ECONOMICS

Paper – II
Note : This paper contains fifty (50) objective type questions, each question carrying two (2)
marks. Attempt all the questions.
Q. Nos. 1-10 : Read the following 6. If interest payments are subtracted
questions and choose the correct from gross fiscal deficit, the
answer from the options given below remainder will be
these questions. (A) revenue deficit
1. For downward movement along the (B) gross primary deficit
iso-quant, MRTS of Labour per unit (C) capital deficit
of capital (MRTSL,K) is given by (D) budgetary deficit
(A) – dK/dL
(B) dK/dL 7. Which of the following measures of
(C) dL/dK central tendency will be the most
(D) – dL/dK appropriate to use if the data relate to
rates, proportions and ratios ?
2. Charging a different price in different (A) Arithmetic mean
markets is called
(B) Median
(A) price discrimination
(B) second degree price (C) Harmonic mean
discrimination (D) Geometric mean
(C) third degree price
discrimination 8. Opportunity cost version of
(D) perfect price discrimination comparative cost advantage doctrine
was introduced by
3. Which of the following is the most
(A) J.M. Keynes
significant in stabilization policy ?
(A) Private investment (B) Kindleberger
(B) Inventory investment (C) Haberler
(C) Autonomous investment (D) Karl Marx
(D) Public investment
9. The most popular definition of
4. The concept of vicious circle of
sustainable development is given by
poverty is associated with
(A) World Development Report
(A) Kindleberger
(B) Schumpeter (B) UNDP Report
(C) Ragnar Frish (C) Brundtland
(D) Gunnar Myrdal (D) IMF Report

5. Solow built his model as an

10. During the planning period, highest
alternative to
growth rate was achieved during
(A) Kaldor’s model of growth
(B) Ranis-Fei model of growth (A) eighth plan
(C) Harrod-Domar model of (B) tenth plan
growth (C) ninth plan
(D) Meade’s model of growth (D) seventh plan

Paper-II 2 D-01-12
 Q. Nos. 11-20 : Read the questions 14. Human Development Index (HDI) is
and select the correct option for the constructed with reference to
answer from the list given below : a. Life expectancy at birth, real
GDP per capita, gross
11. Labour theory of value was enrolment ratio, adult literacy
propounded by rate.
a. Adam Smith b. Life expectancy at birth, real
b. David Ricardo GDP per capita, combined
gross enrolment ratio, adult
c. Ragnar Nurkse, Gunnar
literacy rate.
Myrdal, R.M. Solow
c. Life expectancy, GDP per
d. Fei-Rani’s, Ragnar Nurkse capita, infant mortality rate,
Codes : literacy rate.
(A) a and b (B) a and c d. GDP per capita, infant
(C) a, b, c (D) a, b, c, d mortality rate, literacy rate
Codes :
12. The features of the classical system (A) a and b (B) a and c
are (C) c (D) a, b, d
a. Monetary factors determine
output and employment. 15. The unbalanced growth model was
b. Self adjusting mechanism of propounded first by
the economy. a. Albert O. Hirschman
c. State action to direct b. H.S. Singer and Raul Prebisch
development. c. Kindelberger and Ragnar
d. Optimization through market in Nurkse
the absence of state control. d. W.W. Rostow and Paul
Streeten
Codes :
Codes :
(A) a and b (B) a, b, c
(A) a and b (B) a and c
(C) b and d (D) a, b, d (C) a and d (D) a

