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Test Booklet No. M Signature and Name of Invigilator 1. (Signature)... (Name)... 2. (Signature)... (Name)... AUG - 11315 ECONOMICS Seat No. (In figures as in Admit Card) Seat No.

(To be filled by the Candidate) Time Allowed : 2½ Hours] [Maximum Marks : 150 Number of Pages in this Booklet : 40 Number of Questions in this Booklet : 75 Instructions for the Candidates 1.

1 Test Booklet No. M Signature and Name of Invigilator 1. (Signature)... (Name) (Signature)... (Name)... AUG ECONOMICS Seat No. (In figures as in Admit Card) Seat No.... (In words) OMR Sheet No. (To be filled by the Candidate) Time Allowed : 2½ Hours] [Maximum Marks : 150 Number of Pages in this Booklet : 40 Number of Questions in this Booklet : 75 Instructions for the Candidates 1. Write your Seat No. and OMR Sheet No. in the space provided on the top of this page. 2. This paper consists of 75 objective type questions. Each question will carry two marks. All questions of Paper-III will be compulsory, covering entire syllabus (including all electives, without options). 3. At the commencement of examination, the question booklet will be given to the student. In the first 5 minutes, you are requested to open the booklet and compulsorily examine it as follows : (i) To have access to the Question Booklet, tear off the paper seal on the edge of this cover page. Do not accept a booklet without sticker-seal or open booklet. (ii) Tally the number of pages and number of questions in the booklet with the information printed on the cover page. Faulty booklets due to missing pages/ questions or questions repeated or not in serial order or any other discrepancy should not be accepted and correct booklet should be obtained from the invigilator within the period of 5 minutes. Afterwards, neither the Question Booklet will be replaced nor any extra time will be given. The same may please be noted. (iii) After this verification is over, the OMR Sheet Number should be entered on this Test Booklet. 4. Each question has four alternative responses marked,, and. You have to darken the circle as indicated below on the correct response against each item. Example : where is the correct response (i) (ii) (iii) 4.,, A B D 5. Your responses to the items are to be indicated in the OMR Sheet given inside the Booklet only. If you mark at any place other than in the circle in the OMR Sheet, it will not be evaluated. 6. Read instructions given inside carefully. 7. Rough Work is to be done at the end of this booklet. 8. If you write your Name, Seat Number, Phone Number or put any mark on any part of the OMR Sheet, except for the space allotted for the relevant entries, which may disclose your identity, or use abusive language or employ any other unfair means, you will render yourself liable to disqualification. 9. You have to return original OMR Sheet to the invigilator at the end of the examination compulsorily and must not carry it with you outside the Examination Hall. You are, however, allowed to carry the Test Booklet and duplicate copy of OMR Sheet on conclusion of examination. 10. Use only Blue/Black Ball point pen. 11. Use of any calculator or log table, etc., is prohibited. 12. There is no negative marking for incorrect answers A B D

2 2

3 ECONOMICS Paper III AUG /III Time Allowed : 2½ Hours] [Maximum Marks : 150 Note : This Question Paper contains Seventy Five (75) multiple choice questions. Each question carries Two (2) marks. Attempt All questions. (75) (2) III 1. Samuelson s revealed preference 1. theory proves : Negative substitution effect Positive income effect Negative income effect Both and 2. Which is no the assumption about 2. preferences? Completeness Transitivity Non-satiety Maximization 3 [P.T.O.

4 3. If the price elasticity of demand for commodity X is : 3. X (I) X (I) Any constant number then fall X in price of X will not change expenditure on X. (II) Less than 1 then fall in price of X will reduce expenditure (II) X X on X. (I) is true and (II) is false (II) is true and (I) is false Both (I) and (II) are true Both (I) and (II) are false (I) (II) (I) (I) (II) (II) (II) (I) 4. Elasticity of supply curve passing 4. (0, 0) through origin (0, 0) is equal to : < 1 > 1 = 1 Zero < 1 > 1 = 1 Zero 4

Optimum size of plant is the : maximum level of output that 6.

5 5. Indifference curves for addictive 5. goods are : Convex to the origin Concave to the origin Horizontal Vertical 6. Optimum size of plant is the : maximum level of output that 6. can be produced with the plant level of output that can be produced with minimum marginal cost level of output that can be produced with minimum average cost level of output that can be produced with maximum fixed cost 5 [P.T.O.

7. Suppose introduction of new product results into increase in

20,000 with 40 percent probability and loss of Rs.

