MH SET 2015: 6 September, Paper III, Economics
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Test Booklet No.
M
ECONOMICS
Signature and Name of Invigilator Seat No.
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AUG - 11315 (To be filled by the Candidate)
Time Allowed : 2½ Hours] [Maximum Marks : 150
Number of Pages in this Booklet : 40 Number of Questions in this Booklet : 75
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AUG - 11315/III 2
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AUG - 11315/III
ECONOMICS
Paper III
III
Time Allowed : 2½ Hours] [Maximum Marks : 150
Note : This Question Paper contains Seventy Five (75) multiple choice questions.
Each question carries Two (2) marks. Attempt All questions.
(75) (2)
1. Samuelson’s revealed preference 1.
theory proves :
(A) Negative substitution effect (A)
(B) Positive income effect (B)
(C) Negative income effect (C)
(D) Both (A) and (B) (D) (A) (B)
2. Which is not the assumption about 2.
preferences ?
(A) Completeness (A)
(B) Transitivity (B)
(C) Non-satiety (C)
(D) Maximization (D)
3 [P.T.O.
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3. If the price elasticity of demand for 3. X
commodity X is :
(I) X
(I) Any constant number then fall X
in price of X will not change
expenditure on X.
(II) X
(II) Less than 1 then fall in price
X
of X will reduce expenditure
on X.
(A) (I) (II)
(A) (I) is true and (II) is false
(B) (II) (I)
(B) (II) is true and (I) is false
(C) (I) (II)
(C) Both (I) and (II) are true
(D) (I) (II)
(D) Both (I) and (II) are false
4. (0, 0)
4. Elasticity of supply curve passing
through origin (0, 0) is equal to :
(A) < 1
(A) < 1
(B) > 1 (B) > 1
(C) = 1 (C) = 1
(D) Zero (D) Zero
4
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5. Indifference curves for addictive 5.
goods are :
(A) Convex to the origin
(A)
(B) Concave to the origin
(B)
(C) Horizontal
(C)
(D) Vertical
6. Optimum size of plant is the : (D)
(A) maximum level of output that 6.
can be produced with the plant
(A)
(B) level of output that can be
produced with minimum
marginal cost (B)
(C) level of output that can be
produced with minimum
(C)
average cost
(D) level of output that can be
(D)
produced with maximum fixed
cost
5 [P.T.O.
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7. Suppose introduction of new product 7.
results into increase in net profits 20,000
of Rs. 20,000 with 40 percent 40
probability and loss of Rs. 10,000 10,000
with 60% probability. What will be 60
the expected net profits if the
product is introduced ?
(A) Rs. 30,000 (A) 30,000
(B) Rs. 14,000 (B) 14,000
(C) Rs. 15,000 (C) 15,000
(D) Rs. 20,000 (D) 20,000
8. Expansion path : 8.
(A) is the line joining tangency (A)
points of isoquants and isocost
lines when price of one input
changes
(B) is the line joining tangency (B)
points of isoquants and isocost
lines when prices of both inputs
remain constant
(C) is the line showing optimal (C)
input combinations
(D) Both (B) and (C) (D) (B) (C)
6
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9. Monopolistically competitive firms 9.
set prices above marginal cost
because they :
(A)
(A) face downward slopping
demand curve
(B)
(B) are great in number
(C)
(C) have freedom of entry
(D) have high fixed cost (D)
10. When commodity produced is 10.
homogenous :
(I) Bertrand equilibrium is (I)
competitive equilibrium.
(II) Cournot equilibrium is (II)
monopoly equilibrium.
Select the correct alternative :
(A) Both (I) and (II) are true (A) (I) (II)
(B) Both (I) and (II) are false (B) (I) (II)
(C) (I) is true and (II) is false (C) (I) (II)
(D) (II) is true and (I) is false (D) (II) (I)
7 [P.T.O.
