I) According to Keynes, as income rises, lower proportion of income is spent on consumption.
II) According to Kuznets, as income rise, the average propensity to save remains fairly stable and constant.
Of the above which statement(s) are correct.
A) Both I) and II) are true
B) Neither I) and II) are correct
C) Only I) is true
D) Only II) is true
Ans) A
(2) If the Marginal Propensity to Consume (MPC) is equal to Average Propensity to Consume (APC) for all levels of income (Y), the correct corresponding consumption (C) function will be :
A) C=a+bY
B) C=a+b/Y
C) C=bY
D) C=bY²
Ans) C
(3) Transfer payments by the government are not included in the net domestic product because :
A) These are gifts from the government to the recipients.
B) They are not counted as commodities.
C) No corresponding production of goods and services has taken place to match such payments.
D) There may be leakages in such payments.
Ans) C
(4) Philips curve sets up a relation between :
A) Taxes and inflation
B) Inflation and unemployment
C) Money supply and aggregate demand
D) Price and cost of production
Ans) B
(5) If economy is operating at potential GDP, an increase in money supply will lead to :
A) Stagflation
B) Structural inflation
C) Demand-pull inflation
D) Cost-push inflation
Ans) C
(6) In the long sum, the transitory consumption will :
A) Be infinity
B) Remain unchanged
C) Decline but will remain positive
D) Be zero
Ans) D
(7) According to Keynes, investment demand depends on which of the following two factors ?
a) Rate of interest b) Income of the consumer c) Marginal efficiency of capital d) Marginal propensity to consume
Answer from the codes given below :
A) a) and d)
B) b) and d)
C) a) and c)
D) c) and d)
Ans) C
(8) For the demand function D=P(p) and supply function S=S(p), the excess demand brings about market equilibrium in which of the following situations ?
A) d E(p)/dp > 0
B) d E(p)/dp < 0
C) d E(p)/do = 0
D) d E(p)/do = infinity
Ans) B
(9) Consider the following statements.
a) Profit maximization by a producer.
b) Cournot's duopoly equilibrium.
Which of these are appropriate examples of Nash equilibrium ?
Answer from the code below :
A) Only a)
B) Only b)
C) Both a) and b)
D) Neither a) nor b)
Ans) B
(10) In which of the following market situations/forms, firms are able to maximise profits ?
A) Price leadership
B) Cartel
C) Art the kink point
D) Monopolistic competition
Ans) D
(11) Slutsky equation deals with decomposition of :
A) Price effect into substitution and income effects.
B) Goods into superior and inferior goods.
C) Goods into necessities and luxuries.
D) Consumer and producer surplus.
Ans) A
(12) A discriminating monopolist will charge a higher price in the market in which the price elasticity of :
A) Demand is greater
B) Supply is smaller
C) Supply is greater
D) Demand is smaller
Ans) D
(13) Inclusive growth objective was given for the first time in which plan of India ?
A) 9th five year plan
B) 10th five year plan
C) 11th five year plan
D) 12th five year plan
Ans) C
(14) Match List-I with List-II and select the correct answer from the codes given below :
List-I
a) Backward and forward linkages
b) Turnpike theorem c) Organic composition of capital d) A.K. Production function
List-II
i) Von Neumann model ii) Unbalanced growth iii) Marxian model iv) Endogenous growth model
Codes :
a b c d
A) i ii iii iv
B) iii iv ii i
C) ii i iii iv
D) ii iv iii i
Ans) C
(15) Which among the following variables/factors are used in constructing Human Development Index of India ?
a) Life expectancy at birth b) Real GDP per capita c) Morbidity
Select the correct answer from the codes given below :
A) All the three above
B) Both a) and b)
C) Both b) and c)
D) Both a) and c)
Ans) B
(16) Which of the following is credited with introduction of LPG model of economic development in India ?
A) Dr. C. Rangarajan
B) Dr. Montek Singh Ahluwalia
C) Dr. Amartya Sen
D) Dr. Manmohan Singh
Ans) D
(17) Which one of the following models explains the paradox pertaining to rural-urban migration in the context of rising urban employment ?
A) Solow model
B) Lewis model
C) Vakil and Brahmanand model
D) Todaro model
Ans) D
(18) In Harrod model of growth, if warranted rate of growth is below the natural rate of growth then it is possible to maintain steady state growth with :
A) Continuously increasing unemployment
B) A constant rate of unemployment
C) Continuously decreasing unemployment
D) None of the above
Ans) A
(19) Tobin tax is a tax on :
A) Transactions in the share market
B) Transactions in the money market
C) Transactions in the commodity market
D) Transactions in the foreign exchange market
Ans) D
(20) Budget incidence refers to :
A) The effect of both government expenditure and tax policies on the distribution of income.
B) The effect of government expenditure on the allocation of resources.
C) The effect of tax policies on the distribution of income and wealth in the private sector.
D) None of the above.
Ans) A
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