What will be the expected net profits if the product is

Expansion path : is the line joining tangency points of

the line joining tangency points of isoquants and isocost lines

6 7. Suppose introduction of new product results into increase in net profits of Rs. 20,000 with 40 percent probability and loss of Rs. 10,000 with 60% probability. What will be the expected net profits if the product is introduced? Rs. 30,000 Rs. 14,000 Rs. 15,000 Rs. 20, Expansion path : is the line joining tangency points of isoquants and isocost lines when price of one input changes is the line joining tangency points of isoquants and isocost lines when prices of both inputs remain constant is the line showing optimal input combinations , ,000 14,000 15,000 20,000 AUG /III 20, Both and 6

9. Monopolistically competitive firms 9. set prices above marginal cost because they : face downward slopping demand curve are great in number have freedom of entry have high fixed cost 10.

7 9. Monopolistically competitive firms 9. set prices above marginal cost because they : face downward slopping demand curve are great in number have freedom of entry have high fixed cost 10. When commodity produced is 10. homogenous : (I) Bertrand equilibrium is (I) competitive equilibrium. (II) Cournot equilibrium is (II) monopoly equilibrium. Select the correct alternative : Both (I) and (II) are true Both (I) and (II) are false (I) (I) (II) (II) (I) is true and (II) is false (I) (II) (II) is true and (I) is false (II) (I) 7 [P.T.O.

11. Suppose the demand function of a 11. P = a bq monopolist is P = a bq, then marginal revenue function is : a bq a 2bQ aq bq 2 a bq 2 12.

8 11. Suppose the demand function of a 11. P = a bq monopolist is P = a bq, then marginal revenue function is : a bq a 2bQ aq bq 2 a bq The need of government a bq a 2bQ aq bq 2 a bq 2 intervention in the market arises 12. because : Employment generation is the responsibility of the Government The private sector is inefficient The profit motive of the private sector is harmful to the society There are market failures 8

9 13. Employer does not know job 13. applicant s skills, work attitude etc. is an example of : Adverse selection Negative externality in selection Free riding Both and 14. When both the demand and the supply curves slope downwards and 14. the supply curve is less steeper than the demand curve, the equilibrium is : Stable in both Marshallian and Walrasian sense Unstable in both Marshallian and Walrasian sense Unstable in Marshallian sense but stable in Walrasian sense Stable in Marshallian sense but unstable in Walrasian sense 9 [P.T.O.

hypotheses predicts that young generation saves while old generation dissaves?

10 15. Whose name is not associated with 15. compensation principle in welfare economics? Hicks Kaldor Scitovsky Adam Smith 16. Which of the following consumption 16. hypotheses predicts that young generation saves while old generation dissaves? Permanent income hypothesis Life-cycle hypothesis Relative income hypothesis Keynesian consumption hypothesis 10

amount which is not coming back to the money circulation) of

1,000, what will be the value of money 1,000 10% 10%

4 2 5 3 suppose fixed cost per bank trip = 5, planned

11 17. Suppose an economy s banking 17. system has cash reserve ratio of 10% and a leakage ratio (the amount which is not coming back to the money circulation) of 10%. If a new deposit is thereof Rs. 1,000, what will be the value of money 1,000 10% 10% multiplier? In Baumol type demand for money, suppose fixed cost per bank trip = 5, planned expenditure = 25, interest rate = 0.1, then average money = 0.1 = 5, = 25, demand will be : [P.T.O.

12 19. If an economy is at a point to the 19. IS right of the negatively sloped IS curve, it implies : Savings less than investment in planned levels Savings more than investment in planned levels Savings equal to investment in planned levels Savings less than investment in actual levels 20. If investment is completely insensitive to interest rate in IS-LM 20. IS-LM model, which one of the following will be an effective policy to raise output level? A rise in money supply A cut in money supply A cut in government expenditure A cut in income tax rate 12

21. The money supply change multiplier in IS-LM model is higher if : Savings ratio is lower Slope of investment function is lower Slope of speculative demand curve is higher Velocity of circulation

13 21. The money supply change multiplier in IS-LM model is higher if : Savings ratio is lower Slope of investment function is lower Slope of speculative demand curve is higher Velocity of circulation of money is lower 22. Under flexible exchange rate, 21. IS-LM 22. Mundell-Fleming model shows when capital is perfectly mobile : Monetary policy is a failure but fiscal policy is a success Monetary and fiscal policies, both are failures Monetary policy is a success but fiscal policy is a failure Both monetary and fiscal policies are effective 13 [P.T.O.

