Economics-2007

1. Which curve shows that how much of its
import commodity is required by a nation
in exchange for various quantities of its
export commodity?
a. Offer curve
b. Indifference curve
c. Demand curve
d. Production possibility curve
2. Which of the following is/are correct in
respect of opportunity cost theory?
1. A straight line production possibility
curve indicates constant opportunity
cost.
2. The production possibility curve under
increasing cost would be concave to
the origin.
Select the correct answer by using the code
given below
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2
3. Prebisch-Singer thesis enunciates which of
the following?
1. International trade has been operating
as a mechanism of international
inequalities and has, therefore, retarded
the development of less developed
countries.
2. he strategy of import substitution as a
means to achieve self-sufficiency in
industrial production, has led to mal
allocation of resources and a very bad
effect on industrial productivity.
Select the correct answer by using the code
given below
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2
4. If the supply of a commodity is very
inelastic in the exporting country and
demand for the same is fairly elastic in the
importing country, the imposition of tariff
will have which one of the following?
a. A very large protective effect
b. No protective effect atall
c. A very large revenue effect
d. A very small protective effect
5. If an Indian exporter exports to
Bangladesh Rs. 50,000 worth of goods
payable in three months, the balance of
payment for India will show which one of
the following ?
a. Current account credit goes up and
capital account debit also goes up by
Rs. 50,000 each
b. Current account credit goes down and
capital account debit goes up by Rs.
50,000 each
c. Current account credit goes down and
capital account debit also goes down
by Rs. 50,000 each
d. Current account credit goes up and
capital account debit goes down by Rs.
50,000 each
6. Devaluation makes Balance of Payments
worse in the short-run and then improves it
in the long-run. What is this phenomenon
known as?
a. Marshall -Lerner condition
b. J-curve effect
c. Money illusion effect
d. Backwash effect
7. Which one of the following is considered
as non-debt creating foreign investment
inflow?
a. External assistance
b. Foreign direct investment
c. Borrowing from the IMF
d. Commercial borrowings
8. Exchange rates are kept same in all the
parts of market by using which one of the
following ?
a. SDRs
b. Arbitrage
c. Hedging
d. Speculation
9. An over-valued currency in the foreign
exchange market will have which one of
the following impacts in India ?
a. Make imports costlier and exports
cheaper
b. Will have no effect on cost of imports
c. Give protection to domestic industry
against foreign competition
d. Make imports cheaper and exports
costlier
10. The inflationary impact of the inflow of
foreign capital in India is neutralized by
the Reserve Bank of India by which one of
the following methods?
a. Permitting outflow of foreign
exchange
b. Sale of securities in the open market
c. Facilitating imports of essential
commodities
d. Permitting depreciation of Indian rupee
in the foreign exchange market
11. Which one of the following is the correct
sequence in the process of economic
integration between different countries?
a. Common market—Free trade area—
Custom union— Economic union
b. Free trade area—Custom union—
Common market— Economic union
c. Free trade area—Common market—
Custom union— Economic union
d. Common market—Free trade area—
Economic union— Custom union
12. Under Gold Standard, how can a surplus in
a country's balance of payments be
eliminated ?
a. By inflow of gold and a rise in general
price level
b. By outflow of gold and a rise in
general price level
c. By inflow of gold and a fall in general
price level
d. By outflow of gold and a fall in
general price level
13. Which one of the following governs the
theory which brings parity with respect to
convertibility of currency into gold
content?
a. Mint parity of exchange
b. Special Drawing Rights
c. Floating exchange rate
d. Multiple exchange rate
14. In order to reduce the balance of payment
deficits of the member countries, which
one of the following schemes was
introduced by the World Bank in 1980?
a. Buffer stock loans
b. Supplementary loans
c. Structural adjustment loans
d. Gold loans
15. Special Drawing Rights (SDRs)
introduced by the IMF are in which form ?