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13. Employer does not know job 13.
applicant’s skills, work attitude etc.
is an example of :
(A) Adverse selection
(A)
(B) Negative externality in selection
(B)
(C) Free riding
(C)
(D) Both (B) and (C) (D) (B) (C)
14. When both the demand and the 14.
supply curves slope downwards and
the supply curve is less steeper than
the demand curve, the equilibrium
is :
(A)
(A) Stable in both Marshallian and
Walrasian sense
(B)
(B) Unstable in both Marshallian
and Walrasian sense
(C) Unstable in Marshallian sense (C)
but stable in Walrasian sense
(D) Stable in Marshallian sense but (D)
unstable in Walrasian sense
9 [P.T.O.
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15. Whose name is not associated with 15.
compensation principle in welfare
economics ?
(A)
(A) Hicks
(B)
(B) Kaldor
(C)
(C) Scitovsky
(D)
(D) Adam Smith
16. Which of the following consumption 16.
hypotheses predicts that young
generation saves while old
generation dissaves ?
(A) Permanent income hypothesis (A)
(B) Life-cycle hypothesis (B)
(C) Relative income hypothesis
(C)
(D) Keynesian consumption
(D)
hypothesis
10
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17. Suppose an economy’s banking 17.
system has cash reserve ratio of 10% 10%
and a leakage ratio (the amount
which is not coming back to the 10%
money circulation) of 10%. If a new
1,000
deposit is thereof Rs. 1,000, what
will be the value of money
multiplier ?
(A) 4
(A) 4
(B) 2
(B) 2
(C) 5
(C) 5
(D) 3
(D) 3
18.
18. In Baumol type demand for money,
suppose fixed cost per bank trip = 5,
= 5, = 25,
planned expenditure = 25, interest
rate = 0.1, then average money = 0.1
demand will be :
(A) 15 (A) 15
(B) 25 (B) 25
(C) 20 (C) 20
(D) 30 (D) 30
11 [P.T.O.
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19. If an economy is at a point to the 19. IS
right of the negatively sloped IS
curve, it implies :
(A) Savings less than investment in (A)
planned levels
(B) Savings more than investment (B)
in planned levels
(C) Savings equal to investment in (C)
planned levels
(D) Savings less than investment in (D)
actual levels
20. If investment is completely 20. IS-LM
insensitive to interest rate in IS-LM
model, which one of the following will
be an effective policy to raise output
level ?
(A) A rise in money supply (A)
(B) A cut in money supply
(B)
(C) A cut in government
(C)
expenditure
(D) A cut in income tax rate (D)
12
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21. The money supply change multiplier 21. IS-LM
in IS-LM model is higher if :
(A) Savings ratio is lower
(A)
(B) Slope of investment function is
lower (B)
(C) Slope of speculative demand (C)
curve is higher
(D) Velocity of circulation of money
(D)
is lower
22. Under flexible exchange rate, 22.
Mundell-Fleming model shows
when capital is perfectly mobile :
(A) Monetary policy is a failure but (A)
fiscal policy is a success
(B) Monetary and fiscal policies, (B)
both are failures
(C) Monetary policy is a success but (C)
fiscal policy is a failure
(D) Both monetary and fiscal (D)
policies are effective
13 [P.T.O.
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23. In Keynesian theory of investment,
23.
a downward slopping investment
function rests on the assumption :
(A) Diminishing marginal
productivity of capital
(A)
(B) Diminishing marginal
productivity of labour (B)
(C) Increasing marginal
(C)
productivity of capital
(D)
(D) Constant returns to scale
24. In Solow’s growth model, stability of 24.
equilibrium is ensured through
changes in :
(A) Wage-rental ratio (A)
(B) Savings ratio (B)
(C) Population growth rate (C)
(D) Cash reserve ratio (D)
14
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25. To achieve a rise in income of 500, 25. 0.8
given MPC = 0.8, how much should 500
be the rise in autonomous
investment in a simple Keynesian
model ?
