Friday 2 August 2019

UGC- NET ECONOMICS DECEMBER-2018 (SOLVED)




Q.1. In an economy with a linear homogeneous Cobb-Douglas production function, the share of capital and labour in total output are, respectively, 40% and 60%. The capital stock and labour force are growing, respectively, at 8% and 3% per annum. If the rate of growth of output is recorded as 7% per annum, then the rate of growth of the total factor productivity will be?
1.       4%
2.       2%
3.       11%
4.       10%
Q.2. according to new classical economics, real business cycles are the result of which of the following?
(I) Innovations
(II) Bad weather
(III) Tax policy
(IV) Debt policy
Choose the correct answer from the code given below:
Codes:
1.       (I) and (III)
2.       (II) and (IV)
3.       (I) and (II)
4.       (III) and (IV)
Q.3. GST which came into effect from 1st July, 2017 has four (04) tax slabs applicable to the commodities and services in India. Which of the following tax slabs are correct?
1.       5%, 8%, 12% and 18%
2.       8%, 12%, 15% and 18%
3.       5%, 12%, 18% and 28%
4.       8%, 12%, 18% and 28%
Q.4. Development expenditure of the central government does not include
(i) Grant to states under central sponsored schemes
(ii) Expenditure on social and community services
(iii) Expenditure on economic services
(iv) Defense expenditure
Choose the correct answer from the code given below:
Code:
1.       (ii) and (iii)
2.       Only (iv)
3.       (iii) and (iv)
4.       (i) and (ii)
Q.5. according to the cash balance approach, the elasticity of the demand for money?
1.       Is equal to 1
2.       Is less than 1
3.       Fluctuates with the changes in the phases of inflation
4.       Is more than 1
Q.6. An increase in the level of government spending, other things being equal, will in the IS-LM model?
1.       Increase the level of equilibrium income at all interest rates, shifting the IS curve right
2.       Always move an economy to full employment
3.       Increase interest rates, shifting the LM curve to the left
4.       Lower interest rates, shifting the LM curve to the right


Q.7. an economic region of production consists of
1.       The highest points of all isoquants
2.       The positivity sloped portions of all isoquants
3.       The negatively sloped of all isoquants
4.       The middle of all isoquants
Q.8. which of the statements about Pareto -optimality is incorrect?
1.       All the factors are used in production of all the commodities
2.       Consumers maximize their satisfaction
3.       Consumers have cardinal utility functions
4.        There is perfect competition in the factor and commodity markets
Q.9. to compute the “index of sustainable economic –welfare” which of the following corrections is/are made in the value of GDP?
1.       Subtract the monetary value of depreciation
2.       Subtract the costs of environmental degradation
3.       Subtract the monetary value of the loss due to flood and droughts
4.       Subtract the monetary value of expenditure on Defense
Q.10. According to the union budget, which of the following fiscal deficit targets for 2018-19 is correct?
1.       4.5% of the GDP
2.       4.3% of the GDP
3.       5.3% of the GDP
4.       3.3% of the GDP
Q.11. an income tax will be progressive if
1.       Marginal rate of tax is less than the average rate of tax
2.       Marginal rate of tax is greater than the average rate of tax
3.       Marginal rate of tax is zero
4.       Marginal rate of tax is equal to the average rate of tax
Q. 12. If (K/L)A >(K/L)B, then
1.       Country A is capital abundant
2.       Country A is having cheap labor
3.       Capital is dear in country A
4.       Country A is labor abundant
Q.13. technological dualism means
1.       Prevalence of different technologies in agricultural sector in underdeveloped countries
2.       Prevalence of different production functions in the advanced and traditional sector in underdeveloped countries
3.       Prevalence of different production functions in domestic and export sector of underdeveloped countries
4.       Prevalence of different production functions in the industrial sectors in underdeveloped countries
Q.14. which of the following statements is/are correct about normal profit?
1.       It is earned in the both the long period and the short period
2.       It is earned in the long period only
3.       It is earned only in perfect completion
4.       It is earned in the short period only
Q.15. planning from below is known as
1.       Decentralized planning
2.       Functional planning
3.       Structural planning
4.       Centralized planning

Q.16. which of the following is not a part of the peacock-wiseman hypothesis?
1.       Concentration effect
2.       Displacement effect
3.       Inspection effect
4.       Announcement effect
Q.17. consider the following diagram and statements:


(i)                  Saving is positively related to income
(ii)                Marginal propensity to save is positive, but less than 1
Choose the correct answer from the code given below:
Code:
(i)                  Both (i) and (II)
(ii)                Only (II)
(iii)               Only (I)
(iv)              Neither (I) nor (II)
Q.18. arrange the following crop insurance schemes in the chronological order of their launch:
(i)                  Comprehensive crop insurance scheme
(ii)                National agriculture insurance scheme
(iii)               Modified national agriculture insurance scheme
(iv)              Pradhan mantra fasal bima yojna
Code:
(i)                  I, iii, ii, iv
(ii)                Ii, iii, I, iv
(iii)               I, ii, iii, iv
(iv)              Iii, ii, iv, i
Q.19. which of the following statements is true for the Indian economy according to the world bank figures for 2017?

(i)                  India’s GDP amounted to $5 trillion at the end of 2017
(ii)                India is now the world’s sixth biggest economy
(iii)               Both above
(iv)              None of the above
Q.20. global competitiveness report is released by which of the following organizations?
(i)                  WTO
(ii)                World economic form
(iii)               EU
(iv)              World bank
Q.21. BOP on capital account does not include
(i)                  Government loans to foreign governments
(ii)                FPI
(iii)               Balancing foreign direct investment
(iv)              Net income  transfers

