Economics-2008

1. Consider the following statements:
1. Annual Survey of Industries (ASI)
extends to the entire country
2. ASI covers all factories registered
under Sections 2m (i) and 2m (ii) of
the Factories Act, 1948.
Which of the following given above is/are
correct?
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2
2. Consider the following statements:
1. Varsha Bima, the rainfall insurance
scheme, is managed by the
Agricultural Insurance Company of
India Ltd (AICIL).
2. The scheme was introduced during the
2007 southwest monsoon period.
Which of the following given above is/are
correct?
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2
3. Tax on Banking Cash Transactions
(withdrawals) over a certain threshold in a
single day was introduced in the Union
Budget of which year?
a. 2002 - 03
b. 2004 - 05
c. 2005 - 06
d. 2006 - 07
4. Who among the following has suggested
migration to accrual accounting system
from cash-based accounting system in
India?
a. Y.V. Reddy
b. R.H. Patil
c. D.N. Ghosh
d. C. Rangarajan
5. In which of the following years was the
tax revenue as a percentage of GDP, the
lowest?
a. 2002 - 03
b. 2003 - 04
c. 2004 - 05
d. 2005 - 06
6. Which one of the following is the
proportion of rain-fed agriculture to the net
sown area in India?
a. 40%
b. 50%
c. 60%
d. 72%
7. Consider the following statements about
industrial relations on the basis of
Economic Survey:
1. There was a constant decline in the
number of strikes and lockouts during
2000 - 05 in India.
2. The maximum number of strikes and
lockouts in the year 2006 were
experienced by Kerala, followed by
Tamil Nadu and West Bengal.
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
8. If median and mode of a set of
observations are 206 and 26, respectively,
then what is the value of mean of the
observations?
a. 16
b. 179
c. 184
d. 19
9. Lorenz curve enables one to study which
of the following?
a. Averages
b. Dispersion
c. Correlation
d. Index numbers
10. Which one of the following is correct for a
normal distribution?
a. Standard deviation > Mean deviation >
Quartile deviation
b. Quartile deviation > Mean deviation >
Standard deviation
c. Mean deviation > Standard deviation >
Quartile deviation
d. Quartile deviation < Mean deviation >
Standard deviation
11. Coefficient of correlation is independent of
which of the following?
a. Change of origin only
b. Change of scale only
c. Change of origin and scale
d. None of the above
12. Which one of the following is the correct
expression for rank coefficient?
a.
6 2 1
1
d
n
Ó
.
.
b.
2
3
1 6 d
n n
Ó
.
.
c.
2
2
1 6
1
d
n
Ó
.
.
d.
2
3
1 6
1
d
n
Ó
.
.
(where d is the difference in ranks of an
observation and n is the total number of
observations)
13. Which one of the following indices
satisfies both time reversal and factor
reversal tests?
a. Laspeyre’s index number
b. Fisher’s index number
c. Paasche’s index number
d. Kelly’s index number
14. Which one of the following index numbers
is based on geometric mean?
a. Laspeyre’s index number
b. Fisher’s index number
c. Paasche’s index number
d. Bowley’s index number
15. What is a strategy which makes an all out
effort to provide the masses of people in
India access to basic facilities such as
health education, clean drinking water etc.,
termed as?
a. Inclusive growth strategy
b. Exclusive growth strategy
c. Rapid growth strategy
d. Balanced growth strategy

16. Assertion (A): The monopolist never
operates on the portion of the demand
curve which is inelastic
Reason (R): When elasticity of demand is
less than unity, MR is negative.
a. Both A anti R are individually true and
R is the correct explanation of A
b. Both A and R are individually true and
R is not the correct explanation of A
c. A is true but R is false
d. A is false but R is true
17. Assertion (A): The Revealed Preference
Hypothesis excludes the study of Giffen
Paradox.
Reason (R): Revealed Preference
Hypothesis Considers only negative
income elasticity of demand whereas
Giffen Paradox Giffen Paradox relates to
Positive elasticity of demand.
a. Both A anti R are individually true and
R is the correct explanation of A
b. Both A and R are individually true and
R is not the correct explanation of A
c. A is true but R is false
d. A is false but R is true
18. Assertion (A): Indifference curve for
perfect substitute goods is a downward
Sloping straight line.
