Paper : IAS Prelims Previous Year Paper Economics (2008)

Part - 2

31. Which one of the following statements is correct?
a. External Debt/GDP ratio has declined consistently after the year 2003.
b. External Debt/GDP ratio has fluctuated after the year 2003
c. External Debt/GDP ratio has increased after the year 2003
d. External Debt/GDp ratio has remained constant after the year 2003

32. In which of the following years, was the trade balance favourable to India?
a. 1970-71 and 1974-75
b. 1972-73 and 1976-77
c. 1972-73 and 1975-76
d. 1971-72 and 1976-77

33. Who was the Chairman of the Committee appointed in 2006 for setting out a roadmap towards fuller capital account convertibility
a. S.S. Tarapore
b. C. Rangarajan
c. M. Narasimharn
d. O.P. Sodhani

34. Which sector has attracted highest FDI inflows during the period from August 1991 to September 2006 (in % share)?
a. Services Sector
b. Electrical Equipments
c. Telecommimications
d. Transportation Industry

35. Match List-I with List-II and select the correct answer using the code given below the lists:
List . I 
(Terms of Trade)
A. Gross barter terms of trade
B. Income terms of trade
C. Single factoral terms of trade

List . II 
(Explanation)
1. The ratio between the quantity of a country fs imports and exports 
2. Index of export export prices quantity Index of import prices
3. Obtained by multiplying the commodity terms of trade by an index of productivity changes in domestic export industries
4. The ratio of a countryfs export price index to its import price index  A B C
a. 3 4 1
b. 1 2 3
c. 3 2 1
d. 1 4 3

36. Which one of the following statements is correct? 
The production possibility curve under increasing opportunity cost is :-
a. concave to origin
b. convex to the origin
c. a straight line parallel to the x-axis
d. a straight line parallel to the y-axis

37. Which of the following is not a non-tariff barrier?
a. Voluntary export restraint
b. Health and product standards
c. Environmental protection laws
d. Ad-valorem duties

38. In the Balance-of-Payment Account, the transfer payments are included in which one of the following?
a. Current account
b. Service account
c. Capital account
d. Official Reserves account

39. Which one of the following statements is not correct?
a. The distinction between expenditure switching and expenditure changing was propounded by H. G. Johnson.
b. The Absorption Approach to BOP was developed by Sydney Alexander.
c. The Elasticity Approach to BOP was associated with Stolper-Samuelson.
d. Stability condition in the foreign exchange market is known as Marshall-Lerner condition.

40. Which one of the following explains Balance-of-Payment adjustment mechanism under the gold standard?
a. Devaluation
b. Flexible exchange rates
c. Income-adjustment mechanism
d. Price-specie flow mechanism

41. Which of the following is the highest form of economic integration among different nations?
a. Custom Union
b. Free Trade Area
c. Economic Union
d. Conunon Market

42. Which one of the following best characterizes the Bretton Woods System of exchange rates?
a. Adjustable fixed exchange rates
b. Fixed exchange rates
c. Adjustable pegged exchange rates
d. Pegged exchange rates

43. Which of the following are the basic components of a typical IMF stabilization programme?
1. Liberalization of foreign exchange
2. Devaluation of the official exchange rate
3. A comprehensive anti-inflation programme
4. General opening-up of the economy to international commerce including foreign investment 

Select the correct answer using the code given below
a. 1 and 3 only
b. 2 and 4 only
c. 1, 3 and 4 only
d. 1, 2, 3 and 4

44. Consider the following: 
1. Kennedy Round of negotiations
2. Uruguay Round of negotiations
3. Tokyo Round of negotiations

Which is the correct chronological sequence of the above?
a. 1 . 2 - 3
b. 3 . 1 - 2
c. 1 - 3 . 2
d. 2 - 1 - 3

45. Which of the following is meant by growth in the context of growth and development?
a. Growth of gross national product in money terms
b. Growth of per capita income in money terms
c. growth of gross national product in real terms
d. Growth of per capita income in real terms

46. On which of the following grounds is increasing inequality justified in initial stages of development?
a. It puts greater incomes in the hands of those who have greater average propensity to consume
b. It puts greater incomes in the hands of those who have greater average propensity to save
c. It puts greater incomes in the hands of those who have greater marginal propensity to consume
d. It puts greater incomes in the hands of those who have greater marginal propensity to save


47. What is the correct sequence of the following approaches to development in terms of their chronological emergence?
1. Basic needs approach
2. Per capita income approach
3. Human Development Index Approach

