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Home » IAS Previous Question Papper » IAS Prelims Previous Year Paper Economics (2008)
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IAS Prelims Previous Year Paper Economics (2008)

IAS Prelims Previous Year Paper Economics (2008)

Sub Date: 10/6/2009

IAS Prelims Previous Year Paper Economics (2008)

Part - 1

1. Consider the following statements:
1. Annual Survey of Industries (ASI) extends to the entire country
2. ASI covers all factories registered under Sections 2m (i) and 2m (ii) of the Factories Act, 1948. 

Which of the following given above is/are correct?
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2

2. Consider the following statements:
1. Varsha Bima, the rainfall insurance scheme, is managed by the Agricultural Insurance Company of India Ltd (AICIL).
2. The scheme was introduced during the 2007 southwest monsoon period. 

Which of the following given above is/are correct?
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2

3. Tax on Banking Cash Transactions (withdrawals) over a certain threshold in a single day was introduced in the Union Budget of which year?
a. 2002 - 03
b. 2004 - 05
c. 2005 - 06
d. 2006 - 07

4. Who among the following has suggested migration to accrual accounting system from cash-based accounting system in India?
a. Y.V. Reddy
b. R.H. Patil
c. D.N. Ghosh
d. C. Rangarajan

5. In which of the following years was the tax revenue as a percentage of GDP, the lowest?
a. 2002 - 03
b. 2003 - 04
c. 2004 - 05
d. 2005 - 06

6. Which one of the following is the proportion of rain-fed agriculture to the net sown area in India?
a. 40%
b. 50%
c. 60%
d. 72%

7. Consider the following statements about industrial relations on the basis of Economic Survey:
1. There was a constant decline in the number of strikes and lockouts during 2000 - 05 in India.
2. The maximum number of strikes and lockouts in the year 2006 were experienced by Kerala, followed by Tamil Nadu and West Bengal. 

Which of the statements given above is/are correct?
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2

8. If median and mode of a set of observations are 206 and 26, respectively, then what is the value of mean of the observations?
a. 16
b. 179
c. 184
d. 19

9. Lorenz curve enables one to study which of the following?
a. Averages
b. Dispersion
c. Correlation
d. Index numbers

10. Which one of the following is correct for a normal distribution?
a. Standard deviation > Mean deviation > Quartile deviation
b. Quartile deviation > Mean deviation > Standard deviation
c. Mean deviation > Standard deviation > Quartile deviation
d. Quartile deviation < Mean deviation > Standard deviation

11. Coefficient of correlation is independent of which of the following?
a. Change of origin only
b. Change of scale only
c. Change of origin and scale
d. None of the above

13. Which one of the following indices satisfies both time reversal and factor reversal tests?
a. Laspeyre's index number
b. Fisher's index number
c. Paasche's index number
d. Kelly's index number

14. Which one of the following index numbers is based on geometric mean?
a. Laspeyre's index number
b. Fisher's index number
c. Paasche's index number
d. Bowley's index number

15. What is a strategy which makes an all out effort to provide the masses of people in India access to basic facilities such as health education, clean drinking water etc., termed as?
a. Inclusive growth strategy
b. Exclusive growth strategy
c. Rapid growth strategy
d. Balanced growth strategy 

16. Assertion (A): The monopolist never operates on the portion of the demand curve which is inelastic 

Reason (R):
When elasticity of demand is less than unity, MR is negative.
a. Both A anti R are individually true and R is the correct explanation of A
b. Both A and R are individually 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

17. Assertion (A): The Revealed Preference Hypothesis excludes the study of Giffen Paradox.

Reason (R):
Revealed Preference Hypothesis Considers only negative income elasticity of demand whereas Giffen Paradox Giffen Paradox relates to Positive elasticity of demand.
a. Both A anti R are individually true and R is the correct explanation of A
b. Both A and R are individually 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

18. Assertion (A): Indifference curve for perfect substitute goods is a downward Sloping straight line. 

Reason (R):
For perfect substitute goods, MRS is falling. 
a. Both A anti R are individually true and R is the correct explanation of A
b. Both A and R are individually 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