(A) 200
(A) 200
(B) 300
(B) 300
(C) 100
(C) 100
(D) 400
(D) 400
26. Which one of the following is not 26.
part of the endogenous growth
models ?
(A) Introduction of human capital
(A)
(B) Introduction of research and
development
(B)
(C) Introduction of endogenous
technical change (C)
(D) Introduction of different savings
(D)
behaviour
15 [P.T.O.
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27. In complete Keynesian model, a 27.
vertical AD curve is produced by
which of the following conditions :
(A) Full employment in the
(A)
economy
(B) LM
(B) Inelastic LM curve
(C) LM
(C) Perfectly elastic LM curve
(D) IS
(D) Elastic IS curve
28.
28. In the Marxian theory of capitalist
development there is :
(A)
(A) a constant tendency for profits
(B) falling tendency for profits (B)
(C) increasing tendency of profits (C)
(D) profits will vary all the time (D)
16
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29. The Fei-Rani’s model of development 29.
assumes that :
(A)
(A) Population is endogenous
(B)
(B) Agriculture has increasing
returns to scale
(C) Land is fixed in supply
(C)
(D) There is capital accumulation in
(D)
agriculture
30. Most of the two Gap models 30.
assume :
(A)
(A) The saving gap and investment
(B)
gap
(B) The foreign-exchange gap and
Import-Export gap
(C)
(C) The saving gap and foreign-
exchange gap
(D)
(D) The foreign-exchange gap and
investment gap
17 [P.T.O.
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31. When a company wants to finance 31.
a project and acquire equity capital,
it goes to the :
(A) Secondary market
(A)
(B) Bonds market
(B)
(C) Treasury bills market
(C)
(D) Primary market
(D)
32. In Schumpeter’s theory the
32.
existence of cycles is :
(A) Short-term cycles
(A)
(B) Ratche like fluctuations (B)
(C) Kondratieff type long waves (C)
(D) Medium term cycles (D)
18
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33. Which one of the following is 33.
recommended by the 14th Finance
14
Commission to omit the definition
(A)
of :
(A) Primary Deficit (B)
(B) Fiscal Deficit
(C)
(C) Effective Revenue Deficit
(D)
(D) Revenue Deficit
34.
34. The share of direct taxes in the
central tax revenue became higher
than that of indirect tax the first
time in :
(A) 2001-02
(A) 2001-02
(B) 2005-06
(B) 2005-06
(C) 2007-08
(C) 2007-08
(D) 2009-10 (D) 2009-10
19 [P.T.O.
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35. Which one of the following is not the 35.
components of revenue expenditure
of Central Government ?
(A)
(A) Interest payments
(B)
(B) Defence expenditure
(C) Pensions (C)
(D) Budgetary support (D)
36. All indirect taxes in India are 36.
proposed to be subsumed under ..... .
(A) Direct taxes code
(A)
(B) Goods and services tax
(B)
(C) Union excise duty (C)
(D) Value added tax (D)
37. Which one of the following is not a 37.
subsidy given by the Government of
India ?
(A)
(A) Food
(B)
(B) Fertilizer
(C) Petroleum (C)
(D) Electricity (D)
20
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38. Finance Commission is appointed 38.
under Article ..................... of the
Constitution of India.
(A) 274 (A) 274
(B) 275 (B) 275
(C) 280 (C) 280
(D) 282 (D) 282
39. When consumption by one person 39.
affects the welfare of another person,
it is called :
(A) Excludability
(A)
(B) Externality
(B)
(C) Rivalness (C)
(D) Non-excludability (D)
40. A pure public good is characterized 40.
by :
(A) Rivalness and non-excludability (A)
(B)
(B) Rivalness and excludability
(C)
(C) Non-rivalness and non-
excludability
(D)
(D) Non-rivalness and excludability
21 [P.T.O.
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41. What do you say about the following 41.
statements ?
(I)
(I) The Reserve Bank of India was
1 , 1935
established as a shareholders’
bank on 1st April, 1935.