Q.22. consider the following:
        I.            Fringe benefit tax
      II.            Capital gains tax
    III.            Securities transaction tax
Which of the above is/are direct tax/taxes?
Choose the correct answer from the code given below:
(i)      Only I
(ii)    II and III
(iii)   I and III
(iv)  I, II and III
Q.23. who among the following said that “money is a temporary abode of purchasing power”?
(i)      Milton Friedman
(ii)    Irving fisher
(iii)   James Tobin
(iv)  William J. Baumol
Q.24. in a hypothetical economy, the rate of growth of nominal GDP is 15% per annum, the annual rate of growth of GDP deflator is 5%. If the population is growing at the rate of growth of 2% per annum, what will be the annual rate of growth of per capita real GDP?
(i)      8%
(ii)    7%
(iii)   3%
(iv)  10%
Q.25. if for the constant elasticity of substitution production function, the value of the substitution parameter (ρ) is = -1, the elasticity of substitution will be?
(i)      Zero
(ii)    Unity
(iii)   Indeterminate
(iv)  Infinite
Q.26. which is not true for the third stage of the theory of demographic transition?
(i)      Birth rate declines faster
(ii)    Population growth becomes zero
(iii)   Death rate declines but slowly
(iv)  Population growth rate approximately stabilize in a new range
Q.27. as per the SRS bulletin of September 2017, estimated death rate for Kerala is 7.6, while for Bihar it is 6. From these data which is the correct inference to draw?
(i)      Ageing of population in kerala is faster than in bihar
(ii)    Suicide rate in kerala is very high
(iii)   Life expectancy in bihar is higher than that in kerala
(iv)  Health conditions of people in bihar is better than that in kerala
Q.28. intellectual property tights include
(i)      Copyrights
(ii)    Trademarks
(iii)   Patents
(iv)  All of the above
Q.29. the price elasticity of a linear supply curve through the origin is
(i)      Infinite
(ii)    Unity
(iii)   Zero
(iv)  Less than unity