a. Gold
b. Both silver and gold
c. Paper currency
d. Book-keeping entry only

16. Which one of the following does not
constitute a part of the jurisdiction of
WTO ?
a. Trade related tariff and non-tariff
barriers
b. Trade related intellectual property
rights
c. Agreement related to agriculture
d. Regional trade agreements
17. What is the assumption that economic
growth will percolate down to all sectors,
known as?
a. Dispersal theory
b. Trickle down theory
c. Pump priming
d. Decentralized growth theory
18. What is the approximate share of SSIs in
gross industrial value added in the Indian
economy ?
a. 25%
b. 30%
c. 40%
d. 45%
19. Consider the following sectors,
contributing to India's real GDP during the
year 2005-06 :
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1. Agriculture and allied activities
2. Industry
3. Construction
4. Community, social and personal
services
Which one of the following is the correct
descending order in respect of their
contribution?
a. 1-4-3-2
b. 1-2-4-3
c. 3-4-2-1
d. 3-2-1-4
20. The 12th Finance Commission has
recommended to bring down the revenue
deficit of the centre and states to zero by
which year ?
a. 2006-07
b. 2007-08
c. 2008-09
d. 2009-10
21. In which of the following years, the share
of FII (net) flows into Indian economy was
the highest?
a. 1999-2000
b. 2000-01
c. 2003-04
d. 2004-05
22. Among different items of import of capital
goods to India during the year 2005-06,
which one of the following was the highest
in the value terms ?
a. Machine tools
b. Electronic goods including computer
software
c. Transport equipments
d. Project goods
23. Match List-I with List-II and select the
correct answer using the code given below
the lists
List-I (Type of Unemployment)
A. Frictional Unemployment
B. Structural Unemployment
C. Seasonal Unemployment
D. Disguised Unemployment
List-II (Associated Fact)
1. Non-availability of job
2. Marginal productivity is zero
3. Use of obsolete technology for
production
4. Population pressure on land
Code:
a. A-4, B-2, C-1, D-3
b. A-1, B-3, C-4, D-2
c. A-4, B-3, C-1, D-2
d. A-1, B-2, C-4, D-3
24. According to the 60 th Round of NSSO
Survey on Employment and
Unemployment, unemployment rate on
current daily status basis (number of
person days per 1000 person days) was
highest for which one of the following
categories?
a. Rural male
b. Rural female
c. Urban male
d. Urban female
25. Which one of the following committees
was set up to review the concept of
poverty line ?
a. S. Chakravarty Committee
b. D.T. Lakdawala Committee
c. K.N. Wanchoo Committee
d. R.C. Dutt Committee
26. Which one of the following countries has
the highest life expectancy at birth ?
a. Pakistan
b. India
c. Nepal
d. Sri Lanka
27. According to Census-2001 data, what is
the urban population as percentage of total
population of India ?
a. 23.3%
b. 25.7%
c. 27.8%
d. 28.9%
28. If the Paasche's index is 196 and Fishers'
index is 210, what is the value of the
Laspeyre' index ?
a. 220
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b. 215
c. 225
d. 230
29. Consider the following statements The
coefficient of correlation.
1. is not affected by a change of origin
and scale.
2. lies between –a and +a
3. is a relative measure of linear
association between two or more
variables.
Which of the statements given above is/are
correct ?
a. 1 only
b. 2 and 3
c. 1 and 3
d. 1, 2 and 3
30. In a certain distribution, the following
results were obtained
X = 45, Median = 48, Coefficient of
skewness = - 0.3.
What is the value of standard deviation ?
a. 20
b. 25
c. 28
d. 30
31. The first quartile derived from a set of
observations is 27 and its quartile
deviation is 17. What is its third quartile ?
a. 59
b. 61
c. 65
d. 57
32. What is a cumulative percentage curve
called ?
a. Frequency density curve
b. Ogive curve
c. Lorenz curve
d. Frequency polygon
33. In plan models, which type of model is
generally used to check consistency among
various sectors?
a. Harrod-Domar model
b. Input-output model
c. Linear programming model
d. Solow model
34. Consider the following A dual economy
implies
1. the existence of domestic and export
markets.
