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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

If Marginal Rate of Substitution is constant throughout, the Indifference curve will be : (choose the correct alternative)

(a) Parallel to the x-axis.

(b) Downward sloping concave.

(c) Downward sloping convex.

(d) Downward sloping straight line.

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• Q2

Give equation of Budget Set.

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• Q3

When income of the consumer falls the impact on price-demand curve of an inferior good is : (choose the correct alternative)

(a) Shifts to the right.

(b) Shifts of the left.

(c) There is upward movement along the curve.

(d) There is downward movement along the curve.

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• Q4

The measure of price elasticity of demand of a normal good carries minus sign while price elasticity of supply carries plus sign. Explain why?

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• Q5

Giving reason comment on the shape of Production Possibilities curve based on the following schedule:

 Good X (units) Good Y (units 0 8 1 6 2 4 3 2 4 0

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• Q7

Explain the effects of 'maximum price ceiling' on the market of a good'? Use diagram.

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• Q8

There are large number of sellers in a perfectly competitive market. Explain the significance of this feature.

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• Q9

Define cost. State the relation between marginal cost and average variable cost.

Or

Define revenue. State the relation between marginal revenue and average revenue.

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• Q10

A consumer spends Rs. 60 on a good priced at Rs. 5 per unit. When price falls by 20 per cent, the consumer continues to spend Rs. 60 on the good. Calculate price elasticity of demand by percentage method.

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• Q11

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

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• Q12

Why is the equality between marginal cost and marginal revenue necessary for a firm to be in equilibrium? Is it sufficient to ensure equilibrium? Explain.

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• Q13

State the different phases of changes in Total Product and Marginal Product in the Law of Variable Proportions. Also show the same in a single diagram.

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• Q14

A consumer consumes only two goods X and Y both priced at Rs. 3 per unit. If the consumer chooses a combination of these two goods with Marginal Rate of Substitution equal to 3, is the consumer in equilibrium? Give reasons. What will a rational consumer do in this situation? Explain.

Or

A consumer consumes only two goods X and Y whose prices are Rs. 4 and Rs. 5 per unit respectively. If the consumer chooses a combination of the two goods with marginal utility of X equal to 5 and that of Y equal to 4, is the consumer in equilibrium? Give reason. What will a rational consumer do in this situation? Use utility analysis.

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• Q6

What will be the impact of recently launched 'Clean India Mission' (Swachh Bharat Mission) on the Production Possibilities curve of the economy and why?

OR

What will likely be the impact of large scale outflow of foreign capital on Production Possibilities curve of the economy and why?

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• Q15

Borrowing in government budget is : (choose the correct alternative)

(a) Revenue deficit

(b) Fiscal deficit

(c) Primary deficit

(d) Deficit in taxes

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• Q16

What is 'aggregate supply' in macroeconomics?

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• Q17

The value of multiplier is : (choose the correct alternative)
(a) $\frac{1}{MPC}$

(b) $\frac{1}{MPS}$

(c) $\frac{1}{1-MPS}$

(d) $\frac{1}{MPC-1}$

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• Q18

Other things remaining unchanged, when in a country the price of foreign currency rises, national income is : (choose the correct alternative)

(a) Likely to rise

(b) Likely to fall

(c) Likely to rise and fall both

(d) Not affected

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• Q19

The non-tax revenue in the following is : (choose the correct alternative)

(a) Export duty

(b) Import duty

(c) Dividends

(d) Excise

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• Q20

Where will sale of machinery to abroad be recorded in the Balance of Payments Accounts? Give reasons.

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• Q21

If the Nominal GDP is Rs. 1200 and Price Index (with base = 100) is 120, calculate Real GDP.

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• Q22

Name the broad categories of transactions recorded in the 'capital account' of the Balance of Payments Accounts.

OR

Name the broad categories of transactions recorded in the 'current account' of the Balance of Payments Accounts.

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• Q23

An economy is in equilibrium. Find 'autonomous consumption' from the following:

 National income Marginal propensity to consume Investment expenditure = 1000 = 0.8 = 100

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• Q24

Explain the 'bank of issue' function of the central bank.

OR

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

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• Q25

Government of India has recently launched 'Jan-Dhan Yojna' aimed at every household in the country to have at least one bank account. Explain how deposits made under the plan are going to affect national income of the country.

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• Q26

Explain the role the government can play through the budget in influencing allocation of resources.

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• Q27

Giving reason explain how should the following be treated in estimation of national income:

(i) Expenditure by a firm on payment of fees to a chartered accountant

(ii) Payment of corporate tax by a firm

(iii) Purchase of refrigerator by a firm for own use

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• Q28

Explain the concept of Inflationary Gap. Explain the role of Repo Rate in reducing this gap.

OR

Explain the concept of Deflationary Gap and the role of 'Open Market Operations' in reducing this gap.

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• Q29

Calculate 'Gross National Product at Market Price' and 'Net National Disposable Income':

 (Rs. crores) (i) Rent 100 (ii) Net current transfers to rest of the world 30 (iii) Social security contributions by employers 47 (iv) Mixed income 600 (v) Gross domestic capital formation 140 (vi) Royalty 20 (vii) Interest 110 (viii) Compensation of employees 500 (ix) Net domestic capital formation 120 (x) Net factor income from abroad (−) 10 (xi) Net indirect tax 150 (xii) Profit 200

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