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General Instructions:
(i) All questions in both sections are compulsory. However, there is internal choice in some questions.
(ii) Marks for questions are indicated against each question.
(iii) Question No.1-3 and 15-19 are very short answer questions carrying 1 mark each. They are required to be answered in one sentence.
(iv) Question No.4-8 and 20-22 are short answer questions carrying 3 marks each. Answers to them should not normally exceed 60 words each.
(v) Question No.9-10 and 23-25 are also short answer questions carrying 4 marks each. Answers to them should not normally exceed 70 words each.
(vi) Question No.11-14 and 26-29 are long answer questions carrying 6 marks each. Answers to them should not normally exceed 100 words each.
(vii) Answers should be brief and to the point and the above word limit be adhered to as far as possible.
Question 1
  • Q1

    A consumer consumes only two goods. If price of one of the goods falls, the indifference curve : (Choose the correct alternative)
    (a) Shifts upwards
    (b) Shifts downwards
    (c) Can shift both upwards or downwards
    (d) Does not shift 

    VIEW SOLUTION

  • Q2

    What are monotonic preferences ? 

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  • Q3

    If with the rise in price of good Y, demand for good X rises, the two goods are : (Choose the correct alternative)
    (a) Substitutes
    (b) Complements
    (c) Not related
    (d) Jointly demanded 

    VIEW SOLUTION

  • Q4

    Why is minus sign attached to the measure of price elasticity of demand of a normal good in comparison to the plus sign attached to the measure of price elasticity of supply ? Explain. 

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  • Q5

    Giving reason, comment on the shape of Production Possibilities Curve based on the following table :
     

    Good X (units) Good Y (units)
    0 20
    1 18
    2 14
    3 8
    4 0
     

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  • Q6

    What will be the impact of "Education for All campaign" (Sarv Shiksha Abhiyan) on the Production Possibilities Curve of the Indian economy and why ?

    OR

    What will likely be the impact of large scale inflow of foreign capital in India on Production Possibilities Curve and why ?

     

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  • Q7

    What is maximum price ceiling ? On what type of goods is it normally imposed ? Use diagram. 

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  • Q8

    Explain the significance of the feature 'product differentiation' in monopolistic competition. 

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  • Q9

    What is supply ? Explain the effect of technological progress on supply of a good.


    OR

    What is 'change in supply' ? Explain the effect of tax imposed on a good on the supply of the good. 

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  • Q10

    A consumer spends Rs 200 on a good priced at Rs 5 per unit. When the price falls by 20 percent, he continues to spend Rs 200. Find the price elasticity of demand by percentage method. 

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  • Q11

    Market for a good is in equilibrium. Supply of the good 'decreases'. Explain the chain of effects of this change. 

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  • Q12

    Explain the rationale behind the conditions of equilibrium of a producer. 

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  • Q13

    What are the different phases in the Law of Variable Proportions in terms of Total Product ? Give reasons behind each phase. Use diagram. 

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  • Q14

    A consumer consumes only two goods, each priced at Rupee one per unit. If the consumer chooses a combination of the two goods with Marginal Rate of Substitution equal to 2, is the consumer in equilibrium ? Give reasons. Explain what will a rational consumer do in this situation.
     

    OR

    A consumer consumes only two goods X and Y whose prices are Rs 2 and Rs 1 per unit respectively. It the consumer chooses a combination of the two goods with marginal utility of X being 4 and that of Y also being 4, is the consumer in equilibrium ? Give reasons. Explain what will a rational consumer do in this situation. Use Marginal Utility Analysis. 

    VIEW SOLUTION

  • Q15

    Primary deficit in a government budget equals : (Choose the correct alternative)
    (a) Interest payments
    (b) Interest payments less borrowings
    (c) Borrowings less interest payments
    (d) None of the above 

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  • Q16

    Name any two components of 'aggregate demand'. 

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  • Q17

    If MPC = 0, the value of multiplier is : (Choose the correct alternative)
    (a) 0
    (b) 1
    (c) Between 0 and 1
    (d) Infinity 

    VIEW SOLUTION

  • Q18

    Other things remaining the same, when foreign currency becomes cheaper, the effect on national income is likely to be : (Choose the correct alternative)
    (a) Positive
    (b) Negative
    (c) Positive and negative both
    (d) No effect 

    VIEW SOLUTION

  • Q19

    Which one of these is a revenue expenditure ?
    (a) Purchase of shares
    (b) Loans advanced
    (c) Subsidies
    (d) Expenditure on acquisition of land 

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  • Q20

    Giving reasons explain where charity to foreign countries is recorded in the Balance of Payments Accounts. 

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  • Q21

    If the Real Gross Domestic Product is Rs 200 and the Nominal Gross Domestic Product is Rs 210, calculate the Price Index (base = 100). 

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  • Q22

    Give the meanings of 'autonomous' transactions and 'accommodating' transactions in the Balance of Payments Accounts.
     

    OR

    Give the meanings of Balance of Trade and Balance on Current Account of Balance of Payments Accounts. 

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  • Q23

    An economy is in equilibrium. Find the Investment Expenditure from the following :

    National Income = 750
    Autonomous Consumption = 200
    Marginal Propensity to Save = 0.4 

    VIEW SOLUTION

  • Q24

    Explain 'Government's Bank' function of the central bank.


    OR

    Explain 'Bankers' Bank' function of the central bank. 

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  • Q25

    Why do we say that commercial banks create money while we also say that the central bank has the sole right to issue currency ? Explain. What is the likely impact of money creation by the commercial banks on national income ? 

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  • Q26

    Explain the role of government budget in fighting inflationary and deflationary tendencies. 

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  • Q27

    Giving reasons explain how should the following be treated in estimation of national income :
    (i) Payment of corporate tax by a firm
    (ii) Purchase of machinery by a factory for own use
    (iii) Purchase of uniforms for nurses by a hospital 

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  • Q28

    What is 'inflationary gap' ? Explain the role of Cash Reserve Ratio in removing this gap.
     

    OR

    What is 'deficient demand' ? Explain the role of 'Margin Requirements' in removing this gap. 

    VIEW SOLUTION

  • Q29

    Calculate National Income and Private Income :

        (Rs crores)
    (i) Net imports 5
    (ii) Net domestic capital formation 15
    (iii) Personal income 90
    (iv) National debt interest 10
    (v) Corporate tax 25
    (vi) Government final consumption expenditure 20
    (vii) Net factor income to abroad (−) 5
    (viii) Net indirect tax 10
    (ix) Undistributed profits 0
    (x) Private final consumption expenditure 100
     

    VIEW SOLUTION

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