E.

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Entrance Examination, Febru wy 2014

M.A. @conomics)

Max.Marks:100
Time: 2 Hours

IIALT TICKET NUMBER

TNSTBIJqTIONS

1. Read these instructions carefully before answering.

2. Enter your Hall Ticket Number on this page and also on the OMR answer sheet
provided
3. Answers are to be marked on the OMR answer sheet following the instructions
thereupon.

4. Hand over the OMR answer sheet at the end of the oxamination to the Invigilator.

5. Use of non-programmable calculator is allowed.

6. The euestion paper has two parts - PART-A and PART-B. There are 100 questions in this
paper: 25 questions in Part-A and 75 questions in Part-B. Marks obtained in Part-A will
obtained
detennine the merit rank in case of a tie in the total number of marks

7. Each correct answer carries one mark.

8. There is negative marking, Each wrong answer carries -0.33 mark'

two blank pages
9. This question paper contains 19 pages excluding the cover page. In addition,
(pages 20 and 2l) for rough work are provided at the end of the
question paper marked

"ROUGH WORK'"
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M.A. Entrance Bxamination, February 2014

School of Economics

Max.Marks:100 Time:2 Hours

Part -A (Anslver all 25 Questions)

l, Block pricing by electricity companies is an example of

(A) First Degree Price Discrimination

(B) Second Degree Price Discrimination
(C) Third Degree Price Discrimination
(D) None of these

2. If the prices of both goods increase by the same percent, the budget line will
(A) Shift parallel to the right
(B) Shift parallel to the left
(C) Pivot about the x axis
(D) Pivot about the y axis

3. The cost of a factory with specialized equipment that is of no use in another industry, is
an example of

(A) Fixed Cost

(B) Variable Cost
(Cf ) Sunk Cost
(D) Opportunity Cost

4. In comparison to the quasi-competitive solution which of the following statement is true?

(A) Cournot Duopolists produce smaller total output for smaller profits at higher prices
(B) Cournclt Duopolists produce larger total output for smaller profits at higher prices
(C) Cournot Duopolists produce smaller total output for higherprofits at lower prices
(D) Coumot Duopolists produce smaller totai output for higher protits at higlrer prices
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5. If the prices of ice-cream and chocolate are Rs. 40 and Rs. 30 respectively, and the
marginal utility of chocolate is 150, what is the marginal utility of ice ueam assuming the
consumer is at equilibrium?

(A) nz.s
(B) 200
(c) 22s
(D) 12s

6. If all households in a nation receive the same income, the nation's Lorenz curve would:
(A) Be vertical
(B) Be horizontal
(C) Be a 450 line
(D) Be a 600 line

7 . For a natural monopoly, economies of scale

(A) Exist due to patent protection

(B) Cause legal barriers to entry
(C) Exist over in the long-run average cost curve over the entire range of output
(D) None of the above

8. What is the shape of the isoquants when inputs are perfect substitutes?

(A) L - Shaped
(B) U - Shaped
(C) Straight Lines
(D) Vertical Lines

9. Why do people over age 65 have difficulty buying medical insurance at almost any price?

(A) Asymmetric Information

(B) Symmetric Information
(C) Market Signaling
(D) Moral Hazard

10. Cigarette smoking is an example of

(A) Positive Production Externality

(B) Negative Production Externality
(C) Positive Consumption Externality
(D) Negative Consumption Extemality
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I l. The equation s/v in the Marxist Political-Economy is the same as:

(A) The Rate of Exploitation

(B) The Rate of Surplus
(C) Surplus Labour TimeA.,lecessary labour Time
(D) All the above

12. The transition from feudalisrn to capitalism is dated

between what period of time in History?

(A) Between gth and l3th century

(B) Between I 6th and I 9t: Century
(C) Between l4th and I 6th Century
(D) Between 9tr and l6th Century

13. The Organic composition of capital is given by :

(A) S/c+v
(B) Clv
(C) C/c+v
(D) C/s+v

14. According to Marx, between the l4th and the lTth Century what had been the
influence of the rules pertaining to the length of the working day in Europe?

