TEST PAPER III

KNOW YOUR ECONOMICS


1.  The subject matter of price theory is
A)  Behaviour of industry’s decision making
B)  Economic behaviour of the entire country
C)  Economic behaviour of individual decision making units
D)  Behaviour of all decisionmaking units taken together
2.  The Engel curve shows
A)  The amount of a commodity that the consumer would purchase per unit of
time at various levels of total income
B)  The amount of a commoditythat the consumer would sell at a given level
of income
C)  The amount of consumer durables that the consumer would purchase per
unit of time at various levels of total income
D)  The amount of consumer non durables that the consumer would purchase
per unit of time at variouslevels of income
3.  Hicksian substitution effect refers to
A)  The change in the quantity demanded of a commodity resulting from a
change in its price, while holding real income constant by keeping the
consumer on the same indifference curve before and after the price change
B)  The change in the quantity supplied of a commodity resulting from a
change in its price, while holding real income constant by keeping the
consumer on the same indifference curve
C)  The change in the quantity demanded of a commodity from a change in its
price, while holding absolute income constant by keeping the consumer on
the same indifference curve before and after price change
D)  The change in the quantity demanded of a commodity resulting from a
change in its price, while holding income constant by keeping the consumer
on the same indifference curve beforeand after the price change
4.  Transitivity assumption in RevealedPreference theorem states that
A)  If the consumer is observed to prefer basket A to B, then this consumer will
never prefer B to A
B)  The consumer can be induced to purchase any basket of goods
C)  If A is preferred to B, and B to C, then A is preferred to C
D)  A consumer’s preferences can be inferred
5.  The Learning Curve is
A) Positively sloped
B)  Negatively sloped and convex to the origin
C) Right angled
D)  A horizontal straight line parallel to X axis
6.  A market structure which satisfies three conditions of Pareto Optimality
A)  Monopolistic Competition  B)  Perfect Competition
C) Oligopoly D) Monopoly
7.  The approach of Revealed Preference Theorem is
A) Psychological
B) Introspective
C) Behaviorist
D) Deductive
8.  If specific sales tax is imposed on monopolist output
A)  Will maintain the initial equilibrium position and price will not change in
the short run
B)  Greater the tax burden to the consumer if market supply is less elastic
C)  Shifts the Marginal Cost curve to the left leading to smaller equilibrium
quantity
D)  Will not affect the Marginal Cost curve of monopolist
9.  A rational consumer will operate in the stage where
A)  There is an increase in the productivity of fixed and variable factors
B)  Productivity of variable factor diminishes with positive marginal product
C)  The quantity of variable factor is more than the quantity of fixed factor
D)  There is increasing average returns to the factors of production
10.  At higher wage rate, the supply curve of labour is
A)  Always positively sloped
B)  Forward bending because substitution effect is stronger than income effect
C)  Backward bending because substitution effect is weaker than income effect
D)  Both substitution effect and income effect are equally stronger
11.  The long run supply curve of a constant cost industry is
A) Downward sloping B) Vertical
C)  Positively sloped   D)  Perfectly elastic
12.  By joining the points of producer equilibrium we get
A)  Expansion Path   B)  Ridge lines
C)  Producer Indifference Curves D)  Iso Cost Line
13.  From the industries listed below, which is the best available example for perfect
competition?
A) Tea industry B) Telephone industry
C) Food grains D) Automobile industry
14.  Marginal Cost always refers to  A)  Cost of adding one unit
B)  Gain in reducing one unit
C)  Change in total cost due toaddition or deletion of one unit
D)  Increment in cost
15.  Cobb Douglas production function is homogenous function of degree
A) Zero B) One
C)  Greater than one   D)  Less than one
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16.  A producer of two commodities X and Y using two factors L and K reaches
general equilibrium of production whenever
A) MRTSLKin the production of X is equal to the MRTS LKin the production
of Y
B) MRTS LKin the production of X is less than MRTS LKin the production of
Y
C) MRTS LKin the production of X is greater than MRTS LKin the production
of Y
D)  None of these
17.  The concept of ‘full cost’ includes
A)  Business cost and opportunity cost
B)  Opportunity cost and marketing cost
C)  Opportunity cost and normal profit
D)  Business cost, opportunity cost and normal profit
18.  A curve representing different combinations of two inputs that produce the same
level of output is called  A) Indifference Curve
B) Isoquant
C) Budget Line
D)  Iso Cost Curve
19.  Quasi Rent is
A)  Equal to the firm’s total profit
B)  Greater than the firm’s total profit
C)  Less than the firm’s total profit
D)  Can not be compared with the firm’s total profit
20.  Social Welfare Function shows
A)  The various combinations of marginalutilities of two social groups that
give the society the same level of satisfaction or welfare
B)  The various combinations of utilities of two individuals that give the
society the same level of satisfaction or welfare
C)  The various combinations of sacrifice of all individuals that give the society
an improved level of social welfare
D)  None of the above
21.  Macro economics does not study
A)  Interrelationships between macro variables
B)  Performance of the entire economy
C)  Determination of the levels of aggregate economic activities
D)  Price and output determination of a commodity
22.  In macro economic framework, Aggregate Supply refers to
A)  Total value of goods producedand supplied in an economy
B)  Total value of goods and services supplied in an economy
C)  Total value of goods and services produced and supplied in an economy
D)  Total value of goods produced in an economy
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23.  According to Permanent Income Hypothesis
A)  There exists a non proportional relationship between consumption and
permanent income
B)  Transitory income is positive for lower income households
C)  Consumer behaviour is based on the theory of inter temporal choice
D)  Average Propensity to Consume and Marginal Propensity to Consume are
equal for all levels ofdisposable income
24.  Given a neo classical aggregate supply schedule, a decrease in autonomous
investment leads to
A)  A fall in output, while price level remains the same
B)  A fall in both price and level of output
C)  An increase in price and level of output
D)  A fall in price, but no effect on level of output
25.  Static Multiplier assumes
A)  That the change in investment and the resulting change in income are
simultaneous
B)  That the change in savings and the resulting change in consumption are
simultaneous
C)  That the change in investment and the resulting change in consumption are
simultaneous
D)  That the technology remains constant
26.  Who among the following is a neo Keynesian?
A)  Lucas   B)  Sargent  C)  Muth  D)  Mankiw
27.  Among the following, which is the best definition of national income?
A)  National Income is the money value of all final goods and services
produced in a country during a period of one year
B)  National Income is the money value of all final goods produced in a
country during a period of one year
C)  National Income is the value of all final goods produced in a country during
a period of one year
D)  National Income is the outcome ofall production activities of a nation
valued in terms of money
28.  The ratio of the investment to the change in the national income is called
A) Accelerator B) Multiplier
C)  Marginal Propensity to Consume  D)  Marginal Propensity to Invest
29.  Nash Equilibrium is one
A)  Which every player can improve their pay off given the strategy of the
other players
B)  Which some players can improve their pay off given the strategy of the
other players
C)  Which none of the players can improve their pay off
D)  Which none of the players can improvetheir pay off given the strategy of
the other players.