Select the correct answer using the code given below
a. 1 - 2 – 3
b. 2 – 1 – 3
c. 2 - 3 – 1
d. 1 - 3 – 2

48. The Mahalanobis model was developed for which of the following plans?
a. First Five Year Plan
b. Second Five Year Plan
c. Third Five Year Plan
d. Fourth Five Year Plan

49. Which one of the following models explains the paradox pertaining to the rural-urban migration in the context of rising urban employment?
a. Lewis model
b. Todano model
c. Solow model
d. Mahalanobis model

50. Consider the following statements: Lewis’ model of development with unlimited supplies of labour will fail to work to the full extent if
1. there is no disguised unemployment in the traditional sector.
2. modern sector wages do not remain constant up to the point that surplus labour is exhausted.
3. investment in the modern sector is labour-saving.

Which of the statements given above is/are correct?
a. 1 only
b. 1 and 2 only
c. 2 and 3 only
d. 1, 2 and 3

51. Match List-I with List-II and select the correct answer using the code given below the lists:
List-I
A. Aggregate Growth Model
B. Multi-sector Growth Model
C. Harrod-Domar Growth Model
D. The False Paradigm Model

List-I
1. Western models as applied to the situation of developing countries
2. Analysis of growth in terms of interdependence of sectors
3. Deals with the entire economy by examining a set of important macro variables
4. For a specific growth rate and a given capital output ratio, the required rate of domestic investment is determined 
A B C D
a. 4 2 3 1
b. 3 1 2 4
c. 3 2 4 1
d. 4 3 1 2

52. Under which one of the following fundamental assumptions, Solow was able to show that steady state growth was possible and stable?
a. Flexible K/L ratio
b. Flexible S/Y ratio
c. Constant growth rate of population
d. Constant rate of technical change

53. Consider the following statements: According to the law of variable proportions total product is maximum when
1. marginal product becomes zero.
2. marginal product curve cuts average product curve from above.
3. slope of marginal product curve is zero.
4. tangent to the total product curve is parallel to the horizontal axis.

Which of the statements given above are correct?
a. 1 and 4
b. 3 and 4
c. 1 and 3
d. 2 and 3

54. Which one of the following statements is correct?
If the elasticity of substitution between two factors X and Y be zero, then it implies that for a given change in outputs,
a. X and Y will always change by the same proportion.
b. Y changes but X remains the same
c. X changes but Y remains the same.
d. X and Y both change necessarily by different proportion.

55. Which of the following is not correct in respect of Cobb- Douglas production function?
a. It was originally based on the empirical study of US manufacturing industry.
b. It is a linearly homogeneous production function, taking into account two factors, labour and capital, for the entire output of the manufacturing industry. 
c. It tells us that out put depends upon labour and capital, and that part of output which cannot be explained by labour and capital, is attributed to the residual.
d. It is based on the assumption of operation of law of diminishing returns.

56. Income consumption line of the ‘Consumer Theory’ is analogous in ‘Production Theory’ to which one of the following?
a. Expansion path
b. Isoquant line
c. Ridge line
d. Isocost line

57. Suppose a fisherman has fishing net and a boat, He alone hunts fish in sea for which he has to pay no license fee etc. Fish, caught by him, wifi have which one of the following?
a. Zero economic cost of production as he makes no out-of-pocket payment to anybody and is working of his own
b. Negative economic cost of production because he enjoys fishing and has to make no payment
c. Positive cost of production due to his sacrificing the opportunity of working elsewhere and renting out fishing net and boat etc.
d. Infinite cost of production

58. Short-run marginal cost of a firm does not contain any element of which of the following?
a. Costs of raw materials
b. Salaries of the managerial staff
c. Wages of labour engaged on daily basis
d. Cost of fuel for operating machines engaged in production

59. Consider the following statements
1. The vertical distance from average cost (AC) curve to average variable cost (AVC) curve is average fixed cost (AFC).
2. AVC curve, AC curve and marginal cost (MC) curve are ‘U’ shaped. 
3. AFC curve is horizontal to ‘X’ axis. 

Which of the statements given above are correct?
a. 1 and 2 only
b. 2 and 3 only
c. 1 and 3 only
d. 1, 2 and 3

60. Which one of the following is the correct sequence of magnitude of minima in ascending order in marginal cost (MC) curve, average cost (AC) curve and average variable cost (AVC) curve? 
a. MC, AVC, AC
b. AVC, AC, MC
c. MC, AC, AVC
d. AC, MC, AVC

Part - 2

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