19. Assertion (A): There is no excess capacity under monopolistic competition in the long run.

Reason (R):
The demand curve under monopolistic competition is downward sloping.
a. Both A anti R are individually true and R is the correct explanation of A
b. Both A and R are individually 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

20. Assertion (A): MRP curve lies below the VMP curve under imperfect competition. 

Reason (R):
Under imperfect competition MR < P.
a. Both A anti R are individually true and R is the correct explanation of A
b. Both A and R are individually 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

21. Which among the following is not a committed expenditure of the Government of India?
a. Interest payments
b. Pay and allowances
c. Transfers to States and Union Territories
d. Loans and advances to States and Union Territories

22. Which region of India has the lowest Thermal Plant Load Factor (PLF) for thermal power generation in the year 2006 - 2007?
a. Northern
b. Western
c. North-Eastern
d. Southern

23. Which of the following are the goals of Sarva Shiksha Abhiyan (SSA)?
1. All children of 6 - 14 years age in school/EGS (Education Guarantee Scheme) Centre/bridge course by the year 2015.
2. Bridge all gender and social category gaps at primary stage by the year 2007 and at elementary education level by  the year 2010.
3. Universal retention by the year 2020. 

Select the correct answer using the code given below:
a. 1 and 2 only
b. 2 and 3 only
c. 1 and 3 only
d. 1, 2 and 3

24. Which of the following is/are not monitor able target(s) for the 11th Five-year Plan? 
1. Accelerate growth rate of GDP to 10% by the end of the Plan and then maintain it in the I2t1 Five-Year Plan 
2. Double per capita income by 2016-17
3. Create 20 million new work opportunities.

Select the correct answer using the code given below:
a. 1 only
b. 2 only
c. 3 only
d. 2 and 3

25. Which one area of infrastructure is not included in Bharat Nirman Scheme (2005 - 09) ?
a. Irrigation
b. Rural roads
c. Rural health
d. Rural housing

26. Which of the following statements pertaining to the strategy to raise agricultural output during the 11th Five- Year Plan are correct?
1. Double the rate of growth of irrigated area.
2. Improve water management, rain water harvesting and watershed development.
3. Provide easy access to credit at affordable rates.

Select the correct answer using the code given below:
a. 1 and 2 only
b. 2 and 3 only
c. 1 and 3 only
d. 1, 2 and 3

27. Which one of the following is not proposed in the approach paper to the 11th Five-Year Plan as important new social interventions?
a. Provide freedom and resources to select institutions so that they attain global standards by the year 2011-12 
b. Grant old age pension to the widows, handicapped and deserted and  separated women
c. Ensure adequate representation of women in elected bodies, State Legislatures, and the Parliament 
d. Provide emergency obstetrics care facilities within 2 hours travel from every habitat.

28. During which of the following years, was annual average growth (at constant prices) of agriculture and allied sectors negative?
a. 2002 - 03
b. 2003 - 04
c. 2005 - 06
d. 2006 - 07

29. Consider the following statements 
1. The Fifth Economic Census was conducted by CSO in the year 2007.
2. Intelligent Character Recognition (ICR) technology is being used for detailed processing of the data collected in Fifth Economic Census.

Which of the statements given above is/are correct?
a. 2 only
b. Neither 1 nor 2
c. 1 only
d. Both 1 and 2

30. NSSO regularly collects rural retail prices on monthly basis from selected markets for compilation of Consumer Price Index Numbers. Which one of the following is the correct pair of samples collected for the purpose?
a. 403 villages and 39 urban centers
b. 503 villages and 49 urban centers
c. 603 villages and 59 urban centers
d. 703 villages and 69 urban centers

Part - 2

31. Which one of the following statements is correct?
a. External Debt/GDP ratio has declined consistently after the year 2003.
b. External Debt/GDP ratio has fluctuated after the year 2003
c. External Debt/GDP ratio has increased after the year 2003
d. External Debt/GDp ratio has remained constant after the year 2003

32. In which of the following years, was the trade balance favourable to India?
a. 1970-71 and 1974-75
b. 1972-73 and 1976-77
c. 1972-73 and 1975-76
d. 1971-72 and 1976-77

33. Who was the Chairman of the Committee appointed in 2006 for setting out a roadmap towards fuller capital account convertibility
a. S.S. Tarapore
b. C. Rangarajan
c. M. Narasimharn
d. O.P. Sodhani