(II) 1 , 1949
(II) The Reserve Bank of India was
nationalized on 1st January,
1949.
Mark the correct alternative :
(A) (I) (II)
(A) Both statement (I) and
statement (II) are wrong
(B) (I) (II)
(B) Statement (I) is correct and
statement (II) is wrong
(C) (I) (II)
(C) Statement (I) is wrong and
statement (II) is correct
(D) Both statement (I) and (D) (I) (II)
statement (II) are correct
22
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42. Find the odd out : 42.
Axis Bank, ICICI Bank, Dena Bank,
HDFC Bank.
(A) HDFC Bank (A)
(B) Axis Bank (B)
(C) ICICI Bank (C)
(D) Dena Bank (D)
43. In the context of Indian banking 43.
SLR suggests :
(A) Statutory Lending Ratio (A)
(B) Statutory Liquidity Ratio (B)
(C) Statutory Lending Rules (C)
(D) Simplified Lending Rules (D)
23 [P.T.O.
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44. In July, 1969 whch of the following 44. 1969
phenomena took place in the field
of Banking in India ?
(A)
(A) Major commercial banks were
nationalized
(B) Social control over banks was (B)
announced
(C) Banking commission submitted (C)
its report
(D)
(D) State Bank of India was
nationalized
45. What can you say of the following 45.
statements ? (I)
(I) The NABARD has taken over
the activities of ARDC.
(II) 1969
(II) The NABARD was established
in the year 1969.
Choose the correct answer : (A) (I) (II)
(A) Both statement (I) and
statement (II) are wrong (B) (I) (II)
(B) Both statement (I) and
statement (II) are correct
(C) (I) (II)
(C) Statement (I) is correct and
statement (II) is wrong
(D) Statement (I) is wrong and (D) (I) (II)
statement (II) is correct
24
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46. According to census 2011, the 46. 2011
percentage of urban population in
India is :
(A) 33.02 percentage (A) 33.02
(B) 31.16 percentage (B) 31.16
(C) 30.12 percentage (C) 30.12
(D) 29.10 percentage (D) 29.10
47. The survivor technique for 47.
measuring the relative efficiency of
different sizes of firms was suggested
by :
(A)
(A) Stigler
(B)
(B) Kaldor
(C)
(C) Myrdal
(D) Pratten (D)
25 [P.T.O.
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48. Match the following and select the 48.
correct answer from the codes given
below :
Writers
(a)
(a) G.T. Renner
(b)
(b) Tord Palander
(c)
(c) August Losch
(d)
(d) Sargent Florence
Boo k s
(i)
(i) The market area theory of
industrial location
(ii)
(ii) Geography of industrial
locationalization
(iii)
(iii) Investment, location and size of
plant
(iv)
(iv) The economics of location
Codes :
(a) (b) (c) (d)
(a) (b) (c) (d)
(A) (i) (ii) (iii) (iv)
(A) (i) (ii) (iii) (iv)
(B) (ii) (i) (iv) (iii)
(B) (ii) (i) (iv) (iii)
(C) (iii) (iv) (i) (ii) (C) (iii) (iv) (i) (ii)
(D) (i) (iv) (ii) (iii) (D) (i) (iv) (ii) (iii)
26
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49. Weber’s theory of location of 49.
industry was published in German
language and translated into
English language by ................... .
(A) Carl Freidrich (A)
(B) G.T. Renner (B)
(C) E.M. Rawstron (C)
(D) August Losch (D)
50. Harris-Todaro model is related 50.
with ....................... .
(A) Growth and unemployment
(A)
(B) Growth and migration
(B)
(C) Unemployment and migration
(C)
(D) Unemployment and urbani-
(D)
zation
27 [P.T.O.
