1, 2 and 3
d. 2, 3 and 4
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54. Which one of the following pairs in not
correctly matched?
a. Tariff quota : Non-tariff barrier
b. Export subsidy : Tariff barrier
c. Ad valorem duty : Tariff barrier
d. Multi-fibre arrangement: Non-tariff
barrier
55. What is a countervailing duty ?
a. A lower import duty on raw material
by the importing country to enhance
the competitiveness of final product
exports
b. A duty to raise more revenue by the
government for subsidising exports
c. An import duty or tariff imposed by an
importing country to raise the price of
a subsidised export product to offset its
lower price
d. A lower tariff on imported commodity
produced by a monopoly industry in
the exporting country
56. Which one of the following is the effective
rate of protection ?
a. The percentage increase in the value
added of an industry per unit of output
as a result of tariff relative to free trade
situation but with the same exchange
rate
b. Official nominal rate of tariff on the
value of import of final product
c. When the effect of tariff in imposing
country results in improvement of
terms of trade
d. Effect of tariff on the level of income
and employment in the tariff imposing
country
57. Which of the following would cause
disequilibrium in the balance of payments?
1. The level of domestic demand.
2. Variations in the degree of inflation.
3. International capital flows.
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
58. Which one of the following can not be
considered as the fundamental
disequilibrium in the balance of payment
of a country?
a. Changes in consumer tastes within the
country or abroad which reduce a
country's exports
b. Decline in the competitive strength of
the country in the world market which
adversely affects exports of the country
c. Technological changes in the methods
of production of domestic industries or
in the industries of other countries
d. Decline in the agricultural production
due to natural calamities
59. Which one of the following items is
included in the capital account of the
balance of payments of a country?
a. Invisibles
b. Investment income
c. Commercial borrowings
d. Private transfers
60. Which of the following items constitute (s)
international reserves ?
1. Gold.
2. Foreign Exchange.
3. S.D.Rs.
4. 4.1.F.C. loans.
Select the correct answer using the codes
given below :
a. 1, 2 and 4
b. 1 and 2
c. 1 , 2 and 3
d. 3 and 4

61. Which one of the following is the nature of
convertibility of the Indian currency?
a. Convertibility at trade account
b. Convertibility at current account
c. Convertibility at capital account
d. Freely convertible
62. Which one of the following is not an
affiliate of the World Bank?
a. The International Finance Corporation
b. The Multi-lateral Investment
Guarantee Agency
c. The International Development
Association
d. The Asian Development Bank
63. Special Drawing Rights (SDRs) scheme is
criticised on which of the following
grounds ?
1. Inequitable distribution.
2. Not linked with development finance.
3. Low rate of interest.
4. Failure to meet the requirement of
international liquidity.
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Select the correct answer using the codes
given below:
a. 1 and 3
b. 1, 2, 3 and 4
c. 2, 3 and 4
d. 1, 2 and 4
64. Which of the following are among the
types of assistance provided by the I.M.F.?
1. Buffer stock financing.
2. Compensatory and contingency
financing.
3. Financing agricultural development.
4. Financing infrastructure development.
Select the correct answer using the codes
given below :
a. 1 and 2
b. 2 and 3
c. 2, 3 and 4
d. 1, 3 and 4
65. The Geographical Indications of Goods
(Registration of Goods) Act, 1999, was
enacted in India to meet commitment of
which one of the following agreements
under the WTO ?
a. Trade Related Investment Measure
(TRIMs)
b. Trade Related Intellectual Property
Rights (TRIPs)
c. General Agreement on Trade in
Services (GATS)
d. Agreement on Agriculture (AoA)
66. Match List-I (Term) with List-II (Used
for) and select the correct answer using the
codes given below the lists—
List-I
(Term)
A. Gini Coefficient
B. Lorenz Curve
C. Trickel-down Effect
D. Capability Approach
List-II
(Used for)
1. Analysis of benefits of development
going to the lowest level
2. Study of improvement of ability level
of a person
3. To calculate ratio of the concentration
area to the total area under the line of
equality
4. Study of leakage of water and its waste
5. To study percentile shares of
population in income distribution
Codes:
a. A-3, B-1, C-4, D-2
b. A-2, B-5, C-1, D-3
c. A-3, B-5, C-1, D-2
d. A-2, B-1, C-4, D-3
67. Which of the following items are included
in the Human Development Index ?