2. modern industry and commercial
agriculture co-existing with
subsistence farming and traditional
handicrafts.
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
35. Theory of linkages is most appropriate for
which kind of development models ?
a. Balanced growth models
b. Unbalanced growth models
c. Population growth models
d. One sector growth models
36. With which one of the following is
backward bending supply curve usually
associated ?
a. Land
b. Labour
c. Capital
d. Organisation
37. Which one of the following statements is
correct?
An increase in money supply in Keynesian
framework results in
a. a higher level of income and a higher
rate of interest
b. a lower level of income and a lower
rate of interest
c. a higher level of income and a lower
rate of interest
d. a lower level of income and a higher
rate of interest
38. Which one of the following statements is
correct?
A fall in the money supply results in the
a. rightward shift in the IS curve
b. rightward shift in the LM curve
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c. leftward shift in both die LM curve and
the IS curve
d. leftward shift in the LM curve only
39. Which one of the following statements is
correct?
The IS function indicates the
a. locus of the money market equilibrium
b. locus of the commodity market
equilibrium
c. locus of the labour market equilibrium
d. locus of both money and labour market
equilibrium
40. Which one of the following statements is
correct?
According to Keynes, fresh investment
would be possible only if
a. the marginal efficiency of capital
exceeds the rate of interest
b. the marginal efficiency of capital is
less than the rate of interest
c. the marginal efficiency of capital is
positive
d. the marginal efficiency of capital is
negative
41. Which one of the following statements is
correct?
Autonomous investment is
a. functionally related to interest rate
b. functionally related to both income and
interest rate
c. functionally related to income alone
d. independent of income and interest rate
42. Consider the following statements
1. The MPC is higher in a poor country
and lower in a rich country.
2. Higher the MPC, higher will be the
value of multiplier.
3. Lower the MPS, lower will be the
value of multiplier.
Which of the statements given above are
correct?
a. 1 and 2
b. 1 and 3
c. 2 and 3
d. 1, 2 and 3
43. Match List-I with List-II and select the
correct answer by using the code given
below the lists
List-I (Economist)
A. A. C. Pigou
B. J.M. Keynes
C. J.R. Hicks-A.H. Hansen
D. J.S. Duesenberry
List-II (Concept)
1. Liquidity Preference
2. Real Balance Effect
3. Ratchet Effect
4. IS-LM Analysis
Code:
a. A-2, B-1, C-4, D-3
b. A-4, B-3, C-2, D-1
c. A-2, B-3, C-4, D-1
d. A-4, B-1, C-2, D-3
44.
In the diagram given above, which one of
the following is indicated by the point A
lying below the IS curve ?
a. Excess demand in the commodity
market
b. Excess supply in the money market
c. Excess supply in the commodity
market
d. Equilibrium income and interest
45. In the permanent income hypothesis of
consumption, components of which one
pair has a proportional ' relationship?
a. Permanent income and transitory
income
b. Permanent income and transitory
consumption
c. Permanent income and permanent
consumption
d. Transitory income and transitory
consumption

46. Which one of the following statements is
correct?
Crowding out in an economy can be
avoided if
a. government finances its expenditure by
new money supply
b. government finances its expenditure by
taxes
c. government finances its expenditure by
buying outstanding bonds
d. government finances its expenditure by
raising cash reserve ratio
47. Which one of the following statements is
correct?
According to Say's law of market,
a. demand creates its own supply
b. supply creates its own demand
c. demand and supply are always equal
d. demand and supply are never equal
48. Which one of the following statements in
respect of the National Income Accounting
is correct ?
a. Budget deficit is equal to savingsinvestment
gap
b. Budget deficit is more than savingsinvestment
gap
c. Budget deficit is less than savingsinvestment
gap
d. Budget deficit is always zero
49. Which of the following is/are included in
National Income Accounting ?