34. Which sector has attracted highest FDI inflows during the period from August 1991 to September 2006 (in % share)?
a. Services Sector
b. Electrical Equipments
c. Telecommimications
d. Transportation Industry

35. Match List-I with List-II and select the correct answer using the code given below the lists:
List . I 
(Terms of Trade)
A. Gross barter terms of trade
B. Income terms of trade
C. Single factoral terms of trade

List . II 
(Explanation)
1. The ratio between the quantity of a country fs imports and exports 
2. Index of export export prices quantity Index of import prices
3. Obtained by multiplying the commodity terms of trade by an index of productivity changes in domestic export industries
4. The ratio of a country�fs export price index to its import price index  A B C
a. 3 4 1
b. 1 2 3
c. 3 2 1
d. 1 4 3

36. Which one of the following statements is correct? 
The production possibility curve under increasing opportunity cost is :-
a. concave to origin
b. convex to the origin
c. a straight line parallel to the x-axis
d. a straight line parallel to the y-axis

37. Which of the following is not a non-tariff barrier?
a. Voluntary export restraint
b. Health and product standards
c. Environmental protection laws
d. Ad-valorem duties

38. In the Balance-of-Payment Account, the transfer payments are included in which one of the following?
a. Current account
b. Service account
c. Capital account
d. Official Reserves account

39. Which one of the following statements is not correct?
a. The distinction between expenditure switching and expenditure changing was propounded by H. G. Johnson.
b. The Absorption Approach to BOP was developed by Sydney Alexander.
c. The Elasticity Approach to BOP was associated with Stolper-Samuelson.
d. Stability condition in the foreign exchange market is known as Marshall-Lerner condition.

40. Which one of the following explains Balance-of-Payment adjustment mechanism under the gold standard?
a. Devaluation
b. Flexible exchange rates
c. Income-adjustment mechanism
d. Price-specie flow mechanism

41. Which of the following is the highest form of economic integration among different nations?
a. Custom Union
b. Free Trade Area
c. Economic Union
d. Conunon Market

42. Which one of the following best characterizes the Bretton Woods System of exchange rates?
a. Adjustable fixed exchange rates
b. Fixed exchange rates
c. Adjustable pegged exchange rates
d. Pegged exchange rates

43. Which of the following are the basic components of a typical IMF stabilization programme?
1. Liberalization of foreign exchange
2. Devaluation of the official exchange rate
3. A comprehensive anti-inflation programme
4. General opening-up of the economy to international commerce including foreign investment 

Select the correct answer using the code given below
a. 1 and 3 only
b. 2 and 4 only
c. 1, 3 and 4 only
d. 1, 2, 3 and 4

44. Consider the following: 
1. Kennedy Round of negotiations
2. Uruguay Round of negotiations
3. Tokyo Round of negotiations

Which is the correct chronological sequence of the above?
a. 1 . 2 - 3
b. 3 . 1 - 2
c. 1 - 3 . 2
d. 2 - 1 - 3

45. Which of the following is meant by growth in the context of growth and development?
a. Growth of gross national product in money terms
b. Growth of per capita income in money terms
c. growth of gross national product in real terms
d. Growth of per capita income in real terms

46. On which of the following grounds is increasing inequality justified in initial stages of development?
a. It puts greater incomes in the hands of those who have greater average propensity to consume
b. It puts greater incomes in the hands of those who have greater average propensity to save
c. It puts greater incomes in the hands of those who have greater marginal propensity to consume
d. It puts greater incomes in the hands of those who have greater marginal propensity to save


47. What is the correct sequence of the following approaches to development in terms of their chronological emergence?
1. Basic needs approach
2. Per capita income approach
3. Human Development Index Approach

Select the correct answer using the code given below
a. 1 - 2 � 3
b. 2 � 1 � 3
c. 2 - 3 � 1
d. 1 - 3 � 2

48. The Mahalanobis model was developed for which of the following plans?
a. First Five Year Plan
b. Second Five Year Plan
c. Third Five Year Plan
d. Fourth Five Year Plan

49. Which one of the following models explains the paradox pertaining to the rural-urban migration in the context of rising urban employment?
a. Lewis model
b. Todano model
c. Solow model
d. Mahalanobis model

50. Consider the following statements: Lewis' model of development with unlimited supplies of labour will fail to work to the full extent if
1. there is no disguised unemployment in the traditional sector.
2. modern sector wages do not remain constant up to the point that surplus labour is exhausted.
3. investment in the modern sector is labour-saving.