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30.  The following can be considered asan objective of monetary policy
A)  Achieve monetary stability
B)  Avoid conflicts between the internal and externalinterests of the economy
C)  Control government expenditure
D)  Create conditions for an efficient utilization of labourand other productive
resources as far as possible
31.  GNP deflator is defined as
A)  Ratio of nominal GNP in a yearto the real GNP of that year
B)  Ratio of GNP in a year to the GDP of that year
C)  Ratio of nominal GNP in a year to the nominal GDP of that year
D)  Ratio of GNP to the nominal GDP of that year
32.  Export surplus is desirable when there is
A)  Excess demand   B)  No demand
C)  Deficient demand   D)  All of the above
33.  Money whose intrinsic value is equal to its face value is called
A) Token money B) High Valued money
C)  Representative money  D)  Full Bodied money
34.  According to monetary approach to balance of payments, all payment deficits are
the result of
A)  Disequilibrium in the balance of payments
B)  Floating exchange rate system
C)  Excess supply of money in the home country
D) Speculation
35.  If C = 100 + 0.75Y, where C = Consumption and Y = Income, then multiplier is
A) 0.6 B) 0.4 C) 2 D) 4
36.  If an individual is to receive Rs1100 in oneyear and the market rate of interest is
10 per cent, its present value is
A) 800 B) 900 C) 1100 D) 1000
37.  The name of the economist with whom the Real Balance Effect is associated
A) Patinkin  B) Keynes  C) Arrow   D) Friedman
38.  Aggregate demand in a two sector model refers to
A)  C + I + Y    B)  C + I
C)  C     D)  C + I – Y +X – M
39.  Laffer Curve analysis mainly deals with……………..economics
A) Demand B) Supply
C) Fiscal D) Monetary
40.  “Ratchet Effect” is associated to
A)  James Duesenberry   B)  J M Keynes
C)  Milton Friedman   D)  Arrow and Modigilani
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41.  The derivative of a constant is
A) 1 B) 0
C)  Negative    D)  Logarithm of that constant
42.  The relationship among price elasticity ofdemand, average revenue and marginal
revenue is
A) Average revenue/(average revenue - marginal revenue)
B) Marginal revenue/(marginal revenue - average revenue)
C) Average revenue/(marginal revenue - average revenue)
D)  Average revenue - marginal revenue/average revenue
43.  If P = a - bq represents the demand equation, then marginal revenue is  A)  a – 2bq    B)  a – bq  
C)  aq – bq2  
D)  a + 2bq
44.  If the utility function U = F(x), the utility is maximum when
A)  du/dx = 0    B)  d
2
u/dx
2
>0
C)  du/dx = 0 and d
2
u/dx
2
<0  D)  d
2
u/dx
2
< 0
45.  Which of the following is a property of transpose of a matrix?
A)  Transpose of the sum of matrices is the difference of the transposes of the
individual matrices
B)  Transpose of transpose of a matrix is the original matrix
C)  Transpose of a product of matrices is the product of the transpose of the
matrices
D)  Transposes of the matrices are not comparable
46.  A matrix which has same elements inthe arrangement on both sides of the
diagonal running from north west to south east is called……………….
A)  Diagonal Matrix   B)  Identity Matrix
C) Symmetric Matrix  D) Triangular Matrix
47.  Definite integral is defined as
A)  The value of the integral at the upper limit less its value at the lower limit
B)  The value of the integral at the upperlimit plus its value at the lower limit
C)  The value of the integral at the lower limit less its value at the upper limit
D)  The value of the integral at the upper limit multiplied by its value at the
upper limit
48.  Who is more associated with the development of inputoutput analysis?
A) Leontiff B) Danzing
C) Walras D) Pareto
49.  In the case of a small sample, the sample size will be
A)  Equal to 30    B)  Less than 20
C)  Less than 29    D)  Depends on population
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50.  When population under investigation is infinite, we should use  A) Sample method  
B) Census method
C)  Either sample or census method
D)  None of these
51.  Sampling errors are present only in
A)  Complete enumeration survey
B) Sample survey
C)  Both census and sample surveys
D)  Neither sample or census survey
52. Geographical classification means, classification of data according to
A) Time B) Location
C) Attributes   D) Class intervals
53.  The geometric mean of two numbers 8 and 18 is
 A) 12  B) 13  C) 15  D) 11.07
54.  The correlation coefficient r = 0, implies
A)  Perfect positive correlation
B)  Perfect negative correlation
C) No correlation
D) Insignificant correlation
55.  If the regression coefficients are 0.9 and 0.4, the value of the correlation coefficient
is
A)  0.36  B)  0.60  C)  0.81  D)  0.16
56.  A bag contains 30 balls numbered from 1 to 30. One ball is drawn at random.
Find the probability that the number of the ball drawn will be a multiple of 5 or
seven
A)  1/3  B)  1/5  C)  1/6  D)  1/2
57.  Dr Ambedkar’s contributions to Indian Economic Thought is remarkably found in
A)  The problem of the rupee  B)  Economics of caste
C)  Ancient Indian trade   D)  Deciding foreign exchange rate
58.  The growth rate of the Indian economy during 2009-10, according to the Economic
Survey 2009-10
A)  5.3 per cent    B)  6.7 per cent
C)  7.8 per cent    D)  9.1 per cent
59.  In India, M3 is otherwise stated as
A)  Reserve money   B)  Narrow money
C) Broad money D) Plastic money
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60.  The Prime Minister’s Employment Generation Programme (PMEGP), has been
launched by merging Rural Employment Generation Programme
and………………
A)  National Programme of Mid day meals
B)  Swarnjayanti Gram Swarozger Yojana
C)  Swarna Jayanti Shahari Rozgar Yojana
D)  Prime Minister’s Rozgar Yojana
61.  National Rural Employment Guarantee Scheme (NREGS) was launched in the
year
A)  2005  B)  2006  C)  2007  D)  2008
62.  According to Population Census of India (2001), how many females are there for
every 1000 males in Kerala?