1. Purchase of shares and bonds.
2. Value of residential investment.
3. Value of production for self
consumption.
4. Value of intermediate goods.
Select the correct answer by using the
codes given below:
a. 1 and 2
b. 2 only
c. 2 and 3
d. 3 and 4
50. Consider the following statements
1. The equilibrium between the aggregate
demand and aggregate supply may take
place at a point of less-than-full
employment in an economy.
2. The size of deficient demand is
inversely proportional to the
deflationary gap.
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
51. Among the items of export of agricultural
and allied products from India during the
year 2005-06, which one of the following
was the highest in the value terms ?
a. Tea
b. Coffee
c. Rice
d. Marine products
52. Consider the following important sources
of tax revenue for the Central Government
1. Corporation tax
2. Taxes on income other than
corporation tax
3. Union excise duties
4. Service tax
Which one of the following is the correct
order of the aforesaid taxes in descending
order in terms of their yield as proposed in
the Union Budget 2006-07 ?
a. 1-2-3-4
b. 1-3-2-4
c. 2-3-1-4
d. 4-2-3-1
53. The Twelfth Finance Commission has
recommended States' share in the divisible
pool of taxes at what percentage ?
a. 26.5 percent
b. 28.5 percent
c. 29.5 percent
d. 30.5 percent
54. Consider the following statements about
the National Agricultural Insurance
Scheme (NATS):
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1. The scheme has been
implemented from Rabi 1999-2000
season.
2. The scheme is available to non-loanee
farmers only.
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
55. Which category of the target groups is not
included in the SHG bank linkage
programme for micro-finance to
agriculture ?
a. Unemployed non-agricultural
labourers
b. Agricultural and non-agricultural
labourers
c. Small and marginal farmers
d. Artisans and craftsmen
56. Consider the following components of
money supply in India
1. Currency in'circulation.
2. Banker's deposits with the RBI.
3. Other deposits with the RBI
4. Demand deposits of banks
Which of the above are the components of
Reserve Money ?
a. 1 and 3
b. 1, 2 and 3
c. 1, 2 and 4
d. 2, 3 and 4
57. Which one of the following is the correct
expression for the actual rate of growth
(g)?
(Where s = the ratio of saving to income c =
actual incremental capital- output ratio)
a. g = s/c
b. g = s × c
c. g = s + c
d. g = se
58. Inverted-U hypothesis of Kuznets is
associated with movement of which one of
the following ?
a. Consumption inequality
b. Wealth inequality
c. Income inequality
d. Tax inequality
59. Consider the following statements for
Indian Millennium Deposits (IMDs)
scheme.
1. The scheme was launched by the
Reserve Bank of India.
2. It was intended for NRIs and resident
Indians both.
3. The tenure of IMDs was 5 years.
Which of the statements given above is/are
correct ?
a. 3 only
b. 2 only
c. 1 and 2
d. 2 and 3
60. Assertion (A): An oligopolist faces
demand curve which has a kink at the level
of the prevailing price.
Reason (R): The segment of the demand
curve above the prevailing price level or
kink is highly inelastic and the segment of
the demand curve below the prevailing
price level is elastic.
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

61. Assertion (A): Gross National Product will
always be more than the Gross Domestic
Product.
Reason (R): To get Gross National
Product, not factor income from abroad is
added to Gross Domestic Product.
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
62. Assertion (A): Indirect taxes promote
inequality in the distribution of income.
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Reason (R): Poor bear more burden of
indirect taxes.
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
63. Assertion (A): A balance of payments
deficit is always and every where a
monetary phenomenon.
Reason (R): A balance of payments deficit
cannot be corrected through changes in
money supply. 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
64. Assertion (A): Fisher's index number is an
ideal one.
