Assertion and Reason Questions

TheEconomics hub

MOCK TEST-3

*Assertion and Reason Questions based on last year papers of UGC-NET (economics)

1.      Assertion (A): An Iso-Cost Line is a straight line.

Reason (R): The market rate of exchange between the two inputs is constant.

Codes:

(A) Both (A) and (R) are true and (R) is correct explanation of (A).

(B) Both (A) and (R) are true, but (R) is not correct explanation of (A).

(C) (A) is true, but (R) is false.

(D) (A) is false, but (R) is true.

2.      Assertion (A): In the agricultural lending mechanism of India, moneylenders

despite their Usurious rates of interest are still predominant.

Reason (R): Most often the commercial banks could not meet the target of 18% of their total lending for the agricultural sector in the country.

Codes:

(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) (A) is true and (R) is false.

(D) (A) is false and (R) is true.

3.      Assertion (A): In India, ‘Green Revolution’ was also criticized as Wheat

Revolution.

Reason (R): The productivity of wheat in India during the1970’s was one of the highest in the world.

Codes:

(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) (A) is true, but (R) is false.

(D) (A) is false, but (R) is true.

4.      Assertion (A): Agricultural income is taxed by the Union Government.

Reason (R): Agriculture is a State subject.

Codes:

(A) Both (A) and (R) are true and (R) is the correct explanation of (A).

(B) Both (A) and (R) are true and (R) is not the correct explanation of (A).

(C) (A) is true, but (R) is false.

(D) (A) is false, but (R) is true.

5.      Assertion (A): The prices of Government securities in gift-edged market are not

formed freely.

Reason (R): The Reserve Bank of India has a monopoly dealer position and the demand for Government securities has a captive nature.

Codes:

(A) (A) is true, but (R) is false.

(B) Both (A) and (R) are correct, but (R) is not the correct explanation of (A).

(C) (A) is not correct, but (R) is correct.

(D) Both (A) and (R) are correct and (R) is the correct explanation of (A).

6.      Assertion (A) : There is a natural tendency to collude under oligopoly.

Reason (R) : Inter-dependence of firms in oligopolistic markets.

Codes :

(A) Both (A) and (R) are correct, but (R) is not the correct explanation of (A).

(B) Both (A) and (R) are correct, and (R) is the correct explanation of (A).

(C) (A) is correct, but (R) is incorrect.

(D) (A) is incorrect, but (R) is correct.

7.      Assertion (A) : In short run, the marginal cost of output is the cost of additional

labour and materials used in production.

Reason (R) : Materials and labour used in production alone vary in short run.

(A) (A) is correct and (R) is incorrect.

(B) (A) is incorrect, but (R) is correct.

(C) Both (A) and (R) are correct and (R) is the correct explanation of (A).

(D) Both (A) and (R) are incorrect.

8.      Assertion (A) : ‘A country is poor because it is poor’.

Reason (R) : Income of a poor country is low, so its savings and investment are low. Low investment limits its productive capacity which leads to low output and income.

Codes :

(A) Both (A) and (R) are correct, but (R) is not the correct explanation of (A).

(B) Both (A) and (R) are correct and (R) is the correct explanation of (A).

(C) (A) is correct, but (R) is incorrect.

(D) (A) is incorrect, but (R) is correct.

9.      Assertion (A) : All historical events are the result of a continuous economic

struggle between different classes and groups in a society.

Reason (R) : This struggle is because of the conflict between the mode of production and the value attached to the roles of different agents of production.

Codes :

(A) Both (A) and (R) are correct, but (R) is not the correct explanation of (A).

(B) Both (A) and (R) are correct and (R) is the correct explanation of (A).

(C) (A) is correct, but (R) is incorrect.

(D) (A) is incorrect, but (R) is correct.

10. Assertion (A) : K/L will adjust through time to the equilibrium value of the ratio.

Reason (R) : Technical coefficients of production are fixed.

Codes :

(A) Both (A) and (R) are correct, but (R) is not the correct explanation of (A).