Q.30. which of the following will result in the “crowding in” effect in economy?
(i)      Public borrowings to finance spending on infrastructure
(ii)    Public borrowings to finance spending on salaries and wages
(iii)   Public borrowings to finance spending on health and education
(iv)  Public borrowings to finance spending on skill development
Choose the correct answer from the code given below:
Code:
(i)      (iii) and (iv)
(ii)    (i) and (ii)
(iii)   (i), (iii) and (iv)
(iv)  (i), (ii) and (iii)
Q.31. in the basic neo-classical growth model, where does the growth equilibrium occur ?
(i)      Where investment per worker equals capital per worker
(ii)    Where capital per worker in equals output per worker
(iii)   Where investment per worker is equal to saving per worker
(iv)  Where investment per worker equals depreciation of capital for worker
Q.32. which of the following correctly describes the Musgrave and Thin’s measure of tax progressivity?
 Where
                            Ga = Gini’s coefficient after tax,
                            Gb = Gini’s coefficient before tax.
(i)      M=1- Ga/1- Gb
(ii)    M= Ga/ Gb
(iii)   M= 1- Gb /1- Ga
(iv)  M= Gb / Ga
Q.33. consider the following statements in the context of the new trade theory:
(i)      It explain why countries trade in similar goods
(ii)    It assumes free trade
(iii)   It assumes that trade takes place in monopolistic conditions
(iv)  It exploits the economics of scale in production
Which of the above statements are correct?
Choose the correct answer from the code give below:
Code:
(i)      (i), (iii) and (iv)
(ii)    (i) and (ii)
(iii)   (i) and (iii)
(iv)  (ii) and (iv)
Q.34. in the year 2015-16, India has not been an importer of which of the following products?
(i)      Apples
(ii)    Rice
(iii)   Pulses
Choose the correct answer from the code given below:
Code:
(i)      (i) and (iii)
(ii)    (i), (ii) and (iii)
(iii)   Only (ii)
(iv)  (ii) and (iii)
Q.35. which of the following is not a macro-economic challenge before Indian economy as of now?
(i)      High imports of gold
(ii)    Depreciation of Indian rupee
(iii)   Rising protectionism in the world
(iv)  Widening  current account deficit
Q.36. on which of the following do Keynesians and monetarists agree?
(i)      The most important cause of demand shocks in changes in supply
(ii)    Output deviates at times from the potential output because of demand shocks
(iii)   The demand for money is interest elastic
(iv)  When there is recessionary gap, flexible wages will retrieve the labor market to equilibrium quickly
Q.37. the public expenditure in India is classified as capital and revenue. Which of the following is/ are revenue expenditure?
(i)      Subsidies
(ii)    Interest payments on public debt
(iii)   Wages and salaries
Choose the correct answer from the code given below:
Code:
(i)      (i) and (iii)
(ii)    (i) and (ii)
(iii)   (ii) and (iii)
(iv)  (i), (ii) and (iii)
Q.38. which of the following concept- economist paired is not correctly matched?
1.       Super multiplier- J.M. Keynes
2.       Knife-edge problem- Harrod -Domar
3.       Golden rule of accumulation- E.S. Phelps
4.       Turnpike conjecture- Dorfman, Samuelson and Solow
Q.39. which amongst the following is/are correct for the Keynesian model?
1.       It ignores the money market
2.       It assumes full employment of resources
3.       It is supply determined
4.       None of the above
Q.40. the Inada conditions are applicable to
1.       A well-behaved investment function
2.       A well-behaved consumption function
3.       A well-behaved technical progress function
4.       A well-behaved production function
Q.41. arrange the following events in the chronological order regarding Indian economy:
                    I.            First phase of nationalization of banks
                  II.            Establishment of Narasimhan committee on the banking system
                III.            Enactment of FEMA act in India
                IV.            Establishment of EXIM bank in India
Choose the correct answer from the code given below
Code
          I.            (I),(II),(III), (IV)
        II.            (I), (III), (II), (IV)
      III.            (I), (IV), (II),(III)
      IV.            (I),(III), (II), (IV)
Q.42. opportunity cost theory assumes that
        I.            Labor is the only factor of production
      II.            Cost of commodity is equal to labor cost only
    III.            Labor is homogenous
    IV.            None of the above
Q.43. which of the following is not included in the category of bio-fuels?
        I.            Biodiesel
      II.            Compressed natural gas
    III.            Bioethanol
    IV.            Gobar gas
Q.44. which of the following is considered as the third stage in the Rostow’s stages of economic growth model?
        I.            Traditional society
      II.            Pre-condition for a take off
    III.            High mass consumption
    IV.            Take off
Q.45. T.W. Schultz has given the following ratios in relation to education for economic growth:
        I.            Education labor ratio
      II.            Education labor ratio, education-income ratio and education investment ratio
    III.            Education capital and labor ratio
    IV.            Education income ratio
Q.46. which of the following is the appropriate measure of openness of the economy?
        I.            Export+ Import/GDP
      II.            Export- import
    III.            Export/import
    IV.            Export- import/population
Q.47. match list-I with list-II and choose the correct answer from the code given below
               List-I                                                   list-II
(a)    n= Pk                              (i)  A.C. Pigou
(b)   M=PkT                           (ii)  keynes
(c)    P=kR/M                         (iii) Alfred Marshall
(d)   M=kPY                           (iv) D.H. Robertson
Code:
        I.            (a)-(ii), (b)-(iv), (c)-(i), (d)-(iii)
      II.            (a)-(iii), (b)-(ii), (c)-(i), (d)-(iv)
    III.            (a)-(i), (b)- (ii), (c)-(iii), (d)-(iv)
    IV.            (a)-(iv), (b)-(i), (c)-(ii), (d)-(iii)
Q.48. problem of adverse selection arises due to
        I.            No information
      II.            Full information
    III.            Asymmetric information
    IV.            Wrong information
Q.49. which of the following is not an objective of marginal cost of funds based lending rate (MCLR)?
        I.            To enable to RBI to achieve the inflation target
      II.            To enable banks to become more competitive
    III.            To improve the transmission of policy rates into the lending rates of banks
    IV.            To ensure availability of bank credit in interest rates which are fair to borrowers are well as banks
Q.50. arrange the following states in descending order according to maternal mortality ratio (MMR) as par the special bulletin of SRS, May, 2018:
        I.            Assam
      II.            Bihar
    III.            Madhya Pradesh
    IV.            Uttar Pradesh
Choose the correct answer from the code given below:
Code:
        I.            (I), (IV), (III), (II)
      II.            (III), (II), (I), (IV)
    III.            (IV), (I), (II), (III)
    IV.            (II), (IV), (III), (I)
Q.51.the statement, “Too much money chasing too few goods” is based on which of the following theoretical concepts?
          I.            Quantity theory of prices
        II.            Quantity theory of money
      III.            Inventory theoretic approach to the demand for money
     IV.            Real balance effect
Q.52. who is the author of the book, “I do what I do”?
        I.            Raghuram G. Rajan
      II.            Jagdish N. Bjagwati
    III.            Arvind panagariya
    IV.            Amartya sen
Q.53. ‘round tripping’ in international trade is a method
        I.            To boost foreign direct investment
      II.            Of financing start-ups
    III.            To increase exports
    IV.            To evade tax
Q.54. according to Bent Hansen, which amongst the following were treated as factors enhancing effective demand?
(i)      Public expenditure
(ii)    Rising population