Reason (R): In the Fisher's index number,
the upward bias of Laspeyre's index and
downward bias of Paasche's index are
balanced to a great extent.
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
65. What is the empirically fitted relationship
between the rate of change of money
wages and rate of unemployment, known
as?
a. Baumal's Hypothesis
b. Keynesian Model
c. Friedman' Model
d. Phillips Curve
66. In the simplified version of Friedman's
quantity theory of money, velocity of
circulation of money depends on which of
the following ?
a. Rate of interest and rate of price
change
b. Rate of interest and rate of change of
income
c. Rate of change of money supply and
rate of change of consumption
d. Rate of change of price and rate of
change of investment
67. Consider the following assets
1. Cash held by public
2. Equity shares of banks
3. Deposits of banks
4. RBI bonds
Which of the above assets are considered
as part of money supply?
a. 1 and 2
b. 1 and 3
c. 2 and 3
d. 1, 3 and 4
68. Which one of the following is stated by the
quantity theory of money?
a. An increase in the nominal money
supply causes a proportional increase
in the price level
b. An increase in the real money supply
causes a proportional increase in the
price level
c. An increase in the nominal money
supply causes a proportional increase
in real GNP
d. An increase in the real money supply
causes a proportional increase in real
GNP
69. Consider the following statements
1. Bond price and interest rate are
positively related.
2. Bond price and interest rate are
negatively related.
3. Credit creation varies directly with
Cash Reserve Ratio (CRR).
4. Credit creation varies inversely with
Cash Reserve Ratio (CRR).
Which of the statements given above are
correct?
a. 1 and 3
b. 1 and 4
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c. 2 and 3
d. 2 and 4
70. Suppose, due to an open market purchase
of government securities, reserves in the
commercial banks increase by Rs. 1,000. If
the reserve ratio is 20 percent, what will be
the increase in money supply ?
a. Rs. 5,000
b. Rs. 4,000
c. Rs. 2,000
d. Rs. 1,000
71. Which one of the following is not a
component of demand-pull inflation ?
a. An increase in government expenditure
with no change in tax rate
b. A downward shift in savings function
c. A rise in the money wage rate
d. An upward shift of investment function
72. Which one of the following statements is
correct?
According to Peacock and Wiseman,
public expenditure grows
a. steadily over a period of time
b. at a constant rate in relation to GNP
c. in a step by step manner
d. at a lower rate in relation to GNP
73. As compared to traditional budgeting, in
case of Performance and Programme
Budgeting System (PPBS), which one of
the following statements is correct ?
a. It stresses on outcome only
b. It stresses on expenditure allocation
only
c. It stresses more on outcome and less
oh expenditure allocation
d. It stresses less on outcome and more
on expenditure allocation
74. Which one of the following statements is
correct?
Zero-base budgeting implies that
a. it emphasizes physical targets rather
than financial targets
b. spending on all programmes is reexamined
and justified each year rather
than following add-on every year
c. it is purely an evaluation of existing
budget and there is nothing new in it
d. it focuses on centralization of
expenditure
75. Which one of the following statements is
correct?
The revenue from the imposition of an
advolarem tax and that of a unit tax in a
perfectly competitive market which results
in the same price rise, are
a. more for advolarem tax
b. more for unit tax
c. equal for both the taxes
d. zero for both the taxes

76. In which one of the following groups of
taxes, do impact and incidence of tax
coincide?
a. Income tax and corporation tax
b. Income tax and excise duties
c. Corporation tax and custom duties
d. Excise duties and sales tax
77. The concept of optional taxation, based on
whatever criteria, has to cover decisionmaking
at which of the following levels?
1. The aggregate amount of taxations and
its division between direct and indirect
taxations.
2. The composition and rate schedules of
direct and indirect taxes.
3. The composition and revenue
schedules of indirect taxes.
4. The composition and revenue
schedules of direct taxes.