(B) Both (A) and (R) are correct and (R) is the correct explanation of (A).

(C) (A) is correct, but (R) is incorrect.

(D) (A) is incorrect, but (R) is correct.

11. Assertion (A) : Investment has a demand effect.

Reason (R) : Investment augments the productivity and income in the economy.

Codes :

(A) Both (A) and (R) are correct and (R) is the correct explanation of (A).

(B) Both (A) and (R) are correct, but (R) is not the correct explanation of (A).

(C) (A) is correct, and (R) is not correct.

(D) (A) is incorrect and (R) is correct.

12. Assertion (A) : Agriculture is the main source of livelihood of people in

India.

Reason (R) : Measures for agricultural development should be undertaken.

Codes :

(A) Both (A) and (R) are correct and (R) is the correct explanation of (A).

(B) Both (A) and (R) are correct, but (R) is incorrect explanation of (A).

(C) (A) is correct, but (R) is incorrect.

(D) (A) is incorrect and (R) is correct.

13. Assertion (A) : In the following regression equation Y = a + bX, 'a' shows the

autonomous value of Y.

Reason (R) : If X = 0, Y = a holds.

Hence, a is the minimum value of Y which is independent of any influence of X on Y.

Codes :

(A) Both (A) and (R) are correct and (R) is the true explanation of (A).

(B) (A) is correct, but (R) is not the correct explanation of (A).

(C) (A) is correct, but (R) is not correct.

(D) (A) is incorrect, but (R) is correct.

14. Assertion (A) : Many developing countries contend that labour standards constitute a barrier to

free trade.

Reason (R) : Their competitive advantage in the global economy is cheap labour.

(A) Both (A) and (R) are correct 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 false but (R) is true.

(D) (A) is true but (R) is false.

15. Assertion (A) : India’s Public sector helped in the development of a sound

industrial base.

Reason (R) : Public sector is under State control. The role of State in formulating appropriate policies and providing financial and other support has helped the public sector.

(A) (A) is correct, but (R) is wrong.

(B) Both (A) & (R) are correct.

(C) (A) is wrong but (R) is correct.

(D) Both (A) and (R) are wrong.

16. Assertion (A): During the financial year 2011-12, the Central Government is not

likely to achieve the target of raising Rs. 40,000 crores through disinvestment policy.

Reason (R): Policy of increased public borrowings to bridge the fiscal gap is justified.

In the context of the above two statements, which one is correct from the given?

Codes:

(A) Both (A) and (R) are correct and (R) is the correct explanation of (A).

(B) Both (A) and (R) are correct but (R) is not the correct explanation of (A).

(C) (A) is correct but (R) is incorrect.

(D) (R) is correct but (A) is incorrect.

17. Assertion (A): Employment growth in the organized sector (both public and

private combined) has increased during the period 1994-2008.

Reason (R): There has been relatively faster employment growth in the private sector.

Codes:

(A) Both (A) and (R) are correct and (R) is the correct explanation of (A).

(B) Both (A) and (R) are correct but (R) is not the correct explanation of (A).

(C) (A) is correct but (R) is incorrect.

(D) (A) is incorrect but (R) is correct.

18. Assertion (A): The capital base of regional rural banks (RRBs) is found to be weak.

Reason (R): Deposit mobilization of RRBs has been inadequate.

From the above two statements, select the correct answer from the given codes.

Code :

(A) Both (A) and (R) are correct and (R) is the correct explanation of (A).

(B) Both (A) and (R) are correct but (R) is not the correct explanation of (A).

(C) (A) is false but (R) is true.

(D) (A) is true but (R) is false.

19. Assertion (A) : The imposition of Sales Tax does not affect the profit of the

monopolist.

Reason (R) : The monopolist shifts the burden of Sales Tax on to the consumer.

Codes :

(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) (A) is true, but (R) is false.

(D) (A) is false, but (R) is true.

20. Assertion (A) : There exits inverse relationship between interest rates and bond

prices.

Reason (R) : A bond price represents the present discounted value of the payments agreed upon at the time when the bond was issued.