(iii)   Banking and financial system
Choose the correct answer from the code given below:
Code:
        I.            (i) and (iii)
      II.            (i), (ii) and (iii)
    III.            (ii) and (iii)
    IV.            (i) and (ii)
Q.55. which of the following statements about rational expectations is false?
        I.            It assumes that people take account of all information
      II.            It implies that expected changes in demand have no effect on unemployment
    III.            It implies that unexpected changes in demand have long lasting effect on both unemployment and price level.
    IV.            It assumes that on an average the forecasts made by public are correct
Q.56. why are indirect taxes called regressive?
        I.            They are charged at higher rates than direct tax
      II.            They are charged at the same rate for all income groups
    III.            Both above are correct
    IV.            None of the above are correct
 Q.57. which of the following is/are true for Karl Mark’s theory of economic development?
(i)      Mode of production changes independently
(ii)    Relations in production changes independently
(iii)   Both above
(iv)  None of the above
Q.58. the national rural health mission was launched in the year
(i)      2009
(ii)    1998
(iii)   2005
(iv)  1991
Q.59. which of the following act as an instrument to help in the borrowing by the government?
(i)      Repo rate
(ii)    Reverse repo rate
(iii)   CRR
(iv)  SLR
Choose the correct answer from the code given below:
Code
Only (iv)
(i) and (iii)
(iii) and (iv)
(i) and (iv)
Q.60. historically the term of trade of the developing countries have been unfavorable due to the fact that when income in developed countries rises, the demand for primary goods declines because
(i)      Income elasticity of demand for primary goods is zero
(ii)    Income elasticity of demand for primary goods is low
(iii)   Income elasticity of demand for primary goods is high
(iv)  Price elasticity of demand for primary goods is high
Q.61. consider the following statements:
1. Minimum support price (MSP) policy of India covers only wheat, paddy and coarse cereals
2. Minimum support price (MSP) for grade-A paddy is always higher than that of common paddy
Choose the correct answer from the code give below:
Code:
(i)      Only (ii)
(ii)    Only (I)
(iii)   Neither (I) nor (II)
(iv)  Both (I) and (II)
Q.62. devaluation will be more effective when
(i)      International capital is freely mobile
(ii)    International capital is not freely mobile
(iii)   Marginal propensity to import is high
Which of the above statement is/are correct?
Choose the correct answer from the code given below:
Code
(I) and (iii)
Only (iii)
(ii) and (iii)
Only (ii)
Q.63. the original interpretation of balance growth related to
(i)      All sector growing at the same rate
(ii)    Large scale expansion of activities to overcome divergence between private and social benefits
(iii)   Equal amount to investment in all sectors
(iv)  Absence of shortage or excesses
Q.64. the concept of universal banking was recommended by which of the following committee?
(i)      T.H. Malegam committee
(ii)    Abid hussain committee
(iii)   S.Padmanabhan committee
(iv)  R.H. khan committee
Q.65.consider the following statement about the average fixed cost of a firm:
(i)      Its slope is always negative
(ii)    Its slope is always greater than one
(iii)   Its slope is always equal to one
(iv)  Elasticity with respect to output is equal to one
Choose the correct answer from the code given below
Code:
 (i) and (iv)
Only (iii)
(ii) and (iii)
Only (i)
Q.66. which of the following are the objectives of the commission for agriculture costs and prices (CACP)?
(i)      To ensure meaningful real income levels to the farmers
(ii)    To stabilize agricultural prices
(iii)   To protect interest of the consumers
Choose the correct answer from the code given below:
Code:
(ii) and (iii)
(i) and (ii)
(i) and (iii)
All of the above
Q.67. consider the following statements about the law of variable proportions
1. Input ratio remains unchanged
2. Ultimately the marginal and average product of variable input becomes negative
3. Effect of technological changes is visible on output
Choose the correct answer from the code give below
Code:
(i) and (ii) are correct
Only (ii) is correct
(ii) and (iii) are correct
None of the above statement is correct
Q.68. According to Schumpeter theory of development, which of the following statements is correct?
(i)      Democracy enhances the efficiency of an economic system
(ii)    The expansion of economic outputs is limited by the real saving of the economy
(iii)   All of the above are correct
(iv)  None of the above is correct
Q.69. which of the following is statements is/are correct about Uzawa’s theorem?
(i)      The growth rate of output per worker, consumption per worker and capital per worker are equal and constant over time
(ii)    The production function is linear homogenous
(iii)   The technical progress is ‘Harrod netural’ only
(iv)  All of the above
Q.70. match list-I with list-ii and choose the correct answer from the code given below:
List-I                                                                                  list-ii
(a) Absorptive capacity of capital                     (i)   M. Kalecki
(b) Technological dualism                                  (ii)   A.O. Hirschman
(c) Physical quality of life index                        (iii) D. Morris
(d) Permissive and compulsive sequences     (iv) B. Higgins
Of expanding industries
Code
 I.            (a)-(iv), (b)-(iii), (c)-(ii), (d)-(i)
II.            (a)-(i), (b)-(iv), (c)-(iii), (d)-(ii)
III.            (a)-(i), (b)- (ii), (c)-(iii), (d)-(iv)
IV.            (a)-(ii), (b)-(iv), (c)-(iii), (d)-(i)
Q.71. what is the required capital adequacy ratio for a new bank to apply for a license, under the draft guidelines of RBI?
(i)      10%
(ii)    12%
(iii)   11%
(iv)  9%
Q.72. who among the following has been awarded the Nobel Prize in economics “for analysis of markets with asymmetric information”?
(i)      Robert A. Mundell
(ii)    George A. Akerlof
(iii)   Richard Thaler
(iv)  Paul Krugman
Q.73. who amongst the following economists treated nature to be niggardly?
(i)      J.S. Mill
(ii)    David Ricardo
(iii)   Karl Marx
(iv)  Thomas Robert Malthus
Choose the correct answer from the code given below:
Code:
(iii) and (iv)
(i), (ii), and (iii)
(ii) and (iv)
(ii) and (iii)
Q.74 what is true for neo-classical growth model?
(i)      Rate of interest and profit are flexible
(ii)    Capital is heterogeneous
(iii)   Perfect competition prevails
(iv)  Capital and labor are substitutable
Choose the correct answer from the code given below
Code
(i), (ii), and (iii)
(ii) and (iii)
(i), (iii), and (iv)
All of the above
Q.75. match list-I (authors) with list-ii (books) and choose the correct answer from the code given below
                 List-I                                                                                list-ii
             (Authors)                                                                       (Books)
(a) Milton Friedman                                                              (i) Das capital
(b) Joseph Schumpeter                                                        (ii) Capitalism and freedom
(c) Karl Marx                                                                          (iii) Capital in the21st century
(d) Thomas Piketty                                                               (iv) Capitalism, socialism and democracy
 Code:
 I.            (a)-(iii), (b)-(i), (c)-(iv), (d)-(ii)
II.            (a)-(ii), (b)-(iv), (c)-(i), (d)-(iii)
III.            (a)-(iii), (b)- (ii), (c)-(i), (d)-(iv)
IV.            (a)-(iv), (b)-(iii), (c)-(i), (d)-(ii)
Q.76. the presumption that costly new technology would be undersupplied by the private sector is based on the essential characteristic of new knowledge.
It is (A)…………………………and (B)…………………………..
(i) (A) Rivalous (B) Non-excludable
(ii) (B) Rivalous (B) Excludable
(iii) (C) Non-rivalous (B) Non-excludable
(iv) (D) Non-rivalous (B) Excludable
Q.77. which among the following is not an instrument of money market?
(i)      Certificate of deposit
(ii)    Commercial paper