Reason (R): For perfect substitute goods,
MRS is falling.
a. Both A anti R are individually true and
R is the correct explanation of A
b. Both A and R are individually true and
R is not the correct explanation of A
c. A is true but R is false
d. A is false but R is true
19. Assertion (A): There is no excess capacity
under monopolistic competition in the long
run.
Reason (R): The demand curve under
monopolistic competition is downward
sloping.
a. Both A anti R are individually true and
R is the correct explanation of A
b. Both A and R are individually true and
R is not the correct explanation of A
c. A is true but R is false
d. A is false but R is true
20. Assertion (A): MRP curve lies below the
VMP curve under imperfect competition.
Reason (R): Under imperfect competition
MR < P.
a. Both A anti R are individually true and
R is the correct explanation of A
b. Both A and R are individually true and
R is not the correct explanation of A
c. A is true but R is false
3 of 13
d. A is false but R is true
21. Which among the following is not a
committed expenditure of the Government
of India?
a. Interest payments
b. Pay and allowances
c. Transfers to States and Union
Territories
d. Loans and advances to States and
Union Territories
22. Which region of India has the lowest
Thermal Plant Load Factor (PLF) for
thermal power generation in the year 2006
- 2007?
a. Northern
b. Western
c. North-Eastern
d. Southern
23. Which of the following are the goals of
Sarva Shiksha Abhiyan (SSA)?
1. All children of 6 - 14 years age in
school/EGS (Education Guarantee
Scheme) Centre/bridge course by the
year 2015.
2. Bridge all gender and social category
gaps at primary stage by the year 2007
and at elementary education level by
the year 2010.
3. Universal retention by the year 2020.
Select the correct answer using the code
given below:
a. 1 and 2 only
b. 2 and 3 only
c. 1 and 3 only
d. 1, 2 and 3
24. Which of the following is/are not monitor
able target(s) for the 11th Five-year Plan?
1. Accelerate growth rate of GDP to 10%
by the end of the Plan and then
maintain it in the I2t1 Five-Year Plan
2. Double per capita income by 2016-17
3. Create 20 million new work
opportunities.
Select the correct answer using the code
given below:
a. 1 only
b. 2 only
c. 3 only
d. 2 and 3
25. Which one area of infrastructure is not
included in Bharat Nirman Scheme (2005 -
09) ?
a. Irrigation
b. Rural roads
c. Rural health
d. Rural housing
26. Which of the following statements
pertaining to the strategy to raise
agricultural output during the 11th Five-
Year Plan are correct?
1. Double the rate of growth of irrigated
area.
2. Improve water management, rain water
harvesting and watershed
development.
3. Provide easy access to credit at
affordable rates.
Select the correct answer using the code
given below:
a. 1 and 2 only
b. 2 and 3 only
c. 1 and 3 only
d. 1, 2 and 3
27. Which one of the following is not
proposed in the approach paper to the 11th
Five-Year Plan as important new social
interventions?
a. Provide freedom and resources to
select institutions so that they attain
global standards by the year 2011-12
b. Grant old age pension to the widows,
handicapped and deserted and
separated women
c. Ensure adequate representation of
women in elected bodies, State
Legislatures, and the Parliament
d. Provide emergency obstetrics care
facilities within 2 hours travel from
every habitat.
28. During which of the following years, was
annual average growth (at constant prices)
of agriculture and allied sectors negative?
a. 2002 - 03
b. 2003 - 04
c. 2005 - 06
d. 2006 - 07
29. Consider the following statements
1. The Fifth Economic Census was
conducted by CSO in the year 2007.
2. Intelligent Character Recognition
(ICR) technology is being used for
detailed processing of the data
collected in Fifth Economic Census.
4 of 13
Which of the statements given above is/are
correct?
a. 2 only
b. Neither 1 nor 2
c. 1 only
d. Both 1 and 2
30. NSSO regularly collects rural retail prices
on monthly basis from selected markets
for compilation of Consumer Price Index
Numbers. Which one of the following is
the correct pair of samples collected for
the purpose?
a. 403 villages and 39 urban centers
b. 503 villages and 49 urban centers
c. 603 villages and 59 urban centers
d. 703 villages and 69 urban centers
31. Which one of the following statements is
correct?
a. External Debt/GDP ratio has declined
consistently after the year 2003.
b. External Debt/GDP ratio has fluctuated
after the year 2003
c. External Debt/GDP ratio has increased
after the year 2003
d. External Debt/GDp ratio has remained
constant after the year 2003
32. In which of the following years, was the
trade balance favourable to India?