14 23. In Keynesian theory of investment, a downward slopping investment 23. function rests on the assumption : Diminishing marginal productivity of capital Diminishing marginal productivity of labour Increasing marginal productivity of capital Constant returns to scale 24. In Solow s growth model, stability of 24. equilibrium is ensured through changes in : Wage-rental ratio Savings ratio Population growth rate Cash reserve ratio 14

15 25. To achieve a rise in income of 500, given MPC = 0.8, how much should be the rise in autonomous investment in a simple Keynesian model? Which one of the following is not part of the endogenous growth 26. models? Introduction of human capital Introduction of research and development Introduction of endogenous technical change Introduction of different savings behaviour 15 [P.T.O.

: Full employment in the economy Inelastic LM curve Perfectly

16 27. In complete Keynesian model, a 27. vertical AD curve is produced by which of the following conditions : Full employment in the economy Inelastic LM curve Perfectly elastic LM curve Elastic IS curve IS LM LM 28. In the Marxian theory of capitalist 28. development there is : a constant tendency for profits falling tendency for profits increasing tendency of profits profits will vary all the time 16

17 29. The Fei-Rani s model of development 29. assumes that : Population is endogenous Agriculture has increasing returns to scale Land is fixed in supply There is capital accumulation in agriculture 30. Most of the two Gap models 30. assume : The saving gap and investment gap The foreign-exchange gap and Import-Export gap The saving gap and foreignexchange gap The foreign-exchange gap and investment gap 17 [P.T.O.

market Treasury bills market Primary market 32. In Schumpeter s theory the 32.

18 31. When a company wants to finance 31. a project and acquire equity capital, it goes to the : Secondary market Bonds market Treasury bills market Primary market 32. In Schumpeter s theory the 32. existence of cycles is : Short-term cycles Ratche like fluctuations Kondratieff type long waves Medium term cycles 18

Fiscal Deficit Effective Revenue Deficit Revenue Deficit 34.

19 33. Which one of the following is 33. recommended by the 14th Finance Commission to omit the definition 14 of : Primary Deficit Fiscal Deficit Effective Revenue Deficit Revenue Deficit 34. The share of direct taxes in the 34. central tax revenue became higher than that of indirect tax the first time in : [P.T.O.

proposed to be subsumed under.... Direct taxes code Goods and services tax Union excise duty Value added tax 37.

20 35. Which one of the following is not the components of revenue expenditure 35. of Central Government? Interest payments Defence expenditure Pensions Budgetary support 36. All indirect taxes in India are 36. proposed to be subsumed under.... Direct taxes code Goods and services tax Union excise duty Value added tax 37. Which one of the following is not a subsidy given by the Government of 37. India? Food Fertilizer Petroleum Electricity 20

21 38. Finance Commission is appointed 38. under Article... of the Constitution of India When consumption by one person 39. affects the welfare of another person, it is called : Excludability Externality Rivalness Non-excludability 40. A pure public good is characterized 40. by : Rivalness and non-excludability Rivalness and excludability Non-rivalness and nonexcludability Non-rivalness and excludability 21 [P.T.O.

22 41. What do you say about the following 41. statements? (I) (I) The Reserve Bank of India was established as a shareholders 1, 1935 bank on 1st April, (II) The Reserve Bank of India was (II) 1, 1949 nationalized on 1st January, Mark the correct alternative : (I) (II) Both statement (I) and statement (II) are wrong Statement (I) is correct and (I) (II) statement (II) is wrong Statement (I) is wrong and (I) (II) statement (II) is correct Both statement (I) and (I) (II) statement (II) are correct 22

23 42. Find the odd out : 42. Axis Bank, ICICI Bank, Dena Bank, HDFC Bank. HDFC Bank Axis Bank ICICI Bank Dena Bank 43. In the context of Indian banking 43. SLR suggests : Statutory Lending Ratio Statutory Liquidity Ratio Statutory Lending Rules Simplified Lending Rules 23 [P.T.O.

Social control over banks was announced 44.

report State Bank of India was nationalized

Both statement (I) and statement (II) are

24 44. In July, 1969 whch of the following phenomena took place in the field of Banking in India? Major commercial banks were nationalized Social control over banks was announced Banking commission submitted its report State Bank of India was nationalized 45. What can you say of the following statements? (I) The NABARD has taken over the activities of ARDC. (II) The NABARD was established in the year Choose the correct answer : Both statement (I) and statement (II) are wrong Both statement (I) and statement (II) are correct Statement (I) is correct and statement (II) is wrong Statement (I) is wrong and statement (II) is correct (I) (II) 1969 (I) (II) (I) (II) (I) (II) (I) (II)

25 46. According to census 2011, the percentage of urban population in India is : percentage percentage percentage percentage The survivor technique for 47. measuring the relative efficiency of different sizes of firms was suggested by : Stigler Kaldor Myrdal Pratten 25 [P.T.O.