Which of the statements given above is/are correct?
a. 1 only
b. 1 and 2 only
c. 2 and 3 only
d. 1, 2 and 3

51. Match List-I with List-II and select the correct answer using the code given below the lists:
List-I
A. Aggregate Growth Model
B. Multi-sector Growth Model
C. Harrod-Domar Growth Model
D. The False Paradigm Model

List-I
1. Western models as applied to the situation of developing countries
2. Analysis of growth in terms of interdependence of sectors
3. Deals with the entire economy by examining a set of important macro variables
4. For a specific growth rate and a given capital output ratio, the required rate of domestic investment is determined 
A B C D
a. 4 2 3 1
b. 3 1 2 4
c. 3 2 4 1
d. 4 3 1 2

52. Under which one of the following fundamental assumptions, Solow was able to show that steady state growth was possible and stable?
a. Flexible K/L ratio
b. Flexible S/Y ratio
c. Constant growth rate of population
d. Constant rate of technical change

53. Consider the following statements: According to the law of variable proportions total product is maximum when
1. marginal product becomes zero.
2. marginal product curve cuts average product curve from above.
3. slope of marginal product curve is zero.
4. tangent to the total product curve is parallel to the horizontal axis.

Which of the statements given above are correct?
a. 1 and 4
b. 3 and 4
c. 1 and 3
d. 2 and 3

54. Which one of the following statements is correct?
If the elasticity of substitution between two factors X and Y be zero, then it implies that for a given change in outputs,
a. X and Y will always change by the same proportion.
b. Y changes but X remains the same
c. X changes but Y remains the same.
d. X and Y both change necessarily by different proportion.

55. Which of the following is not correct in respect of Cobb- Douglas production function?
a. It was originally based on the empirical study of US manufacturing industry.
b. It is a linearly homogeneous production function, taking into account two factors, labour and capital, for the entire output of the manufacturing industry. 
c. It tells us that out put depends upon labour and capital, and that part of output which cannot be explained by labour and capital, is attributed to the residual.
d. It is based on the assumption of operation of law of diminishing returns.

56. Income consumption line of the 'Consumer Theory' is analogous in 'Production Theory' to which one of the following?
a. Expansion path
b. Isoquant line
c. Ridge line
d. Isocost line

57. Suppose a fisherman has fishing net and a boat, He alone hunts fish in sea for which he has to pay no license fee etc. Fish, caught by him, wifi have which one of the following?
a. Zero economic cost of production as he makes no out-of-pocket payment to anybody and is working of his own
b. Negative economic cost of production because he enjoys fishing and has to make no payment
c. Positive cost of production due to his sacrificing the opportunity of working elsewhere and renting out fishing net and boat etc.
d. Infinite cost of production

58. Short-run marginal cost of a firm does not contain any element of which of the following?
a. Costs of raw materials
b. Salaries of the managerial staff
c. Wages of labour engaged on daily basis
d. Cost of fuel for operating machines engaged in production

59. Consider the following statements
1. The vertical distance from average cost (AC) curve to average variable cost (AVC) curve is average fixed cost (AFC).
2. AVC curve, AC curve and marginal cost (MC) curve are 'U' shaped. 
3. AFC curve is horizontal to 'X' axis. 

Which of the statements given above are correct?
a. 1 and 2 only
b. 2 and 3 only
c. 1 and 3 only
d. 1, 2 and 3

60. Which one of the following is the correct sequence of magnitude of minima in ascending order in marginal cost (MC) curve, average cost (AC) curve and average variable cost (AVC) curve? 
a. MC, AVC, AC
b. AVC, AC, MC
c. MC, AC, AVC
d. AC, MC, AVC

Part - 3

61. Under perfect competition supply curve is identified as which one of the following?
a. Rising portion of marginal cost curve
b. Rising portion of average total cost curve
c. Rising portion of average variable cost curve
d. Portion of marginal cost above the average variable cost curve

62. Which one of the following statements is correct? A straight line demand curve (cutting both the axes) is elastic
a. throughout the length of the demand curve.
b. at the mid-point.
c. below the mid-point towards the demand axis.
d. above the mid-point towards the price axis.