A)  1056  B)  1057  C)  1058  D)  1059
63.  Total number of Revenue Villages in Kerala in 2009
A) 1452 B) 999 C) 991 D) 1642
64.  Which Article of the Indian Constitution empowers the appointment of Finance
Commissions?
A)  280  B)  180  C)  279  D)  179
65.  The significance of 73
rd
Constitution Amendment (1993)
A)  Enactment relating to social welfare
B)  Enactment relating to panchayats
C)  Enactment relating to anti corruption
D)  Enactment relating to women empowerment
66.  “Current Daily Status” is a concept used in measuring
A)  Daily average stock of money supply
B)  Daily average stock of Foreign Exchange Reserves
C)  Rate of inflation
D)  Employment and unemployment
67.  The main objective of Bharat Nirman (2005) programme is
A)  Developing skill oriented youth
B)  Providing basic amenities in rural areas
C)  Providing sanitation facilities in rural and urban areas
D)  Encouraging the birth of girl child
68.  The Unorganised Worker’s Social Security Act was passed in the year
A) 2008 B) 2009
C) 2007 D) 2006
69.  The basic principles of decentralisation of power in Kerala State was framed by
A)  Kerala Panchayat Raj Act  B)  Sen Committee
C)  ADB guidelines   D)  World Bank guidelines
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70.  The Head Quarters of Small Industries Development Bank of India is located at
A) Mumbai B) New Delhi
C) Lucknow D) Chennai
71.  The time period of the 11
th
Five Year Plan
A) 2009-14 B) 2008-13 C) 2006-11 D) 2007-12
72.  In India, Five Year Plans are approved by the
A) Planning Commission
B) Parliament
C)  National Development Council
D)  President of India
73.  According to the neo classical model, the rate of economic growth depends on
A) Capital Stock
B)  Capital Stock and Labour Supply
C)  Capital Stock, Labour Supply and Technological Progress
D) Technological progress
74.  The new growth theory assumes technology as
A) Endogenous B) Exogenous
C) Constant D) Neutral
75.  One of the major contributions of ArthurLewis to the theoryof economic growth
is
A)  The concept of full employment
B)  The concept of employment
C)  The concept of frictional unemployment
D)  The concept of disguised unemployment
76.  The “Critical Minimum Effort” theory of development was advanced by
A) Nurkse B) Nelson
C) Leibenstein D) Kaldor
77.  Ricardian analysis of rent is based on the following principle
A)  Law of diminishing returns  B)  Comparative cost advantage
C)  Fertility of the land   D)  Law of increasing returns
78.  Which committee looked into the problem of tax evasion and suggested measures
(1971)
A)  Tyagi Committee   B)  Boothalingam Committee
C)  Jha Committee   D)  Wanchoo Committee
79.  The statement “A country is poor because it is poor” is associated with the name of
A) Nrukse B) Hicks C) Smith D) Myrdal
80.  Stockholm Conference on Human Environment was held in the year
A)  1987  B)  1972  C)  1992  D)  1991
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81.  The environmental Kuznets Curve Hypothesis proposes that
A)  There is an inverted U shape relation between quality of environment and
per capita income
B)  There is a linear relation between quality of environment and per capita
income
C)  There is a negative relation between quality of environment and per capita
income
D)  There is a L shape relation between quality of environment and per capita
income
82.  Among the following, which term is more associated to environmental issues?
A) Public utilities B) Shadow price
C) Gross profit D) Market price
83.  Among the following, which is the best example for international public good?
A) Western Ghats B) River Nile
C) Silent Valley D) Biological Diversity
84.  Among the following, which agency is moreassociated to environmental issues?
A) UNO  B) UNCTAD C) UNDP  D) ADB
85.  National Environment Policy was declared in the year
A)  2005  B)  2004  C)  2006  D)  2007
86.  According to Harrod, the equilibrium between G and Gwis
A) Stable B) Knife edge
C) Under employment  D) Fluctuating
87.  According to Kaldor, when savings out of profit is less than savings out of wages
A)  Prices will increase   B)  Cumulative fall in prices
C) Increase in consumption  D)  Increase in production
88.  The person behind the concept “Industrial Reserve Army”
A) Adam Smith B) David Ricardo
C) Malthus D) Karl Marx
89.  The rate of exchange can be defined as
A)  The rate at which the currency of one country is converted into US Dollars
B)  The rate at which Indian rupee is converted into any other currency
C)  The rate at which one currency is converted into another currency
D)  The rate declared by the Reserve Bankof India for the conversion of Indian
rupee into US Dollars
90.  Under fixed exchange system, the rate of exchange is determined by
A)  New York Stock Exchange  B)  Central Bank of a country
C) Planning Commission  D) Ministry of Finance
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91.  The account which shows all transactions to trade in goods, services and unilateral