(iii)   Preference share
(iv)  Treasury bill
Q.78. a rise in general price level may be caused by which amongst the following?
1. An increase In the money supply
2. In increase in the aggregate level of output
3. An increase in the effective demand
Choose the correct answer from the following code given below
Code
(i) and (iii)
Only (iii)
(i), (ii), and (iii)
(i) and (ii)
Q.79. in the context of ‘transformation of aspirational districts’ programme, consider the following statements
1. There are 115 districts in this programme
2. The core strategy of this progremme is convergence, collaboration and competition
3. There are 49 key performance indicators to measure the progress of the districts
Choose the correct answer from the code given below:
Code
(i) and (ii)
(ii) and ( iii)
(i) and (iii)
(i), (ii), and (iii)
Q.80. the frequent farm loan waivers in India may give rise to the problem of
1.       Adverse selection
2.       Deb overhang
3.       Moral hazard
4.       Risk aversion
Q.81. given below are two statements, one labeled as assertion (A) and the other labeled as Reason (R). read the statements and choose the correct answer using the code given below
Assertion (A): business cycles according to new classical economics are monetary in nature
Reason (R) : these are the results of the fall in real wage rates.
Code
Both (A) and (R) are true and (R) is the correct explanation of (A)
(A) is false, but (R) is true
Both (A) and (R) are true, but (R) Is not the correct explanation of (A)
(A) is true, but (R) is false
Q.82. given below are two statements, one labeled as assertion (A) and the other labeled as Reason (R). read the statements and choose the correct answer using the code given below
Assertion (A): A progressive income tax is based on equimarginal sacrifice
Reason (R) : Higher the income, lower will be the marginal utility of money for the tax payer
Code
Both (A) and (R) are true and (R) is the correct explanation of (A)
(A) is true, but (R) is false
Both (A) and (R) are true, but (R) Is not the correct explanation of (A)
(A) is false, but (R) is true
Q.83. given below are two statements, one labeled as assertion (A) and the other labeled as Reason (R). read the statements and choose the correct answer using the code given below
Assertion (A): in an oligopolistic market, there is price rigidity
Reason (R) : Rival firms match price decrease but not price increase
Code
(A) is false, but (R) is true
Both (A) and (R) are true, but (R) Is not the correct explanation of (A)
(A) is true, but (R) is false
Both (A) and (R) are true and (R) is the correct explanation of (A)
Q.84. given below are two statements, one labeled as assertion (A) and the other labeled as Reason (R). Read the statements and choose the correct answer using the code given below
Assertion (A): in the P.N. Rosenstein Rodan’s model, the positive role of individualities in production has been analyzed
Reason (R): Removal of indivisibilities leads to constant returns to scale in production
Code
Both (A) and (R) are true and (R) is the correct explanation of (A)
Both (A) and (R) are true, but (R) Is not the correct explanation of (A)
(A) is true, but (R) is false
(A) is false, but (R) is true
Q.85. given below are two statements, one labeled as assertion (A) and the other labeled as Reason (R). Read the statements and choose the correct answer using the code given below
Assertion (A): Indian is a service sector derived economy.
Reason (R): Share of the service sector in total employment is higher
Code
(A) is true, but (R) is false
Both (A) and (R) are true, but (R) Is not the correct explanation of (A)
(A) is false, but (R) is true
Both (A) and (R) are true and (R) is the correct explanation of (A)
Q.86. in regression analysis, if a quantitative variable has ‘m’ categories, one can introduce
(i)      Only m dummy variables
(ii)    Only 2 m variables
(iii)   Only m -1 dummy variables
(iv)  Only m +1 dummy variables
Q.87. a monopolist faces a linear demand curve p=100-4q, while his cost function is C=50+20q. the profit maximizing output for this monopolist is
(i)      10
(ii)    5
(iii)   20
(iv)  40
Q.88. if demand for a consumer is given by the function p=27-3x-x²
(Where x= quantity demanded, p= price), the consumer’s surplus at x=3 is
(i)      32.5
(ii)    50.5
(iii)   31.5
(iv)  49.5
Q.89.the price elasticity of demand for goods with the demand function q=kp¯ʳ (here p is price, q is quantity demanded and (k) and (r) are positive constants) is
(i)      1
(ii)    Not constant as the function is non-linear
(iii)   1/r
(iv)  r
Q.90. though two time series are individually non-stationary, their linear combination is stationary. This is an example of
(i)      Spurious regression
(ii)    Trend stationary
(iii)   Cointegration
(iv)  Random walk
Q.91. in the context of simultaneous equations econometric models, consider the following statements
(i)      Both order and rank conditions for identification are to be satisfied before estimation
(ii)    Order condition is necessary but not sufficient condition of identification
(iii)   Two-stage least squares method is suitable for over-identified equations
Which of the above statements is/are correct?
Choose the correct answer from the code given below:
Code
(i)                  Only (i)
(ii)                (i) and (iii)
(iii)               Only (ii)
(iv)              (i), (ii), and (iii)
Q.92. a series of index numbers is given below as follows:
Year:                    2014            2015                  2016
Index number:   100                120                    126
If the base year is shifted to year 2015, the value of index number in the year 2016, in the new series will be;
(i)      105
(ii)    151.2
(iii)   95.2
(iv)  106
Q.93. by autocorrelation we mean that
(i)      The residuals of a regression model are related with one or more of the regression
(ii)    The residuals of a regression model are not independent
(iii)   The variance of the residuals of a regression model is not constant for all observations
(iv)  The square of the residuals of a regression model are not equally spread
Q.94. Harrods’s growth model is given as under:
St=αYt         0<α<1
ɪt=β[Yt-Yt-1]              β>0
St= ɪt
Where St= saving,  Yt=income, ɪt=investment, t=time
In this model for economic growth, the condition for economic growth is
(i)      β/α>0
(ii)    β/α-β>0
(iii)   β/β-α>1
(iv)  β/β-α<0
Q.95. Match list-1 with list-2 and choose the correct answer from the code given below
                     List-1                                               list-2
(a) Hawkins-Simon conditions                  (i) Theory of game
(b) Saddle point                                           (ii) Non-Linear programming
(c) Simplex method                                    (iii) Input-output method
(d) Kuhn-Tucker condition                        (iv) Linear programming
Code:
(i)      (a)-(iii), (b)-(ii), (c)-(i), (d)-(iv)
(ii)    (a)-(ii), (b)-(i), (c)-(iii), (d)-(iv)
(iii)   (a)-(i), (b)- (ii), (c)-(iv), (d)-(iii)
(iv)  (a)-(iii), (b)-(i), (c)-(iv), (d)-(ii)
Q.96 Match list-1 with list-2 and choose the correct answer from the code given below
                     List-1                                               list-2
(a) Delphi method                                       (i) Stationary
(b) Dickey-Fuller test                                  (ii) Autocorrelation
(c) Durbin-Watson test                              (iii) testing significance of a regression coefficient
(d) Student’s t –test                                   (iv) Forecasting
Code:
(i)      (a)-(iv), (b)-(i), (c)-(ii), (d)-(iii)
(ii)    (a)-(i), (b)-(iv), (c)-(iii), (d)-(ii)
(iii)   (a)-(iv), (b)- (ii), (c)-(i), (d)-(iii)
(iv)  (a)-(i), (b)-(ii), (c)-(iii), (d)-(iv)
Q.97. a box contains 10 bulbs, 4 of which are defective. If 3 of the bulbs are drawn randomly without replacement, what is the probability that all three bulbs are defective?
(i)      1/30
(ii)    4/10
(iii)   3/10
(iv)  3/4
Q.98. in two-variable regression, the correlation coefficient between dependent and independent variable Y and X is 0.7. what is the percentage of variable in Y explained of by X?
(i)      49%
(ii)    7%
(iii)   0.7%
(iv)  70%
Q.99. For the diagram given below, which of the following is correct in terms of derivatives?