48. Match the following and select the correct

Sargent Florence Books (i) The market area

industrial locationalization (iii) Investment,

location (a) (b) (c) (d) (i) (ii) (iii) (iv)

(i) (iv) (iii) (iii) (iv) (i) (ii) (i) (iv) (ii)

26 48. Match the following and select the correct answer from the codes given below : 48. Writers (a) G.T. Renner (b) Tord Palander (c) August Losch (d) Sargent Florence Books (i) The market area theory of industrial location (ii) Geography of industrial locationalization (iii) Investment, location and size of plant (iv) The economics of location (a) (b) (c) (d) (i) (ii) (iii) (iv) Codes : (a) (b) (c) (d) (i) (ii) (iii) (iv) (ii) (i) (iv) (iii) (iii) (iv) (i) (ii) (i) (iv) (ii) (iii) 26 (a) (b) (c) (d) (i) (ii) (iii) (iv) (ii) (i) (iv) (iii) (iii) (iv) (i) (ii) (i) (iv) (ii) (iii)

... Carl Freidrich G.T. Renner E.M. Rawstron August Losch 50.

27 49. Weber s theory of location of 49. industry was published in German language and translated into English language by.... Carl Freidrich G.T. Renner E.M. Rawstron August Losch 50. Harris-Todaro model is related 50. with.... Growth and unemployment Growth and migration Unemployment and migration Unemployment and urbanization 27 [P.T.O.

Capitalist Development (c) Economics of Imperfect Competition (a) (b) (c) (d) (d) Asian Drama Codes : (i) (ii) (iii) (iv) (a) (c)

28 51. Match the following and select the correct answer from the codes given 51. below : Authors (i) Gunnar Myrdal (ii) E.F. Schumacher (iii) Paul Sweezy (iv) Joan Robinson (i) (ii) (iii) (iv) Title of the books (a) Small is Beautiful (b) Theory of Capitalist Development (c) Economics of Imperfect Competition (a) (b) (c) (d) (d) Asian Drama Codes : (i) (ii) (iii) (iv) (a) (c) (d) (b) (c) (d) (a) (b) (b) (c) (a) (d) (d) (a) (b) (c) 28 (i) (ii) (iii) (iv) (a) (c) (d) (b) (c) (d) (a) (b) (b) (c) (a) (d) (d) (a) (b) (c)

29 52. Activities resulting in transfer of 52. wealth between two countries are recorded in the... account of Balance of Payments. Current Capital Revenue Financial 53. Which one of the following is not a 53. principle of the World Trade Organization? Non-discrimination Multilateralism Opposition to Quota Restrictions Most Favoured Nation 29 [P.T.O.

54. According to the theory of optimum currency areas,

are most appropriate for : (I) Countries that are closely

(II) Countries that are closely (II) integrated through

Select the correct answer : (I) is true and (II) is false

and (II) are false Both (I) and (II) are true (I) (I) (II)

30 54. According to the theory of optimum currency areas, fixed exchange rates 54. are most appropriate for : (I) Countries that are closely (I) integrated through trade. (II) Countries that are closely (II) integrated through factor movements. Select the correct answer : (I) is true and (II) is false (II) is true and (I) is false (I) (II) (II) (I) Both (I) and (II) are false Both (I) and (II) are true (I) (I) (II) (II) 55. The relationship between relative 55. prices of output and relative factor rewards is stated in... theorem. Mill Marshall Heckscher Ohlin Stolper Samuelson Rybczynski 30

the Government. Nachiket Mor Taraporewala Rangarajan Urgit Patel 57.

deleted from state list Co-operation has become one of the fundamental

31 56. The Jan Dhan Yojana championed 56. by the Government is based on the recommendations of Committee appointed by the Government. Nachiket Mor Taraporewala Rangarajan Urgit Patel 57. As per the 97th amendment of the Constitution : Co-operation has been deleted from state list Co-operation has become one of the fundamental rights Co-operation has become part of the fundamental duties Co-operative institutions shall be progressively privatized 31 [P.T.O.