transfers is called
A)  Capital Account   B)  Current Account
C)  Revenue Account   D)  None of these
92.  Find odd man out
A)  Value of shipping services  B)  Value of marine products exported
C)  Value of tea exported  D)  Value of pepper exported
93.  If the value of the currency increases interms of some other foreign currency by
the market mechanism, it is called
A) Devaluation B) Appreciation
C) Depreciation D) Dumping
94.  Foreign Direct Investment (FDI) comes under  A) Current Account  
B)  Official Reserve Account
C) Capital Account
D) Revenue Account
95.  Among the following which is the best advantage of international trade?
A)  Benefit of price stability
B)  Benefit of demand and supply equilibrium for commodities
C)  Benefit of achieving equilibrium in foreign exchange reserves
D)  Benefit of specialization
96.  Ricardian Theory of Comparative Advantage suggests that trade between two
countries is desirable
A)  If one has absolute advantage inthe production of both the commodities
and the other absolute disadvantage in production of both the commodities
B)  If one has absolute advantage in the production of at least one commodity
and the other absolute disadvantage in production of both the commodities
C)  If one has absolute advantage inthe production of both the commodities
and the other absolute disadvantage in production of at least one
commodity
D)  If one has comparative advantage in the production of both the
commodities, with out considering the status of the other country
97.  Terms of Trade can be defined as
A)  Quantity of domestic goods that mustbe given in exchange for one unit of
imported goods
B)  Quantity of goods to be exported tobalance the deficit in the foreign
exchange reserves with respect to a country
C)  Quantity of goods to be imported in exchange of one unit of exported goods
D)  Ratio between goods exported and goods imported in a given year
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98.  Forward market refers to
A)  Foreign exchange deals for sale and purchases of foreign currency at some
future date
B)  Foreign exchange deals for sale of foreign currency at some future date
C)  Foreign exchange deals for purchase of foreign currency at some future
date
D)  Foreign exchange deals for sale and purchase for foreign currency at spot
99.  Remittances of the nationals working aboard come under
A)  Current Account   B)  Capital Account
C)  Official Reserve Account  D)  Balance of Trade Account
100.  Net Factor Income from abroad is defined as
A)  Total income from abroad – factor income
B) Factor income from abroad – factor income
C)  Factor income from abroad – personal income
D)  Total income from abroad – personal income
101.  World Trade Organisation (WTO) came into force on
A) 1-1-1995 B) 1-1-1994 C) 1-1-1996  D) 1-1-1991
102.  Doha Agreement is associated to
A) Industry  B) Agriculture C)  Trade  D)  Banking
103.  Which agency is more associated to world trade?
A) ADB  B) UNCTAD C) UNO  D) EEC
104.  “The Third World War will start from………………….”(Paul Roberts)
A) Struggle for food
B) Struggle for water
C)  Struggle for gender empowerment
D)  Struggle for sanitation facilities
105.  Who is more associated tooptimality in allocations?
A) Wicksell B) Pareto
C) Tiebout D) Bowen
106.  Who advocated expenditure taxation?
A) Adam Smith
B)  Raja J Chelliah
C)  Indirect Tax Enquiry Committee
D) Nicholas Kaldor
107.  Which of the following is a local tax?
A) Turnover tax B) Advertisement tax
C)  Sales tax    D)  Capital gains tax
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108.  A standard framework introduced in 1969 for disbursing plan assistance to the
States
A)  Kelkar Formula   B)  Gadgil Formula
C)  Population area ratio   D)  Density area ratio
109.  Treasury bills are instruments in
A) Capital market B) Money market
C) Goods market D) Foreign Exchange market
110.  Value Added Tax (VAT) is
A)  Tax on total value of the goods sold
B)  Tax on the value added by the last seller
C)  Tax on the value added by all the intermediaries
D)  None of the above
111.  Pick odd man out
A) Fiscal Deficit  B) Revenue Deficit
C) Budget Deficit D) Deficit Financing
112.  Expenditure that does not create any asset is called
A)  Revenue Expenditure  B)  Capital Expenditure
C)  Plan Expenditure   D)  Non Plan Expenditure
113.  Property of persons who die without heirs is called
A) Forfeiture B) Special assessment
C) Escheats D) Gifts
114.  Who was the Chairman of the Tax Reform Committee, 1991?
A) Rangarajan B) Talwar
C) Raja Chelliah D) Narashimham
115.  Expenditure tax was abolished in India in the year
A) 1962 B) 1963
C) 1964 D) 1965
116.  Excess of fiscal deficit over interest payments is
A)  Monetised deficit   B)  Budget deficit
C)  Primary deficit   D)  Secondary deficit
117.  Penalty imposed by the court for breaking of contract is called
A) Escheats B) Forfeiture
C) Fine D) None of these
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118.  Among the following, which is the best explanation for disinvestment?  A)  Selling of shares  
B)  Selling of shares of government in the public enterprises
C)  Selling of shares of government in the public enterprises to the private
companies
D)  Selling of shares of government inthe public enterprises to the Multi
National Companies
119.  Spill over effects refer to
A)  Direct effects which flow fromthe production to the other parties
B)  Economic effects due to externalities
C)  Economic effects which flow from the production or use of the good to
final users only
D)  Effects which flow from the production or use of the good to final users
only
120.  Who coined the term “Merit goods”?
A) Dalton B) Musgrave
C) Marshall D) Lerner
………………….
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TEST PAPER II

 .........KNOW YOUR ECONOMICS......

1.  Continuous substitutability of capital and labour is shown by
A)  Smooth convex isoquant  B)  Kinked isoquant
C)  Linear isoquant    D)  None of these
2.  Input output analysis was put forward by
A)  Leon Walras      B)  Keynes
C)  Wassiley Leontief    D)  Marshall
3.  If the income elasticity of demand is greater than 1, the commodity is
A)  Luxury        B)  Inferior
C)  Non related good    D)  Necessity
4.  Cross elasticity of a complementary good is
A)  Positive      B)  Negative
C)  Zero        D)  None of these
5.  Slope of total product curve measures
A)  Marginal product    B)  Total product
C)  Average product    D)  MRTS
6.  The short run average variable cost has a flat stretch which reflects the fact
that firms build into their plants some ----------------- which allows flexibility
in their operation.
A)  Excess capacity    B)  Marginal capacity
C)  Reserve capacity    D)  None of these
7.  The demand curve becomes the  marginal revenue curve of the monopolist under
A)  First degree price discrimination
B)  Second degree price discrimination
C)  Third degree price discrimination
D)  None of the above
8.  The Theory of Monopolistic Competition is authored by
A)  Joan Robinson      B)  E.Chamberlin
C)  Augustin Cournot    D)  Sweezy
9.  The upper section of a kinked demand curve has a --------------- price
elasticity than the lower part.
A)  Higher         B)  Lower
C)  Equal        D)  None of these
10.  All of the following are true about a monopolist except
A)  Average and marginal revenue are not the same
B)  Marginal revenue is greater than price
C)  Marginal revenue is zero if price elasticity of demand equals one.