(i)      dy/dx>0, d²y/dx²>0
(ii)    dy/dx<0, d²y/dx²>0
(iii)   dy/dx<0, d²y/dx<0
(iv)  dy/dx>0, d²y/dx<0

Q.100. consider the following statements about a time series of annual observation on sales of a firm for ten years:
(i)      The series will have seasonal variations
(ii)    The series will have a secular trend
(iii)   The series will have cyclical variations
Choose the correct answer from the code given below
Code
(i) and (ii)
(i), (ii), and (iii)
(ii) and (iii)
(i) and (iii)


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Saturday 27 July 2019

Marx theory of development


Marxist Theory
Marx is regarded as the father of history (scientific socialism) who prophesied the decline of capitalism and the advent of socialism. He is considered a great thinker of history. His famous book ‘Das Kapital’ is known as the Bible of socialism (1867). He presented the process of growth and collapse of the capitalist economy. He expected capitalistic change to break down because of sociological reasons and not due to economic stagnation and only after a very high degree of development is attained.

“Marxism is a religion. To an orthodox Marxist, an opponent is not merely in error but in sin”.
-Prof. Schumpeter wrote,
According to Marx, human civilization has manifested itself in a series of organizational structures, each determined by its primary mode of production, particularly the division of labor that dominates in each stage. In Marxian theory, production means the generation of value. Thus economic development is the process of more value-generating, and labor generates value.
Marxian Economic theory of growth is based on certain Assumptions:-
1. There are two principal classes in society. (a)Bourgeoisie (b) Proletariat. 
2. Wages of the workers are determined at a subsistence level of living. 
3. Labour theory of value holds good. Thus labor is the main source of value generation. 
4. Factors of production are owned by the capitalists. 
5. Capital is of two types: (a) constant capital (b) variable capital. 
6. Capitalists exploit the workers. 
7. Labour is homogenous and perfectly mobile. 
8. Perfect competition in the economy. 
9. National income is distributed in terms of wages and profits.

Marks stage of economic growth is classified in the five stages which are as follows:-
                             

STAGE 1 – PRIMITIVE COMMUNISM

This is the first stage in which men performed the same economic functions i.e. – hunter-gathering. They worked together in order to survive. There was no private property and there was no classes exist in the society. Eventually, the most successful hunter-gatherers gained power and control over the others and this leads to the next stage which is imperialism.

STAGE 2 – IMPERIALISM

The strong man ruled. He began by owning all the land but when threatened by outsiders, he would grant land to others in return for military services. A new land-owning aristocracy was therefore created. In this stage, people start having private property right.



STAGE 3 – FEUDALISM
The land was owned by the aristocracy who exploited the peasantry who worked it. There was a surplus of food which the aristocracy sold to others creating a class of merchants and capitalists who wanted to share political power.





STAGE 4 – CAPITALISM
The wealthy merchants and factory owners (bourgeoisie) obtained political power and exploited the workers (proletariat).In such a society, the proletariat is fooled into believing that she/he is free because she/he is paid for his/her labor. In fact, the transformation of labor into an abstract quantity that can be bought and sold on the market leads to the exploitation of the proletariat, benefitting a small percentage of the population in control of the capital. The working class thus experiences alienation since the members of this class feel they are not in control of the forces driving them into a given job. The reason for this situation is that someone else owns the means of production, which are treated as private property. As the proletariat became politically aware they would rise up and overthrow the bourgeois government. All this because of the eventual growth of commerce (and of human populations), feudal society began to accumulate capital, which, along with the increased debt incurred by the aristocracy, eventually led to the English Revolution of 1640 and the French Revolution of 1789 both of which opened the way for the establishment of a society structured around commodities and profit (i.e. capitalism). Human society's entrance into capitalism occurred because of a transformation in the understanding of exchange-value and of labor.
STAGE 5 – SOCIALISM OR COMMUNISM
There would be a dictatorship of the proletariat as workers’ organizations re-distributed food, goods, and services fairly according to need, and profits were shared by all. The middle classes would come to understand that equality was superior to private ownership. Everyone would join together for the common good. Money and government would no longer be needed and society would be class-less. As all countries reached this stage the world would become state-less and competition and wars would cease and more capital accumulation and technological improvement. At the start, growth under capitalism, generation of value and accumulation of capital underwent at a high rate. After reaching its peak, there is a concentration of capital associated with a falling rate of profit. In turn, it reduces the rate of investment and as such a rate of economic growth. Unemployment increases. Class conflicts increase. Labor conflicts start and there is a class revolt. Ultimately, there is a downfall of capitalism and the rise of socialism.


Gist Of Theory 

STAGES OF HISTORY AND CLASS CONFLICT AT EACH STAGE

STAGE
OPPRESSING CLASS
OPPRESSED CLASS
Primitive communism
No classes
No conflict
Slavery
Slave owners
Slaves
Feudalism
Landowners
Serfs
Capitalism
Bourgeoisie
Proletariat
Socialism
State managers
Workers
Communism
No classes
No conflict
                    










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Thursday 18 July 2019

UGC-NET (ECONOMICS) JULY-2018 {QUESTIONS 1-50}*



1. Which of the following will be true for both monopoly and monopolistic competition in the short run?
(1) Price is greater than marginal revenue.
(2) Price is equal to marginal revenue.
(3) Price is equal to marginal cost.
(4) Price is equal to average cost.
2. Consider the following matrix which describes the respective strategies and the corresponding pay-offs of firms A and B operating in a duopoly:

Which of the following statement(s) is/are true for the above game?
Select the correct answer from the codes given below:
(a) Firm A has no dominant strategy.
(b) Firm B has a dominant strategy.
(c) The game has a Nash equilibrium.
(d) Neither Firm A nor Firm B has a dominant strategy.
Code:
(1) (a), (c)
(2) (b), (c)
(3) (d) Only
(4) (a), (b) and (c)
3. In the context of oligopoly, consider the following statements:
(a) Cournot’s equilibrium is a Nash equilibrium.
(b) Stackelberg equilibrium is a Nash equilibrium.
Select the correct answer from the code given below:
(1) Only (a)
(2) Only (b)
(3) Both (a) and (b)
(4) Neither (a) nor (b)
4. Match List – I with List-II and point out the correct answer from the codes below:
List - I (Concept)
List-II (Economist)
(a) Profit as a dynamic surplus
(b) Profit as a reward for innovation
(c) Profit as a reward for uncertainty bearing
(d) Profit arises due to monopoly power enjoyed by the producers
(i) J. Schumpeter
(ii) M. Kalecki
(iii) F.H. Knight
(iv) J.B. Clark
Code:
      (a) (b) (c) (d)
(1) (ii) (i) (iii) (iv)
(2) (iv) (i) (iii) (ii)
(3) (iv) (ii) (iii) (i)
(4) (iii) (iv) (ii) (i)
5. When the marginal cost is equal to average cost, the slope of the average cost is:
(1) positive
(2) negative
(3) zero
(4) infinite
6. For the function Q=A  Kα  Lβ, which of the following is correct?
(1) The degree of homogeneity is 1
(2) The elasticity of substitution is equal to α+β
(3) Output elasticity with respect to capital is α
(4) The marginal product of a factor=Average product of the factor
7. When information asymmetry is observed after an agreement is obtained between individuals, it is called:
(1) Signaling
(2) Moral hazard
(3) None of the above
(4) Both (1) and (2) above
8. In the given diagram, after the price change, the price line shifts from PQ to PQ’. And consumer comes to equilibrium at point B instead of point A. Then what is true for potatoes?
(1) It is a normal good.
(2) It is an inferior good.
(3) It is a Giffen good.
(4) Nothing can be said about the nature of the good.
9. Which amongst the following is a correct description of inverse demand function?
(1) p=f (D)
(2) D=f (p)
(3) D = f(1/p)
(4) p = f(D, 1/y)
Where p=price, D=demand, and y=income.
10. The first fundamental Theorem of Welfare Economics requires:
(1) that there be an efficient market for every commodity.
(2) that the economy operates at some point on the utility possibility curve.
(3) producers and consumers to be price takers.
(4) All of the above.
11. The Theory in which the trade cycle is generated due to excess of actual over the desired investment has been given by who amongst the following?
(1) R.G. Hawtry
(2) F. Hayek
(3) P. Samuelson
(4) J. Schumpeter
12. Consider the following statements:
(a) ‘Liquidity trap ‘is a situation when people prefer to hold money rather than investing it.
(b) ‘Liquidity preference’ is the situation when people prefer to invest money rather than hold it.
(c) ‘Liquidity crunch’ is a situation of short supply of money in the money market.
(d) ‘Credit crunch’ is a situation of short supply of money in the loan market.
Select the correct statements using the code given below:
(1) (a), (b) and (d)
(2) (a), (c) and (d)
(3) (b), (c) and (d)
(4) (a), (b) and (c)
13. ‘Menu costs’ in relation to inflation refers to:
(1) Cost of revaluing the currency.
(2) Cost of altering price lists.
(3) Cost of the maintenance of monetary base.
(4) Cost of finding better rates of return.
14. According to M. Friedman, Quantity Theory of Money is the theory of:
(1) Value of money
(2) Price determination
(3) Nominal income
(4) Demand for money
15. Gilt-edged market means:
(1) Bullion Market
(2) The market of pure metals
(3) The market of government securities
(4) Market of commodities
16. Which of the following is likely to be most inflationary in its impact?
(1) Repayment of public debt
(2) Borrowings from the public to finance a budget deficit
(3) Borrowings from banks to finance a budget deficit
(4) Creating new money to finance a budget deficit
17. Consider the following statements regarding the Marginal Standing Facility (MSF).
(a) MSF is on the line of the existing LAF and is part of it.
(b) MSF is a costlier route than Repo.
(c) MSF functions as the last resort for banks to borrow short term funds.
(d) MSF is linked to the net demand and time liabilities of the Banks.
Choose the correct code given below.
(1) (b), (c) and (d)
(2) (a), (b) and (c)
(3) (a), (c) and (d)
(4) (a), (b), (c) and (d)
18. “The absorption approach” of analyzing the balance of payments was formulated by: 
(1) M. Friedman
(2) Marshall and Lerner
(3) Sydney Alexander
(4) Haberler
19. Which amongst the following is not correctly matched with regard to the balance of payments account?
Item
Nature
(1) Import of goods and services
(2) Receipt of transfer payments
(3) Direct investment receipts
(4) Portfolio investment redemption
Debit in the current account
Credit in the current account
Credit in the capital account
Debit in the current account
20. Prebisch – singer hypothesis relates to:
(1) Balance of payments problem of developing countries.
(2) Terms of trade in developing countries.
(3) Prevalency of poverty among developing countries.
(4) Inequality of income in developing countries.
21. Which of the following statement about India’s balance of payments is not correct?
(1) If a foreign citizen deposits some money in a bank in India, the accounts regard this as a credit.
(2) The current account balance shows only the balance for the trade in goods and services combined.
(3) Allowing for errors and omissions, the accounts always balance.
(4) If the country’s reserves of foreign currencies increase then there is a minus sign for this entry.
22. Let elasticity of demand for exports for a certain country be ex and elasticity of demand for imports be em. Assume that the country devalues its currency. Its balance of payments will almost certainly show improvement if:
(1) ex + em > 1
(2) ex + em < 1
(3) ex + em=1
(4) ex = em =1
23. Which of the following would cause Rupee to depreciate against U.S. Dollar, other things being equal?
(1) A rise in interest rates in India.
(2) A fall in incomes in the U.S.A.
(3) An expected rise in the external value of the rupee.
(4) An increased flow of foreign investment into India.
24. According to Mercantilists, trade is a:
(1) Positive sum game
(2) Infinite sum game
(3) Zero-sum game
(4) Negative sum game
