Economics MCQs Questions (NET)

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ECONOMICS QUESTIONS Generally, the demand curve has a. A negative slope b. A slope downward from left to right c. Both (a) and (b) d. A slope upward from left to right The law of demand can be derived with the help of a. Law of Diminishing marginal utility b. Law of Equi marginal utility c. Any of the above d. None of above Price leadership can be on the basis of a. Low cost price leader b. Dominant firm price leader c. Both (a) and (b) d. None of the above The equilibrium is unstable and indeterminate under a. Edgeworth model b. Cournot model c. Sweezy model d. Pareto model The equilibrium prices of duopoly model are obtained at the intersection of their reaction curves, it is correct in case of a. Edgeworth model b. Sweezy model c. Betrand model d. None of the above The value of elasticity of demand ranges from a. Zero to infinity b. One to infinity c. Zero to one d. None of the above If no commodity is found, the elasticity of demand is a. Zero or perfectly inelastic b. Infinite or perfectly elastic c. Both (a) and (b) d. None of the above Discriminating monopoly is possible if two markets have a. Rising cost curves b. Equal elasticities of demand c. Different elasticities of demand d. Rising and declining cost curves What is the sufficient condition for equilibrium for a perfectly competitive firm? a. MR=MC

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b. MC curve should cut the MR curve from below c. MR = AC d. MC curve should cut the MR curve from above 10. With a substantial change in price, there is no change in demand, then it is called a. Unit elastic demand b. Moderately elastic demand c. Perfectly elastic Demand d. Perfectly inelastic demand 11. Proportionate method of measurement of elasticity of demand is also known as a. Arithmetic method b. Ratio method c. Flux method d. All of the above 12. Consumer surplus under price discrimination is a. Maximum b. Minimum c. Zero d. Non-predictable 13. The law of variable proportion is a. Also called law of proportionality b. Also called law of non-proportional returns c. Wider and includes law of increasing returns, law of decreasing returns and law of constant return as three phases d. All of the above 14. All money costs can be regarded as a. Social costs b. Opportunity costs c. Explicit costs d. Real costs 15. Marginal revenue will be negative if the demand is a. Relatively elastic b. Unitary elastic c. Relatively inelastic d. Perfectly elastic 16. Increasing returns imply a. Constant average cost b. Diminishing cost per unit of output c. Optimum use of capital and labour d. External economies 17. Who compared the relationship between demand and the price with see saw? a. Lionel Robbins b. Arthur Cecil Pigou c. Alfred Marshal d. Hall and Hitch

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18. The upper portion of the kinked demand curve is relatively a. More inelastic b. More elastic c. Less elastic d. Inelastic 19. Under perfect competition, a firm will be in equilibrium when a. MC is greater than MR b. MC cuts MR from below c. MC = MR d. Both (b) and (c) 20. Decrease or fall in the price of commodity leads to increase in demand because of a. Income effect i.e., consumer becomes better off b. Substitution effect i.e., relatively cheaper than related goods c. Both (a) and (b) d. None of the above 21. Who has given four major exceptions to the law of demand? a. Paul Anthony Samuelson b. Fredric Bentham c. Robert Giffen d. J.S.Bain 22. Under monopoly and imperfect competition, MC is a. More than the price b. Less than the price c. Equal to the price d. Any of the above 23. Under perfect competition, there can be a. One buyer b. Large number of buyers c. Few buyers d. Both (a) and (b) 24. When quantity demanded changes only due to change in price then it is called a. Contraction in demand b. Extension in demand c. Both (a) and (b) d. None of the above 25. When quantity demanded changes due to factors other than price, it is called a. Decrease in demand b. Increase in demand c. Both (a) and (b) d. None of the above 26. Extension of Curnot model is a. Stackelberg model b. Sweezy model c. Betrand model

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d. None of the above 27. Factors responsible for creating conditions for emergence and growth of monopoly are a. Patents b. Control over strategic raw materials c. Licensing d. All of the above 28. In case of contraction or extension in demand, the movement is along a demand curve whereas in case of increase or decrease, the demand curve will move a. Upward b. Downward c. Any of the above d. None of the above 29. The fall in the price of one national newspaper may lead to fall in the circulation of another national paper (assuming price of 2nd paper is not lowered). It is due to a. Income effect b. Substitution effect c. Both (a) and (b) d. None of the above 30. In case of monopolistic competition a. MR curve cannot be defined b. AR curve cannot be defined c. The short run supply curve cannot be defined d. None of the above 31. Kinked demand curve is theory of a. Monopoly b. Collusive oligopoly c. Non-collusive oligopoly d. None of the above 32. Supply of a commodity is a a. Stock concept b. Flow concept c. Both (a) and (b) d. None of the above 33. An ISO-Cost line represents a. Combination of two inputs which yield the same amount of output b. Combination of two inputs which cost the same amount to a firm c. Combinations of two inputs which yields varying amounts of output d. Combinations of two inputs which cost different amounts of outlay to a firm 34. Pure monopoly exists a. When there is a single producer b. When there is a single producer without any close substitutes c. When there is a single producer with close substitutes d. When a few producers control the industry

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35. When AR is falling, MR will be a. Equal to AR b. Less than AR c. More than AR d. Either more or equal to AR 36. In case of the two commodities are complements cross elasticity will be a. Positive b. Unitary c. Negative d. Infinite 37. An indifference curve is always a. Concave to the origin b. Convex to the origin c. A vertical straight line d. A horizontal straight line 38. The concept of indifference curves analysis was given scientific touch by a. Irving Fisher 1892 b. Edgeworth 1881 c. Slustsky 1915 d. Marshall 1921 39. The price which a consumer would be willing to pay for a commodity equal to his a. Total utility b. Marginal utility c. Average utility d. Does not have any relation to any one of these 40. The substitution effect works to encourage a consumer to purchase more of a product when the price of that goods is falling because a. The consumer‟s real income has increased b. The consumer‟s real income has decreased c. The product is now relatively less expensive than before d. Other products are now less expensive than before 41. Gossen‟s second law states that a. When the income increases the money value or real income will decrease b. The consumers consume only when px/py = Mum c. Once a person has spent his entire income he would have maximized his total pleasure from it only if the satisfaction gained from the last item of each commodity bought was the same d. None of these 42. Price effect in indifferent curve analysis arises a. When the consumer becomes either better off or worse off because price change is not compensated income change b. When income and price change c. When the consumer is better off due to a change in income and price d. None of the above

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43. In case of inferior goods, the income effect a. Partially off sets the substitution effect b. Reinforces the substitution effect c. Is equal to the substitution effect d. More than off sets the substitution effect 44. On an indifference map, if the income consumption curve slopes downwards to the right it shows that a. X is an inferior good b. Y is an inferior good c. Both X and Y are superior goods d. Both X and Y are inferior goods 45. On an indifference map higher indifference curves show a. The same lower level of satisfaction b. The optimum level of satisfaction c. The higher level of satisfaction d. Levels of satisfaction among which the consumer is different 46. The concept of supply curve as it is used in economic theory is relevant only for the case of a. Monopoly b. Perfect or pure competition c. Monopolistic competition d. Oligopoly competition 47. The short run supply curve of market always a. Slope upward from left to right b. Slope downward from left to right c. Slope horizontally d. None of the above 48. External economies are witnessed in a. A rising supply curve b. A rising demand curve c. A falling supply curve d. A falling demand curve 49. The law of increasing returns is only applicable to agriculture; according to a. Classical school b. Neo-classical school c. Modern school d. J.M.Keynes 50. ISO-Quant refers to a. Another name of indifference curve b. The production indifference curve c. An equal quantity curve of a consumer d. An equal cost curve of a producer 51. The increasing returns to scale occurs because large scale provides greater specialization to various factors according to

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a. Joan Robinson b. Marshall c. Edward Chamberlin d. Paul A.Samuelson 52. Increasing returns is not caused by a. Technological advance b. Specialization of labor c. Marketing economies d. Varying factor proportions 53. The law of diminishing returns depends on the assumption that a. Total output is constant b. The state of technical knowledge is unchanged c. Land is the factor kept constant d. Average output declines faster than marginal output 54. The elasticity of substitution between two inputs in CES production function a. Decreases continuously b. Increases continuously c. Remains constant d. None of these 55. A long run analysis of production is called a. Economies of scale b. Law of variable proportion c. Law of increasing returns d. Law of returns to scale 56. Law of diminishing returns to factors is relevant to a. Short run b. Long period c. Secular period d. Both short and long periods 57. Under imperfect competition a firm can produce with a. An optimum plant b. An optimum output c. Maximum profit d. Identical products at low cost 58. Consumers‟ are likely to get a variety of goods under a. Perfect competition b. Monopoly c. Imperfect competition d. Oligopoly 59. Excess capacity is not found under a. Monopoly b. Monopolistic competition c. Perfect competition d. Oligopoly