1. Life expectancy.
2. Education.
3. GDP per capita (PPP US $).
4. Infant mortality.
Select the correct answer using the codes
given below :
a. 1, 2 and 3
b. 1, 3 and 4
c. 2, 3 and 4
d. 1, 2 and 4
68. What does inverted U-shaped Kuznet's
curve depict where PCY stands for per
capita income ?
a. As PCY increases, equality of income
increases and then falls
b. As PCY increases, inequality of
income increases and then falls
c. PCY and inequality are inversely
related to each other
d. PCY and equality of incomes are
inversely related to each other
69. Which one of the following is the correct
statement ? 'Verdoorn Coefficient' reflects
a relationship between
a. growth of labour productivity in
agriculture and growth of agricultural
output
b. growth of labour productivity in
agriculture and growth of
manufacturing output
c. growth rate of labour productivity in
manufacturing and growth of
manufacturing output
d. growth rate of labour productivity in
manufacturing and growth of
agriculture output
70. Sum of a set of 100 observations is 500. If
its Standard Deviation is 4, which one of
the following is equal to the value of sum
of squares of these observations ?
a. 2500
b. 4100
c. 2516
d. 50000
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71. Which one of the following is the correct
statements? According to Harrod,
technical change is said to be capital
saving if it
a. raises the capital output ratio
b. leaves the capital output ratio
unchanged
c. lowers the capital output ratio
d. raises the capital labour ratio
72. Consider the following statements :
In Harrod's Growth Model (assuming no
technical progress) the 'knife edge'
problem arises because—
1. The natural rate of growth is
exogenously given.
2. Capital output ratio is constant.
3. There is no technical progress.
Which of the statements) given above is /
are correct ?
a. 1 only
b. 2 and 3
c. 1 and 2
d. 1, 2 and 3
73. Match List-I (Term) with List-II
(Occurrence) and select the correct answer
using the codes given below the lists—
List-I
(Term)
A. East Asian Miracle
B. Brazilian model of development of the
seventies
C. Neo-Marxist view of development
D. Success of planning in achieving rapid
economic development
List-II
(Occurrence)
1. Economic relations between developed
and developing countries could only
lead to development of
underdeveloped countries
2. Soviet Union in the early 20th century
3. Success of free-market economies like
South Korea, Hong Kong, Taiwan etc.
4. Those countries where share of
industrial output in GDP is rising most
rapidly
5. Growth based on increased
international borrowing
Codes:
a. A-2, B-3, C-4, D-1
b. A-3, B-4, C-1, D-2
c. A-2, B-5, C-3, D-1
d. A-3, B-5, C-1, D-2
74. Consider the following statements :
Market failure refers to a situation in
which
1. True benefit of output may not reflect
price because of externalities.
2. Price may not reflect marginal cost
because of market imperfections.
3. There is disequilibrium in demand and
supply.
Which of the statements) given above is /
are correct ?
a. 2 only
b. 1 and 2
c. 1 and 3
d. 1, 2 and 3
75. Match List-I (Economic term) with List-II
(Applicability of the term) and select the
correct answer using the codes given
below the lists—
List-I
(Economic term)
A. Asymmetric Information
B. Lack of Government Credibility
C. Rent-seeking Behaviour
D. Institutional Environment
List-II
(Applicability of the term)
1. Failure to protect law and order,
property and interest of vulnerable
group
2. Abuse of public office for private gain
3. Imbalance of knowledge in a market
between buyers and sellers
4. Effective economic policies with
improved state capability
Codes:
a. A-3, B-1, C-2, D-4
b. A-2, B-4, C-3, D-1
c. A-3, B-4, C-2, D-1
d. A-2, B-1, C-3, D-4

76. Which one of the following is not include
under WTO regulations ?