(A) The length of the working day was increasing

(B) The length of the working day was decreasing
(C) T'he length of the working day was static
(S)'lhe length of the working day was indeterminate

15. The value of a commodity according to Marx is :

(A) Directly related to productivity

(B) Unrelated to productivity
(C) Indirectly related to productivity
(D) lnversely related to productivity

16. Raw material in the Marxist political Economy is characterized as :

(A) Variable Capital

(B) Non-Capital
(C) Constant Capital
(D) Marginal Capital
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17. The capitalist form of circulation of commodities in the Marxian analysis is represented
by

'(A) c-M-C
(B) M-C-M
(c) M-c-M'
(D) C-M-C'

18. In the Marxist analysis of Surplus value, the surplus value which the working day of one
labourer supplies multiplied by the number of labourers employed gives:

(A) Mass of surplus

(B) Rate of surplus
(C) Extended Surplus
(D) Intensive Surplus

19. An increase in the price of a commodity when demand is inelastic causes the total
expenditures of consumers of the commodity to

(A) Increase
(B) Decrease
(C) Remain unchanged
(D) Any of the above

20. Slutsky keeps real income constant when the price of a commodity falls by

(A) Keeping the consumer on the same indifference curve

(B) pushing the consumer to a lower indifference curve
(C) Allowing the consumer to purchase the same basket of goods as before the price
change
(D) Allowing the consumer to purchase more of both commodities than before the price
changes.

21. Which of the following is not an assumption of the theory of revealed preference?

(A) A cardinal measure of utility

(B) Consistency
(C) Transitivity
(D) A consumer can be induced to purchase any basket of commodities if its price is
made suffi ciently attractive.

22. The cost that a firm incurs in purchasing or hiring any factor of production is referred to
AS

(A) Explicit cost

(B) Implicit cost
(C) Variable cost
(D) Fixcd cost
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23. When a=314 and p-l14 for the Cobb-Douglas production function, returns to scale are

(A) Constant
(B) Increasing
(C) Decreasing
(D) First increasing and then decreasing

24. The best or optirnum , level of output for a perfectly competitive firm is given by the
point where

- (A) MR equals AC
(B) MR equals MC
(C) MR exceeds MC by the greatest amount
(D) MR equals MC and MC is rising.

25. When tfie perfectly competitive firm and industry are both in long run equilibrium

(A) P:MR:SMC=LMC
(B) P:MR:SAC:LAC
(C) P:MR-lowest point on the LAC curve
(D) All of the above
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Part -B (Answer all 75 Questions)

the form
26. Find the price elasticity of demand for the curvilinear demand function of
Q=aP-b

(A) -b
(B) b
(c) I
(D) None of the above.
27 .lnflation measures change in

(A) Absolute prices

(B) Relative prices
(C) Both absolute and relative prices
(D) All of the above

28. Deflation is

(A) lncrease in general price level

(B) Inflation and economic stagnation occurs simultaneously
(C) Decrease in general price level
(D) Decrease in rate of inflation
29. Laspeyre's index is

(A) Base year price index

(B) Base weighted price index
(C) End year price index
(D) End year weighted Price index
30. Rate of unemployment is calculated as
(A) Percentage of number unemployed to total population
(B) Percentage of number unemployed to Labor Force
(C) Percentage of number unemployed to skilled population
(D) None of the Above
31. The name of Francois Quesnay is associated with

(A) Input-output rnethod

(B) General Equilibrium TheorY
(C) Marginal Cost TheorY
(D) Tableau Economique
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32. Division of Labour in Adam Smith's analysis implies

(A) Research and Development

(B) Human Deveopment
(C) Specialisation
(D) Multi-taskingactivity

33. Which of the following names is associated with theory of Entrepreneurship

(A) Alfred Chandler

(B) Frank Knight
(C) Joseph Schumpeter
(D) Graham Pyatt

34. The economist who defined economics as a science studying human behavior as a
relation between 'ends and scarce means' was:

(A) Afred Marshall

(B) Lionel Robbins
(C) Samuelson
(D) Pigou

35. Twelfth Five Year Plan in India pertains to the period:

(A) 2012-2017
(B) 2012-2016
(c) 20t t-20 I 5
(D) 201 1 -2016

36. In conventional economic approach, the demand for labour is characterized as :

(A) Necessary Demand

(B) Inelastic Demand
(C) Upwardly Sloping Demand
(D) Derlved Demand

37. The method of estimation of national incorne adopted by the CSO in India is a
combination of :
(A) The product and income Methods;
(B) The product and expenditure Methods;
(C) The income and expenditure Methods;
(D) All of the above
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3g. Contributions of six industrial sectors, viz., Agriculture, Forestry &

logging, Fishing,
Mining & euanying, Manufacturing, and Construction to the National Income in India is
estimated through:

(A) Income method;

(B) Expenditure method
(C) Product method
(D) A combination of any two of the above methods