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51. Match the following and select the 51.
correct answer from the codes given
below :
Authors
(i)
(i) Gunnar Myrdal
(ii) E.F. Schumacher (ii)
(iii) Paul Sweezy (iii)
(iv) Joan Robinson (iv)
Title of the books
(a) Small is Beautiful
(a)
(b) Theory of Capitalist
(b)
Development
(c) Economics of Imperfect (c)
Competition (d)
(d) Asian Drama
Codes :
(i) (ii) (iii) (iv)
(i) (ii) (iii) (iv)
(A) (a) (c) (d) (b)
(A) (a) (c) (d) (b)
(B) (c) (d) (a) (b)
(B) (c) (d) (a) (b)
(C) (b) (C) (b) (c) (a) (d)
(c) (a) (d)
(D) (d) (a) (b) (c) (D) (d) (a) (b) (c)
28
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52. Activities resulting in transfer of 52.
wealth between two countries are
recorded in the .................... account
of Balance of Payments.
(A) Current (A)
(B) Capital (B)
(C) Revenue (C)
(D)
(D) Financial
53. Which one of the following is not a 53.
principle of the World Trade
Organization ?
(A)
(A) Non-discrimination
(B)
(B) Multilateralism
(C)
(C) Opposition to Quota Restrictions
(D)
(D) Most Favoured Nation
29 [P.T.O.
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54. According to the theory of optimum 54.
currency areas, fixed exchange rates
are most appropriate for :
(I)
(I) Countries that are closely
integrated through trade.
(II) Countries that are closely (II)
integrated through factor
movements.
Select the correct answer :
(A) (I) (II)
(A) (I) is true and (II) is false
(B) (II) (I)
(B) (II) is true and (I) is false
(C) (I) (II)
(C) Both (I) and (II) are false
(D) Both (I) and (II) are true (D) (I) (II)
55. The relationship between relative 55.
prices of output and relative factor
rewards is stated in ............ theorem.
(A) Mill—Marshall
(A)
(B) Heckscher—Ohlin
(B)
(C) Stolper—Samuelson (C)
(D) Rybczynski (D)
30
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56. The Jan Dhan Yojana championed 56.
by the Government is based on the
recommendations of Committee
appointed by the Government.
(A)
(A) Nachiket Mor
(B)
(B) Taraporewala
(C)
(C) Rangarajan
(D) Urgit Patel (D)
57. As per the 97th amendment of the
Constitution :
(A)
(A) Co-operation has been deleted
from state list
(B)
(B) Co-operation has become one of
the fundamental rights
(C)
(C) Co-operation has become part of
the fundamental duties
(D)
(D) Co-operative institutions shall
be progressively privatized
31 [P.T.O.
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58. The duration of 12th Five Year 58.
Plan is :
(A) 2007-12 (A) 2007-12
(B) 2008-13 (B) 2008-13
(C) 2012-17 (C) 2012-17
(D) 2010-15 (D) 2010-15
59. The Second Five Year Plan in India 59.
was based on the model of :
(A) Gunnar Myrdal (A)
(B) Shriman Narayan (B)
(C) Paul Sweezy (C)
(D) P.C. Mahalnobis (D)
32
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60. Consider the following statements : 60.
(I) Finance Commission in India is
(I)
an advisory body appointed by
the Governor, Reserve Bank of
India annually.
(II)
(II) Finance Commission in India is
a statutory body appointed by
the President, Govt. of India
every five years.
Choose the correct alternative :
(A) (I) (II)
(A) Statement (I) is correct and
statement (II) is wrong
(B) (I) (II)
(B) Statement (I) is wrong and
statement (II) is correct
(C)
(C) Both statements are correct
(D) Both statements are wrong (D)
33 [P.T.O.
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61. The Government securities market 61.
is also known as :
(A) Derivatives market (A)
(B) Government share market (B)
(C) Gilt-edged market
(C)
(D) Intermediaries market
(D)
62. The Liquidity Adjustment Facility
62. RBI
(LAF) of RBI works through :
(A) Repos and Reverse Repos
(A)
(B) Inverse Repos
(B)
(C) Buybacks
(C)
(D) Derivatives
(D)
63. Tobin tax is a tax on :
63.