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60. The supply function, would shot downward and to the right if the MC of all the firms in a perfectly competitive industry were to a. Decrease b. Increase c. No change d. None of these 61. The competition among buyers, each trying to get enough of the product to satisfy his wants tend to move a. The consumer‟s price b. The market price c. The equilibrium price d. All of the above 62. From the resource allocation view point, perfect competition is preferable because a. The firms operate at excess capacity levels b. There is a whole variety of output produced c. There is no restriction on entry and exit of firms d. There is no idle capacity 63. A perfectly competitive industry becomes a monopoly with the same cost conditions, it will now sell a. An unchanged output at a higher price b. A larger output at the old price c. A larger output at a higher price d. A reduced output at a higher price 64. Under price discrimination, price will be higher in the market where demand is a. Unitary elastic b. Highly elastic c. Less elastic d. None of the above 65. if the firms under perfect competition have different costs, abnormal profits will be earned in the long run only by a. Marginal firm b. All the firms c. Intra-marginal firms d. None of the firms 66. long run equilibrium price of a perfect competitive firm is always a. Above the long run average cost b. Below the long run average cost c. Equal to average fixed cost d. Equal to long run average cost 67. A firm under perfect competition faces for its product a. A horizontal demand curve b. A downward sloping demand curve c. An upward rising demand curve d. A vertical demand curve

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68. In the long run competitive equilibrium a. Every firm will earn economic profit b. Every firm will incur loss c. Every firm will earn only normal d. The marginal firm will earn no profit 69. Economist associated with the development of indifference curve analysis are a. Hicks and Allen b. Hicks and Robbins c. Marshall and Hicks d. Hicks and Walras 70. The indifference curve technique a. Has replaced utility technique altogether b. Is used as an alternative to the utility technique c. Is used along with the utility approach d. Has become a part of the utility approach 71. Which of the following is one of the assumptions of the indifference curve analysis? a. Cardinal utility b. Ordinal utility c. Independent utility d. Constant marginal utility of money 72. Ceteris paribus, when a consumer‟s income increases, his equilibrium points move to a. A higher indifference curve b. A lower indifference curve c. Remains unchanged on the same indifference curve d. Moves to the left hand side on the same indifferent curve 73. When the consumer‟s income increases, the budget line on an indifferent map moves to a. A parallel position to the right b. A parallel position to the left c. A parallel position to the origin d. None of the above 74. Marginal utility curve always a. Rising b. Falling c. Parallel to X axis d. Parallel to Y axis 75. The total utility is maximum when a. Marginal utility is zero b. Average utility is higher c. Marginal utility is highest d. Marginal utility is equal to average utility 76. The falling part of a total utility curve show a. Increasing marginal utility b. Decreasing marginal utility

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c. Zero marginal utility d. Negative marginal utility 77. Total utility curve is a. Concave to X-axis b. Convex to X-axis c. Concave or convex depending on situations d. Concave to Y-axis 78. Utils is a term used a. By marshal in demand theory b. By Walras to measure cardinal utility c. To mean marginal utility d. None of the above 79. Which of the following creates time utility? a. Farmer b. Carpenter c. Trader d. Driver 80. A consumer‟s demand curve can be obtained from a. Income consumption curve b. Engle‟s curve c. Price consumption curve d. None of these 81. Marginal utility approach was finalized by a. J.R. Hicks b. Alfred Marshall c. John Stewart Mill d. Arthur Cecil Pigou 82. Diamond water paradox concept explained by a. Adam Smith b. Thomas Robert Malthus c. David Ricardo d. John Stewart Mill 83. Diamond water paradox shows that a. Utility is related to supply b. Utility is related to demand c. Utility could be the cause of value d. Utility could not be the cause of value 84. The area which lies under the demand curve for a given good measures a. Marginal utility b. Total utility c. Disutility d. Marginal cost of production 85. Total utility of a commodity can be found by a. Multiplying the number of units by its marginal utility

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b. Adding up the marginal utility of all units c. Multiplying price by number of units d. None of the above 86. In the case of an inferior commodity, the income elasticity of demand is a. Positive b. Unitary c. Negative d. Infinity 87. Income elasticity of demand will be zero when a given change in income brings about a. A less than proportionate change in quantity demanded b. A more than proportionate change in quantity demanded c. The same proportionate change in quantity demanded d. No change in demand 88. Two commodities are considered to be perfect substitutes for each other if the elasticity of substitution is a. Positive b. Negative c. Zero d. Infinite 89. If a straight line demand curve is tangent to a curvilinear demand curve, the elasticity of the two demand curves at the points of tangency is a. The same b. Different c. Can be the same or different d. Depends on the location of the point of tangency 90. Which of the following is the method of measuring elasticity of demand when changes in price of a commodity is substantial a. Percentage method b. Point method c. Arc method d. None of these 91. The demand for pepper is likely to have a low price elasticity because it a. Involves only a small proportion of consumers expenditure b. It is single-use goods c. Has no close substitutes d. Can readily be foregone a. 1 and 2 only b. 1 and 3 only c. 2 and 3 only d. 2 and 4 only e. 2,3 and 4 only 92. Consider a demand curve which takes the form of a straight line cutting both axis elasticity at the mid-point of the line would be a. 0

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b. 1.0 c. 1.5 d. 2.0 93. When with a change in price the total outlay on a commodity remains constant, it is a case a. Perfect elasticity b. Perfect inelasticity c. Unit elasticity d. Zero elasticity 94. Income elasticity of demand will be zero when a given change in income brings about a. A less than proportionate change in quantity demanded b. A more than proportionate change in quantity demanded c. The same proportionate change in demand d. No change in demand 95. One common definition of luxury goods is goods with an income elasticity a. Greater than one b. Equal to one c. Less than one but more than zero d. None of these 96. A demand curve which takes the form of a horizontal line parallel to the quantity axis illustrates elasticity which is a. Zero b. Infinite c. Less than one d. Greater than one 97. Elasticity of demand is equal to unity while marginal revenue a. Positive b. Zero c. Negative d. Indeterminate 98. In the longer period permitting adjustment, demand is likely to be a. Inelastic b. Elastic c. Unit elastic d. Cannot be known 99. A straight line downward sloping demand curve implies that, as price falls, the elasticity of demand a. Increases b. Decreases c. Remains the same d. Is zero 100. Which of the following does not have a uniform elasticity of demand at all points? a. A downward sloping demand curve b. A vertical demand curve

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c. A rectangular hyperbola demand curve d. A horizontal demand curve 101. In general, if the average revenue curve is a straight line, the marginal revenue curve will be a. U shaped b. A straight line c. C shaped d. Bell shaped 102. When the law of diminishing returns begins to operate, the total variable cost begins to a. Fall at an increasing rate b. Rise at a decreasing rate c. Fall at a decreasing rate d. Rise at an increasing rate 103. Marginal cost curve is given by a. The slope of the Total Fixed Cost curve b. The slope of the Total Variable Cost but not by the slope of the Total Cost curve c. The slope of Total Curve but not by the slope of the Total Variable Cost curve d. Either the slope of the Total Variable Cost curve or the slope of Total Cost curve 104. The slope of the ISO-Cost line measures a. The MRTS b. The MRS c. The ratio of input prices d. Optional combination of inputs 105. In short run the monopolist a. Breaks even b. Incurs a loss c. Makes a profit d. Any of these 106. The short run supply curve of the monopolist is a. The rising portion of the marginal cost curve b. The rising portion of the marginal cost curve above average variable cost c. The rising portion of the marginal cost curve above average cost d. None of these 107. Which of the following most closely approximates an oligopoly? a. The cigarette industry b. The barber shops in a city c. The gasoline stations in a city d. Wheat farmers in the village 108. The laws of returns to scale assume: a. Techniques of production is unchanged b. All units of factors are homogeneous c. Returns are measured in physical terms d. All of the above

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109. In the light of the Revealed Preference Theory, consider the following axioms, and select the right answer from the code given below: a. Rationality b. Consistency c. Transitivity d. Non-satiation a. (a) and (b) are correct b. All the four axioms are correct c. (a) and (c) are correct d. (a), (b) and (c) are correct 110. Starting from the earliest, arrange the following concepts in terms of their development in Demand Theory : a. Revealed preference theory b. Newmann and Morgenstern utility theory c. Ordinal utility theory d. Cardinal utility theory 111. The notion of production function implies: a. Economic Efficiency b. Technical Efficiency c. Allocative Efficiency d. All of the above 112. In the Sweezy model of Oligopoly, an increase in demand will make upper portion of the demand curve: a. More elastic b. Less elastic c. Unitary elastic d. None of the above 113. A competitive firm achieves long-run equilibrium in the product market when: a. AR = MR b. MR = AC c. MR = MC d. Price = AR 114. Which of the following factors does not stall the entry of other firms in an Oligopolistic industry: a. huge advertising expenditure incurred by existing firms b. economies of scale c. Technology d. Increase in demand 115. Which of the following is not an element of selling cost : a. Salary of the salesmen b. Expenses incurred in advertising c. Transportation cost d. Costs incurred on window displays