a. 1970-71 and 1974-75
b. 1972-73 and 1976-77
c. 1972-73 and 1975-76
d. 1971-72 and 1976-77
33. Who was the Chairman of the Committee
appointed in 2006 for setting out a
roadmap towards fuller capital account
convertibility
a. S.S. Tarapore
b. C. Rangarajan
c. M. Narasimharn
d. O.P. Sodhani
34. Which sector has attracted highest FDI
inflows during the period from August
1991 to September 2006 (in % share)?
a. Services Sector
b. Electrical Equipments
c. Telecommimications
d. Transportation Industry
35. Match List-I with List-II and select the
correct answer using the code given below
the lists:
List . I (Terms of Trade)
A. Gross barter terms of trade
B. Income terms of trade
C. Single factoral terms of trade
List . II (Explanation)
1. The ratio between the quantity of a
countryfs imports and exports
2.
Index of export
export prices quantity
Index of import prices
. .. .
. .. .
. .. .
3. Obtained by multiplying the
commodity terms of trade by an index
of productivity changes in domestic
export industries
4. The ratio of a countryfs export price
index to its import price index
A B C
a. 3 4 1
b. 1 2 3
c. 3 2 1
d. 1 4 3
36. Which one of the following statements is
correct?
The production possibility curve under
increasing opportunity cost is
a. concave to origin
b. convex to the origin
c. a straight line parallel to the x-axis
d. a straight line parallel to the y-axis
37. Which of the following is not a non-tariff
barrier?
a. Voluntary export restraint
b. Health and product standards
c. Environmental protection laws
d. Ad-valorem duties
38. In the Balance-of-Payment Account, the
transfer payments are included in which
one of the following?
a. Current account
b. Service account
c. Capital account
d. Official Reserves account
39. Which one of the following statements is
not correct?
a. The distinction between expenditure
switching and expenditure changing
was propounded by H. G. Johnson.
b. The Absorption Approach to BOP was
developed by Sydney Alexander.
c. The Elasticity Approach to BOP was
associated with Stolper-Samuelson.
5 of 13
d. Stability condition in the foreign
exchange market is known as
Marshall-Lerner condition.
40. Which one of the following explains
Balance-of-Payment adjustment
mechanism under the gold standard?
a. Devaluation
b. Flexible exchange rates
c. Income-adjustment mechanism
d. Price-specie flow mechanism
41. Which of the following is the highest form
of economic integration among different
nations?
a. Custom Union
b. Free Trade Area
c. Economic Union
d. Conunon Market
42. Which one of the following best
characterizes the Bretton Woods System of
exchange rates?
a. Adjustable fixed exchange rates
b. Fixed exchange rates
c. Adjustable pegged exchange rates
d. Pegged exchange rates
43. Which of the following are the basic
components of a typical IMF stabilization
programme?
1. Liberalization of foreign exchange
2. Devaluation of the official exchange
rate
3. A comprehensive anti-inflation
programme
4. General opening-up of the economy to
international commerce including
foreign investment
Select the correct answer using the code
given below
a. 1 and 3 only
b. 2 and 4 only
c. 1, 3 and 4 only
d. 1, 2, 3 and 4
44. Consider the following:
1. Kennedy Round of negotiations
2. Uruguay Round of negotiations
3. Tokyo Round of negotiations
Which is the correct chronological
sequence of the above?
a. 1 . 2 - 3
b. 3 . 1 - 2
c. 1 - 3 . 2
d. 2 - 1 - 3
45. Which of the following is meant by growth
in the context of growth and development?
a. Growth of gross national product in
money terms
b. Growth of per capita income in money
terms
c. growth of gross national product in
real terms
d. Growth of per capita income in real
terms

46. On which of the following grounds is
increasing inequality justified in initial
stages of development?
a. It puts greater incomes in the hands of
those who have greater average
propensity to consume
b. It puts greater incomes in the hands of
those who have greater average
propensity to save
c. It puts greater incomes in the hands of
those who have greater marginal
propensity to consume
d. It puts greater incomes in the hands of
those who have greater marginal
propensity to save


47. What is the correct sequence of the
following approaches to development in
terms of their chronological emergence?