25. There is incomplete specialization in production when the country faces:
(1) constant opportunity costs
(2) decreasing opportunity costs
(3) increasing opportunity costs
(4) indeterminate opportunity costs
26. Tax buoyancy is expressed as:
(1) 1
(2) 2
(3) 3
(4) 4
27. Income tax is generally based on the principle of:
(1) Benefit received principle
(2) Ability to pay principle
(3) Willingness to pay principle
(4) None of these
28. Which method can help in obtaining a welfare improvement if externalities exist?
(1) Regulation
(2) Assigning property rights and permitting bargaining
(3) Pigovian taxes
(4) All of the above
29. Which of the following is a capital receipt in the Government budget?
(1) Interest receipts on loans given by the Government to other parties.
(2) Dividend and profit of public enterprises.
(3) Borrowings of the government from the public.
(4) Property tax receipts.
30. Which amongst the following would be most effective in mitigating the effect of externalities?
(1) Fiscal policy
(2) Regulation of monopoly
(3) Active monetary policy
(4) Freeing the markets
31. The maximum social advantage is achieved when:
(1) Total Social Sacrifice=Total Social Benefits
(2) Marginal Social Sacrifice=Marginal Social Benefits
(3) Net Social Sacrifice=Net Social Benefits
(4) Average Social Sacrifice=Average Social Benefits
32. Statutory incidence of a tax deal with:
(1) the person(s) legally responsible for paying the tax.
(2) the amount of revenue left over after taxes.
(3) the amount of taxes paid after accounting for inflation
(4) the amount of tax revenue generated after a tax is levied.
33. The relationship described by the Expectations – Augmented Phillips curve is correct in which of the following?
(1) Only in the long run.
(2) Only in the short run.
(3) Both in the short run and in the long run.
(4) Neither in the short run nor in the long run.
34. Non Accelerating Inflation Rate of Unemployment (NAIRU) means:
(1) a rate of unemployment for which the change in the rate of inflation is zero.
(2) a rate of inflation which makes the rate of unemployment zero.
(3) a rate of inflation for which the change in the rate of unemployment is zero.
(4) a rate of unemployment which is equal to the rate of inflation.
35. New Keynesians use which of the following to explain price and wage stickyness?
(1) Staggered labor contracts
(2) Menu Costs
(3) Behavior-based on bounded rationality
(4) All of the above
36. Consider the following statements:
(a) Effective demand in a market is the demand for a product or service which occurs when purchasers are constrained in a different market.
(b) Notional demand is the demand that occurs when purchasers are not constrained in any market.
Which of the above statements is/are correct? Answer from the code below:
(1) Only (a) is correct
(2) Only (b) is correct
(3) Both (a) and (b) are correct
(4) Neither (a) nor (b) is correct
37. For the capitalist economy, the primary objective of New Classical Economics is to explain which of the following?
(1) Business cycle phenomenon
(2) Underemployment
(3) Wage – price rigidity
(4) Effectiveness of Government policy
38. Which of the following growth model(s) assume(s) Neutral Technical Progress?
(1) Harrod model
(2) Solow model
(3) Both (1) and (2)
(4) Neither (1) nor (2)
39. In an economy, the GDP deflator is found to be 110 for the current year. If the GDP has registered an annual growth rate of 15 percent in the same year, then, the rate of growths of real GDP will be:
(1) 5%
(2) 1.5%
(3) 25%
(4) 2.5%
40. What is the nature of equilibrium in the IS-LM model?
(1) Stock equilibrium
(2) Flow equilibrium
(3) Stock and flow equilibrium
(4) Oscillating equilibrium
41. If marginal propensity to import is 0.1 and the marginal propensity to consume is 0.7, the value of the income multiplier will be:
(1) 1.25
(2) 2.33
(3) 2.5
(4) 3.33
42. According to the neoclassical theory of distribution, constancy in the wage share in national income would come about only when the elasticity of factor substitution:
(1) is less than one
(2) is equal to one
(3) is zero
(4) is greater than one
43. Which amongst the following is not a feature of J.E. Meade’s model?
(1) Perfect competition prevails.
(2) The economy produces consumer goods and producer goods.
(3) Perfect substitution is possible between consumption and capital goods.
(4) It examines the relationship between the growth rate of population and the growth rate of savings.
44. Consider the following production function forms with a technical progress term A(t).
(a) Q=f (Kt, A(t)  Lt)
(b) Q=f (A(t)  Kt, Lt)
(c) Q=A(t) f (Kt, Lt)
Of the above, which production function, with labor augmenting technology will keep the distribution of output between labor and capital as constant? Answer from the code below:
(1) Only (a)
(2) Both (a) and (b)
(3) Only (c)
(4) Both (a) and (c)
45. Which of the following statements about the AK model (Y=AK) of growth is false?
(1) This is a part of endogenous growth theories.
(2) The model assumes that an increase in the physical stock of capital will shift the production function upwards.
(3) The model assumes diminishing returns to capital.
(4) The model suggests that if the level of investment is higher than depreciation, there would be sustained growth.
46. Which of the following is not a correct feature for the absolute convergence to hold good?
(1) The same population growth rate
(2) Same savings propensity
(3) Same capital-labor ratio
(4) Different capital-labor ratio
47. In Solow’s growth model, the output per capita is a function of:
(1) Labour – Output ratio
(2) Capital – Output ratio
(3) Technical progress
(4) Capital – Labour ratio
48. Dusenberry was of the opinion that less developed countries will have a serious and adverse effect on their balance of payments due to:
(1) demonstration effect
(2) multiplier effect
(3) backwash effect
(4) spread effect
49. Leibenstein in his critical minimum effort thesis treats the population as a factor that is:
(1) Income-generating
(2) Investment – inducing
(3) Income – depressing
(4) Market – expanding
50. ‘Workers must own the capital to which their savings has given rise.’ This is an important assumption of the growth model, developed by:
(1) L. Pasinetti
(2) N. Kaldor
(3) R. Solow
(4) J.E. Meade

**TO BE CONTINUED........ 

Scope of Economics and Different Career Options

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