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116. If specific sales tax is imposed on monopolist output a. Will maintain the initial equilibrium position and price will not change in the short run b. Greater the tax burden to the consumer if market supply is less elastic c. Shifts the Marginal Cost curve to the left leading to smaller equilibrium quantity d. Will not affect the Marginal Cost curve of monopolist 117. A rational consumer will operate in the stage where a. There is an increase in the productivity of fixed and variable factors b. Productivity of variable factor diminishes with positive marginal product c. The quantity of variable factor is more than the quantity of fixed factor d. There is increasing average returns to the factors of production 118. At higher wage rate, the supply curve of labour is a. Always positively sloped b. Forward bending because substitution effect is stronger than income effect c. Backward bending because substitution effect is weaker than income effect d. Both substitution effect and income effect are equally stronger 119. The long run supply curve of a constant cost industry is a. Downward sloping b. Vertical c. Positively sloped d. Perfectly elastic 120. By joining the points of producer equilibrium we get a. Expansion Path b. Ridge lines c. Producer Indifference Curves d. ISO-Cost Line 121. From the industries listed below, which is the best available example for perfect competition? a. Tea industry b. Telephone industry c. Food grains d. Automobile industry 122. Marginal Cost always refers to a. Cost of adding one unit b. Gain in reducing one unit c. Change in total cost due to addition or deletion of one unit d. Increment in cost 123. Cobb Douglas production function is homogenous function of degree a. Zero b. One c. Greater than one d. Less than one 124. A producer of two commodities X and Y using two factors L and K reaches general equilibrium of production whenever

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a. MRTSLK in the production of X is equal to the MRTSLK in the production of Y b. MRTSLK in the production of X is less than MRTSLK in the production of Y c. MRTSLK in the production of X is greater than MRTSLK in the production of Y d. None of these 125. A curve representing different combinations of two inputs that produce the same level of output is called a. Indifference Curve b. Isoquant c. Budget Line d. ISO-Cost Curve 126. Marginal utility theory was given by a. Alfred Marshall b. J.R.Hicks c. R.G.D.Allen d. Paul Samuelson 127. In which of the following kind of goods, law of demand does not operate a. Normal goods b. Giffen goods c. Veblen goods d. Both (b) and (c) 128. Which of the following is not the assumption of Marshallian approach to demand analysis? a. Rationality b. Cardinal utility c. Constant marginal utility of money d. Ordinal utility 129. Area under the demand curve and above the price line measures a. Consumer surplus b. Producer surplus c. Total revenue d. Total expenditure 130. Contraction in demand occurs when a. Price increases and demand decreases b. Price increases and demand also increases c. Price remains constant but demand falls down d. Price falls down but demand remains constant 131. When the law of demand operates, the demand curve a. Slopes downward b. Slopes upward c. Become horizontal d. Becomes vertical 132. When the demand curve is rectangular hyperbola, it represents a. Perfectly elastic demand b. Relatively inelastic demand

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c. Unitary elastic demand d. Perfectly inelastic demand 133. Revealed preference theory was formulated by a. Paul Samuelson b. J.R.Hicks c. Joseph Stiglitz d. John Maynard Keynes 134. If demand curve is horizontal, then ep is equal to a. One b. Two c. Zero d. Infinite 135. In case of Veblen goods, demand curve will slope a. Upward b. Downward c. Horizontal d. Vertical 136. Indifference curves are usually a. Convex b. Concave c. L-Shaped d. Vertical 137. All Giffen goods are inferior, but all inferior goods are not Giffen goods. The statement is a. False b. True c. Sometimes true d. None of the above 138. Consumer reaches a saturation point for a commodity when marginal utility is a. Positive b. Zero c. Negative d. None of these 139. Cross elasticity between complementary goods will be a. Positive b. Negative c. Zero d. Infinity 140. Which of the following commodities has the lowest elasticity of demand? a. Car b. Books c. House d. Salt 141. If the price elasticity is zero, demand curve will be

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a. Horizontal b. Upward sloping c. Vertical d. Downward sloping 142. Demand curve can be derived from a. Engle curve b. Price consumption curve c. Marginal utility curve d. Both (b) and (c) 143. According to Marshall, the law of diminishing marginal utility: a. Applies on money in the manner it applies on the other commodities b. Does not apply on money except bank money c. Does not apply on bank money but applies on bank money d. Applies on all the commodities except on money 144. If the marginal utility is divided by the price of the commodity; the resultant figure is called a. Comparative marginal utility b. Weighted marginal utility c. Partial marginal utility d. The coefficient of marginal utility 145. Marginal cost is the cost a. Of the last unit production b. Of marginal unit c. Of marginal efficient units d. Of the average units of production 146. In the perfect competition, there is a process of a. Free entry and restricted exit of the firms b. Free entry and free exit of the firms c. Restricted entry and exit of the firms d. Semi-free exit but absolute free entry 147. The marginal productivity theory is a. Normative only b. Positive and normative both c. Positive and not normative d. More positive and less normative 148. According to Ricardo actual amount of rent is a. True surplus left and which is divided among all the factors of production including the rent b. True surplus left to be distributed among the factors of production c. True surplus left after paying all the factors of production d. None of the above 149. Quasi rent is the rent a. Earned by the instrument of production besides land b. Which is earned by the land falling under the quasi category

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c. Earned with the quasi efforts of the land owners and the user d. Which is half rent and half wages 150. In general the level of wages is equal to the a. Point where demand and supply curves cut each other b. Amount fixed up by the trade union c. Amount demanded by the labour d. Amount determined by the demand forces 151. Who has written the economics of welfare? a. A.C.Pigou b. Nicholas Kaldor c. Vilfredo Pareto d. Lionnel Robbins 152. Which of the following statements is correct? a. An increase in the national income diminishes economic welfare b. An increase in the national income increases economic welfare c. An increase in the national income keeps economic welfare constant d. An increase in national income does not affect economic welfare. 153. The concept of elasticity of demand was evolved by a. Alfred Marshall b. Bohm Bawerk c. Fredic Benham d. Jermy Bentham 154. Who evolved the point method for measuring price elasticity of demand? a. J.S.Mill b. Marshall c. Stiglar d. Bain 155. Who is the author of the work “Theory of Price”. a. Hicks b. Samuelson c. G.J. Stiglar d. D.H. Robertson 156. The concept of price expectation elasticity was evolved by a. Edward Chamberlin b. Edwin Cannon c. Joan Robinson d. J.R.Hicks 157. Who evolved the concept of consumer surplus? a. I.M.D.Little b. Alfred Marshall c. Paul Anthony Samuelson d. J.R.Hicks 158. Who was the author of “value and Capital”? a. R.G.D.Allen

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b. Edwin Cannon c. Irving Fisher d. J.R.Hicks 159. Who was the first economist to use indifference curve analysis? a. J.R.Hicks b. H.H.Gossen c. Joan Robinson d. Samuelson 160. The equilibrium of a firm under monopoly is possible only when a. Two conditions are fulfilled b. Three conditions are fulfilled c. Four conditions are fulfilled d. Five conditions are fulfilled 161. Under perfect competition, there can be a. One buyer b. Large number of buyers c. Few buyers d. Two buyers 162. Name of the economist who dynamised the theory of pricing for the first time? a. Jermy Bentham b. Alfred Marshall c. David Ricardo d. John Stuart Mill 163. “An industry is said to be in equilibrium when there is no tendency for it to expand or contract” is the statement of a. Kenneth E Boulding b. E.A.G Robinson c. Edwin Cannon d. Edward Shapiro 164. For the short run equilibrium to industry to be established: a. Five conditions must be satisfied b. Four conditions must be satisfied c. Three conditions must be satisfied d. Two conditions must be satisfied 165. Who is the author of the book Price theory and its uses? a. K.E.Boulding b. D.S.Waston c. Daniel Bernouli d. J.R.Hicks 166. Price discrimination under monopoly is of a. One type b. Two types c. Three types d. Four types

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167. Which of the followings is not viewed as national debt? a. LIC policies b. Long term government bonds c. National savings certificates d. Provident fund 168. Who propounded the wage theory of profit? a. Thomas Robert Malthus b. David Ricardo c. F. Taussig d. Carver 169. What is the sum total of incomes a. It is virtually, the national income b. Budget estimates c. Government‟s annual revenue d. Other revenues 170. Who gave the first scientific treatment of general equilibrium analysis? a. Leon Walras b. John Baptist Say c. Edward Chamberlin d. Kenneth E Boulding 171. Who was the founder of the input-output analysis? a. Wassily Leontief b. J.R.Hicks c. D.S.Watson d. Leon Walras 172. Name the economist who has attempted to test the validity of the kinked demand curve theory? a. G.J.Stiglar b. Samuelson c. Baldwin d. Frederic Bentham 173. Name the economist who evolved the kinked demand curve a. Paul M.Sweezy b. G.J.Stiglar c. Fritz Machlup d. Albert Meyer 174. Who fixes the price under price leadership form of the oligopoly pricing? a. The average firm b. The smallest firm c. The largest firm d. None of the above 175. Who coined the term selling cost? a. Edward Chamberlin b. Alfred Marshall