1. Basic needs approach
2. Per capita income approach
3. Human Development Index Approach
Select the correct answer using the code
given below
a. 1 - 2 – 3
b. 2 – 1 – 3
c. 2 - 3 – 1
d. 1 - 3 – 2
48. The Mahalanobis model was developed for
which of the following plans?
a. First Five Year Plan
b. Second Five Year Plan
c. Third Five Year Plan
d. Fourth Five Year Plan
49. Which one of the following models
explains the paradox pertaining to the
rural-urban migration in the context of
rising urban employment?
a. Lewis model
b. Todano model
c. Solow model
d. Mahalanobis model
50. Consider the following statements:
6 of 13
Lewis’ model of development with
unlimited supplies of labour will fail to
work to the full extent if
1. there is no disguised unemployment in
the traditional sector.
2. modern sector wages do not remain
constant up to the point that surplus
labour is exhausted.
3. investment in the modern sector is
labour-saving.
Which of the statements given above is/are
correct?
a. 1 only
b. 1 and 2 only
c. 2 and 3 only
d. 1, 2 and 3
51. Match List-I with List-II and select the
correct answer using the code given below
the lists:
List-I
A. Aggregate Growth Model
B. Multi-sector Growth Model
C. Harrod-Domar Growth Model
D. The False Paradigm Model
List-I
1. Western models as applied to the
situation of developing countries
2. Analysis of growth in terms of interdependence
of sectors
3. Deals with the entire economy by
examining a set of important macro
variables
4. For a specific growth rate and a given
capital output ratio, the required rate of
domestic investment is determined
A B C D
a. 4 2 3 1
b. 3 1 2 4
c. 3 2 4 1
d. 4 3 1 2
52. Under which one of the following
fundamental assumptions, Solow was able
to show that steady state growth was
possible and stable?
a. Flexible K/L ratio
b. Flexible S/Y ratio
c. Constant growth rate of population
d. Constant rate of technical change
53. Consider the following statements:
According to the law of variable
proportions total product is maximum
when
1. marginal product becomes zero.
2. marginal product curve cuts average
product curve from above.
3. slope of marginal product curve is
zero.
4. tangent to the total product curve is
parallel to the horizontal axis.
Which of the statements given above are
correct?
a. 1 and 4
b. 3 and 4
c. 1 and 3
d. 2 and 3
54. Which one of the following statements is
correct?
If the elasticity of substitution between
two factors X and Y be zero, then it
implies that for a given change in outputs,
a. X and Y will always change by the
same proportion.
b. Y changes but X remains the same
c. X changes but Y remains the same.
d. X and Y both change necessarily by
different proportion.
55. Which of the following is not correct in
respect of Cobb- Douglas production
function?
a. It was originally based on the
empirical study of US manufacturing
industry.
b. It is a linearly homogeneous
production function, taking into
account two factors, labour and capital,
for the entire output of the
manufacturing industry.
c. It tells us that out put depends upon
labour and capital, and that part of
output which cannot be explained by
labour and capital, is attributed to the
residual.
d. It is based on the assumption of
operation of law of diminishing
returns.
56. Income consumption line of the
‘Consumer Theory’ is analogous in
‘Production Theory’ to which one of the
following?
a. Expansion path
b. Isoquant line
c. Ridge line
d. Isocost line
7 of 13
57. Suppose a fisherman has fishing net and a
boat, He alone hunts fish in sea for which
he has to pay no license fee etc. Fish,
caught by him, wifi have which one of the
following?
a. Zero economic cost of production as
he makes no out-of-pocket payment to
anybody and is working of his own
b. Negative economic cost of production
because he enjoys fishing and has to
make no payment
c. Positive cost of production due to his
sacrificing the opportunity of working
elsewhere and renting out fishing net
and boat etc.
d. Infinite cost of production
58. Short-run marginal cost of a firm does not
contain any element of which of the
following?
a. Costs of raw materials
b. Salaries of the managerial staff
c. Wages of labour engaged on daily
basis
d. Cost of fuel for operating machines
engaged in production
59. Consider the following statements
1. The vertical distance from average cost
(AC) curve to average variable cost
(AVC) curve is average fixed cost
(AFC).
2. AVC curve, AC curve and marginal
cost (MC) curve are ‘U’ shaped.