a. Removal of industrial licenses
b. Removal of import tariffs
c. Removal of foreign portfolio
investments
d. Removal of price controls
77. Match List-I (Type of planning) with List-
II (Method of implementation) and select
the correct answer using the codes given
below the lists—
11 of 16
List-I
(Type of planning)
A. Totalitarian Planning
B. Democratic Planning
C. Indicative Planning
D. Decentralised Planning
List-II
(Method of implementation)
1. Planning by inducement
2. Planning from grass roots
3. Planning by direction
4. Planning with flexibility
Codes:
a. A-2, B-4, C-1, D-3
b. A-3, B-1, C-4, D-2
c. A-2, B-1, C-4, D-3
d. A-3, B-4, C-1, D-2
78. Which one of the following is the correct
statement ?
The 'Sen measure' of poverty is said to
measure the distribution of welfare rather
than merely the distribution of wealth in a
society because
a. it defines poverty in terms of minimum
level of living
b. it measures the energy requirements of
a household
c. it prescribes a universal standard of
well being
d. it seeks to measure the income
shortfall of each person below the
poverty line
79.
Sectoral shares in GDP
In the pie-chart given above, the shares of
different sectors in a country's GDP are
shown. Rank the following sectors in the
descending order of their shares :
1. Tertiary sector.
2. Secondary sector.
3. Primary sector.
Select the correct answer using the codes
given below
a. 1, 2, 3
b. 1, 3, 2
c. 3, 1, 2
d. 3, 2, l
80. Consider the following statements relating
to Mahalanobis models of planning:
1. The co-efficient lk (output of capital
goods sector ploughed back) is the
crucial determinant of growth of
national income.
2. The long term growth of income
depends on growth of C-sector.
3. The per capita income is targeted to
double after 2 plans.
Which of the statements) given above is /
are correct ?
a. 1 only
b. 2 only
c. 2 and 3
d. 1 and 3
81. The point of intersection of the curves 'less
than Ogive' and 'more than Ogive' gives
which one of the following measures ?
a. Median
b. Harmonic Mean
c. Arithmetic Mean
d. Geometric Mean
82. Match List-I (Correlation between
Variables) with List-II (Sign/Nature) and
select the correct answer using the codes
given below the lists—
List-I
(Correlation between Variables)
A. Correlation between fixed cost and
variable cost
B. Correlation between ex-post savings
and ex-post investments
C. Correlation between investment
and rate of interest
D. Correlation between demand for
money for transaction and national
income
List-II
(Sign/Nature)
1. Positive
2. Negative
3. Positive and perfect
4. Negative and perfect
5. Zero
Codes:
a. A-5, B-1, C-2, D-3
b. A-2, B-3, C-4, D-1
c. A-5, B-3, C-2, D-1
d. A-2, B-1, C-4, D-3
12 of 16
83. Consider the following two ranking series
R1 and R2:
R1: a1, a2, ..........., An–1, an
R2 : an, an–1, .........., a2, a1
What is value of the Spearman's
correlation coefficient?
a. – l
b. – 0.5
c. 1
d. 0.5
84. If z = x + y, and x and z are positively
correlated, then what is the nature of the
correlation between variable y and variable
z?
a. Negative
b. Positive
c. May be negative or positive
d. None of the above
85. If food prices increase at relatively faster
rates than other items, then at what rate
will the consumer price index for
agricultural labour in relation to that for
urban non-manual workers increase ?
a. Slower rate
b. Same rate
c. Faster rate
d. Cannot be determined
86. Consider the following statements :
National Water Policy, 2002 provides for
1. Stress on maintenance of irrigation
projects.
2. Participatory approach to water
management.
3. Conventional methods of water
conservation.