39. The concept that is used to represent the total income of own account workers as

well as the profit generated in unincorporated enterprises in the national income data
in India is:

(A) Informal income

(B) Marginal Income
(C) Unregistered Income
(D) Mixed Income

40. What were the methods used to assess economic activity prior to the development of
national income concept?

(A) Human Development lndices

(B) Crude Development Indices
(C) Indices of sectoral incomes & money supply.
(D) Indices of Economic Progress

41. The statement 'Census is carried out on all

Self-employed, Family enterprises, Small and
tiny enterprises and Non-wag€, non-salaried services' for calculating national incomc
data is :

(A) True
(B) False
(C) True in more recent context
(D) Cannot say

42. Aspart of the estimations of savings data in India, the household savings are divided into
which of the following categories:

(A) Current and Future savings

(B) Precautionary and Speculative savings
(C) Financial and Physical savings
(D) Current and Capital savings
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43. Which of the following categories are part of the NAS classifisation of the organizational
patterns in India?

(A) Organised and Unorganised

(B) Formal and Informal
(C) Modern and Traditional
(D) Capitalist and Artisanal

44. Which of the following organizations supplies data on State Domestic Product in India?

(A) National Sample Survey Organisation (NSSO)

(B) Organisation for Federal Data (OFD)
(C) Reserve Bank of India (RBI)
(D) Indian Council for Applied Economic Research (ICAER)

45. If the rise in the implicit price deflator for the primary sector was higher than for the NDP
as a whole. while the rise in those of the secondary and tertiary sectors were lower, it can
be inferred that:

(A) The primary sector got a differential advantage over the other two sectors
(B) T'he other two sectors got a differential advantage over the primary sector
(C) It is inconsequential
(D) All the three sectors are mutually benefited
46. The Current weighted price index is otherwise also known as:

(A) Pasche's Index

(B) Fischer's Index
(C) Paasche's Index
(D) Lespeyre's Index

47. Compounded Annual Grorvth Rates (CAGR) is calculated on the basis of:

(A) (End value/Starting value) lA'rumberol'Years

(B) (End ValueiStarting value) l'0{umberof Years - I
(c) (Starting value/End value) lA"lumtrcrorYears - I
(D) (Starting Value/End Value) lNumberorYears
48. The Social Accounting Matrix analytically can be traced back to:

(A) Adam Smith's Division of Labour

(B) Francois Quesnay's the Tableau Economique.
(C) Ricardo's Rent Theory
(D) Marx's Social Division of Labour
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49.1n a Social Accounting Matrix every entry when read in rows context and columns
context respectivelY rePresents:

(A) Industry of origin and Industry of Destination

(B) Demand and SUPPIY
(C) Receipts and ExPenditure
(D) ConsumPtion and Production

by
50. In order to avoid economically meaningless results, the viability conditions developed
which set of scholars must be satisfied by the Input-Output system.

(A) Hawkins - Simon

(B) H icks-Simon
(C) Hawkins-Smith
(D) Kaldor-Simon

5l . In the evaluation of the value of Capital Stock by the CSO in India, which of the
follorving category is not included

(A) Machinery
(B) Human Capital
(C) Construction
(D) Changes in Stocks

52. Supposing that the prevailing inflation is 20 percent per annum and private rate
of interest
in nominul t.r*,is 30 percent per annum. 'itl.n private real rate of interest per annum is
approximately:

(A) 10.0 percent

(B) 8.3 percent
(C) 8.0 percent
(D) 6.67 percent

53. Let set S: { x lx is a letter in woTd "ARTHASHASTRA"}. What is the cardinality

of
the power set of S?

(A) 32
(B) 40e6
(c) 12
(D) s

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54. Let A be a square matrix of order n and let B_ k.A where k is a real number.
Considering that lXl denotes determinant of a square matrix X, which of the following is
true?

(A) lBl = lAl

(B) lBl :klAl
(c) lBl : k" lAl
(D) lBl : ftin) lAl

55. Let,f(x) : ln (13x). Derivativ e of f(x) with respect to x is equal to:

(A) ln 13lx
(B) t3 lx
(C) I / l3x
(D) | lx

56. Consider system of equations: 4x + 3y :4 ; and 2x- y : 3. Then,

(A) x--l; y-0
(B) x: {ll2); y:2
(C) x:l; y-2
(D) x: (tl2); y - 4
57.LetX and Zbe random variables such that X = 5.2 *2A. Civen that mean of X is Fx:
80 and its standard deviation is ox : 55, then,