(A) Exports
(A)
(B) Imports
(B)
(C) Transactions in foreign
exchange sales (C)
(D) Sales (D)
34
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64. The call money market is the market 64.
for :
(A) Long-term funds
(A)
(B) Medium-term funds
(B)
(C) Short-term funds
(C)
(D) Money supply
65. The principal business of a Non- (D)
Banking Financial Company 65.
(NBFC) is :
(A) Create money supply
(A)
(B) Create credit lines
(B)
(C) Receiving deposits from the
public under any scheme and (C)
lending in any manner
(D) Raising finance in international
capital markets
(D)
66. Suppose government raises
resources for development purposes
through market-borrowing, it results 66.
into :
(A) Expansion of share market (A)
(B) Expansion of bank credit
(B)
(C) Private investment is crowded
(C)
out due to rise in interest rate
(D) Increase in money supply
becomes unstable (D)
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67. What is the number of degrees of 67. 50
freedom for a simple bivariate linear
regression with 50 observations ?
(A) 48 (A) 48
(B) 47 (B) 47
(C) 2 (C) 2
(D) 50 (D) 50
68. The assumption of zero mean of the 68.
error term in classical linear
regression model is needed to
prove :
(A)
(A) Bestness of the estimates
(B)
(B) Unbiasedness of the parameters
(C)
(C) Linearity of the parameters
(D) Randomness of the parameters (D)
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69. If Y = –X, then correlation coefficient 69. Y = –X
will be :
(A) –1 (A) –1
(B) +1 (B) +1
(C) Between –1 and +1 (C) –1 +1
(D) 0 (D) 0
70. The assumption of multicollinearity 70. (multicollinearity)
means that :
(A) There should be no correlation
(A) (regressors)
among the regressors
(B) There should be no linear
relationship among the (B) (regressors)
regressors
(C) There should be no non-linear
(C) (regressors)
relationship among the
regressors
(D) (regressors)
(D) There should be no relationship
among the regressors
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71. The model where the value of Y 71. Y
depends on its value in the previous
time-period and a random term
is :
(A) Single equation model (A)
(B) AR (1) model (B) AR (1)
(C) MA (1)
(C) MA (1) model
(D) ARMA (1, 1)
(D) ARMA (1, 1) model
72.
72. In trying to test that females earn
less than their male counterparts,
Yi = 1 + 2Di;
we estimate the following model :
Y =
Yi = 1 + 2Di, where Y = average
D=1 0
earnings per day in Rs., D = 1 for
2
females and 0 otherwise. 2 here
(A)
refers to the :
(B)
(A) Average earnings of male
(C)
(B) Average earnings of female
(differential intercept
(C) Differential intercept coefficient coefficient)
for male earnings
(D)
(D) Differential intercept coefficient (differential intercept
for female earnings coefficient)
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73. Suppose the demand function 73.
of a monopolist is P = a – b Q P = a – bQ
and marginal cost function. MC = c + kQ
MC = c + kQ, then equilibrium (Q)
output (Q) would be :
a b
(A) Q =
a b 2c k
(A) Q =
2c k
a k
(B) Q =
a k 2c b
(B) Q =
2c b
a c
(C) Q =
a c 2b k
(C) Q =
2b k
a b
(D) Q =
a b 2c k
(D) Q =
2c k 74. (integral)
74. The definite integral represents :
(A) a definite unit of measure (A)
(B) a definite length (B)
(C) a perfect shape (C)
(D) area under a curve (D)
75. Rejecting a true hypothesis results 75.
in this type of error :
(A) Type I error (A) I
(B) Type II error (B) II
(C) Structural error (C)
(D) Hypothesis error (D)
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ROUGH WORK
40Official key not published for this paper.
Page 1 of 40
Source: Savitribai Phule Pune University. Question paper published by Savitribai Phule Pune University.