63. Consider the following statements:
1. The shape of a unitary elastic demand curve a is rectangular hyperbola.
2. The shape of a perfectly elastic demand curve a is rectangular hyperbola.
3. Perfectly inelastic demand curve is parallel to the price axis.
4. Perfectly elastic demand curve is parallel to the quantity axis. 

Which of the statements given above are correct?
a. 1 and 2
b. 1, 3 and 4
c. 2 and 3
d. 2 and 4

64. Which of the following is not a necessary condition of perfect competition?
a. Large number of firms in the industry producing homogeneous products
b. Free entry and free exit of firms
c. Need for incurring selling costs to attract consumers
d. Absence of artificial restrictions by the government

65. Consider the following statements Short run profit is maximum under perfect competition when
1. Second order condition is satisfied.
2. MC curve cuts MR curve from below.
3. MC curve cuts MR curve from above.

Which of the statements given above is/are correct?
a. 1 and 3
b. 1 and 2
8 of 13
c. 1 only
d. 2 only

66. In the kinked demand curve model, suppose MC curve shifts upward in the discontinuous range of the MR curve. 
Which one of the following is correct? At equilibrium 
a. price rises but quantity remains the same.
b. price and quantity both remain the same.
c. quantity rises but price remains the same.
d. price and quantity both rise.

67. Who developed the Time Preference Theory of Interest?
a. Irving Fisher
b. N. Senior
c. J. R. Hicks
d. J. M. Keynes

68. In the graph given above, what does the point B indicates?
a. Excess supply in the goods market and excess demand in the money market
b. Excess demand in the goods market and excess supply in the money market
c. Excess supply in both goods and money market
d. Excess demand in both goods and money market

69. Which one of the following is the most important determinant of speculative demand for money?
a. Income
b. Interest rate
c. Profits
d. Prices

70. Which one of the following equations was used by Fischer to explain the Quantity Theory of Money? (Symbols have their usual meanings)
a. MVPT
b. MP'=VT
c. MP'PT
d. PVMT

71. If Y is the total money income of the community, M is the supply and P is the price level, then how is Vy (the income velocity of money) defined as?
a. Vy = M/Y
b. Vy = Y/M
c. Vy = Y/(MP)
d. Vy = PY/M

72. When shall an increase in money supply have a small effect on nominal Gross Domestic Product?
a. If the velocity is decreasing
b. If the velocity is unchanged
c. If the velocity is increasing
d. If the Government's spending is also increasing

73. What is the theory that opening a country to world markets gives an opportunity to utilize unemployed and underemployed resources known as?
a. Ricardian theory
b. Hecksher-Ohlin theory
c. Vent-for-surplus theory
d. Strategic trade theory

74. There are a number of banks in a market. The initial total primary deposit is Rs. 1,000. Every bank is required to maintain a 10% reserve legally. The  transactions are completely made through cheque and no transaction is made in cash. What will be the total credit creation in the market?
a. Rs. 1,000
b. Rs. 5,000
c. Rs. 10,000
d. None of the above

75. Which one of the following is a qualitative credit control method?
a. Open market operations
b. Bank rate
c. Variable cash reserve ratio.
d. Moral suasion 

76. 76. What kind of change is to be made in 
(1) Cash reserve ratio, and (2) Bank rate, to control inflation ?
a. 1 should increase but 2 should decrease
b. 2 should increase but 1 should decrease
c. Both should increase
d. Both should decrease

77. Which one of the following pairs is called an open market operation?
a. Selling and buying of securities or bills by the central bank
b. Selling and buying of foreign exchange
c. Selling and buying of shares by the foreign institutional investors
d. Selling and buying of gold in the open market by commercial banks


78. The money multiplier in an economy increases with which one of the following?
a. Increase in the cash-reserve ratio
b. Increase in the statutory liquidity ratio
c. Increase in the banking habit of the population
d. Increase in the population of the country

79. Match List - I with List-II and select the correct answer using the code given below the lists:
List - I 
(Market Type)
A. Perfect competition
B. Monopoly
C. Monopolistic competition
D. Oligopoly

List - II 
(Implication)
1. Collusion of firms
2. Excess capacity
3. Uniform price
4. Blocked entry

A B C D
a. 2 4 3 1
b. 3 1 2 4
c. 2 1 3 4
d. 3 4 2 1

80. Consider the following statement: 
1. The number of firms is large both under perfect competition and monopolistic completion
2. There is freedom of entry and exit in both perfect competition and monopolistic Competition.
3. In both perfect competition and monopolistic competition, every firm is a price taker and quantity adjuster.