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c. Joan Robinson d. Samuelson 176. The abstinence theory was bitterly criticized on the ground that: a. If the poor people save they are involved in abstinence b. If the rich people and the poor save alike; none of them is involved in abstinence c. If the poor people save they are not involved in abstinence d. Nothing like abstinence can affect the individual. 177. Which theory is called the neo-classical theory of rate of interest? a. The keynesian theory b. Liquidity preference theory c. The time preference theory d. Loanable fund theory 178. Net profit stands for a. Total revenue – (total cost + depreciation) b. Gross profit – implicit cost c. Gross profit – explicit cost d. None of the above 179. Which of the following is essential characteristic of money? a. Money is stamped with seal of the issuing authority b. Money has no particular shape, design or colur c. Money is homogenous in spite of the differences of the nations d. Money does not differ from country to country 180. Token coins means a. The coin whose face value is more than the value of the metal b. The coin issued as a token of deposited money c. The coin issued for the deposit of the standard coins d. The coin issued by some authority for the mere sake of representation 181. Gravitious means a. The system in which metals are used in less amount b. The system, where gravity measures the value of the metal c. The system in which the coinage is free of minting charge d. None of the above 182. Monometalism means a. The coin made of a kind of metal known as mono b. The coin made of a single metal c. The circulation of metallic monograms d. None of the above 183. When there is inflation due to increase in the credit money, it is called as a. Devaluation inflation b. Over investment inflation c. Credit inflation d. Semi inflation 184. When price rises rapidly, it is called as a. Worst inflation

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b. Creeping inflation c. Hyper inflation d. Demand full inflation 185. High rate of investment may a. Reduce the amount of credit creation b. Create better chances for the credit creation c. Not affect the amount of credit in any way d. Lead to any of the above mentioned occurences 186. Trade balance of a county is equal to a. Balance of payments b. BOP + net invisibilities c. BOP – net invisibilities d. Export - import 187. A hot money or the refugees capital is the capital: a. Which is transferred from one centre to another for greater safety b. Earned by a refugee c. Deposited by a refugee who is taking refuge in the country d. None of these 188. Production refers to a. Creation of utility b. Manufacture of goods c. Creation of value and utility d. Creation of value 189. National product includes a. All goods whether exchanged or not b. Only goods exchanged in markets c. Good exchanged in markets but not those consumed by producers d. Both goods exchanged in markets and retained by producers for selfconsumption 190. An international product is a product sold by one business unit to another: a. For use b. For sale c. For further processing d. For storing to sell at a further date 191. In the case of giffen goods like brinjal a fall in its price tends to . a. Make the demand remain constant b. Reduce the demand c. Increase the demand d. Change demand in an abnormal way 192. Which of the following pairs of commodities is an example of substitutes a. Coffee and milk b. Diamond and cow c. Pen and ink d. Mustard oil and coconut oil

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193. For most of consumers apples and oranges are substitutes goods. Therefore, we would expect a rise in the price of apples to lead to a. A rightward shift in the supply curve of orange b. A leftward shift in the supply curve of apples c. An upward change in the demand curve of oranges d. A fall in the price of oranges 194. A fall in the relative price of fruit would: a. Increase the demand for fruit b. Increase the quantity of seeds demand c. Have no effect on the demand for fruit d. None of these 195. A change in climatic conditions resulting in hot weather, price remaining the same, would cause a consumer of cold drinks: a. To move a higher demand curve b. To move up the same demand curve DD c. To move lower down the curve DD d. To move to a lower demand curve 196. If we wanted to show the effect on the amount demanded of oranges when the price of grape fruit (which is substitute good) rises, we: a. Must resort to higher mathematics b. Could show this is as a shift to the right in the whole demand schedule for oranges c. Must try to find a way to depict the simultaneous effect of a change in the price of both oranges and grape fruit on the quantity of oranges demanded d. Should abandon the analysis 197. If two good complements, this means that a rise in the price of one commodity will include: a. An upward shift in demand for the other commodity b. A rise in the price of the other commodity c. A downward shift in demand for the other commodity d. No shift in demand for the other commodity 198. A fall in price of a commodity, holding everything else constant, result sin and is referred to as: a. An increase in demand b. A decrease in demand c. An increase in the quantity demanded d. A decrease in the quantity demanded 199. When an individual‟s income rises, ceteris paribus, his demand for a normal goods: a. Rises b. Falls c. Remains the same d. Any of the above 200. When an individual income falls, ceteris paribus, his demand for inferior goods: a. Increases

25

b. Decreases c. Remains unchanged d. None of the above 201. When the price of a substitute of commodity X falls, the demand for X: a. Rises b. Falls c. Remains unchanged d. Any of the above 202. When both the price of a substitute and the price of a complement of commodity X rises, the demand for X a. Rises b. Falls c. Remains unchanged d. All of the above are possible 203. If more is demanded at the same price or same quantity at a higher price, this fact of demand is known as: a. Extension of demand b. Increase of demand c. Contraction of demand d. Decrease in demand 204. There is increase in demand when: a. Less is demanded at the same price b. More is demanded at a lower price c. Less is demanded at a higher price d. None of the above 205. Other things being equal an increase in the number of houses demanded at prevailing prices is likely to result from: a. An increase in the number of marriages and a rise in real income b. An increase in the number of marriages and a rise in the rate of interest charged to borrowers by building societies c. An increase in the number of marriages and a fall in the population d. A rise in the real income and a decrease in the population 206. Ceteris paribus, a decrease in demand can be caused by a. A rise in the price of the commodity b. A rise in the income of the consumer c. A fall in the price of the commodity d. None of the above 207. The elasticity of demand describes a. The distinction between changes in demand and changes in amount demanded b. A change in the incomes of the buyers in response to change in the price of product they sell c. The responsiveness of price to changes in the quantity demanded d. The responsiveness of quantity demanded to changes in prices 208. The elasticity of demand for a product will be higher

26

a. The more that product is concerned a necessity by its buyers b. The more is buyers‟ demand loyalty c. The more substitutes are available for that product d. The less important a part of total expenditures that product represents e. All of the above 209. Demand for a good is elastic if: a. Demand for that good increases when price falls b. A price fall produces a decrease in total expenditure on that goods c. A price fall produces a less than proportionate rise in the quantity d. As a result of a rise in price total expenditure on the good decreases 210. If the percentage increase in the quantity of a commodity demanded is smaller than the percentage fall in its price, the coefficient of price elasticity of demand is a. Greater than one b. Equal to one c. Less than one d. Zero 211. If the quantity of a commodity demanded remains unchaged as its price changes, the coefficient of price elasticity of demand is: a. Greater than one b. Less than one c. Equal to one d. Zero 212. In general, if demand is elastic, then: a. A price decrease increases total revenue and a price increase decreases total revenue b. A price decrease decreases total revenue, and a price increase increases total revenue c. A price increase increases total revenue, and a price decrease increases total revenue d. A price increase leaves total revenue unchanged, and so does a price decrease 213. If total consumer expenditure on a good falls as its price falls this indicates that: a. It is an inferior good b. Its price elasticity of demand is less than one c. It is being produced under conditions of decreasing cost d. Taste for it is declining e. Producers are experiencing economies of large scale 214. Which of the following statements about elasticity of demand is true? a. We can tell which products have close substitutes by their higher elasticity of demand b. We can say that necessities have a very low demand elasticity but we say it largely because we define necessities by their very low demand elasticity c. Products sold along with other products are likely to have less elastic demands than products sold alone

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d. Products that are relatively unimportant in terms of total expenditure are likely to have relatively low elasticities of demand e. All of the above statement are true 215. Elasticity of demand indicates: a. Change in quantity demanded b. Rate of change in quantity demanded c. Change in prices d. Changes in income 216. The subject matter of price theory is a. Behaviour of industry‟s decision making b. Economic behaviour of the entire country c. Economic behaviour of individual decision making units d. Behaviour of all decision making units taken together 217. The Engel curve shows a. The amount of a commodity that the consumer would purchase per unit of time at various levels of total income b. The amount of a commodity that the consumer would sell at a given level of income c. The amount of consumer durables that the consumer would purchase per unit of time at various levels of total income d. The amount of consumer non- durables that the consumer would purchase per unit of time at various levels of income 218. Hicksian substitution effect refers to a. The change in the quantity demanded of a commodity resulting from a change in its price, while holding real income constant by keeping the consumer on the same indifference curve before and after the price change b. The change in the quantity supplied of a commodity resulting from a change in its price, while holding real income constant by keeping the consumer on the same indifference curve c. The change in the quantity demanded of a commodity from a change in its price, while holding absolute income constant by keeping the consumer on the same indifference curve before and after price change d. The change in the quantity demanded of a commodity resulting from a change in its price, while holding income constant by keeping the consumer on the same indifference curve before and after the price change 219. Transitivity assumption in Revealed Preference theorem states that a. If the consumer is observed to prefer basket A to B, then this consumer will never prefer B to A b. The consumer can be induced to purchase any basket of goods c. If A is preferred to B, and B to C, then A is preferred to C d. A consumer‟s preferences can be inferred 220. The Learning Curve is a. Positively sloped b. Negatively sloped and convex to the origin