Codes :

(A) Both (A) and (R) are correct, and (R) is the correct explanation of (A).

(B) (A) is correct, but (R) is not the correct explanation of (A).

(C) (A) is correct, but (R) is incorrect.

(D) (A) is incorrect, but (R) is correct.

21. Assertion (A) : The Natural Rate of Unemployment Hypothesis yields in the long

run a vertical Phillips Curve.

Reason (R) : The Natural Rate of Unemployment assumes static price expectations.

Codes :

(A) (A) is correct and (R) is the correct explanation of (A).

(B) Both (A) and (R) are correct and (R) is not the correct explanation of (A).

(C) (A) is correct, but (R) is incorrect.

(D) Both (A) and (R) are incorrect.

22. Assertion (A) : A lump sum tax imposed on a monopolist cannot be shifted to the

consumers.

Reason (R) : The lump sum tax becomes a part of his fixed cost and it does not affect the marginal cost of production.

Codes :

(A) (A) is true, but (R) is false.

(B) Both (A) and (R) are false.

(C) (A) is not correct, but (R) is correct.

(D) Both (A) and (R) are correct and (R) is the correct explanation of (A).

23. Assertion (A) : The public distribution system in India has close links with food

security for the vulnerable segments of population.

Reason (R) : Public distribution system is failure in India.

Codes :

(A) Both (A) and (R) are true and (R) is correct explanation for (A).

(B) Both (A) and (R) are true and (R) is not correct explanation for (A).

(C) (A) is true, but (R) is false.

(D) (A) is false, but (R) is true.

24. Assertion (A) : Fisher’s Index No. is ideal Index No.

Reason (R) : Fisher’s Index satisfies time reversal and factor reversal tests.

Codes :

(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 correct explanation of (A).

(C) (A) is true, but (R) is false.

(D) (A) is false, but (R) is true.

25. Assertion (A): Sunk costs are not relevant to economic decisions.

Reason (R): The opportunity cost of such resources is zero.

Codes:

(A) Both (A) and (R) are correct and (R) is the correct explanation of (A).

(B) (A) is correct, but (R) is not correct.

(C) Both (A) and (R) are correct, but (R) is incorrect explanation of (A).

(D) (R) is correct, but (A) is incorrect.

26. Assertion (A): According to Keynes, individuals hold either cash or all bonds.

Reasoning (R): Because, according to him, the speculative demand for money is associated with uncertainty.

Codes:

(A) Both (A) and (R) are correct and (R) is the correct explanation of (A).

(B) Both (A) and (R) are correct, but (R) is not the correct explanation of (A).

(C) (A) is correct, but (R) is incorrect.

(D) Both (A) and (R) are incorrect.

27. Assertion (A): The fiscal policy is less effective in an open economy than in a

closed economy.

Reasoning (R): Because the value of the multiplier in an open economy is less than that in a closed economy.

Codes:

(A) Both (A) and (R) are correct and (R) is the correct explanation of (A).

(B) Both (A) and (R) are correct, but (R) is not the correct explanation of (A).

(C) (A) is correct, but (R) is incorrect.

(D) Both (A) and (R) are incorrect.

28. Assertion (A): Innovations in one field rarely induce innovations in related fields.

Reason (R): Once an innovation becomes profitable, other entrepreneurs follow it in “Swarm like clusters”.

Codes:

(A) (A) is not correct and (R) is correct.

(B) (A) is correct and (R) is not correct.

(C) Both (A) and B are not correct.

(D) Both (A) and (R) are correct.

29. Assertion (A): Dependence of Less Developed Countries (LDCs) on Developed

Countries (DCs) is the main cause for the underdevelopment of the former.

Reason (R): “This is because of historical evolution of a highly unequal international capitalist system of rich-poor country relationships.”

Codes:

(A) (A) is correct and (R) is the correct reason for (A).

(B) (A) is incorrect, but (R) is correct.

(C) Both (A) and (R) are incorrect.

(D) Both (A) and (R) are correct.