(A) Vz= 80 and 6z= 55

(B) Vz:2A and oz: ll
(C) Vz:80 and 67: ll
(D) Vz:20 and 6y:55
5g. Ler A and B be irrdependent events and let P(B) > P(B), where P(X) is probability that
event X occurs. Let p(AB) be probability ofjoint occurrence of events A and
B. Then,

(A) P(B) - P(AB) Z P(B)

(B) P(AB) < P(B) s P(B)
(c) P(AB) > P(B) z P(B)
(D) :
P(AB) P(B) + P(B)

59. The quadratic equation,2*t - 3.x *4: 0,

(A) has distinct real roots

(B) has distinct comPlex roots
(C) has identical real roots
(D) has identical comPlex roots

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 L -3O

60.Ifoneweretodividethestandarddeviationofapopulationofthemeanofthesample
calculated the
population and multiply this value by 100, one would have

(A) Population standard score.

(B) Populationvariance.
(C) Populationstandarddeviation'
(D) Population coefficient of Variation'
are drawn at random' What is
61. A bag contains 2 red, 3 green, and 2 blue balls' Two balls
the probability that none ofthe balls drawn are blue?

(A) t0l2t
(B) 1tl2t
(c) 2t7
(D) 517
.62.Theaverage score for a Biology test is 77 and the standarc I deviation is 8'
which percent
between 6l and 93 on the test?
best repre;n$ the probability that any one student scored

(A) 99.5o/o
(B) 95o/o
(c) 68Vo
(D) 34o/o

63. The simple probability ofan occurrence ofan event is called the

(A) BayesianProbabilitY.
(B) Joint ProbabilitY
(c) MarginalProbabilitY
(D) ConditionalProbabilitY

used is
64, ln case of open end classes, an appropriate measure ofdispersion to be

(A) Range
(B) Quartile Deviation
(C) Absolute Deviation
(D) Standard Deviation

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65. The cumulative percentages of a frequency table have little or no meaning for
data.

(A) Nominal
(B) Ordinal
(C) Interval
(D) Ratio

66. Average wages of workers of a factory are Rs. 550.00 per month and the standard
deviation of wages is I10. The coefficient of variation is:

(A) C.V. = 30 per cent

(B) C.V. : 15 per cent
(C) C.V. : 500 per cent
(D) C.V. = 20 per cent

67. F,xponential Smoothing is

(A) A method to use number exponents to smooth the time series

(B) One of the forecasting methods
(C) A method of testing linearity
(D) None of the above

68. Consumer Price Index (CPI) falls in the category of

(A) A simple index

(B) An aggregate index
(C) An inflation index
(D) Both (B) and (c)
69. A pair of dice is thrown. Find the probability of obtaining a sum of 8 or getting an even
number on both the dice.

(A) 1t t36
(B) 10t36
(c) et36
(D) 8t36

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70. Which is not a central government tax

,(A) Corporation tax

(B) WEALTH TAX
(C) Agricultural income tax
(D) none

71. If the elasticity of supply is less than the elasticity of demand,the burden of tax will
fall on

(A) Entirely on the seller

(B) Entirely on the buYer
(C) Both on the seller and buYer
(D) NONE

72. Laffer curve shows the relationship between

(A) J'ax revenue and time

(B) TAX Rate and income
(C ) Tax revenue and tax rate
(D) NoNE

73. Which is not a characteristic of PUBLIC GOOD

(A) Non-exclusion
(B) NON-RIVAL
(C) Divisibility
(D) NONE

74. The basic difference betrveen a sales tax and a VAT

(A) INCIDENCE oftax

(B) METHOD Of collection
(C) Tax base
(D) NONE

75. Countries trade with each other because they are _-- and because of

(A) differento costs

-.
(B) Similar, scale economies
(C) different, scale economies
(D) Similar, costs

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76. Given the following information":
Unit Labor Requirements

Cloth Wine

Flome l0 20

Foreign 60 30

(A) Neither country has a comparative advantage.

(B) Home has a comparative advantage in cloth.
(C) Foreign has a comparative advantage in cloth'
(D) Home has a comparative advantage in widgets.

77 . ln the 2-fact or, 2 good Heckscher-Ohlin model, the two countries differ in

(A) tastes.
(B) military capabilities.
(C) size.
(D) relative availabilities of factors of production.

78. Starting from an autarky (no-trade) situation with Heckscher-Ohlin model, if

Country H is relatively labor abundant, then once trade begins

(A) wages and rents should rise in H

(B) wages and rents should fall in H
(C) *ug.t should rise and rents should fall in H.
(D) wages should fall and rents should rise in H.