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c. Right angled d. A horizontal straight line parallel to X axis 221. A market structure which satisfies three conditions of Pareto Optimality i. Monopolistic Competition ii. Perfect Competition iii. Oligopoly iv. Monopoly 222. The approach of Revealed Preference Theorem is a. Psychological b. Introspective c. Behaviorist d. Deductive 223. If specific sales tax is imposed on monopolist output a. Will maintain the initial equilibrium position and price will not change in the short run b. Greater the tax burden to the consumer if market supply is less elastic c. Shifts the Marginal Cost curve to the left leading to smaller equilibrium quantity d. Will not affect the Marginal Cost curve of monopolist 224. A rational consumer will operate in the stage where a. There is an increase in the productivity of fixed and variable factors b. Productivity of variable factor diminishes with positive marginal product c. The quantity of variable factor is more than the quantity of fixed factor d. There is increasing average returns to the factors of production 225. At higher wage rate, the supply curve of labour is a. Always positively sloped b. Forward bending because substitution effect is stronger than income effect c. Backward bending because substitution effect is weaker than income effect d. Both substitution effect and income effect are equally stronger 226. The long run supply curve of a constant cost industry is i. Downward sloping ii. Vertical iii. Positively sloped iv. Perfectly elastic 227. By joining the points of producer equilibrium we get i. Expansion Path ii. Ridge lines iii. Producer Indifference Curves iv. ISO-Cost Line 228. From the industries listed below, which is the best available example for perfect competition? i. Tea industry ii. Telephone industry iii. Food grains

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iv. Automobile industry 229. Marginal Cost always refers to a. Cost of adding one unit b. Gain in reducing one unit c. Change in total cost due to addition or deletion of one unit d. Increment in cost 230. Cobb Douglas production function is homogenous function of degree i. Zero ii. One iii. Greater than one iv. Less than one 231. A producer of two commodities X and Y using two factors L and K reaches general equilibrium of production whenever a. MRTSLK in the production of X is equal to the MRTSLK in the production of Y b. MRTSLK in the production of X is less than MRTSLK in the production of Y c. MRTSLK in the production of X is greater than MRTSLK in the production of Y d. None of these 232. The concept of „full cost‟ includes a. Business cost and opportunity cost b. Opportunity cost and marketing cost c. Opportunity cost and normal profit d. Business cost, opportunity cost and normal profit 233. A curve representing different combinations of two inputs that produce the same level of output is called a. Indifference Curve b. Isoquant c. Budget Line d. Iso Cost Curve 234. Quasi Rent is a. Equal to the firm‟s total profit b. Greater than the firm‟s total profit c. Less than the firm‟s total profit d. Cannot be compared with the firm‟s total profit 235. Social Welfare Function shows a. The various combinations of marginal utilities of two social groups that give the society the same level of satisfaction or welfare b. The various combinations of utilities of two individuals that give the society the same level of satisfaction or welfare c. The various combinations of sacrifice of all individuals that give the society an improved level of social welfare d. None of the above

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236. Macroeconomics does not study a. Interrelationships between macro variables b. Performance of the entire economy c. Determination of the levels of aggregate economic activities d. Price and output determination of a commodity 237. In macroeconomic framework, Aggregate Supply refers to a. Total value of goods produced and supplied in an economy b. Total value of goods and services supplied in an economy c. Total value of goods and services produced and supplied in an economy d. Total value of goods produced in an economy 238. According to Permanent Income Hypothesis a. There exists a non-proportional relationship between consumption and permanent income b. Transitory income is positive for lower income households c. Consumer behaviour is based on the theory of inter temporal choice d. Average Propensity to Consume and Marginal Propensity to Consume are equal for all levels of disposable income 239. Given a neo-classical aggregate supply schedule, a decrease in autonomous investment leads to a. A fall in output, while price level remains the same b. A fall in both price and level of output c. An increase in price and level of output d. A fall in price, but no effect on level of output 240. Static Multiplier assumes a. That the change in investment and the resulting change in income are simultaneous b. That the change in savings and the resulting change in consumption are simultaneous c. That the change in investment and the resulting change in consumption are simultaneous d. That the technology remains constant 241. Who among the following is a neo Keynesian? a. Lucas b. Sargent c. Muth d. Mankiw 242. Among the following, which is the best definition of national income? a. National Income is the money value of all final goods and services produced in a country during a period of one year b. National Income is the money value of all final goods produced in a country during a period of one year c. National Income is the value of all final goods produced in a country during a period of one year

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d. National Income is the outcome of all production activities of a nation valued in terms of money 243. The ratio of the investment to the change in the national income is called i. Accelerator ii. Multiplier iii. Marginal Propensity to Consume iv. Marginal Propensity to Invest 244. Nash Equilibrium is one a. Which every player can improve their pay off given the strategy of the other players b. Which some players can improve their pay off given the strategy of the other players c. Which none of the players can improve their pay off d. Which none of the players can improve their pay off given the strategy of the other players 245. The following can be considered as an objective of monetary policy a. Achieve monetary stability b. Avoid conflicts between the internal and external interests of the economy c. Control government expenditure d. Create conditions for an efficient utilization of labour and other productive resources as far as possible 246. GNP deflator is defined as a. Ratio of nominal GNP in a year to the real GNP of that year b. Ratio of GNP in a year to the GDP of that year c. Ratio of nominal GNP in a year to the nominal GDP of that year d. Ratio of GNP to the nominal GDP of that year 247. Export surplus is desirable when there is i. Excess demand ii. No demand iii. Deficient demand iv. All of the above 248. Money whose intrinsic value is equal to its face value is called i. Token money ii. High Valued money iii. Representative money iv. Full Bodied money 249. According to monetary approach to balance of payments, all payment deficits are the result of a. Disequilibrium in the balance of payments b. Floating exchange rate system c. Excess supply of money in the home country d. Speculation 250. If C = 100 + 0.75Y, where C = Consumption and Y = Income, then multiplier is i. 0.6

32

ii. 0.4 iii. 2 iv. 4 251. If an individual is to receive Rs1100 in one year and the market rate of interest is 10 per cent, its present value is a. 800 b. 900 c. 1100 d. 1000 252. The name of the economist with whom the Real Balance Effect is associated a. Patinkin b. Keynes c. Arrow d. Friedman 253. Aggregate demand in a two sector model refers to i. C + I + Y ii. C + I iii. C iv. C + I – Y +X – M 254. Laffer Curve analysis mainly deals with……………..economics i. Demand ii. Supply iii. Fiscal iv. Monetary 255. “Ratchet Effect” is associated to i. James Duesenberry ii. J M Keynes iii. Milton Friedman iv. Arrow and Modigilani 256. The derivative of a constant is i. 1 ii. 0 iii. Negative iv. Logarithm of that constant 257. The relationship among price elasticity of demand, average revenue and marginal revenue is a. Average revenue/(average revenue - marginal revenue) b. Marginal revenue/(marginal revenue - average revenue) c. Average revenue/(marginal revenue - average revenue) d. Average revenue - marginal revenue/average revenue 258. If P = a - bq represents the demand equation, then marginal revenue is i. a – 2bq ii. a – bq

33

iii. aq – bq2 iv. a + 2bq 259. If the utility function U = F(x), the utility is maximum when i. du/dx = 0 ii. d2u/dx2 >0 iii. du/dx = 0 and d2u/dx2 MPC b. APC=MPC c. APC < MPC d. APC=MPS 632. Indicative Planning is : a. Rigid b. Comprehensive c. Autocratic d. Flexible 633. The major difference between Harrod-Domar and Solow models of growth lies in : a. Substitutability between labour and capital b. Returns to Scale c. Returns to variable factor d. Growth of income 634. In Nurksian formulation of the thesis of the 'vicious circle of poverty' in the context of an underdeveloped country, the inducement to invest is limited by : a. Lack of savings b. Lack of investment opportunities c. Size of the market d. The policy of the government 635. Taxes raised are credited into : a. Consolidated Fund b. Contingency Fund c. Public Accounts d. Private Accounts 636. Items which are of recurring nature are covered under : a. Capital Budget b. Revenue Budget c. Cash Budget d. Unified Budget 637. The difference between total revenue and total expenditure is called : a. Capital deficit b. Revenue deficit c. Fiscal deficit d. Budgetary deficit 638. Borrowings from foreigners are known as : a. export of goods b. unrequited receipts c. capital goods d. current receipts 85

Dr.S.Saravanan /Economics questions for Paper 2 & 3

639. Quantitative restrictions on imports by a country will lead to : a. Decreased demand for imported products b. Increased demand for imported products c. Increased supply of imported products d. Decreased supply of imported products 640. According to Economic survey 2007-08, India‟s exports as per cent to GDP in 2006-07 stood at: a. 11.0 b. 14.0 c. 16.0 d. 19.0 641. The fiscal deficit of the Central Government in India as percentage of GDP in 2006- 2007 stood at : a. 1.4 b. 3.4 c. 5.4 d. 4.1 642. As per the UNDP's Global Human Development Report 2007, India's relative ranking out of 177 countries in respect of HDI was : a. 123 b. 131 c. 128 d. 125 643. Gross Domestic Savings as percent of GDP at current market prices in India in 20062007 was : a. 30.8 b. 34.8 c. 37.7 d. 39.2 644. Which of the following averages is known as 'root-mean square'? a. Quadratic Mean b. Harmonic Mean c. Geometric Mean d. Combined Mean Consider the following statements and select the correct answer from the codes given below for questions 21 to 30 (Assertion and Reasoning type item). 645. Assertion (A): Under oligopoly, all firms are aware of their inter-dependence. Reason (R): Personal rivalries do not exist among firms under oligopoly. a. Both (A) and (R) are false b. Both (A) and (R) are true but (R) is not the explanation of (A) 86