Which of the statements given above are correct?
a. 1, 2 and 3
b. 2 and 3 only
c. 1 and 3 only
d. 1 and 2 only

81. Which one of the following statements is correct?
The Engel Curve for Giffen goods is
a. positively sloped
b. negatively sloped
c. vertical
d. horizontal

82. Which one of the following statements is correct?
In a production process with two factors, land and labour, if the marginal productivity of land is negative, then it is in
a. the stage I for land and stage II for labour.
b. the stage II for land and labour.
c. the stage I for land and stage III for labour.
d. the stage I for labour and stage III for land.

83. Match List - I with List - II and select the correct answer using the code given below the lists:
List - I (Economist)
A. Pareto
B. Hicks-Kaldor
C. Bergson
D. Scitovosky

List II (Concept)
1. Compensation principle
2. Social Welfare Function
3. Social Optimum
4. Double Criterion Compensation

A B C D
a. 3 1 2 4
b. 2 4 3 1
c. 3 4 2 1
d. 2 1 3 4

84. Which of the following statements about Pareto Optimum are correct?
1. It changes with changes in the distribution of income
2. At the Pareto Optimum, MRS in consumption = MRT in production.
3. It is not unique
4. It is obtained under imperfect competition.

Select the correct answer using the code given below:
a. 1 and 2 only
b. 1, 2 and 3
c. 1, 3 and 4
d. 2 and 3 only

85. Money demand (Md) is expressed as Md = f(Y) + �(i) where f(Y) = transaction  demand related to income, and �(i) = speculative demand related to rate of interest. In a normal situation, which combination of the following restrictions on the slope of the component functions will hold good? 
a. f '(Y ) > 0,� '(i) > 0
b. f '(Y ) > 0,� '(i) < 0
c. f '(Y ) < 0,� '(i) < 0
d. f '(Y ) < 0,� '(i) > 0

86. Which one of the following statements is correct? To derive disposable income from National Income, one has to
a. deduct income taxes and add transfer payments.
b. deduct income taxes and deduct transfer payments.
c. add income taxes and add transfer payments.
d. add income taxes and deduct transfer payments.

87. Match List - I with List - II and select the correct answer using the code given below the lists:
List - I (Concept)
A. Liquidity trap
B. Demonstration effect
C. Permanent income hypothesis
D. Wealth effect

List - II (Economist)
1. M, Friedman
2. A.C. Pigou
3. J. Duesenberry
4. J.M. Keynes

A B C D
a. 4 3 1 2
b. 1 2 4 3
c. 4 2 1 3
d. 1 3 4 2

88. Given
% change in nominal GNP = 18
% change in population = 0.5
% change in price level 1.3

What is the approximate percentage change in real per capita GNP?
a. Zero
b. 0.5
c. 1.0
d. 1.3

89. Which one of the following statements is correct?
Value of output and value-added can be distinguished if we know
a. the value of intermediate inputs
b. the value of net indirect taxes
c. the value of imports
d. the value of consumption of fixed capital

90. There are 2 assets A and B in which one can invest his saving of Rs. 1,000/-, Assume that there is no risk and interest rate is 10% Asset A gives a return of Rs. 100/- in perpetuity. Asset B gives Rs. 200/- at the end of year 1 and Rs. 900/- at the end of the year 2. Which one of the following statements is correct?
a. Present value of A and B are the same.
b. Present value of B is higher than that of A.
c. Present value of A is higher than that of B.
d. Information is inadequate to determine the present values of A and B.