D)  Marginal revenue decreases with increases in output
2
11.  The Lerner Index equals
A)  (P-MC)/P      B)  P/(MC-P)
C)  (MC-P)/MC      D)  MC/(MC-P)
12.  Negative network externality in which a consumer wishes to own an expensive or
unique good
A)  Snob effect      B)  Bandwagon effect
C)  Ratchet effect      D)  None of these
13.  When the price lines are parallel it implies
A)  The same commodity prices, but different amounts of money expenditure
B)  Different commodity prices, but same amount of money expenditure
C)  Same commodity prices and same amount of money expenditure
D)  Different amounts of commodity prices and different amounts of money
expenditure.
14.  The Prisoner’s Dilemma illustrates
A)  The lack of co-operation among firms in a competitive market
B)  The lack of co-operation among firms in a monopolistic market
C)  The lack of co-operation between a monopoly and its customers
D)  Why in an oligopoly  market, co-operation is difficult to achieve even when
it is mutually beneficial.
15.  Which of the following is not true about revealed preference curve?
A)  It was pioneered by American economist Paul Samuelson
B)  It establishes the  law of demand without indifference curves
C)  It proves the existence of indifference curves
D)  It is based on cardinal measurement of utility
16.  When negative income effect is greater than substitution effect, it is the
case of which one of the following?
A)  Giffen good      B)  Inferior good
C)  Normal good      D)  Luxury good
17.  A firm has a certain initial equilibrium price when demand function
Q(D)=100  4P and supply function is 30+3P. If the firm’s demand
function is shifted to 170  4P, what is the initial equilibrium price
and new equilibrium price?
A)  10 and 20      B)  20 and 10
C)  5 and 15      D)  7 and 17
18.  Which one of the following is a necessary condition for barometric  price
leadership?
A)  Must be a large firm
B)  Must have control over a large portion of the market
C)  Must have good knowledge about the prevailing market conditions
D)  Must be a low cost firm
3
19.  The Engel curve for a giffen good is
A)  Negatively sloped    B)  Positively sloped
C)  Vertical      D)  Horizontal
20.  The locus of general equilibrium points of exchange in a two individual
two commodity economy is called
A)  The consumption contract curve
B)  The production contract curve
C)  The social welfare function
D)  The transformation curve
21.  By leading to a higher nominal interest rate, inflation leads to lower
money balances and hence people are required to go to banks
more frequently. This cost is termed as
A)  Shoe leather cost    B)  Menu cost
C)  Tax cost      D)  None of these
22.  Macroeconomic impact of one firm’s price adjustment on the demand for
all firm’s products is called
A)  Aggregate supply externality
B)  Aggregate demand externality
C)  Aggregate income externality
D)  None of these
23.  According to quantity theory of money equation, an increase in------------causes
inflation.