32 58. The duration of 12th Five Year 58. Plan is : The Second Five Year Plan in India 59. was based on the model of : Gunnar Myrdal Shriman Narayan Paul Sweezy P.C. Mahalnobis 32

(II) Finance Commission in India is (II) a statutory body appointed by the President, Govt. of India every five years.

33 60. Consider the following statements : 60. (I) Finance Commission in India is (I) an advisory body appointed by the Governor, Reserve Bank of India annually. (II) Finance Commission in India is (II) a statutory body appointed by the President, Govt. of India every five years. Choose the correct alternative : (I) (II) Statement (I) is correct and statement (II) is wrong Statement (I) is wrong and (I) (II) statement (II) is correct Both statements are correct Both statements are wrong 33 [P.T.O.

34 61. The Government securities market 61. is also known as : Derivatives market Government share market Gilt-edged market Intermediaries market 62. The Liquidity Adjustment Facility (LAF) of RBI works through : 62. RBI Repos and Reverse Repos Inverse Repos Buybacks Derivatives 63. Tobin tax is a tax on : Exports Imports Transactions in foreign exchange sales Sales

64. The call money market is the market for :

Company (NBFC) is : Create money supply Create credit

scheme and lending in any manner Raising finance in

Suppose government raises resources for development

Expansion of share market Expansion of bank credit

35 64. The call money market is the market for : Long-term funds Medium-term funds Short-term funds Money supply 65. The principal business of a Non- Banking Financial Company (NBFC) is : Create money supply Create credit lines Receiving deposits from the public under any scheme and lending in any manner Raising finance in international capital markets 66. Suppose government raises resources for development purposes through market-borrowing, it results into : Expansion of share market Expansion of bank credit Private investment is crowded out due to rise in interest rate Increase in money supply becomes unstable 35 [P.T.O.

67. What is the number of degrees of 67. 50 freedom for a simple bivariate linear regression with 50 observations? 48 48 47 47 2 2 50 50 68. The assumption of zero mean of the 68.

36 67. What is the number of degrees of freedom for a simple bivariate linear regression with 50 observations? The assumption of zero mean of the 68. error term in classical linear regression model is needed to prove : Bestness of the estimates Unbiasedness of the parameters Linearity of the parameters Randomness of the parameters 36

69. If Y = X, then correlation coefficient 69.

(multicollinearity) means that : There should

There should be no non-linear relationship

37 69. If Y = X, then correlation coefficient 69. Y = X will be : 1 +1 Between 1 and The assumption of multicollinearity 70. (multicollinearity) means that : There should be no correlation among the regressors (regressors) There should be no linear relationship among the regressors (regressors) There should be no non-linear relationship among the regressors There should be no relationship among the regressors (regressors) (regressors) 37 [P.T.O.

D, i where Y = average earnings per day in Rs., D = 1 for females and 0 otherwise.

38 71. The model where the value of Y 71. Y depends on its value in the previous time-period and a random term is : Single equation model AR (1) model MA (1) model ARMA (1, 1) model 72. In trying to test that females earn less than their male counterparts, we estimate the following model : Y i = D, i where Y = average earnings per day in Rs., D = 1 for females and 0 otherwise. 2 here refers to the : Average earnings of male Average earnings of female Differential intercept coefficient for male earnings Differential intercept coefficient for female earnings AR (1) MA (1) ARMA (1, 1) Y i = D; i Y = D = (differential intercept coefficient) (differential intercept coefficient)

The definite integral represents : a definite unit of measure a definite length a perfect shape area under a curve 75.

39 73. Suppose the demand function of a monopolist is P = a bq and marginal cost function. MC = c + kq, then equilibrium output (Q) would be : ab Q = 2 ck ak Q = 2 cb ac Q = 2 bk a b Q = 2 ck 74. The definite integral represents : a definite unit of measure a definite length a perfect shape area under a curve 75. Rejecting a true hypothesis results in this type of error : 73. P = a bq MC = c + kq (Q) ab Q = 2 ck ak Q = 2 cb ac Q = 2 bk a b Q = 2 ck 74. (integral) 75. Type I error Type II error Structural error Hypothesis error I II 39 [P.T.O.

40 ROUGH WORK 40

Test Booklet Code & Serial No. A ECONOMICS

Test Booklet Code & Serial No. A Signature and Name of Invigilator 1. (Signature)... (Name)... 2. (Signature)... (Name)... JAN - 11218 ECONOMICS Seat No. (In figures as in Admit Card) Seat No.... (In words)