3. AFC curve is horizontal to ‘X’ axis.
Which of the statements given above are
correct?
a. 1 and 2 only
b. 2 and 3 only
c. 1 and 3 only
d. 1, 2 and 3
60. Which one of the following is the correct
sequence of magnitude of minima in
ascending order in marginal cost (MC)
curve, average cost (AC) curve and
average variable cost (AVC) curve?
a. MC, AVC, AC
b. AVC, AC, MC
c. MC, AC, AVC
d. AC, MC, AVC

61. Under perfect competition supply curve is
identified as which one of the following?
a. Rising portion of marginal cost curve
b. Rising portion of average total cost
curve
c. Rising portion of average variable cost
curve
d. Portion of marginal cost above the
average variable cost curve
62. Which one of the following statements is
correct?
A straight line demand curve (cutting both
the axes) is elastic
a. throughout the length of the demand
curve.
b. at the mid-point.
c. below the mid-point towards the
demand axis.
d. above the mid-point towards the price
axis.
63. Consider the following statements:
1. The shape of a unitary elastic demand
curve a is rectangular hyperbola.
2. The shape of a perfectly elastic
demand curve a is rectangular
hyperbola.
3. Perfectly inelastic demand curve is
parallel to the price axis.
4. Perfectly elastic demand curve is
parallel to the quantity axis.
Which of the statements given above are
correct?
a. 1 and 2
b. 1, 3 and 4
c. 2 and 3
d. 2 and 4
64. Which of the following is not a necessary
condition of perfect competition?
a. Large number of firms in the industry
producing homogeneous products
b. Free entry and free exit of firms
c. Need for incurring selling costs to
attract consumers
d. Absence of artificial restrictions by the
government
65. Consider the following statements Short
run profit is maximum under perfect
competition when
1. Second order condition is satisfied.
2. MC curve cuts MR curve from below.
3. MC curve cuts MR curve from above.
Which of the statements given above is/are
correct?
a. 1 and 3
b. 1 and 2
8 of 13
c. 1 only
d. 2 only
66. In the kinked demand curve model,
suppose MC curve shifts upward in the
discontinuous range of the MR curve.
Which one of the following is correct? At
equilibrium
a. price rises but quantity remains the
same.
b. price and quantity both remain the
same.
c. quantity rises but price remains the
same.
d. price and quantity both rise.
67. Who developed the Time Preference
Theory of Interest?
a. Irving Fisher
b. N. Senior
c. J. R. Hicks
d. J. M. Keynes
68.
In the graph given above, what does the
point B indicates?
a. Excess supply in the goods market and
excess demand in the money market
b. Excess demand in the goods market
and excess supply in the money market
c. Excess supply in both goods and
money market
d. Excess demand in both goods and
money market
69. Which one of the following is the most
important determinant of speculative
demand for money?
a. Income
b. Interest rate
c. Profits
d. Prices
70. Which one of the following equations was
used by Fischer to explain the Quantity
Theory of Money? (Symbols have their
usual meanings)
a. MVPT
b. MP’=VT
c. MP’PT
d. PVMT
71. If Y is the total money income of the
community, M is the supply and P is the
price level, then how is Vy (the income
velocity of money) defined as?
a. Vy = M/Y
b. Vy = Y/M
c. Vy = Y/(MP)
d. Vy = PY/M
72. When shall an increase in money supply
have a small effect on nominal Gross
Domestic Product?
a. If the velocity is decreasing
b. If the velocity is unchanged
c. If the velocity is increasing
d. If the Government’s spending is also
increasing
73. What is the theory that opening a country
to world markets gives an opportunity to
utilize unemployed and underemployed
resources known as?
a. Ricardian theory
b. Hecksher-Ohlin theory
c. Vent-for-surplus theory
d. Strategic trade theory
74. There are a number of banks in a market.
The initial total primary deposit is Rs.
1,000. Every bank is required to maintain a
10% reserve legally. The transactions are
completely made through cheque and no
transaction is made in cash. What will be
the total credit creation in the market?
a. Rs. 1,000
b. Rs. 5,000
c. Rs. 10,000
d. None of the above
75. Which one of the following is a qualitative
credit control method?
a. Open market operations
b. Bank rate
c. Variable cash reserve ratio.
d. Moral suasion

76. 76. What kind of change is to be made in
(1) Cash reserve ratio, and (2) Bank rate,
to control inflation ?
a. 1 should increase but 2 should
decrease
b. 2 should increase but 1 should
decrease
c. Both should increase
d. Both should decrease
77. Which one of the following pairs is called
an open market operation?
a. Selling and buying of securities or bills
by the central bank
b. Selling and buying of foreign exchange
c. Selling and buying of shares by the
foreign institutional investors
d. Selling and buying of gold in the open
market by commercial banks


78. The money multiplier in an economy
increases with which one of the following?