A)  Money supply     B)  Money demand
C)  Rate of interest    D)  None of these
24.  The horizontal parallel section of the Keynesian speculative demand for
money indicates that
A)  There is no speculative demand for money
B)  There is small but limited demand for money
C)  Monetary policy ineffective
D)  Monetary policy becomes effective
25.  When investment is negatively related to the rate of interest,
equilibrium output in the goods market
A)  Is unrelated to the rate of interest
B)  Is inversely related to the rate of interest
C)  Is positively related to the rate of interest
D)  falls as the rate of interest decreases
26.  The slope of IS curve -------------- when investment spending becomes
less interest sensitive
A)  Increases      B)  Decreases
C)  Remains unchanged    D)  None of these
4
27.  A rapid and decisive reduction in growth rate of money supply aimed at
reducing the rate of inflation is called
A)  Cold turkey      B)  Gradualism
C)  Reflation      D)  None of these
28.  Okun’s law states that output falls by 2.5% for each percentage point
increase in
A)  Inflation      B)  Unemployment
C)  Productivity      D)  Investment
29.  The proposition that changes in the government budget deficit caused
entirely by changes in tax collections have no effect on the economy
is known as
A)  Seignorage      B)  Ricardian equivalence
C)  Purchasing power parity   D)  Fiscal accommodation
30.  Tendency of inflation and nominal interest rate to move together is called
A)  Pigou effect      B)  Fisher effect
C)  Keynes effect      D)  Real balance effect
31.  Relative Income Hypothesis was propounded by
A)  James Duessenberry    B)  Keynes
C)  Milton Friedman    D)  Modiglani
32.  When marginal propensity to consume is 0.5, the value of multiplier is
A)  1    B)  5    C)  10    D)  2
33.  Rational Expectations Hypothesis was propounded by
A)  Lucas        B)  Smith
C)  Marx        D)  Schumpeter
34.  GDP at factor cost equals
A)  GNP at market price+ indirect taxes- subsidies
B)  GNP at market price + Direct taxes
C)  GDP at market price-indirect taxes+ subsidies
D)  None of the above
35.  Efficiency wage model is a feature of
A)  New keynesian school  B)  Monetarism
C)  New Classical school    D)  Supply side economics
36.  Unemployment in Keynes model is caused by
A)  Demand deficiency    B)  Supply deficiency
C)  Demand sufficiency    D)  Supply sufficiency
37.  National Income is
A)  Per capita at factor cost  B)  NDP at factor cost
C)  GDP at market price    D)  GNP at market price
5
38.  Which of the variables shift the classical aggregate demand curve?
A)  An increase in government spending
B)  Decrease in taxes
C)  An increase in autonomous investment expenditure
D)  An increase in the money stock
39.  An increase in marginal propensity to import
A)  Has no effect on the multiplier
B)  Increases the value of the multiplier
C)  Decreases the value of the multiplier
D)  None of the above
40.  In a two sector model, consumption is 40+0.90Y and investment is 50,
equilibrium output is
A)  900    B)  500    C)  400    D)  90
41.  The characteristic feature(s) of a good estimator
A)  Best        B)  Linear
C)  Unbiased      D)  All of these
42.  Probability is associated with
A)  Certain events     B)  Uncertain events
C)  Impossible events    D)  None of these
43.  Suppose in a binomial distribution, n=number of trials, p=probability of
success and q=probability of failure, the mean of binomial distribution is
A)  npq    B)  np    C)  pq    D)  nq
44.  The coefficient of skewness of normal distribution is
A)  3        B)  Less than 3
C)  More than 3      D)  0
45.  The level of significance is the probability of
A)  Type 1 error      B)  Type 2 error
C)  Power of a test    D)  None of these
46.  The percentage of total variation explained by explanatory variable is
A)  f    B)  z    C)  t    D)  R
2
47.  t test is used for
A)  Small sample      B)  Large sample
C)  Both        D)  None of these
48.  The algebraic sum of the deviations of various values from the ------------- = 0
A)  Co-efficient of variation  B)  Arithmetic mean
C)  Variance      D)  None of these
6
49.  When the observed and expected frequencies completely coincide, χ
2
will be
A)  Less than 1      B)  Greater than 1
C)  Zero        D)  One
50.  The method of making research inference from general to particular is
A)  Deductive      B)  Inductive
C)  Both        D)  None of these
51.  The y intercept of a line is a point when
A)  y is 0        B)  y is negative
C)  x is 0        D)  x is negative
52.  Mode can be obtained by
A)  3Mean-2Median    B)  1Mean-2Median
C)  3Median-3Mean    D)  3Median-2Mean
53.  When 2 coins are tossed, what is the probability of getting two tails?
A)  1/4    B)  1/2    C)  4/2    D)  1
54.  Derivative of log x is
A)  1    B)  0    C)  1/5    D)  1/x
55.  If the marginal revenue is 25 and the elasticity of demand with respect to
price is 2,find the average revenue.
A)  25    B)  50    C)  12.5    D)  27
56.  ------------------------ of a matrix is the sum of the elements of the leading
diagonal.
A)  Transpose of a matrix   B)  Trace of a matrix
C)  Order of a matrix    D)  None of these
57.  As per economic survey 2011-12, agriculture including allied
activities accounted for --------- of GDP in 2010-11, at 2004-05
prices.
A)  13.9%    B)  12.5%    C)  15.3%    D)  14.5%
58.  According to Census of India 2011, the literacy rate of India is
A)  65.73%  B)  64.83%  C)  74.04%  D)  75.05%
59.  As per the Human Development Report 2011, the HDI rank of India is
A)  123    B)  134    C)  157    D)  127
60.  R.N. Malhotra committee gave reccomendations in the field of
A)  Agricultural sector    B)  Sick industries
C)  Insurance sector    D)  Banking sector
61.  NABARD was established on the recommendations of
A)  Public Accounts Committee  B)  Shivaraman Committee
C)  Narasimhan Committee  D)  None of these
7
62.  The Competition Commission of India became operational with effect from  the
year
A)  2009    B)  2008    C)  2010    D)  2007
63.  The States which do not have RRB’s
A)  Goa and Sikkim    B)  Assam and Kerala
C)  Bihar and Rajasthan    D)  Mizoram and Manipur
64.  According to 2011 census ,which is the most populous State in India?
A)  Maharashtra      B)  Bihar
C)  Uttar Pradesh      D)  West Bengal
65.  The Grey revolution is associated with
A)  Oil seeds      B)  Fertilizers
C)  Petroleum      D)  Meat\Tomato
66.  The share of industry in total employment in India increased from 16.2% in
1999-2000 to ----------- % in 2009-10.
A)  28.5%    B)  25.6%    C)  19.4%    D)  21.9%
67.  As per Indian Economic Survey 2011-12, fiscal deficit as a percentage of GDP
was ----------  in 2009-10.
A)  5.6%    B)  6.5%    C)  4.5%    D)  3.5%
68.  The per capita income of Kerala during 2008-09 at current prices is
A)  Rs 59716      B)  Rs 80366
C)  Rs 47900      D)  Rs 67916
69.  The primary sector’s contribution to SDP of Kerala at factor cost during
2008-09 at current prices
A)  15.99%  B)  20.80%  C)  24.31%  D)  33.45%
70.  The sex ratio (females per 1000 males) in Kerala according to 2011 Census of
India    is
A)  1032      B)  1058    C)  1084    D)  1056
71.  ---------------- is a self employment scheme meant for uplifting the most
backward and segregated women in Kerala belonging to ST community.
A)  SURAKSHA      B)  SARANYA
C)  SURABHI      D)  SUKANYA
72.  District-wise analysis of Kerala’s literacy rate according to 2011 census shows
that ---------------------- district has the lowest literacy rate.
A)  Palakkad      B)  Pathanamthitta
C)  Wayanad      D)  Idukki
73.  The author of the book Problems of Capital Formation in UDCs.
A)  Rosenstein Rodan    B)  Arthur Lewis
C)  Ricardo      D)  Ragner Nurkse
8
74.  According to Hick’s classification of technical progress, given constant
capital output ratio, technical progress is said to be------------------ if it
raises the marginal product of labour in greater proportion than
marginal product of capital.
A)  Capital saving     B)  Labour saving
C)  Neutral      D)  None of the above
75.  According to Rostow, in which stage growth becomes a normal condition
of the society?
A)  The pre take off stage    B)  The take off stage
C)  Drive to Maturity    D)  The Age of High Mass Consumption
76.  According to Joan Robinson, which type of golden age has a situation where
a steady rate of accumulation of capital takes place below full employment?
A)  A Leaden Golden age   B)  A Bastard Golden age
C)  A Restrained Golden Age  D)  A Limping Golden Age
77.  The Gender Empowerment Measure(GEM) was introduced by the
Human Development Report of the year
A)  1995    B)  1990    C)  1985    D)  1975
78.  The Optimum population theory was propounded by
A)  Thomas Robert Malthus  B)  Dalton
C)  Edwin Cannan      D)  C.P. Blacker
79.  For any component of HDI, individual indices are calculated according to
the formula
A)  Actual value-Minimum Value/maximum value-minimum value
B)  Maximum value-minimum value/actual value-minimum value
C)  Actual value-maximum value/maximum value-minimum  value
D)  None of the above
80.  ‘The problem of population is not of mere size but efficient production
and equitable distribution’ has been remarked by
A)  Malthus       B)  Seligman
C)  Smith        D)  Ricardo
81.  Industrial Reserve Army denotes
A)  A wing of government which inspects quality of products introduced in
industries
B)  The army reserved for the supply of industries
C)  The reserve raw materials kept by firms
D)  The unemployed population due to the growth of constant capital.