Select the correct answer by using the code
given below:
a. 1 and 4
b. 1 and 3
c. 1 and 2
d. 2, 3 and 4
78. According to Colin Clark, what is the
optimum limit of taxable capacity ?
a. 20 percent of National Income
b. 25 percent of National Income
c. 30 percent of National Income
d. 35 percent of National Income
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79. Which one of the following is not the
Canon of taxation as stated by Adam
Smith ?
a. Canon of equality
b. Canon of certainty
c. Canon of convenience
d. Canon of productivity
80. In the total deployment of gross bank
credit, which one of the following sectors
had the maximum share as in March,
2006?
a. Agriculture and allied activities
b. Services
c. Personal loan
d. Trade
81. As per use-based classification, which one
of the following sectors had recorded
highest growth in the year 2005-06 ?
a. Basic goods
b. Capital goods
c. Consumer goods
d. Intermediate goods
82. In which one of the following years, the
National Food Processing Policy was
formulated?
a. 2003
b. 2004
c. 2605
d. 2006
83. Consider the following statements
Accelerated Irrigation Benefit Programme
(AIBP) was modified in the year 2004 to
provide
1. the central assistance in the form of 70
percent loan and 30 percent grant for
non-special category states.
2. the central assistance in the form of 10
percent loan and 90 percent grant for
special category states.
3. the central assistance in the form of
conversion of the loan to grant if
projects are completed on schedule.
Which of the statements given above is/are
correct ?
a. 1 only
b. 1 and 3
c. 2 and 3
d. 1, 2 and 3
84. The Command Area Development
Programme (CADP) has been renamed as
which one of the following ?
a. Command Area Development and
Water Management Programme
b. Command Area Development and
Forest Conservation Programme
c. Command Area Development and
Pollution Control Programme
d. None of the above
85. Which one of the following states had the
highest per capita SDP (at current prices)
during 2003-04 on the basis of Economic
Survey 2005-06?
a. Haryana
b. Maharashtra
c. Punjab
d. Gujarat
86. Approach paper to 11th five year plan,
issued by the Planning Commission refers
to die merger of which one of the
following pairs of government
programmes ?
a. Sarva Shiksha Abhiyan with Mid-day
Meal Programme
b. Jawahar Rojgar Yojana with Mid-day
Meal Programme
c. Sarva Shiksha Abhiyan with National
Rural Employment Guarantee
Programme
d. Shram Shakti Yojana with Jawahar
Rojgar Yojana
87. Consider the following sectors
1. Electrical Equipments
2. Service Sector
3. Food Processing Industries
4. Metallurgical Industries
Which one of the following is the correct
sequence in ascending order in terms of
their share in attracting FDI inflows in
India ?
a. 4-3-2-1
b. 1-2-3-4
c. 2-1-3-4
d. 1-2-4-3
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88. Consider the following statements in
respect of the Tenth Plan
1. This plan has specific monitorable
targets in respect of poverty.
2. Decline in incremental capital-output
ratio is to be achieved through creating
new capacities.
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
89. In which of the following years, was the
highest growth of general index of
industrial production in India registered ?
a. 2001-02
b. 2002-03
c. 2003-04
d. 2004-05
90. Growth rate in NNP at factor cost (at
constant prices) has been highest during
which Five-Year Plan?
a. Ninth Plan
b. Eighth Plan
c. Seventh Plan
d. Fifth Plan
91. Which one of the following is not the
target stipulated in the Tenth Five-Year
Plan ?
a. "Creating 50 million job opportunities
b. Reduction in poverty ratio from 26
percent to 21 percent
c. Reducing gender gaps in literacy and
wages rates by 50 percent
d. Doubling per capita income in 8 years
92. Consider the following items which are
assigned weight in calculating wholesale
price index in India
1. Primary articles
2. Fuel, power light and lubricants
3. Food products
4. Chemicals and chemical products
Which one of the following is the correct
order of the above items in descending
order in terms of their weight in the price
index ?