4. Dam safety legislation to ensure proper
inspection, maintenance and
surveillance.
Which of the statements given above are
correct?
a. 1, 2 and 3
b. 1, 2 and 4
c. 2, 3 and 4
d. 1, 3 and 4
87. According to 2001 Census, what is the
approximate value of Work Participation
Rate (WPR) in India ?
a. 37 percent
b. 39 percent
c. 41 percent
d. 43 percent
88. Consider the following statements :
The unemployment rate differs in the
different sections of the people in India.
Arrange the different sections, given
below, in the order of increasing rate of
unemployment—
1. Youth (15-29 years of age).
2. Educated youths.
3. Technically educated youth.
Select the correct answer using the codes
given below:
a. 1, 3, 2
b. 2, 3, l
c. 1, 2, 3
d. 3, 2, l
89. Consider the following statements :
The dependency rate depends on
1. Rate of growth of population.
2. Birth rates.
3. Population profile by age groups.
Which of statement(s) given above is / are
correct ?
a. 2 only
b. 2 and 3
c. 1 and 3
d. 1, 2 and 3
90. Match List-I (Types of Average) with List-
II (Properties of Average) and select the
correct answer using the codes given
below the lists
List-I
(Types of Average)
A. Geometric Mean
B. Harmonic Mean
C. Arithmetic Mean
D. Mode
List-II
(Properties of Average)
1. Give largest weight to smallest item
2. Sum of the deviations from it is zero
3. Value can also be determined
graphically
4. Best suited for averaging of ratios and
percentages
5. Not capable of mathematical
manipulation
Codes:
a. A-4, B-5, C-2, D-1
b. A-2, B-1, C-3, D-5
c. A-4, B-1, C-2, D-5
d. A-2, B-5, C-3, D-1
91. Which one of the following criteria gives
the estimate of the extent of underutilisation
of the labour force in terms of
person days ?
a. CWS criterion
b. CDS criterion
c. UPS criterion
d. UPSS criterion
92. Consider the following statements :
In order to augment employment
opportunities, the draft Tenth Five Year
Plan has proposed some labour intensive
sectors that require policy intervention.
These sectors are:
1. Agriculture and allied activities.
2. Small and medium enterprises.
3. Export promotion activities.
4. Services sectors.
Which of the statements given above are
correct?
a. 1 and 3
b. 3 and 4
c. 1, 2 and 3
d. 1,2 and 4
93. In which type of unemployment, marginal
productivity is zero or near zero?
a. Structural
b. Disguised
c. Seasonal
d. Frictional
94. Consider the following statements :
The major challenge to the viability of
agriculture in India is posed by
1. High domestic support.
2. Export-subsidies.
3. Market-imperfections.
4. Denial of market access through
various tariff and non-tariff barriers.
Which of the statements given above are
correct?
a. 1 and 2
b. 1, 2 and 4
c. 1, 3 and 4
d. 2, 3 and 4
95. Which one of the following is not correct ?
a. The share of primary sector in GDP
has been declining over the years
b. Stationary position of the secondary
sector indicates lack of employment
orientation on the part of the industrial
growth
c. Rising share of tertiary sector seems to
be more employment oriented
d. The proportion of employees'
compensation has been declining over
the years
96. Consider the following statements :
Direction of India's Foreign Trade on the
basis of share in total exports during 1987-
88 to 2001-02 shows
1. Fall in relative importance of OECD
(Organisation for Economic Cooperation
and Development) countries
over the years mentioned above.
2. Rise in importance of OPEC
(Organisation of Petroleum Exporting
Countries) countries over the same
years.
3. Rise in importance of Eastern
European countries.
4. Rise in importance of developing
countries.