Dr.S.Saravanan /Economics questions for Paper 2 & 3

c. (A) is true, but (R) is false d. (A) is false, but (R) is true 646. Assertion (A) : Giffen goods have a positively sloped demand curve. Reason (R): The positive substitution effect in their case is more than offset by negative income effect. a. Both (A) and (R) are true and (R) is the correct explanation of (A) b. (A) is true, but (R) is false c. Both (A) and (R) are false d. Both (A) and (R) are true, but (R) is not the correct explanation of (A) 647. Assertion (A): According to Hicks, trade cycle occurs due to the interaction between multiplier, and accelerator. Reason (R): In Hicksian business cycle theory, accelerator is impotent in the depression phase. a. Both (A) and (R) are true and (R) is the correct explanation of (A) b. Both (A) and (R) are true, but (R) is not the correct explanation of (A) c. Both (A) and (R) are false d. (A) is true, but (R) is false 648. Assertion (A): Duesenberry hypothesised that consumption - income relationship is irreversible. Reason (R): Consumption depends not only on current income but also on previous peak income. a. Both (A) and (R) are true, but (R) is not the correct explanation of (A) b. Both (A) and (R) are true, and (R) is the correct explanation of (A) c. (A) is true, but (R) is false d. Both (A) and (R) are false 649. Assertion (A): Backwash effects imply an unfavourable situation arising in underdeveloped countries. Reason (R): Undue emphasis on exports of raw-materials at the expense of the growth of domestic manufacturing. a. (A) is true, but (R) is false b. Both (A) and (R) are false c. Both (A) and (R) are true and (R) is the correct explanation of (A) d. Both (A) and (R) are true, but (R) is not the correct explanation of (A) 650. Assertion (A): Low levels of labour productivity exist in underdeveloped countries. Reason (R): It is due to the lack of physical capital. a. Both (A) and (R) are false b. (A) is true, but (R) is false c. Both (A) and (R) are true and (R) is the correct explanation of (A) d. Both (A) and (R) are true, but (R) is not the correct explanation of (A) 651. Assertion (A): In India, more and more farmers are getting pushed out of agriculture. 87

Dr.S.Saravanan /Economics questions for Paper 2 & 3

Reason (R): Their land base is becoming smaller. a. (A) is true, but (R) is false b. Both (A) and (R) are false c. Both (A) and (R) are true, and (R) is the correct explanation of (A) d. Both (A) and (R) are true, but (R) is not the correct explanation of (A) 652. Assertion (A): Jagdish Bhagwati stated that a country, in its growth process, would experience 'immiserizing growth' and deterioration of 'terms of trade'. Reason (R): Income elasticity of demand for the country's exports is high. a. Both (A) and (R) are true b. (A) is false, but (R) is true c. Both (A) and (R) are true and (R) is the correct explanation of (A) d. (A) is true, but (R) is false 653. Assertion (A): Coefficient of Concurrent Deviations is calculated between the direction of deviations and not their magnitudes. Reason (R): If it is desired to study the correlation between two series in a very casual manner. a. (A) is false, but (R) is true b. (A) is true, but (R) is false c. Both (A) and (R) are true, but (R) is not the correct explanation. d. Both (A) and (R) are true and (R) is the correct explanation. 654. Assertion (A): James Buchanan viewed that primary burden of public debt is shifted to posterity. Reason (R): Public debt is paid by taxing the posterity. a. (A) is true, but (R) is false b. (A) is false, but (R) is true c. Both (A) and (R) are false d. Both (A) and (R) are true and (R) is the correct explanation of (A). 655. If two commodities are good substitutes, indifference curve will : a. be a straight line b. approach a right angle c. approach a straight line d. slope upwards 656. The firms in the modern world, use reserve capacity to : a. ensure greater flexibility in operations b. reduce costs c. reduce wages d. reduce taxes 657. If the firms are behaving on the basis of average cost principle, orderly coordination is often attained by : a. Price leadership 88

Dr.S.Saravanan /Economics questions for Paper 2 & 3

b. Price cutting c. High cost firm d. None of the above 658. For any given individual preferences, which are reflexive, transitive and complete, majority rule based social preferences are : i. Reflexive ii. Transitive iii. Complete Select correct code: Code: All above are true Only (i) and (iii) are true Only (i) and (ii) are true Only (ii) and (iii) are true 659. If demand curve assumes the shape of a rectangular hyperbola, price elasticity is equal to: a. Zero b. less than one c. greater than one d. one 660. Let the consumption function be C=Rs. 30+0.80 Υ and investment spending be I=Rs. 70−2 i, where i is the rate of interest. Then an increase in autonomous investment by Rs. 30 would shift the IS curve : a. To the left by Rs. 150 b. To the right by Rs. 150 c. To the right by Rs. 30 d. To the left by Rs. 30 661. According to Milton Friedman, quantity theory of Money deals with : a. Prices b. Income c. Supply of money d. Demand for money 662. The concept of Multiplier was introduced for the first time by : a. R.F. Kahn b. J.M. Keynes c. R.F. Harrod d. V.K.R.V. Rao 663. Sustainable development addresses to : a. The needs of the present generation. b. The needs of the future generation. c. The needs of the present generation without compromising the needs of the future 89

Dr.S.Saravanan /Economics questions for Paper 2 & 3

generations. d. The needs of the future generations, without compromising on the needs of the present generation. 664. Sen‟s measure of poverty includes : a. The Head Count ratio. b. The Head Count ratio and the poverty-gap ratio. c. The poverty-gap ratio and the distribution of income among the poor. d. The Head Count ratio, the poverty-gap ratio, and the distribution of income among the poor. 665. For a planner, in the context of choice of techniques, the propriety of a technique is dictated by : a. The factor endowments b. The level of development c. The character of technical progress d. The plan objectives 666. Mode of production refers to : a. Forces of production b. Methods of production c. Relations of production d. The duality of Forces of Production and Relations of Production 667. Unlimited supply of labour presumes : a. Inelastic supply of labour b. Infinitely elastic supply of labour c. Redundancy of labour d. Disguised unemployment 668. Who among the following gave the law of increasing State Activities? a. Musgrave b. Wiseman Peacock c. Wagner d. Dalton 669. Which of the following is not a development expenditure of the State? a. Medical and Health b. Education c. Debt Services d. Development of Agriculture 670. According to Dalton, the total social advantage becomes maximum when taxation and expenditure are carried to a point where, : a. Marginal Social Sacrifice (MSS) > Marginal Social Benefit (MSB) b. Marginal Social Sacrifice (MSS) < Marginal Social Benefit (MSB) c. Marginal Social Sacrifice (MSS)=Marginal Social Benefit (MSB) 90

Dr.S.Saravanan /Economics questions for Paper 2 & 3

d. None of the above 671. Devaluation, will improve the balance of payment deficit, if sum of elasticity of exports and imports of the devaluing country is : a. greater than one b. less than one c. equal to zero d. negative 672. From April 1999, Jawahar Rojgar Yojana has been renamed as : a. Jawahar Gram Samriddhi Yojana b. Jawahar Swarna Jayanthi Yojana c. Jawahar Samriddhi Yojana d. Jawahar Rural Development Yojana 673. In the year 2000 - 2001 External Debt GDP ratio in India was : a. 15.3 per cent b. 9.1 per cent c. 7.1 per cent d. 5.4 per cent 674. Which of the following is not a measure of dispersion ? a. Mean of deviations b. Variance c. Range d. Inter-quartile range 675. GDP deflator is an index of type : a. Paasche index b. Laspyres index c. Fisher index d. Divisia index 676. There are 50 students in a class. Their mean weight, µ=55 kg and standard deviation, σ=17 kg. Two students from the class whose weights are 47 kg and 58 kg respectively leave the school and two new students with weights of 50 kg and 55 kg respectively join the class. Then the new mean weight µ1 and s.d., σ1 (in kgs) are : a. µ1=55, σ1=17 b. µ1=55, σ1 < 17 c. µ1 < 55, σ1 > 17 d. µ1 > 55, σ1=17 677. Starting with the earliest, arrange the following in the chronological order of development of general theory of equilibrium : a. R. Cantillon b. F. Quesnay c. L. Walras 91

Dr.S.Saravanan /Economics questions for Paper 2 & 3

d. W. Leontief Code: a. (iv), (i), (ii), (iii) b. (iii), (iv), (i), (ii) c. (i), (ii), (iii), (iv) d. (ii), (iii), (iv), (i) 678. Starting with the earliest, arrange the following authors in the chronological order of their contribution to welfare economics : a. J. Bentham b. Y. Pareto c. M. Marshall d. J. Hicks Code: a. (iii), (ii), (iv), (i) b. (i), (iii), (ii), (iv) c. (iv), (i), (iii), (ii) d. (ii), (iv), (i), (iii) 679. Arrange the following in descending order of their share in Global FDI receipts in 2002: a. Hong – Kong b. China c. India d. Korea Code: a. (ii), (i), (iii), (iv) b. (iv), (ii), (i), (iii) c. (iii), (iv), (ii), (i) d. (i), (iii), (iv), (ii) 680. Arrange the following in descending order of their share in world exports in 2004 : a. China b. Hong – Kong c. Indonesia d. Malaysia Code: a. (iii), (iv), (ii), (i) b. (i), (ii), (iv), (iii) c. (iv), (i), (iii), (ii) d. (ii), (iii), (i), (iv) 681. Starting with the earliest, arrange the following authors chronologically in the context of development of theory of Oligopoly : a. E. Stackelberg 92