a. Increase in the cash-reserve ratio
b. Increase in the statutory liquidity ratio
c. Increase in the banking habit of the
population
d. Increase in the population of the
country
79. Match List - I with List-II and select the
correct answer using the code given below
the lists:
List - I (Market Type)
A. Perfect competition
B. Monopoly
C. Monopolistic competition
D. Oligopoly
List - II (Implication)
1. Collusion of firms
2. Excess capacity
3. Uniform price
4. Blocked entry
A B C D
a. 2 4 3 1
b. 3 1 2 4
c. 2 1 3 4
d. 3 4 2 1
80. Consider the following statement:
1. The number of firms is large both
under perfect competition and
monopolistic completion
2. There is freedom of entry and exit in
both perfect competition and
monopolistic Competition.
3. In both perfect competition and
monopolistic competition, every firm
is a price taker and quantity adjuster.
Which of the statements given above are
correct?
a. 1, 2 and 3
b. 2 and 3 only
c. 1 and 3 only
d. 1 and 2 only
81. Which one of the following statements is
correct?
The Engel Curve for Giffen goods is
a. positively sloped
b. negatively sloped
c. vertical
d. horizontal
82. Which one of the following statements is
correct?
In a production process with two factors,
land and labour, if the marginal
productivity of land is negative, then it is
in
a. the stage I for land and stage II for
labour.
b. the stage II for land and labour.
c. the stage I for land and stage III for
labour.
d. the stage I for labour and stage III for
land.
83. Match List - I with List - II and select the
correct answer using the code given below
the lists:
List - I (Economist)
A. Pareto
B. Hicks-Kaldor
C. Bergson
D. Scitovosky
List II (Concept)
1. Compensation principle
2. Social Welfare Function
3. Social Optimum
4. Double Criterion Compensation
A B C D
a. 3 1 2 4
b. 2 4 3 1
c. 3 4 2 1
d. 2 1 3 4
84. Which of the following statements about
Pareto Optimum are correct?
1. It changes with changes in the
distribution of income
2. At the Pareto Optimum, MRS in
consumption = MRT in production.
3. It is not unique
4. It is obtained under imperfect
competition.
Select the correct answer using the code
given below:
a. 1 and 2 only
b. 1, 2 and 3
c. 1, 3 and 4
d. 2 and 3 only
85. Money demand (Md) is expressed as Md =
f(Y) + ø(i) where f(Y) = transaction
10 of 13
demand related to income, and ø(i) =
speculative demand related to rate of
interest.
In a normal situation, which combination
of the following restrictions on the slope of
the component functions will hold good?
a. f '(Y ) > 0,ø '(i) > 0
b. f '(Y ) > 0,ø '(i) < 0
c. f '(Y ) < 0,ø '(i) < 0
d. f '(Y ) < 0,ø '(i) > 0
86. Which one of the following statements is
correct?
To derive disposable income from
National Income, one has to
a. deduct income taxes and add transfer
payments.
b. deduct income taxes and deduct
transfer payments.
c. add income taxes and add transfer
payments.
d. add income taxes and deduct transfer
payments.
87. Match List - I with List - II and select the
correct answer using the code given below
the lists:
List - I (Concept)
A. Liquidity trap
B. Demonstration effect
C. Permanent income hypothesis
D. Wealth effect
List - II (Economist)
1. M, Friedman
2. A.C. Pigou
3. J. Duesenberry
4. J.M. Keynes
A B C D
a. 4 3 1 2
b. 1 2 4 3
c. 4 2 1 3
d. 1 3 4 2
88. Given
% change in nominal GNP = 18
% change in population = 0.5
% change in price level 1.3
What is the approximate percentage
change in real per capita GNP?
a. Zero
b. 0.5
c. 1.0
d. 1.3
89. Which one of the following statements is
correct?
Value of output and value-added can be
distinguished if we know
a. the value of intermediate inputs
b. the value of net indirect taxes
c. the value of imports
d. the value of consumption of fixed
capital
90. There are 2 assets A and B in which one
can invest his saving of Rs. 1,000/-,
Assume that there is no risk and interest
rate is 10%
Asset A gives a return of Rs. 100/- in
perpetuity.
Asset B gives Rs. 200/- at the end of year
1 and Rs. 900/- at the end of the year 2.