Part - 4

91. Consider the following consumption and saving functions:
1. C = 200 + 0.8Y
2. S = 200 + 0.2Y
3. C = 150 + 0.8Y
4. S = -150 + 0.2Y

Which of the above are consistent pairs of functions?
a. 1 and 2
b. 1 and 4
c. 2 and 3
d. 3 and 4

92. In the context of the figure given above, which of the following statements is/are correct?
1. Investment is autonomous.
2. Saving is autonomous.
3. Investment is dependent on income.
4. Saving is dependent on income.

Select the correct answer using the code given below
a. 2 and 3
b. 1 and 4
c. 2 only
d. 1 only

93. Which of the following is not a characteristic of indicative planning?
a. The government sets targets for all sectors of the economy including those dominated by private enterprises
b. The emphasis is on consistency of the targets with each other
c. Given the consistency of targets with each other, the government directs the private enterprises to attain those targets
d. The government provides the right incentives to the private sector to attain the targets

94. The two gaps in a two-gap model refer to which of the following?
1. Revenue-expenditure gap
2. Saving-investment gap Select the correct answer using the code given below:
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2

95. Which one of the following statements is correct?
J.M. Keynes assumed that supply of money as a function of rate of interest is
a. perfectly elastic
b. highly elastic
c. unitary elastic
d. perfectly inelastic

96. Which of the following sectors has the largest percentage share in India's total exports for the period April 2006 - October 2007?
a. Chemicals and related goods
b. Engineering goods
c. Gems and jewellery
d. Textiles including readymade garments

97. Consider the following agreements
1. ISLFTA (India-Sri Lanka Free Trade Agreement)
2. SAFTA (South Asia Free Trade Area) 
3. CECA (Comprehensive Economic Cooperation Agreement between India and Singapore)
4. SAPTA (South Asia Preferential Trade Area) 

Which one of the following is the correct chronological sequence of the above agreements?
a. 1 - 3 - 2 � 4
b. 4 - I - 2 � 3
c. 2 - 1 - 4 � 3
d. 1 - 2 - 3 - 4

98. The National Horticulture Mission (NHM) has aimed at doubling the horticultural production. For this, the target year is
a. 2010
b. 2011
c. 2012
d. 2015

99. What does infant mortality rate refer to? 
a. The ratio of number of children who die before their fifth birthday out of every 1000 live births
b. The ratio of number of children who die before their first birthday out of every 100 live births
c. The ratio of number of children who die before their fifth birthday out of every 100 live births
d. The ratio of number of children who die before their first birthday out of every 1000 live births

100. Which group of infrastructure industry has the highest gap in targets and achievements of production during the year 2006-07?
a. Finished steel
b. Crude Petroleum
c. Power
d. Fertilizers

101. Consider the following statements. 
1. The coverage of integrated Child Development programme is limited and often the youngest children in the 0 - 3 year age group get left out of its ambit.
2. According to ICMR, at any given time, 7 � 15% of Indian children suffer from mental disorder. 

Which of the statements given above is/ are correct?
a. 1 only
12 of 13
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2

102. Why is demographic divided likely to be manifested in India in future?
a. Population in the age group between 8 - 15 years is likely to increase
b. Population of children below 7 years is likely to increase
c. Population in the age group of 15 -64 years is likely to increase
d. Population in the age group above 65 years is likely to increase

103. Match List - I with List - II and select the correct answer using the code given below the lists:
List-I (Property of a Plan)
A. Feasibility
B. Consistency
C. Optimality

List-II (Model used)
1. Input-output model
2. Linear programming
3. Harrod-Domar type equation

A B C
a. 1 2 3
b. 3 1 2
c. 2 3 1
d. 1 3 2

104. Match List - I with List - II and select the correct answer using the code given below the lists:
List - I (Economist)
A. Ragner Nurkse
B. Paul N. Rosenstein-Rodan
C. Gunnar Myrdal
D. A.O. Hirschman

List - II (Concept/Theory)
1. Backwash effects
2. Theory of balanced growth
3. The big push theory
4. Theory of unbalanced growth

A B C D
a. 2 1 3 4
b. 4 3 1 2
c. 2 3 1 4
d. 4 1 3 2


105. Using Harrod-Domar growth equation, what is the rate of growth of a closed economy with C/Y = 3/4 and �K/�Y = 3 where C = consumption, Y = output, K = capital?
a. 8.66%
b. 8.50%
c. 8.33%
d. 7.50% 

