26-11-2012, 01:01 PM
Question Paper Economics – II (122) : April 2003
1Question Paper Economics.pdf (Size: 87.8 KB / Downloads: 46)
1. Expecting a rise in the price of rice, Mr. Kamesh stocks an inventory of 100 kgs. of rice for
his personal use. In national income accounting, this transaction is treated as
a. Personal consumption expenditure
b. Private investment
c. Private savings
d. Inventory investment
e. Both (a) and (d) above.
2. If the marginal propensity to consume is zero, a decrease in investment would lead to
a. A decrease in the equilibrium level of income by the same amount
b. No change in the equilibrium level of income
c. An unending downward spiral in equilibrium level of income
d. An unending upward spiral in the equilibrium level of income
e. An increase in the equilibrium level of income by the same amount.
3. Which of the following statements is true with regard to price indices?
a. GDP deflator measures the cost of buying a fixed basket of goods and services
b. Consumer Price Index (CPI) measures the prices of a larger basket of goods than the
GDP deflator does
c. When automobile production in the economy is relatively large, automobiles receive a
relatively larger weight in the computation of the GDP deflator
d. If prices of imports increase, the GDP deflator also increases
e. When automobile production in the economy is relatively large, automobiles receive a
relatively larger weight in the computation of the CPI
4. When the Central Bank of a country resorts to contractionary or expansionary monetary
policies to neutralize the change in money supply caused by changes in foreign exchange
reserves, it is referred to as
a. Transmission mechanism
b. Sterilization
c. Stabilization
d. Monetary mechanism
e. Exchange rate mechanism.
5. End of the Kargil operation witnessed reduction in government expenditure, leading to a
leftward shift in the aggregate demand curve in the economy. At the same time, if an oil price
shock shifted the short-run aggregate supply curve up, which of the following could not have
happened?
a. The prices remained more or less at the previous level, if the magnitude of change in
aggregate demand is equal to the magnitude of change in aggregate supply.
b. Reduction in GDP
c. Increase in the rate of unemployment
d. Inflation, if the magnitude of change in aggregate supply is lower than the aggregate
demand
e. Both (b) and © above.
6. Keynes held that money is used
a. To settle transactions
b. To meet unexpected contingencies
c. To take advantage of fluctuating rates of interest
d. Both (a) and (b) above
e. (a), (b) and © above.
7. Value added by a firm is equal to
a. Firm’s revenue – Costs of intermediate goods
b. Cost of producing a good – Costs of raw materials
c. Wages + Interest payments + Indirect taxes – Profits
d. Wages + Interest payments + Indirect taxes + Costs of intermediate goods + Profits
e. Price of the goods sold – Profits.
8. An increase in government expenditure will
a. Shift both IS and LM curves to the right
b. Shift both IS and LM curves to the left
c. Not affect the position of LM curve but shift IS curve to the left
d. Not affect the position of IS curve but shift LM curve to the right
e. Not affect the position of LM curve but shift IS curve to the right.
9. Which of the following is considered to be the most appropriate measure for the standard of
living of a country, like India?
a. GDP at market prices
b. GNP at factor cost
c. Per capita GDP
d. National income
e. Personal income.
10. When the addition to capital goods in an economy is less than the capital consumption
allowance, the economy experiences
a. Negative net investment
b. Zero net investment
c. Positive net investment
d. Negative gross investment
e. Zero gross investment.
11. When there is an unanticipated inflation, which of the following sections of an economy
benefit?
a. Borrowers
b. Fixed income earners
c. Holders of currency
d. Lenders
e. None of the above.
12. A tax is regressive if
a. The proportion of income paid as taxes increases as income increases
b. The proportion of income paid as taxes decreases as income increases
c. The absolute amount of tax paid is directly proportional to income
d. The tax rate is constant
e. None of the above.