Which one of the following statements is
correct?
a. Present value of A and B are the same.
b. Present value of B is higher than that
of A.
c. Present value of A is higher than that
of B.
d. Information is inadequate to determine
the present values of A and B.
91. Consider the following consumption and
saving functions:
1. C = 200 + 0.8Y
2. S = 200 + 0.2Y
3. C = 150 + 0.8Y
4. S = -150 + 0.2Y
Which of the above are consistent pairs of
functions?
a. 1 and 2
b. 1 and 4
c. 2 and 3
d. 3 and 4
92.
In the context of the figure given above,
which of the following statements is/are
correct?
1. Investment is autonomous.
2. Saving is autonomous.
3. Investment is dependent on income.
4. Saving is dependent on income.
11 of 13
Select the correct answer using the code
given below
a. 2 and 3
b. 1 and 4
c. 2 only
d. 1 only
93. Which of the following is not a
characteristic of indicative planning?
a. The government sets targets for all
sectors of the economy including those
dominated by private enterprises
b. The emphasis is on consistency of the
targets with each other
c. Given the consistency of targets with
each other, the government directs the
private enterprises to attain those
targets
d. The government provides the right
incentives to the private sector to attain
the targets
94. The two gaps in a two-gap model refer to
which of the following?
1. Revenue-expenditure gap
2. Saving-investment gap
Select the correct answer using the code
given below:
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2
95. Which one of the following statements is
correct?
J.M. Keynes assumed that supply of
money as a function of rate of interest is
a. perfectly elastic
b. highly elastic
c. unitary elastic
d. perfectly inelastic
96. Which of the following sectors has the
largest percentage share in India’s total
exports for the period April 2006 - October
2007?
a. Chemicals and related goods
b. Engineering goods
c. Gems and jewellery
d. Textiles including readymade garments
97. Consider the following agreements
1. ISLFTA (India-Sri Lanka Free Trade
Agreement)
2. SAFTA (South Asia Free Trade Area)
3. CECA (Comprehensive Economic Cooperation
Agreement between India
and Singapore)
4. SAPTA (South Asia Preferential Trade
Area)
Which one of the following is the correct
chronological sequence of the above
agreements?
a. 1 - 3 - 2 – 4
b. 4 - I - 2 – 3
c. 2 - 1 - 4 – 3
d. 1 - 2 - 3 - 4
98. The National Horticulture Mission (NHM)
has aimed at doubling the horticultural
production. For this, the target year is
a. 2010
b. 2011
c. 2012
d. 2015
99. What does infant mortality rate refer to?
a. The ratio of number of children who
die before their fifth birthday out of
every 1000 live births
b. The ratio of number of children who
die before their first birthday out of
every 100 live births
c. The ratio of number of children who
die before their fifth birthday out of
every 100 live births
d. The ratio of number of children who
die before their first birthday out of
every 1000 live births
100. Which group of infrastructure industry has
the highest gap in targets and
achievements of production during the
year 2006-07?
a. Finished steel
b. Crude Petroleum
c. Power
d. Fertilizers
101. Consider the following statements.
1. The coverage of integrated Child
Development programme is limited
and often the youngest children in the
0 - 3 year age group get left out of its
ambit.
2. According to ICMR, at any given time,
7 – 15% of Indian children suffer from
mental disorder.
Which of the statements given above is/
are correct?
a. 1 only
12 of 13
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2
102. Why is demographic divided likely to be
manifested in India in future?
a. Population in the age group between 8
- 15 years is likely to increase
b. Population of children below 7 years is
likely to increase
c. Population in the age group of 15 -64
years is likely to increase
d. Population in the age group above 65
years is likely to increase
103. Match List - I with List - II and select the
correct answer using the code given below
the lists:
List-I (Property of a Plan)
A. Feasibility
B. Consistency
C. Optimality
List-II (Model used)
1. Input-output model
2. Linear programming
3. Harrod-Domar type equation
A B C
a. 1 2 3
b. 3 1 2
c. 2 3 1
d. 1 3 2
104. Match List - I with List - II and select the
correct answer using the code given below
the lists:
List - I (Economist)
A. Ragner Nurkse
B. Paul N. Rosenstein-Rodan
C. Gunnar Myrdal
D. A.O. Hirschman
List - II (Concept/Theory)
1. Backwash effects
2. Theory of balanced growth
3. The big push theory
4. Theory of unbalanced growth
A B C D
a. 2 1 3 4
b. 4 3 1 2
c. 2 3 1 4
d. 4 1 3 2


105. Using Harrod-Domar growth equation,
what is the rate of growth of a closed
economy with C/Y = 3/4 and ÄK/ÄY = 3
where C = consumption, Y = output, K =
capital?