13. Concepts of displacement and 16. Harrod-Domar model of growth is

concentration effect in public based on the concepts of and their
expenditure are attributed to equality
a. A.C. Pigou and J.K. Mehta a. Population and productivity
b. Alan T. Peacock and Jack growth.
Wiseman b. Investment and average growth
c. Kenneth Arrow and Paul A. rate of income.
Samuelson c. Actual, warranted and natural
d. A.R. Prest and I.M.D. Little growth rate.
Codes : d. Productivity growth and
investment growth.
(A) a and b (B) b
Codes :
(C) a, b, c (D) a, b, c, d
(A) a and c (B) a and d
(C) c (D) a, b, c
Paper-II 4 D-01-12
17. Factor endowment theory is also Q. Nos. 21-30 : Read the following
known as questions and select the right
a. Modern theory of international combination of Assertion (A) and
Reason (R) from the codes given
trade. below :
b. Classical theory of 21. Assertion (A) : There is a natural
international trade. tendency to collude under
c. Reciprocal demand theory. oligopoly.
d. Factor proportions theory of Reason (R) : Inter-dependence of
international trade. firms in oligopolistic markets.
Codes : Codes :
(A) Both (A) and (R) are correct, but
(A) a and b (B) b and c (R) is not the correct explanation
(C) a and d (D) c and d of (A).
18. Most important theory of increasing (B) Both (A) and (R) are correct, and
(R) is the correct explanation of
public expenditure is associated with (A).
a. Adolph Wagner’s hypothesis (C) (A) is correct, but (R) is
b. Critical limit hypothesis incorrect.
c. Administrative efficiency (D) (A) is incorrect, but (R) is
hypothesis correct.
d. Stability of income hypothesis 22. Assertion (A) : In short run, the
Codes : marginal cost of output is the cost
(A) a and b (B) a and c of additional labour and materials
(C) a (D) c and d used in production.
Reason (R) : Materials and labour
19. Under the Brettonwood system, the used in production alone vary in
long term development assistance short run.
was to be provided by Codes :
a. IBRD (A) (A) is correct and (R) is
incorrect.
b. IDA (B) (A) is incorrect, but (R) is
c. IMF correct.
d. All the above (C) Both (A) and (R) are correct
Codes : and (R) is the correct
(A) a and b (B) a, b, c explanation of (A).
(C) b and c (D) d (D) Both (A) and (R) are incorrect.
23. Assertion (A) : Post reform liberal
20. The Planning Commission of India trade policies have stimulated
has recently announced the poverty India’s growth.
line as Reason (R) : Private enterprise got
a. ` 42 per day per person for opportunities to contribute to
urban area. growth of Indian manufacturing
b. ` 26 per person per day for industries.
Codes :
rural areas. (A) Both (A) and (R) are correct, and
c. ` 32 per person per day for (R) is the correct explanation of
urban areas. (A).
d. ` 32 per day per person for (B) Both (A) and (R) are correct, but
rural areas. (R) is not the correct explanation
Codes : of (A).
(A) a and b (B) a and c (C) Both (A) and (R) are incorrect.
(D) (A) is incorrect, but (R) is
(C) b and c (D) c and d correct.
Paper-II 6 D-01-12
24. Assertion (A) : Use of goods and 27. Assertion (A) : K/L will adjust
services from which one can be through time to the equilibrium
excluded are pure private goods. value of the ratio.
Reason (R) : Such goods and services
are not provided free by the State. Reason (R) : Technical coefficients of
Codes : production are fixed.
(A) Both (A) and (R) are correct and Codes :
(R) is the correct explanation of (A) Both (A) and (R) are correct, but
(A). (R) is not the correct explanation
(B) Both (A) and (R) are correct, but of (A).
(R) is not the correct explanation (B) Both (A) and (R) are correct and
of (A).
(C) (A) is correct, but (R) is incorrect. (R) is the correct explanation of
(D) (A) is incorrect, but (R) is correct. (A).
(C) (A) is correct, but (R) is
25. Assertion (A) : ‘A country is poor
because it is poor’. incorrect.