82.  Passinetti model is an extension of ------------------ model of distribution
A)  Kaldor model      B)  Harrod model
C)  Joan Robinson  model    D)  Solow model
9
83.  If the capital -output ratio is 4 and targeted growth rate is 5%,the required
level of savings is
A)  25%    B)  15%    C)  20%    D)  10%
84.  Tragedy of commons was first described in his thesis by
A)  G. Debru      B)  D. Kenneth Arrow
C)  S.H. Hahn      D)  Garrett Hardin
85.  ------------------ method gives a minimum estimate of the benefits received
from the environment protection programme.
A)  Delphi method
B)  Costless choice method
C)  Preventive expenditure method
D)  None of the above
86.  Which of the following characteristic is widely regarded as being
an important aspect of sustainable development?
A)  Intergenerational equity  B)  Increasing consumer expenditure
C)  Increased level of savings  D)  None of these
87.  ---------------------- is a tax levied on a non market activity that generates
Negative externalities which is intended to correct the market outcome.
A)  Specific tax      B)  Ad  velorem tax
C)  Carbon tax      D)  Pigovian tax
88  ----------------------- is a measure of income inequality which is equal to
the  portion of the total community income that would have to be
redistributed for there to be perfect equality.
A)  Herfindahl index    B)  Hoover index
C)  Solow index      D)  Pareto index
89.  ---------------------- curve shows how much of its import comm odity is required by
a nation in exchange for various quantities of its export commodity
A)  Offer curve      B)  Indifference curve
C)  Demand curve      D)  Production possibility curve
90.  A graph showing all the combinations of goods and services that can be produced
if all of society’s resources are used efficiently is
A)  Capital consumption curve  B)  Circular flow diagram
C)  Production possibility curve  D)  Lorenz curve
91.  The Leontief paradox presented by Wassiley Leontief in 1951,  found that
USA exported -------------- and imported ---------------- in apparent contradiction
with Hekscher-Ohlin theorem.
A)  Labour intensive commodities, capital intensive commodities
B)  Capital intensive commodities, labour intensive commodities
C)  Capital intensive commodities, capital intensive commodities
D)  Labour intensive commodities, labour intensive commodities
10
92.  A hot money or refugee capital is
A)  One which is transferred from one centre to another for greater safety
B)  Earned by refugees
C)  Deposited by refugees before taking refuge
D)  None of these
93.  Match the following:
a.  Adjustable peg system    1.  IMF fixed exchange rate system in
which the exchange rate can be
varied, if there is fundamental
equilibrium.
b.  Crawling Peg system    2.  Changing the exchange rate little
by little continuously to check
speculation.
c.  The wider band    3.  Flexible movements within a definite
range.
A)  a1, b2, c3      B)  a3, c2, b1
C)  a2, b3, c1      D)  a3, b1, c2
94.  If depreciation is to improve the country’s BoP, the Marshall Lerner condition
requires that the sum of elasticities of demand for imports and demand for exports
should be
A)  Smaller than unity    B)  Greater than unity
C)  Equal to unity      D)  Equal to 0
95.  Which of the following items is within the total of BoP?
A)  The merchandise balances  B)  The basic balance
C)  The current account balance  D)  All of these
96.  The OLI paradigm (ownership advantages,  locational considerations and
international gains) as an explanation for FDI has been put forward by
A)  Emmanuel      B)  Dunning
C)  Kindle Berger      D)  Hymer
97.  Under fixed exchange rate system, an expansionary monetary policy always leads
to ---------------- in BoP, while a contractionary monetary policy always leads to   --------------- in the BoP.
A)  Deterioration, improvement  B)  Improvement, deterioration
C)  Deterioration, deterioration  D)  Improvement, improvement
98.  The essence of -------------------- is that the importing country negotiates with its
foreign suppliers on quantitative restrictions on the amount of exports they will
supply to the domestic market.
A)  Voluntary Export Restraints  B)  Import Tariff
C)  Export tariff      D)  None of these
11
99.  The neo Chamberlinian models of intra industry trade differ from neo Heksher
Ohlin model in that the goods in question are
A)  Vertically differentiated  B)  Identical
C)  Horizontally differentiated  D)  None of these
100.  The Rybczynski theorem states that if the endowment of one of the factors of
production increases, the endowment of the other being constant, the output of the
good using the accumulating factor intensively will ------------------ and the output
of other good will ------------- in absolute terms provided that commodity and
factor prices are kept constant.
A)  Increase,decrease    B)  Increase,increase
C)  Decrease,decrease    D)  Decrease, increase
101.  The offer curve of a nation bulges or bends towards the axis which measures its
A)  Import commodity    B)  Export commodity
C)  Export or import commodity  D)  Non traded commodity
102.  Increasing opportunity costs to produce more and more units of a commodity are
given by the production possibility curve
A)  Convex to the origin    B)  Concave to the origin
C)  Straight line      D)  None of these
103.  The Stopler Samuelson theorem postulates that imposition of a tariff by a nation
causes the real income of the nation’s
A)  Scarce factor to fall
B)  Abundant factor to rise
C)  Scarce and abundant factors to rise
D)  Scarce factors to rise
104.  Factor intensity Reversal refers to a situation where
A)  The same commodity is more labour intensive in one nation than in the
other
B)  One commodity is the labour intensive commodity in one nation and the
capital intensive commodity in the other nation.
C)  Both commodities are more labour intensive in one nation than in the other
nation.
D)  None of the above.
105.  The part of public finance which deals with the study of methods and
causes of public borrowings.
A)  Public expenditure    B)  Public debt
C)  Public revenue    D)  None of these
106.  -------------------- is established by a government agency or business for the
purpose of reducing debt by repaying or purchasing outstanding loans and
securities held against the entity.
A)  Capital levy      B)  Surplus revenue
C)  Sinking fund      D)  Annuities
12
107.  The demand for a commodity is perfectly elastic and supply is inelastic, then the
burden of taxation will be
A)  Fully on buyer  
B)  Is equally shared by buyer and seller
C)  Fully on seller    
D)  More burden on seller and less on buyer
108.  According to Arthur Laffer, when rate of tax is 100%, the tax revenue will be
A)  0    B)  25%    C)  50%    D)  100%
109.  VAT is imposed
A)  Directly on consumers
B)  On final stage of production
C)  On first stage of production
D)  On all stages between production and final sale
110.  Which of the following has  made recommendations in respect of centre-state
financial relation in India?
