Paper : IAS Prelims Previous Year Paper Economics (2008)

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 ÄK/ÄY = 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

Part - 4

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