30. Assertion (A): Reserve Bank of India raises money supply through purchase of

securities in the money market.

Reason (R): Increase in money supply may result in the expansion of investment and employment.

Codes:

(A) Both (A) and (R) are correct and (R) is the correct explanation of (A).

(B) Both (A) and (R) are correct, but (R) is not the correct explanation of (A).

(C) Both (A) and (R) are incorrect.

(D) (A) is correct, but (R) is incorrect.

Mock test -1

TheEconomics hub

MOCK TEST-1

Q.1 an economic region of production consists of
A. The highest points of all isoquants
B. The positivity sloped portions of all isoquants
C. The negatively sloped of all isoquants
D. The middle of all isoquants
Q.2 Arrange the following in chronological order. (i) Theory of monopolistic competition (ii) Gurnot’s Theory of Duopoly (iii) Marshall’s Theory of Quasi-rent. (iv) Sweezy’s kinked demand curve Analysis
A. (iv) (iii) (i) (ii)
B. (i) (iii) (ii) (iv)
C. (ii) (iii) (i) (iv)
D. (iii) (i) (iv) (ii)
Q.3 PAUL M SWEEZY used a kinked demand curve to explain:
(A) Price determination in oligopoly
(B) Price rigidity in oligopoly
(C) Profit maximization in oligopoly
(D) Price output determination in oligopoly
Q.4 Revealed preference theory can be used:
(A) To prove the convexity of an indifference curve
(B) To break the price effect
(C) To prove basic proposition of law of demand
(D) All of the above
Q.5 According to Milton Friedman quantity theory of money is the theory of :
(A) Prices
(B) Income
(C) Demand for money
(D) Supply of money
Q.6 Even as the fixed average cost continues to fall, the average variable cost begins to rise because
(A) Returns to factors start diminishing
(B) Returns to factors start rising
(C) Input prices start rising
(D) Producers budget starts shrinking
Q.7 which among the following is not a characteristic of Imperfect Competition?
(A) Perfect knowledge
(B) Free transport
(C) Free Entry of firms
(D) Homogeneous product
Q.8 which of the following is an inferior good?
(A) Kerosene
(B) Cooking gas
(C) Electricity
(D)Chemical fertilizers
Q.9 Slutsky equation explains the
A. Demand for durable goods.
B. Supply of durable goods.
C. Split between price, income, and substitution effects.
D. Demand for rare or non-reproducible goods
Q.10 If a linear consumption function passes through the origin it means:
A. APC > MPC
B. APC < MPC
C. APC MPC
D. APC = MPC =0
Q.11 Slope of the LM Curve depends upon which of the following?
A. Interest elasticity of investment
B. Interest elasticity of income
C. Interest elasticity of demand for money
D. None of the above
Q.12 In consumption, inferior goods have
A. Negative income effect
B. Positive income effect
C. Zero income effect
D. Infinite income effect
Q.13 Which of the following can be considered as leakages in the force of the multiplier?
A. Higher propensity to import
B. Higher marginal propensity to save
C. Both (1) and (2) above
D. Neither (1) nor (2) above
Q.14 As income falls, consumption declines but proportionately less than the decrease in income because the consumer desires to sustain the previous standard of living. This is called?
A. Ratchet effect
B. Wealth effect
C. Demonstration effect
D. Income effect
Q.15 Which one is NOT axiom of inequality measures?
A. Principles of scale invariance
B. Principle of equity
C. Principles of translation invariance
D. Axiom of decomposability