a. 8.66%
b. 8.50%
c. 8.33%
d. 7.50%

106. Who among the following developed the
wage-goods model?
a. M. Dobb
b. A.K.Sen
c. Vakil and Brahmananda
d. P. C. Mahalanobis
107. Match List - I with List - II and select the
correct answer using the code given below
the lists:
List - I (Concept)
A. Vicious circle of poverty
B. Balanced growth
C. Big push
List - II (Explanation)
1. Massive increase in investment to
initiate economic development in
LDCs
2. A stagnant low level of investment
3. Simultaneous investment in all
interrelated industries
A B C
a. 2 3 1
b. 1 2 3
c. 2 1 3
d. 1 3 2
108. Which one of the following statements is
correct?
According to the classical economists, the
existence of unemployment at any time is
only of temporary nature and can be
considered as
a. structural unemployment
b. cyclical unemployment
c. frictional unemployment
d. disguised unemployment
109. Which one of the following statements is
correct?
Creeping inflation is a situation in which
the rate at which price level rises is
a. very high
b. high
c. moderately high
d. slow
110. Which of the following groups are
adversely affected by inflation?
1. Wage earners in the informal sector
2. Profit earners
3. Salary earners with salaries indexed to
inflation
4. Pensioners with fixed pensions
Select the correct answer using the code
given below:
13 of 13
a. 1 and 2
b. 3 and 4
c. 1 and 4
d. 2 and 3
111.
The shift in the SS curve to S’S’ is due to
an imposition of a tax.
Which of the following areas in the
diagram shows excess burden of the tax?
a. ODD’
b. SDA
c. FGA
d. CAD’
112. Which one of the following is a source of
non-tax revenue for governments?
a. Import duty on cars
b. Octroi at check points on roads
c. Entrance fee to museums
d. Excise duty on beverages
113. The Laffer Curve explains the relationship
between which of the following?
a. Tax rates and tax revenue
b. Tax rates and employment
c. Tax rates and income
d. Tax rates and government expenditure
114. What does an increase in the ratio of
revenue deficit to gross fiscal deficit
indicate?
a. An increase in investment
b. An increase in the utilization of
borrowed funds for revenue purposes
c. An increase in the utilization of
borrowed funds for imports
d. An increase in the utilization of
borrowed funds for leading
115. If in a year, the gross fiscal deficit of a
government is Rs. 3,00,000 crores,
revenue deficit is Rs. 1,50,000 crores and
interest payments are Rs. 80,000 crores,
what is the primary deficit of the
government in the year?
a. Rs. 23,000 crores
b. Rs. 45,000 crores
c. Rs. 70,000 crores
d. Rs. 2,20,000 crores
116. What s the technical progress that
increases the productivity of labour (L)
proportionately more than teh productivity
of capital (K) and results in an increase in
L/K at constant relative factor prices,
called?
a. Labour-saving technical progress
b. Neutral technical progress
c. Wage-saving technical progress
d. Capital-saving technical progress
117. Which of the following may not be
considered as a merit of the opportunity
cost theory over the Ricardiart theory of
comparative cost?
a. It takes into account two or more
factors of production instead of labour
theory of value.
b. It takes into account the possibilities of
trade under all the laws of production,
instead of constant costs only as in the
Ricardian theory
c. The theory provides a theoretical
framework for general equilibrium
approach
d. The theory considers the welfare point
of view neglected by the Ricardian
theory
118. Which one of the following statements is
correct?
The Heckscher - Ohlin theory states that
the most important cause of trade is the
difference in
a. preferences
b. technology
c. magnitude
d. factor endowments
119. Which one of the following statements is
correct? The Leontief Paradox makes
a. a critical analysis of Haberler’s theory
of opportunity cost
b. an empirical study of factor-price
equalization theory of Samuelson
c. an empirical testing of Mills’ theory of
reciprocal demand
d. an empirical testing of Heckscher —
Ohlin theory of international trade
120. What is the ratio between the price of a
country’s export goods and price of its
import goods known as?
a. Single factoral terms of trade
b. Double factoral terms of trade
c. Net barter terms of trade
d. Income terms of trade