106. Who among the following developed the wage-goods model?
a. M. Dobb
b. A.K.Sen
c. Vakil and Brahmananda
d. P. C. Mahalanobis

107. Match List - I with List - II and select the correct answer using the code given below the lists:
List - I (Concept)
A. Vicious circle of poverty
B. Balanced growth
C. Big push

List - II (Explanation)
1. Massive increase in investment to initiate economic development in LDCs
2. A stagnant low level of investment
3. Simultaneous investment in all interrelated industries

A B C
a. 2 3 1
b. 1 2 3
c. 2 1 3
d. 1 3 2

108. Which one of the following statements is correct?
According to the classical economists, the existence of unemployment at any time is only of temporary nature and can be considered as
a. structural unemployment
b. cyclical unemployment
c. frictional unemployment
d. disguised unemployment

109. Which one of the following statements is correct?
Creeping inflation is a situation in which the rate at which price level rises is
a. very high
b. high
c. moderately high
d. slow

110. Which of the following groups are adversely affected by inflation?
1. Wage earners in the informal sector
2. Profit earners
3. Salary earners with salaries indexed to inflation
4. Pensioners with fixed pensions

Select the correct answer using the code given below:
13 of 13
a. 1 and 2
b. 3 and 4
c. 1 and 4
d. 2 and 3

111. The shift in the SS curve to S'S' is due to an imposition of a tax. Which of the following areas in the diagram shows excess burden of the tax?
a. ODD'
b. SDA
c. FGA
d. CAD'

112. Which one of the following is a source of non-tax revenue for governments?
a. Import duty on cars
b. Octroi at check points on roads
c. Entrance fee to museums
d. Excise duty on beverages

113. The Laffer Curve explains the relationship between which of the following?
a. Tax rates and tax revenue
b. Tax rates and employment
c. Tax rates and income
d. Tax rates and government expenditure

114. What does an increase in the ratio of revenue deficit to gross fiscal deficit indicate?
a. An increase in investment
b. An increase in the utilization of borrowed funds for revenue purposes
c. An increase in the utilization of borrowed funds for imports
d. An increase in the utilization of borrowed funds for leading

115. If in a year, the gross fiscal deficit of a government is Rs. 3,00,000 crores, revenue deficit is Rs. 1,50,000 crores and interest payments are Rs. 80,000 crores, what is the primary deficit of the government in the year?
a. Rs. 23,000 crores
b. Rs. 45,000 crores
c. Rs. 70,000 crores
d. Rs. 2,20,000 crores

116. What s the technical progress that increases the productivity of labour (L) proportionately more than teh productivity of capital (K) and results in an increase in L/K at constant relative factor prices, called?
a. Labour-saving technical progress
b. Neutral technical progress
c. Wage-saving technical progress
d. Capital-saving technical progress

117. Which of the following may not be considered as a merit of the opportunity cost theory over the Ricardiart theory of comparative cost?
a. It takes into account two or more factors of production instead of labour theory of value.
b. It takes into account the possibilities of trade under all the laws of production, instead of constant costs only as in the Ricardian theory
c. The theory provides a theoretical framework for general equilibrium approach
d. The theory considers the welfare point of view neglected by the Ricardian theory

118. Which one of the following statements is correct? The Heckscher - Ohlin theory states that the most important cause of trade is the difference in -
a. preferences
b. technology
c. magnitude
d. factor endowments

119. Which one of the following statements is correct? The Leontief Paradox makes
a. a critical analysis of Haberler's theory of opportunity cost
b. an empirical study of factor-price equalization theory of Samuelson
c. an empirical testing of Mills' theory of reciprocal demand
d. an empirical testing of Heckscher � Ohlin theory of international trade

120. What is the ratio between the price of a country's export goods and price of its import goods known as?
a. Single factoral terms of trade
b. Double factoral terms of trade
c. Net barter terms of trade
d. Income terms of trade



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Comment By: parveen taj
I am just now planning to do i,a,sbut really i dont know anything abt this i.a.s but whn i came i got more informtion abt i.a.s thank for stisfying me....
7/6/2012
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