a. 1-2-3-4
b. 1-2-4-3
c. 4-3-2-1
d. 1-3-2-4
93. Consider the following components of
financial saving of the household sector in
India
1. Currency
2. Deposits
3. Shares and debentures
4. Insurance funds
Which one of the following is the correct
order of the aforesaid items in descending
order in terms of their contribution to the
financial saving of the household sector in
the year 2005-06 ?
a. 1-2-3-4
b. 2-1-3-4
c. 2-4-1-3
d. 4-2-1-3
94. Consider the following statements relating
to marginal rate of technical substitution
(MRTS)
1. The MRTS in case of an isoquant
measures the rate at which one input is
substituted for the other.
2. The MRTS of input X for input Y at a
point on an isoquant is equal to the
positive slope of the isoquant at that
point.
3. The MRTS equals to the ratio of the
marginal product of input Y to the
marginal product of input X.
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
95. When is an isoquant L-shaped?
a. When the two factors are
complementary
b. When the two factors are perfect
substitutes
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c. When the two factors are used in fixed
proportions
d. When the two factors are imperfect
substitutes
96. A firm's average total cost is Rs 60, its
average variable cost is Rs. 55, and its
output is 50 units. What is its total fixed
cost ?
a. Less than Rs. 200
b. Between Rs. 200 and Rs. 300
c. More than Rs. 300
d. Firm has no fixed cost
97. Under constant returns to scale, which one
of the following is the nature of the longrun
average cost curve ?
a. Parallel to output axis
b. Upward rising
c. Downward sloping
d. Identical to short-run average cost
curve
98. In the figure shown below, MN and QR
are two straight line demand curves
parallel to each other. Consider the
following statements
1. The slope and elasticity of demand is
same on the demand curves MN and
QR, at the price P0.
2. The slopes are same but elasticity of
demand is more on demand curve MN
than demand curve QR, at price
3. Elasticities of demand are same but
slope of demand curve MN is less than
that of QR at the price P0.
Which of the statements given above is/are
correct ?
a. 1 only
b. 2 only
c. 1 and 3
d. 2 and 3
99. When the negative income effect is greater
than substitution effect, it is die case of
which one of the following?
a. Giffen goods
b. Inferior goods
c. Luxury goods
d. Normal goods
100. Which one of the following statements is
correct?
Consumption possibility frontier is same
as
a. the indifference curve
b. the budget line
c. the production possibility frontier
d. the demand curve
101. Which one of the following statements is
not correct ?
a. Normal goods have a positive income
elasticity of demand
b. Inferior goods have a negative income
elasticity of demand
c. Necessity has an income elasticity of
demand that is less than one
d. Luxury goods have an income
elasticity of demand that is equal to
one
102. A firm has certain initial equilibrium price,
when demand function QD = 50 - 3P and
supply function is 20 + 3P. If the firm's
demand function is shifted to QD = 68 -
3P, what is the initial equilibrium price
and the new equilibrium price,
respectively ?
a. 5 and 6
b. 5 and 8
c. 6 and 8
d. 8 and 5
103. Cournot' model assumes which of the
following?
1. There are two firms operating in the
market.
2. The firms face a kinked demand curve.
3. Each firm acts on the assumption that
their competitors will not react to her
decision to change output.
Select the correct answer by using the code
given below
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a. 1 and 2
b. 2 and 3
c. 1 and 3
d. 1, 2 and 3
104. Which one of the following statements is
correct?