Which of the statements) given above is /
are correct ?
a. 1 only
b. 1 and 2
c. 1, 2 and 4
d. 2, 3 and 4
97. Which one of the following statements
holds good for Indian economy ?
a. The rate of growth of black income
generated in India is faster than the rate
of growth of Gross National Product
b. The rate of growth of black income
generated in India is equal to the rate
of growth of its industrial sector
c. The rate of growth of black income
generated in India is equal to the rate
of growth of its agricultural sector
d. The rate of growth of black income
generated in India has been brought
down significantly in the post reform
period
98. Match List-I (Committee / Commission)
with List-II (Chair-person) and select the
correct answer using the codes given
below the lists—
List-I
(Committee/ Commission)
A. Foreign Direct Investment
B. Venture Capital
C. Disinvestment
D. Capital Account Convertibility
14 of 16
List-II
(Chairperson)
1. N.K.Singh
2. Chandrashekhar
3. Tarapore
4. G.V. Ramakrishna
5. Raja Chellaiah
Codes:
a. A-4, B-2, C-1, D-3
b. A-1, B-3, C-4, D-5
c. A-4, B-3, C-1, D-5
d. A-1, B-2, C-4, D-3
99. Match List-I with List-II and select the
correct answer using the codes given
below the lists—
List-I
A. Crowding out effect
B. Rolling settlements
C. Special economic zones
D. Development of social sector
List-II
1. Surplus budget
2. Off-shore banking units
3. Equity markets
4. Deficit budget
5. Disinvestment fund
Codes:
a. A-5, B-2, C-1, D-4
b. A-4, B-3, C-2, D-5
c. A-5, B-3, C-2, D-4
d. A-4, B-2, C-1, D-5
100. Which of the following forms can be
assumed by the inter-relationship between
economic growth and human
development?
1. High human development is possible at
low level of economic growth.
2. High economic growth may not get
translated into high human
development.
3. High economic growth and high
human development is impossible.
4. High economic growth and high
human development is possible
depending on the policy choices of a
country.
Select the correct answer using the codes
given below :
a. 1, 2 and 4
b. 2 and 3
c. 1, 3 and 4
d. 1, 2 and 3
101. In which three years, there had been
negative rate of growth for agriculture and
allied sectors ?
a. 1996-97, 1998-99,1999-2000
b. 1997-98, 2000-2001,2002-2003
c. 1996-97, 2001-2002, 2002-2003
d. 1998-99, 1999-2000, 2000-2001
102. Consider the following statements :
1. Integrated Forest Protection Scheme
has been formulated by merging two
existing schemes 'Forest Fire Control
and Management' and 'Bridging of
Infrastructure Gaps in the Forestry
Sector in the North Eastern Region and
Sikkim.'
2. Integrated Forest Protection Scheme is
a joint venture of Central and State
governments.
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
103. India achieved more than 8 per cent rate of
growth in Real Gross Domestic Product in
2003-04. In which three years in the past
India achieved a growth rate in Real GDP
at more than 8 per cent ? Select the correct
answer using the codes given below:
a. 1967-68,1975-76, 1988-89
b. 1966-67,1980-81,1994-95
c. 1955-56, 1982-84,2001-02
d. 1972-73,1985-86, 1999-2000
104. Consider the following statements with
respect to measures adopted by the
Government of India to control black
income:
1. Voluntary disclosure scheme.
2. Issue of five hundred rupee notes.
3. Issue of special bearer bond on
nominal rate of interest.
4. Privatisation of economy.
Which of the statements given above are
correct?
a. 1 and 3
b. 2 and 3
c. 2, 3 and 4
d. 1, 2, 3 and 4
105. Mahalanobis plan model was adopted from
which growth model?