Dr.S.Saravanan /Economics questions for Paper 2 & 3

b. P. Sweezy c. J. Bertrand d. A. Cournot Code: a. (ii), (i), (iii), (iv) b. (iv), (iii), (ii), (i) c. (i), (ii), (iv), (iii) d. (iii), (iv), (i), (ii) 682. Arrange the following States in the descending order of state-wise literacy rates in India, 2001: a. Kerala b. Mizoram c. Lakshadweep d. Goa Code: a. (iv), (iii), (i), (ii) b. (i), (ii), (iii), (iv) c. (ii), (i), (iv), (iii) d. (iii), (iv), (ii), (i) 683. In the context of the development of theory of consumer behaviour, arrange the following chronologically, starting with the earliest: a. Revision of demand theory b. Revealed preference theory c. Indifference curves analysis d. Marshallian theory of consumer behavior Code: a. (iii), (iv), (i), (ii) b. (i), (ii), (iii), (iv) c. (ii), (i), (iv), (iii) d. (iv), (iii), (ii), (i) 684. Starting with the earliest, arrange the following schemes chronologically : a. Prime Minister‟s Rozgar Yojana b. Rural Employment Generation Programme c. Sampoorna Grameena Rozgar Yojana d. National Food for Work Programme Code: a. (i), (ii), (iii), (iv) b. (iv), (ii), (iii), (i) c. (iii), (iv), (ii), (i) d. (i), (iii), (ii), (iv) 93

Dr.S.Saravanan /Economics questions for Paper 2 & 3

685. The revealed preference theory of consumer‟s behaviour is based on a. Consistency b. Strong Ordering c. Positive income elasticity of demand d. All the above 686. An individual‟s supply curve for labour will bend backwards when a. The substitution effect of wage rate increase is higher than income effect. b. The income effect of wage rate increase is negative and higher than the substitution effect. c. Leisure is a Giffen good. d. The substitution and income effect of wage rate increase reinforce each other. 687. The short run supply curve of a firm under perfect competition is the same as the a. marginal cost curve b. marginal cost curve above the average variable cost curve c. average variable cost curve d. average total cost curve 688. The difference between the value of marginal product and the marginal revenue product arises only if a. Average revenue is not equal to marginal revenue. b. Average cost is not equal to marginal cost. c. Total revenue is not equal to total cost. d. Average cost is not equal to average revenue. 689. Assertion (A): In the short run, a producer operates in only stage II of the law of diminishing returns where average product of the variable factor is declining. Reason (R): In stage I and stage III the marginal products of the fixed and the variable factors respectively are negative. a. (A) is true and (R) is false. b. Both (A) and (R) are true and (R) is the correct explanation of (A). c. Both (A) and (R) are true, but (R) is not the correct explanation of (A). d. (A) is false and (R) is true. 690. Assertion (A): In monopolistic competition, a firm earns only normal profit in the long run. Reason (R): A firm in monopolistic competition produces a commodity which has no close substitutes. a. Both (A) and (R) are true and is the correct explanation of (A). b. Both (A) and (R) are true, but is not the correct explanation of (A). c. (A) is true, but (R) is false. d. (A) is false, but (R) is true. 691. Assertion (A) : Devaluation in general is resorted to increase the exports. Reason (R) : It makes exports cheaper. 94

Dr.S.Saravanan /Economics questions for Paper 2 & 3

a. Both (A) and (R) are correct. b. (A) is correct, but (R) is not correct. c. Both (A) and (R) are incorrect. d. (A) is incorrect, but (R) is correct. 692. Assertion (A): The role of monetary policy in a developing economy in general is to achieve growth with stability. Reason (R): It makes availability of credit to public at cheaper rate of interest. a. (A) is correct but (R) is not the explanation of (A). b. Both (A) and (R) are incorrect. c. (A) is incorrect but (R) is correct d. Both (A) and (R) are correct. 693. Assertion (A): The average and the spread of indirect taxes have been lowered in India over the past two decades. Reason (R): Tax-GDP ratio in India has declined during this period. a. Both (A) and (R) are true and is the correct explanation of (A). b. Both (A) and (R) are true, but is not the correct explanation of (A). c. (A) is true, but (R) is false. d. (A) is false, but (R) is true. 694. The classical analysis of determination of output and employment is characterised as a a. Static Analysis b. Comparative Static Analysis c. Dynamic Analysis d. All of the above 695. „Consumption is irreversible‟ is implicit in which of the following hypothesis? a. Absolute Income Hypothesis b. Relative Income Hypothesis c. Life Cycle Hypothesis d. Permanent Income Hypothesis 696. Inventory-theoretic approach to transactions demand for money has been given by a. J. M. Keynes b. Milton Friedman c. Don Patinkin d. W.J. Baumol 697. Liquidity trap is a situation when demand for money is a. Zero elastic b. Unit elastic 698. Which statements in case of Kaldor model of trade cycle is incorrect? a. Its foundation can be found in Keynes‟ theory of income determination. b. It assumes that both saving and investment function (or at least one of the two) are non-linear. 95

Dr.S.Saravanan /Economics questions for Paper 2 & 3

c. It makes use of investment multiplier interaction to generate trade cycles. d. It is based on capital – Stock Adjustment principle. 699. Which of the following is not an indicator of Globalization? a. Opening of the economy for unrestricted imports and exports. b. Allowing free capital movement among nations. c. Free movement of technology among nations. d. Achieving exchange rate stability. 700. Which one of the following is an indicator of poverty? a. Head-count index b. Poverty-gap ratio c. Poverty-square gap ratio d. All of the above 701. The unbalanced growth strategy was propounded by a. Ragnar Nurkse b. H. Leibenstein c. A.O. Hirschman d. R. Rodan 702. Opportunity cost theory of international trade is given by a. Haberler b. Adam Smith c. Ricardo d. Heckschor-Ohlin 703. The concept of intra-industry trade is given by a. Balassa b. Meade c. Jagdish Bhagwati d. J.S. Mill 704. Which one of the following is considered as non-debt creating foreign investment inflow? a. External assistance b. Foreign direct investment c. Borrowing from I.M.F. d. Commercial borrowings 705. Various trade reforms after 1991 in India were implemented by a. Manmohan Singh b. C.N. Vakil c. P.R. Brahmananda d. Jagdish Bhagwati 706. In 1971, collapse of Brettonwood system was largely due to a. Fall of gold standard b. Rise in the value of gold 96

Dr.S.Saravanan /Economics questions for Paper 2 & 3

c. Failure to manage international liquidity d. Surplus countries did not revalue and deficit countries did not devalue their currencies 707. Purchasing power parity theory was given by a. Haberler b. J.S. Mill c. J.E. Meade d. Gustav Cassell 708. When was minimum reserve system of note issue adopted in India? a. 1947 b. 1953 c. 1956 d. 1960 709. Which one of the following is not the objective of monetary policy in India ? a. To accelerate economic development b. To achieve price stability c. To regulate foreign trade d. To stabilise exchange rate 710. The continuous deficit in the balance of payments of India is due to a. Continued rise in imports b. Slow rise in exports c. Exchange rate volatility d. All of the above 711. „Currency War‟ during the present recession is concerned with a. Under valuation of currency b. Over valuation of currency c. Neutral valuation of currency d. None of the above 712. Who is the Chairman of the Economic Advisory Council of the Prime Minister of India? a. Suresh Tendulkar b. Jagdish Bhagwati c. C. Rangarajan d. Vijay Kelkar 713. The distribution for which mean and variance are equal is a. Poission b. Binominal c. Normal d. Gamma 714. The sum of the squares of deviations of the given set of observations is minimum when taken from 97

Dr.S.Saravanan /Economics questions for Paper 2 & 3

a. Mode b. Median c. Variance d. Mean 715. Factor reversal test is satisfied by a. Laspayer‟s Index b. Fischer’s Index c. Marshall-Edgworth Index d. Pasche‟s Index 716. Type I error is defined as a. Reject null-hypothesis when it is false. b. Reject null-hypothesis when it is true. c. Accept null-hypothesis when it is true. d. Accept null-hypothesis when it is false. 717. An increase in the marginal propensity to import a. has the same effect upon the multiplier as an increase in the MPC b. has no effect upon the multiplier c. will increase the value of the multiplier d. θ1 < θ2 718. Golden Age hypothesis is concerned with a. Natural rate of growth > warranted rate of growth b. Actual rate of growth > warranted growth rate c. Warranted rate of growth > natural rate of growth d. Warranted rate of growth = natural rate of growth 719. A term financial liberalisation is concerned with a. Control by the RBI b. Decontrol and Deregulation of financial system in an economy c. Only decontrolling interest rate structure d. Asset-liability efficient management of nationalized banks 720. Which of the following economist developed the concept of “immiserzing growth”? a. Jagdish Bhagwati b. Samuelson c. Mrs. Joan Robinson d. Harrod-Domer 721. The gap between domestic product and national product is significant for a country with a. Small foreign investment b. Huge foreign investment c. Practically no foreign investment d. None of these 722. Imports into a country generate income for a. Foreign producers b. Domestic manufactures c. Traders 98