The Sweezy mode of oligopoly assumes
that price elasticity of demand
a. is higher for a price increase than for a
price decrease
b. is lower for a price increase than for a
price decrease
c. cannot change for a price increase or
price decrease
d. cannot change for a price decrease
105. Which one of the following statements is
correct?
a. Demand for factors of production is an
independent demand
b. Demand for factors of production is a
derived demand
c. Demand for factors of production is a
reciprocal demand
d. Demand for factors of production is
same as the demand for commodities

106. What is the principle which is applied to
redress the imbalance between distribution
and welfare, known as ?
a. Principle of taxation
b. Compensation principle
c. Principle of effective demand
d. Principle of supply
107. The inconsistency of which one of the
following criteria is labelled as Scitovsky
Paradox ?
a. Little Criterion
b. Pareto Criterion
c. Bergson Criterion
d. Kaldor- Hicks Criterion
108. Consider the following statements
The distribution of two commodities
between two individuals is Pareto optimal
if
1. one individual cannot be made better
off without making the other worse off.
2. the individuals are on their
consumption contract curve.
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
109. What is maximising the level of
satisfaction with the given level of inputs
and technology, called ?
a. Technical efficiency
b. Allocative efficiency
c. Economics of scale
d. X- efficiency
110. Match List-I with List-II arid select the
correct answer by using the code given
below the lists
List-I (Model)
A. Marxist model of economic
development
B. Harrod-Domar growth model
C. Solow's growth model
D. Kaldor's growth model
List-II (Proposition)
1. Give importance to non-economic
variables
2. Flexible capital-output ratio is assumed
3. Productive capacity is equal to
aggregate demand
4. Structural maladjustment in a growing
economy
Code:
a. A-4, B-2, C-3, D-1
b. A-1, B-3, C-2, D-4
c. A-4, B-3, C-2, D-1
d. A-1, B-2, C-3, D-4
111. Which one of the following is a
component of disequilibrium mentioned
often in the context of trade and
development ?
a. Revenue gap
b. Savings-investment gap
c. Income gap
d. Expenditure gap
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112. The Feldman-Mahalanobis growth model,
which one of the following strategies is
followed ?
a. Emphasize the consumer goods first
and then the investment goods
b. Emphasize the investment goods first
and consumer goods later
c. Emphasize both the above sectors
simultaneously
d. Put emphasis on foreign trade only
113. Theory of demographic transition is
consistent with what kind of population
growth curve when plotted against
income?
a. U-shaped with a flat tail
b. Inverted U-shaped with a flat tail
c. S-shaped with a flat tail
d. Flat-shaped
114. What is the major underlying assumption
of efficiency wage models ?
a. Labour productivity depends on level
of nutrition
b. Labour productivity is independent of
number of labourers
c. Capital productivity is maximum
d. Capital and labour productivities are
equal
115. Which one of the following is not a
component of foreign aid of a country ?
a. Bilateral grant
b. Multilateral grant
c. Loans from international financial
institutions
d. Commercial borrowing
116. How is 'Path dependency" defined as ?
a. A condition of the past affecting the
past situation
b. A comparatively fast path of progress
of economy
c. A condition on which the past
conditions of an individual or economy
affects future condition
d. A slow path of progress of the
economy
117. What are the sufficient conditions for
operation of stage theories of growth?
1. Well-integrated commodity and money
markets.
2. Highly developed transport facilities.
3. Well-trained workforce and an
efficient bureaucracy.
4. Existence of a federal structure.
Select the correct answer by 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
118. What is the correct sequence of the
Marxian stage theory of growth?
1. Slavery
2. Primitive Communism
3. Socialism
4. Communism
5. Feudalism
6. Capitalism
Select the correct answer by using the
codes given below
a. 1-2-3-4-5-6
b. 2-1-5-6-3-4
c. 1-2-5-6-3-4
d. 2-1-5-6-4-3
119. Capital fundamentalism refers to which
one of the following ?
a. Capital structure of a country
b. Accelerated capital accumulation for
development
c. A capitalistic system of economy
d. Growth of capital expenditure
120. To make meaningful international
comparisons of income and living
standards, which one of the following is
most appropriate ?
a. A measure of purchasing power parity
b. A measure of per capita income
c. An index of poverty
d. An index of infrastructure
development