15 of 16
a. Harrod-Domar model
b. Feldman's model
c. Lewis model of economic growth
d. Ranis-Fei model

106. Which one of the following is the basic
objective of monetary policy ?
a. To control deficit of the budget
b. To control deficit in the balance of
payment
c. To control cost and availability of
money
d. To control public expenditure
107. Match List-I (Committee) with List-II
(Subject) and select the correct answer
using the codes given below the lists :
List-I
(Committee)
A. Tandon Committee
B. Rakesh Mohan Committee
C. Narasimhan Committee
D. Omkar Goswami Committee
List-II
(Subject)
1. Capital Financing
2. Infrastructure Development
3. Financial Sector Reforms
4. Industrial Sickness
Codes:
a. A-1, B-3, C-2, D-4
b. A-4, B-2, C-3, D-1
c. A-1, B-2, C-3, D-4
d. A-4, B-3, C-2, D-1
108. The heavy industries strategy under the
Second Five Year Plan has been criticised
for several reasons. Which one of the
following is not among them ?
a. Inadequate emphasis on agriculture,
small scale and cottage industries
b. Emergence of continuous trade deficits
c. Growing unemployment and inequality
of income and wealth
d. Failure to achieve expansion in the
capital goods sector and diversification
of industrial capacity
109. Which one of the following statements is
correct?
a. Rural urban income disparities have
increased over a period of time
b. Rural urban income disparities have
not changed over a period of time
c. Rural urban income disparities have
declined over a period of time
d. Income distribution does not influence
growth
110. Consider the following statements :
The National Agricultural Policy of 2000
in India aims at
1. A growth rate of 6% per annum in
agriculture.
2. Growth with equity.
3. Supply driven growth rate.
4. Demand driven growth rate.
Which of the statements given above are
correct?
a. 1 and 2
b. 2 and 3
c. 2 and 4
d. 3 and 4
111. In India, which one among the following
formulates the fiscal policy ?
a. Planning Commission
b. Ministry of Finance
c. Finance Commission
d. The Reserve Bank of India
112. Consider the following statements :
1. The first Industrial Policy of
Government of India was introduced in
1948.
2. The Industrial Policy introduced by
Government of India in 1956 is also
known as 'Economic Constitution' of
India.
3. The Committee on Growth of
concentration of economic powers in
India was appointed under the
chairmanship of Prof. P.C.
Mahalanobis in 1961.
4. A special group on targeting ten
million employment opportunities per
year was constituted by Planning
Commission with one of its member as
Chairman.
Which of the statements given above are
correct?
a. 1, 2 and 3
b. 2, 3 and 4
c. 1, 3 and 4
d. 1, 2 and 4
113. Which one of the following is correct in
respect of India? Percentage of workers
engaged in
a. agricultural sector is increasing
b. industry sector is more than tertiary
sector
c. tertiary sector is decreasing
d. tertiary sector is more than industry
sector
114. Consider the following statements :
16 of 16
1. Tenth Five Year Plan aims at a
reduction of poverty ratio by 5
percentage points by 2007.
2. Tenth Five Year Plan aims at a
reduction in gender gaps in literacy
and wage rates by at least 40 per cent
by 2007.
3. Tenth-Five Year Plan aims at a
reduction in the decadal rate of
population growth between 2001 and
2011 to 16.2 per cent.
4. Tenth Five Year Plan aims at an
enhancement in literacy rates to 75 per
cent by 2007.
Which of the statements given above are
correct?
a. 1 and 2
b. 2 and 3
c. 2, 3 and 4
d. 1, 3 and 4
115. Assertion (A): VAT is less inflationary
man multi-stage turnover tax.
Reason (R): VAT reduces the cascading
effect on prices.
Codes:
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): Indirect taxes do not satisfy
the canon of equity.
Reason (R): Indirect taxes fall on all
persons indiscriminately, irrespective of
their ability to pay.
Codes:
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): Variance of X is always
greater than the Standard Deviation of X.
Reason (R): Variance is square of
Standard Deviation.
Codes:
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): Index numbers are useful
tools in economic planning.
Reason (R): Consumer price index number
estimates the changes in the standard of
living of the people.
Codes:
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): Reducing fiscal deficit is a
challenging job for the government of
India.
Reason (R): Reduction in government
expenditure reduces social investment.
Codes:
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): Real income is greater than
money income during inflation.
Reason (R): Real
Income Money Income
Pr ice Index Number
=
Codes:
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