Dr.S.Saravanan /Economics questions for Paper 2 & 3

d. Government 723. National income total reveals a. The production side b. The spending side c. The distributive side d. The investment side 724. A deflator is a technique for a. Adjusting for change in commodity b. Accordance for higher increase of GNP c. Accordance for decline of GNP d. Adjusting for changes in price level 725. Trade between two countries takes place on account of: a. Comparative difference in costs b. Need for export c. Difference in costs d. Scarcity of goods 726. The purpose of international trade is a. To encourage exports b. Need for exports c. To increase the income of participating countries d. To promote international understanding 727. The exchange rate is kept the same in all parts of the market by a. Speculation b. Interest arbitrage c. Exchange arbitrage d. None of the above 728. The power of banks to create credit depends on: a. Amount of cash with them only b. Safe ratio only c. Amount of cash with them and the safe ratio d. None of the above 729. The money the bank creates is a. His asset b. His liability c. Both his asset and liability d. None of these 730. If all the banks in an economy are nationalized and converted into a monopoly banks, total deposit creation: a. Will decrease b. Will increase 99

Dr.S.Saravanan /Economics questions for Paper 2 & 3

c. Will neither increase nor decrease d. None of the above 731. Which of the following would cause interest rates to rise? a. The value of money b. The demand for money c. The general level of prices d. Aggregate monetary demand 732. The difference between GNP and NNP equals a. Depreciation b. Indirect business taxes c. A statistical discrepancy d. None of the above 733. In economies “marginal land” means that land on which: a. Normal rent accrues b. High rent is charged c. No rent accrues d. None of the above 734. The principal aim of the first plan were: a. To solve food problem b. To rehabilitate Indian economy c. To check prices d. All of the above 735. Planning commission was established in a. 1950 b. 1947 c. 1948 d. 1949 736. Which of the following group of items within the total of balance of payments? a. The merchandise balance b. Basic balance c. Current account balance d. All of the above 737. Mark the correct statement a. No equilibrium can be attained without intervention b. Equilibrium is a state of the balance of payments which can be sustained without intervention c. Equilibrium is a state of the balance of payments which can be sustained only through intervention d. None of the above 738. The upward shift of the demand curve for exports, expressed in local currency: 100

Dr.S.Saravanan /Economics questions for Paper 2 & 3

a. Raises the local currency value of imports b. Shifts the total currency of values to exports to infinitive position c. Decreases the local currency value exports d. Raises the local currency value of exports 739. If the elasticity of demand for imports is less than unity: a. The value of exports will increase b. Nothing will happen c. The value of imports will increase d. The value of imports will remain constant 740. It is argued that even if there is local unstable equilibrium, the market by and large is a. Unstable b. Stable c. In declining condition d. In increasing condition 741. The achievement of gains from trade: a. Requires comparative advantage b. Requires pure advantage c. Requires absolute advantage d. Requires comparative as well as absolute advantage 742. The public sector enterprise which is not one of the top profit making enterprises is: a. National fertilizers b. Eastern coalfields c. State trading corporation d. Indian pertro-chemical corporation 743. The most promising non-conventional source of energy in india is: a. Wind power b. Tidal power c. Geo-thermal energy d. Solar energy 744. Which state has the largest drought prone areas? a. Andhra Pradesh b. Gujarat c. Karnataka d. Rajasthan 745. Growing frequency of flood in A.P, Maharastra, Gujarat and Rajasthan is largely due to: a. Earthquakes b. Land slides c. Deforestration d. None of the above 746. Consumption can be defined as 101

Dr.S.Saravanan /Economics questions for Paper 2 & 3

a. The use of goods and services to satisfy current wants b. Any activity directed to the satisfaction of wants c. The use of goods for satisfaction of wants in future d. The wearing out of physical assets e. Making additions to the stock of assets 747. Consumer wants refer to: a. All those things a consumer would like to have b. The goods and services necessary to maintain the consumer‟s standard of living c. The goods and services for which a consumer is able and willing to pay d. All those goods required by a consumer to sustain existence e. All the items within a consumer‟s purchasing powers 748. In economics demand means a. The ability of the society to purchase all that is on the market at a given period of time b. The desire and willingness of the individual for all the goods and services for his standard of living c. At a given price per unit of time the desirability and willingness of an individual to purchase goods and services d. None of the above 749. Demand means a. Willingness and ability of an individual to buy goods and services at a given price and time b. Ability of a society to buy all that is on the market at a given time c. Desire of an individual of goods and services needed by him to keep up standard of living d. The desire and ability of the society to buy certain necessities at a given price per unit of time 750. The law of demand states that when: a. Income rises demand rises b. When price rises demand rises c. When price falls demand rises d. When income and price rise demand rises 751. The term paper gold is associated with a. Deficit financing b. Currencies still in gold standard c. Special drawing rights of the RAF d. Special facility of the world bank 752. A fall in price of a commodity leads to: a. A shift in demand b. A fall in demand 102

Dr.S.Saravanan /Economics questions for Paper 2 & 3

c. A rise in consumers real income d. A fall in the consumers real income 753. Demand curve for giffen goods will be: a. Upwards to the right b. Downwards to the right c. Upwards to the left d. Horizontally 754. The second French economist who received Nobel prize was a. Maurice Allias b. Maria Pearson c. Pierre d. None of the above 755. Kenneth Arrow shared Nobel Prize in 1972 alongwith a. Peter Diamond b. J.R.Hicks c. Samuelson d. Ronald Coase 756. Impossibility theorem developed by a. Kaldor b. Abraham Bergson c. J.R.Hicks d. Kenneth Arrow 757. The book „The bread of our forefathers‟ is written by a. W.J.Ashley b. J.S.Mill c. Karl Marx d. Oliver Willamson 758. Asimakopulous is a a. Micro Economist b. Macro Economist c. Fiscal Economist d. World bank Economist 759. The concept infinite number of agents developed by a. Robert J.Aumann b. F.W.Taussig c. Gautav Gassal d. Robert Triffin 760. Bargaining set concept introduced by a. Fredric list b. Machlup 103

Dr.S.Saravanan /Economics questions for Paper 2 & 3

c. Walras d. Aumann 761. Marketing clearing approach concerned with a. Asimakopolous b. Koutsiyannis c. Robert J.Barro d. Samuelson 762. Contestable market concepts related with a. W.J.Baumol b. Marshall c. Hicks d. Samuelson 763. The term principle of scarcity associated with a. Lionel Robbins b. Alfred Marshall c. Paul Anthony Samuelson d. Gutsav Cassal 764. The static state model first developed by a. Samuelson b. J.B.Clark c. J.B.Say d. J.S.Mill 765. ARCH model of time series analysis developed by a. Damodar Gujarati b. L.R.Klein c. William H.Greene d. Ragner Frisch 766. „Decision models‟ was developed by a. Ragner Frisch b. Marshall c. Samuelson d. Hicks 767. The first economist who applied axiomatic approach in utility analysis was a. Marshall b. Leon walras c. Ranger Frisch d. Von Newmann and Morgenstern 768. The cointegration approach was developed by a. Ragner Frisch b. Clive Granger 104

Dr.S.Saravanan /Economics questions for Paper 2 & 3

c. Klein d. Marshall 769. Cobb-webb theorem is concerned with a. Nicholar Kaldor b. Cobb-Douglas c. Marshall d. Leon walras 770. Expenditure tax advocated by a. J.M.Keynes b. Arthur Smithies c. Kaldor d. Musgrave 771. Compensation of the loser‟s test proposed by a. Bergson b. Hicks c. Kaldor d. Arrow 772. Verdoon law states a. The relationship between the growth of manufacturing productivity and output growth b. The relationship between growth of agricultural productivity and output growth c. The relationship between growth of export and GDP growth d. None of the above 773. Who used the term „long waves‟ in business cycle analysis a. Kondratieff b. Sraffa c. Hicks d. Marshall 774. The concept X-efficiency was developed by a. Harvey leibenstein b. Marshall c. Solow d. Harrod 775. The first table of input-output model, for 1919 and 1929, represented a ---------- model a. Open model b. Closed model c. Both (a) and (b) d. None of these 776. Input-output table created in 1947 represented a ----------- model a. Closed model 105

Dr.S.Saravanan /Economics questions for Paper 2 & 3

b. Open model c. Both (a) and (b) d. None of these 777. The book „Economics of control‟ is written by a. J.S.Mill b. Davenport c. Carl Menger d. Appa P.Lerner 778. Rational expectation hypothesis is concerned with a. Samuelson b. Robert Solow c. John Luke d. John Muth 779. The first economist who applied the hypothesis of rational expectation in the study of cyclical fluctuations of economic activity a. Philips b. Schultz c. Hicks d. Robert Lucas

106