Reason (R) : Income of a poor country (D) (A) is incorrect, but (R) is
is low, so its savings and correct.
investment are low. Low
investment limits its productive 28. Assertion (A) : Investment has a
capacity which leads to low output demand effect.
and income. Reason (R) : Investment augments the
Codes :
(A) Both (A) and (R) are correct, but productivity and income in the
(R) is not the correct explanation economy.
of (A). Codes :
(B) Both (A) and (R) are correct and (A) Both (A) and (R) are correct and
(R) is the correct explanation of (R) is the correct explanation of
(A). (A).
(C) (A) is correct, but (R) is
incorrect. (B) Both (A) and (R) are correct, but
(D) (A) is incorrect, but (R) is (R) is not the correct explanation
correct. of (A).
(C) (A) is correct, and (R) is not correct.
26. Assertion (A) : All historical events
are the result of a continuous (D) (A) is incorrect and (R) is correct.
economic struggle between
different classes and groups in a 29. Assertion (A) : Agriculture is the main
society. source of livelihood of people in
Reason (R) : This struggle is because India.
of the conflict between the mode of Reason (R) : Measures for agricultural
production and the value attached
to the roles of different agents of development should be undertaken.
production. Codes :
Codes : (A) Both (A) and (R) are correct and
(A) Both (A) and (R) are correct, but (R) is the correct explanation of
(R) is not the correct explanation (A).
of (A). (B) Both (A) and (R) are correct, but
(B) Both (A) and (R) are correct and (R) is incorrect explanation of
(R) is the correct explanation of
(A). (A).
(C) (A) is correct, but (R) is (C) (A) is correct, but (R) is incorrect.
incorrect. (D) (A) is incorrect and (R) is
(D) (A) is incorrect, but (R) is correct. correct.
Paper-II 8 D-01-12
30. Assertion (A) : In the following 33. Identify the correct chronological
regression equation order of the following :
Y = a + bX, 'a' shows the a. Keynes’ consumption function
autonomous value of Y. b. Life Cycle hypothesis
Reason (R) : If X = 0, Y = a holds. c. Relative income hypothesis
Hence, a is the minimum value of d. Friedman’s permanent income
Y which is independent of any hypothesis
influence of X on Y. Codes :
Codes : (A) d, b, a, c (B) b, a, c, d
(A) Both (A) and (R) are correct and (C) a, c, d, b (D) c, d, b, a
(R) is the true explanation of 34. Identify the correct chronology of
(A). stages of Marxian model of
(B) (A) is correct, but (R) is not the economic development.
correct explanation of (A). a. Capitalist crisis
(C) (A) is correct, but (R) is not b. Capital accumulation
correct. c. Surplus value
(D) (A) is incorrect, but (R) is d. Materialistic interpretation of
correct. history
Q. Nos. 31-40 : Read the questions and Codes :
select the correct sequence from (A) b, a, c, d (B) c, d, b, a
the codes given below : (C) d, c, b, a (D) c, b, a, d
35. The sequencing process of Harrod’s
31. Identify the order of chronological model of development is
development of the theory of a. Natural growth rate
demand. b. Warranted growth rate
a. Marshall’s theory of demand c. Actual growth rate
b. Indifference curves d. Divergence
c. Revealed preference theory Codes :
d. Weak Preference ordering (A) d, c, b, a (B) c, b, a, d
theory of demand. (C) b, a, d, c (D) a, d, c, b
36. Arrange the following summits of
Codes :
SAARC members in order in which
(A) a, c, d, b (B) d, b, a, c
these were organized :
(C) a, c, b, d (D) a, b, c, d
a. New Delhi b. Bangalore
c. Islamabad d. Kathmandu
32. Identify the correct chronological
Codes :
order of the following theories :
(A) a, c, d, b (B) a, b, c, d
a. Cambridge version of quantity (C) b, d, c, a (D) c, b, a, d
theory of money.
37. Arrange the structure of balance of
b. Fisher’s version of quantity
payments accounts in which these
theory of money.
items appear :
c. Tobin’s theory of demand for
a. Capital account
money.
b. Errors and omissions