ANSWER SHEET

MOCK TEST -1

Q.1 -C
Q.2-C
Q.3- B
Q.4-C
Q.5-C
Q.6-D
Q.7-A
Q.8-A
Q.9-C
Q.10-C
Q.11-C
Q.12-B
Q.13-C
Q.14-B
Q.15-A

*T&C

Author

TheEconomics hub

Mock test- 2

TheEconomics hub

MOCK TEST -2

Q.1 A tax is said to be direct, when

A. Impact and incidence fall upon the same person

B. The only incidence falls upon the same  person

C. The impact is shifted to another person

D. Person escapes from paying tax

Q.2 Match the following

          List – I                                                              List – II

a) Theory of big push                                      i) J H Boeke

b) Warranted rate of growth                        ii) Paul Romer

c) Social dualism                                              iii) Rosenstein Rodan

d) Endogenous growth theory                      iv) RF Harrod  

Choose the correct option

A. a-ii, b-iii, c-iv, d-i

B. a-iii, b-I, c-iv, d-ii

C. a-iii, b-iv, c-I, d-ii

D. a-iv, b-ii, c-iii, d-i

Q.3 Who among the following is not associated with the endogenous growth theory?

A. Robert Solow  

B. Paul Romer

C. Rebelo

D. Robert Lucas

Q.4 Which age structure is important for the demographic dividend?

A. 0-14

B. 15-59

C. 60 and above

D. 0-14 and 60 and above

Q. 5 Market failure occurs in the case of most of the environmental goods, because

(A) Environmental goods are rival products

(B) Environmental goods are excludable products

(C) Environmental goods are Non-rival in production

(D) Environmental goods are Non-rival and Non-excludable in consumption  

Q.6 global competitiveness report is released by which of the following organizations?

(A) WTO

(B) World economic forum

(C) EU

(D) World bank

Q.7 the Inada conditions are applicable to

(A) A well-behaved investment function

(B) A well-behaved consumption function

(C) A well-behaved technical progress function

(D) A well-behaved production function

Q. 8 why are indirect taxes called regressive?

(A) They are charged at higher rates than direct tax

(B) They are charged at the same rate for all income groups

(C) Both above are correct

(D) None of the above are correct

Q.9 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 the output

Choose the correct answer from the code given below

Code:

(A) (i) and (ii) are correct

(B) Only (ii) is correct

(C) (ii) and (iii) are correct

(D) None of the above statement is correct

Q.10 match list-I (authors) with list-ii (books) and choose the correct answer from the code is 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 the 21^ST century

(d) Thomas Piketty                                              (iv) Capitalism, socialism and democracy

 

Code:

(a)- (iii), (b)-(i), (c)- (iv), (d)- (ii)

(a)- (ii), (b)- (iv), (c)- (i), (d)- (iii)

(a)- (iii), (b) - (ii), (c)- (i), (d)- (iv)

(a)- (iv), (b)-(iii), (c)- (i), (d)- (ii)

Q.11 The analysis of variance is carried out by using:

(A) T-test

(B) Z-test

(C) X2-test

(D) F-test

Q.12 If interest payments are subtracted from the gross fiscal deficit, the remainder will be?

(A) Revenue deficit

(B) Gross primary deficit

(C) Capital deficit

(D) Budgetary deficit

Q.13 During the planning period, the highest growth rate was achieved during

(A) Eighth plan

(B) Tenth plan

(C) Ninth plan

(D) Seventh plan

Q.14 Assertion (A): Agriculture is the main source of livelihood of people in India. Reason (R): Measures for agricultural development should be undertaken.

(A) Both (A) and (R) are correct, but (R) is not the correct explanation of (A).

(B) Both (A) and (R) are correct and (R) is the correct explanation of (A).

(C) (A) is correct, but (R) is incorrect.

(D) (A) is incorrect, but (R) is correct.

Q.15 Indicate the sequence of the following taxes in terms of their implementation.

a. Income Tax

b. Expenditure Tax

c. Value Added Tax

d. Fringe Benefits Tax

CODES:

(A) a, c, b, d

(B) a, b, c, d

(C) b, c, d, a

(D) c, d, a, b

ANSWER SHEET

MOCK TEST -2

Q.1-A
Q.2-C
Q.3-A
Q.4-B
Q.5-B
Q.6-B
Q.7-D
Q.8-B
Q.9-D
Q.10-B
Q.11-D
Q.12-B
Q.13-B
Q.14-A
Q.15- B

*T&C

Author 

TheEconomics hub

Marx theory

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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