79.Terms of trade refers to

(A) what goods are importeD.

(B) what goods are exporteD.
(C) the volume of trade
(D) the prices at which trade occurs.

80. The most common form of price discrimination in international trade is

(A) non-tariff barriers.

(B) Voluntary Export Restraints.
(c) dumping
(D) preferential trade arrangements.

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81. The WTO was established by the of multilateral trade negotiations.

(A) Kennedy Round

(B) Tokyo Round
(C) Uruguay Round
(D) Dillon Round
82. The infant industry argument was an important theoretical basis for

(A) Neo-colonialist theory of international exproitation.

(B) Import - substituting irrdustrialization.
(C) Historiography of the industrial revolution in Western Europe.
(D) East-Asianmiracle.
83. A country's current account

(A) balance equals the change in its net foreign wealth.

(B) balance equals the change in its foreign wealth.
(C) surplus equals the change in its foreign wealth.
(D) deficit equals the change in its foreign wealth.

84. For open economies,

(A) S: I.
(B) S: I +CA.
(c) S:l-CA.
(D) S>I+CA.

85' many British pounds would it cost to buy a pair of American designer jeans
low costing
if
$45 the exchange rate is r.50 dollars per British'pound?

(A) lo British pounds

(B) 20 British pounds
(c) 30 British pounds
(D) 35 British pounds

86. The J-curve illustrates which of the folrowing?

(A) The effects of depreciation on the home country's economy

(B) The immediate increase in the current account taused by a currency
depreciation
(c) rhe gradual adjustment of home prices to a currency depreciation
(D) The short-term effects of depreciation on the current account

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87. The quantity theory of money implies that if the money stock were to double, the price
level would

(A) fall by one half.

(B) rise, but only slightly.
(C) also double.
(D ) be unchanged

88. If the consumption function is given by C: 100 +.6(y-T) and planned investment is
I 50, government spending is 50, and T is 100, then equilibrium income is

(A ) 600
(B) 7 s0
(c)400
( D) 3s0

89' Compared to the closed economy Keynesian model, the open economy model
in which
imports are a function of income has an investment multiplier that is

(A) smaller.
(B) larger.
(C ) equal.
(D) equal to I

90. Keynes believed that the instability in income was caused by variability
in

(A) investment
(B) taxes.
(C) consumption and savings.
( D ) government spending.

9l . A rise in the money stock will

(A )
shift the LM schedule ro the right.
(B) shifr the LM schedule to the left.
(C) not have any effect on the LM schedule.
(D) shift the IS schedule downward and to the right

92. The rate of unemployment can be calculated by

(A) simply dividing all unemployed

persons by all employed persons.
(B) subtracting those ernployed from the total labor force to find the number of
unemployed and express this number as a percent of the total labor force.
(C) subtract those unemployed from the total labor force and express this number as a
percent of the total labor force.
(D) dividing all unemployed by rhe population.

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93. Capital inflows in the balance of payments accounts include

(A) purchases of financial assets by domestic residents.

(B) direct investments in foreign countries.
(C) indirect investments in foreign countries.
(D) purchases of domestic government bonds by foreigners.*

94. A system of exchange rate determinati'on with no central bank intervention is a

(A) fixed exchange rate system.

(B) flexible exchange rate system.
(C) floating exchange rate system.
(D) either a flexible or a floating exchange rate system.
-lhe
95. primarytool utilized bythe Reserve Bank of lndiatoday in conducting monetary policy
is

(A) the discount rate.

(B) reserve requirements.
(C) open market operations.
(D) selective credit controls.

96. Robert Solow is one of the developers of

(A) classical economics.

(B)the neoclassical gromh model.
(C) real business cycle theory.
(D) new classical economics.

97. The difference between the nominal interest rate and the real interest rate is

(A) Inflation
(B). taxes
(C). Seignorage
(D). Hyperinflation

98. The inflation caused by supply shocks is called

(A) Expected inflation

(B) Wage inflation
(C) demand pull inflation
(D) cost-push inflation

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99. Theories of money demand that emphasize the role of money as a medium of exchange are
called

(A) Transaction theories

(B) portfolio theories
(C) quantity theories
(D) q theories

100. M3 measure of money compiled by Reserve Bank of India includes

(A) Currency, demand deposits and Time deposits

(B) Currency and Demand deposits
(C) Demand deposits and Time deposits
(D) Currency, Demand deposits and Post office deposits

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