d. Baumol’s theory of demand for
c. Current account
inventory.
d. Official settlements account
Codes :
Codes :
(A) c, d, a, b (B) b, a, d, c (A) a, b, c, d (B) c, a, d, b
(C) d, a, b, c (D) a, b, c, d (C) d, c, b, a (D) c, d, a, b
Paper-II 10 D-01-12
38. State the order of the appointment of 42. List – I List – II
the following as chairman of Finance a. Psychological Law 1. Irving
Commission : of Consumption Fisher
a. K.C. Neogy b. Time preference 2. J.M. Keynes
b. K. Brahamanand Reddy
c. N.K.P. Salve theory of interest
d. A.K. Chanda c. Public Choice 3. Mundell and
Codes : View Fleming
(A) a, c, b, d (B) a, d, b, c d. Open Economy 4. Gorden
(C) a, c, d, b (D) a, b, d, c IS-LM model Tullock
39. Indicate the sequence of the Codes :
following in terms of the
implementation. a b c d
a. Income Tax (A) 3 2 4 1
b. Expenditure Tax (B) 4 1 3 2
c. Value Added Tax (C) 2 1 4 3
d. Fringe Benefits Tax
Codes : (D) 1 3 4 2
(A) a, c, b, d (B) a, b, c, d
(C) b, c, d, a (D) c, d, a, b 43. List – I List – II
40. Determine the order in which the a. Mid-day meal 1. 2006
following were developed scheme
a. Fisher’s F test of significance of b. Implementation 2. 1995
differences between the means of of M-NREGA
more than two samples.
b. Gosset’s t-test of difference c. Cash Reserve 3. Finance
between the means of two Ratio Commission
samples. d. Divisible Taxes 4. Reserve Bank
c. Pearson’s correlation coefficient. of India
d. Spearman’s rank correlation Codes :
coefficient.
Codes : a b c d
(A) a, b, c, d (B) b, a, c, d (A) 1 2 3 4
(C) c, b, a, d (D) d, a, b, c (B) 2 1 4 3
Q. Nos. 41-50 : Read the following (C) 4 2 3 1
questions and match the correct pair (D) 3 4 1 2
from List – I and II. Use the codes
given below for answering :
41. List – I List – II 44. List – I List – II
a. Kinked demand 1. William a. Monetary Policy 1. Tax Rate
curve hypothesis Baumol b. Trade Policy 2. Margin Money
b. Sales maximization 2. Paul
model of oligopoly Sweezy c. Credit Policy 3. Imports and
c. Social Welfare 3. Adam Exports
Criterion Smith d. Fiscal Policy 4. Bank Rate
d. Law of Invisible 4. Bergson Codes :
hand
Codes : a b c d
a b c d (A) 4 3 2 1
(A) 4 3 1 2 (B) 4 2 3 1
(B) 2 1 4 3 (C) 3 2 1 4
(C) 2 3 1 4
(D) 1 4 3 2 (D) 2 1 4 3
Paper-II 12 D-01-12
 45. List – I List – II 48. List – I List – II
a. J.M. Buchanan 1. Canons of a. Law of Absolute 1. Haberler
Public Cost Advantage
Expenditure b. Doctrine of 2. Hescher-
b. Findlay Shirras 2. Functional Comparative Cost Ohlin
Finance Advantage
c. R.N. Bhargava 3. Public-Choice c. Modern Theory of 3. Adam
Theory International Trade Smith
d. A.P. Lerner 4. Federal Finance d. Opportunity Cost 4. Ricardo
Codes : Principle
a b c d Codes :
(A) 3 2 1 4 a b c d
(A) 4 2 1 3
(B) 3 1 4 2
(B) 3 4 2 1
(C) 2 3 1 4
(C) 2 3 4 1
(D) 1 4 3 2 (D) 1 4 3 2
46. List – I List – II 49. List – I List – II
a. Organic Composition 1. Hirschman a. Monetarism 1. R.F. Kahn
of Capital b. Employment 2. T. Havelmo
b. Doctrine of Natural 2. Schumpeter multiplier
Law c. Multiplier effect of 3. John Muth
c. Innovation 3. Marx balanced budget
d. Doctrine of 4. Adam d. Rational expectation 4. Milton
Unbalanced Growth Smith hypothesis Friedman
Codes : Codes :
a b c d
a b c d (A) 2 4 3 1
(A) 3 4 2 1 (B) 4 1 2 3
(B) 4 3 1 2 (C) 1 3 4 2
(C) 2 1 3 4 (D) 3 2 1 4
(D) 1 2 4 3 50. List – I List – II
a. Theory of 1. Single value to
47. List – I List – II Probability represent
a. Low Income 1. Karl Marx distribution
Equilibrium Trap b. Mean 2. Uncertain events
b. Poverty 2. Adam c. Normal 3. Mini replica of
Measurement Smith Distribution population
c. Laissezfair 3. Nelson d. Sample 4. Symmetrical with
d. Industrial 4. Suresh almost total area
Reserve Army Tendulkar with in M(mean)
Codes : +–30(sig, ma)
a b c d Codes :
(A) 1 2 4 3 a b c d
(A) 1 2 3 4
(B) 3 4 2 1 (B) 4 3 2 1
(C) 4 3 1 2 (C) 2 1 4 3
(D) 2 1 3 4 (D) 4 1 2 3
Paper-II 14 D-01-12
 Space For Rough Work

Paper-II 16 D-01-12