A)  Sarkaria Commission    B)  Kelkar Commission
C)  Rekhi Committee    D)  Chelliah Committee
111.  In 2010, the Government of India earned maximum revenue from
A)  Excise duties      B)  Customs duties
C)  Income tax      D)  None of these
112.  Which of the following taxes is/are levied by the union and collected and
appropriated by the state?
A)  Stamp duties      B)  Passenger and goods taxes
C)  Estate duties      D)  Taxes on newspapers
113.  The issue authority of one rupee currency note is
A)  RBI        B)  State Bank of India
C)  Ministry of Finance    D)  Finance Commission
114.  The profit from sale of a house property which is earned by an owner is taxed by
the government.This form of tax is known as
A)  Sales tax      B)  Capital gains tax
C)  Wealth tax      D)  None of these
115.  Pump priming means
A)  Increase in government expenditure in times of recession to boost
economic activity.
B)  Reducing government expenditure to cut fiscal deficit
C)  Prioritizing government expenditure towards social sectors.
D)  None of the above
13
116.  The term ‘vote with their feet ‘was put forward by
A)  Tullock      B)  Charles Tiebout
C)  John Stuart Mill    D)  Robert Allen
117.  “As per capita income in an economy rises, the relative size of the public sector
will also grow” was stated by
A)  Adolph Wagner    B)  Wiseman
C)  Rostow      D)  Herbert Simon
118.  In cost benefit analysis, the method which solves for the rate of interest which will
make the present value of the net benefit of the project zero is
A)  Working capital method  B)  Internal rate of return method
C)  Capital turnover criterion  D)  None of these
119.  ------------------- effect arises from the voter’s keener awareness of social problems
during the period of upheaval
A)  Displacement effect    B)  Concentration effect
C)  Inspection effect    D)  None of these
120.  With a regressive tax, as income
A)  Increases, the tax rate remains the same
B)  Decreases, the tax rate decreases
C)  Increases, the tax rate increases
D)  Increases, the tax rate decreases
*********************

TEST PAPER 1

KNOW YOUR ECONOMICS

1.  ---------------effect is an example of a network externality in which a consumer
wishes to own an exclusive or unique good
A) Bandwagon   B) Snob
C)  Veblen    D)  None of the above
2.  The implication of asymmetric information about product quality was first
analysed by
A)  Kenneth Lehn   B)  Michael Spence
C)  George Akerlof   D)  Harvey Leibenstein
3.  The difference between positive economics and normative economics is
A)  Positive economics describes the positive effects of economic decisions
while normative economics describes both positive and normative effects
of economic decision
B)  Positive economics describes the facts of an economy while normative
economics prescribes solutions
C)  Positive economics describes demand and supply theories of individual
markets and firms while normative economics describes the total world
economy as a whole
D)  Normative economics describes demand and supply theories of individual
markets and firms while positive economics describes the world markets
4.  Which of the following has the lowest elasticity of supply?
A)  Luxury items    B)  Necessities
C)  Perishable goods   D)  None of the above
5.  For complimentary goods, the cross elasticity of demand will be
A) Zero B) Infinity
C)  Positive but less than infinity D)  Negative
6.  Market period refers to
A)  The period in which the producers of the good cannot change the quantity
produced in response to a change in price
B)  The period in which the producers of the good can change the quantity
produced in response to a change in price
C)  The time it takes for market to attain equilibrium stable
D)  The time it takes for consumers to respond to change in the price
7.  The difference between total utility derived from the consumption of a certain
amount of a given good and the amount of money actually paid for it is called
A)  Marginal utility   B)  Average utility
C)  Producers surplus   D)  Consumers surplus


2
8.  If the price of good X exceeds the price of good Y in consumer equilibrium, it
may be true that
A)  The demand for both X and Y has began to decline
B) The marginal utility of X exceeds the marginal utility of Y
C)  The marginal utility of X equals the marginal utility of Y
D)  The marginal utility of Y exceeds the marginal utility of X
9.  Average product is defined as
A)  Total cost divided by total units of input
B)  Total output divided by total units of input
C)  Total cost divided by total output
D)  Total output divided by total cost of input
10.  Isoquant for two inputs which are used in fixed proportion
A)  Convex to the origin    B)  L- shaped
C)  Straight line with negative slope  D)  Concave to the origin
11.  A firm will break even when
A) TR=TC    B) MR=MC
C) AR=AC    D) P=MC
12.  Which of the following curves resembles supply curve under perfect competition
in the short run?
A)  AC curve above breakeven point
B)  MC curve above shut down point
C) MC curve
D) AVC curve
13.  In which of the following models of oligopoly it is assumed that firms believe
their rivals will continue to produce the same output irrespective of the output
produced by the firm
A)  Kinked demand curve model B)  Cournot’s
C)  Price leadership   D)  Cartel formation
14.  Which of the following does not indicate Lerner index of monopoly power?
A) L=P-MC/P   B) L=P-MR/P
C) L=e/1 D) L=1/e
15.  The Economics of Imperfect Competitionis authored by
A)  E.H. Chamberlin   B)  John Robinson
C)  P. Sraffa    D)  None of the above
16.  In a two commodity (X and Y) two individual (A and B) economy, the maximum
social welfare is reached at
A)  Any point on the grant utility possibility curve
B)  Any point on the social welfare function
C)  The point where marginal rate of transformation equals marginal rate of
substitution
D)  The point of tangency of grand utility possibility curve with a social
welfare function


3
17.  Monopolistic exploitation of labour occurs when
A)  Wages equals Marginal Revenue Product
B)  Wages are greater than Marginal Revenue Product
C)  Wages equals Value of Marginal Product
D)  Wages are less than Marginal Revenue Product
18.  If Production Possibility Curve is concave to the origin, it shows
A)  Increasing opportunity cost of production
B)  Decreasing opportunity cost of production
C)  Constant opportunity cost of production
D)  None of the above
19.  According to Karl Marx, organic composition of capital is
A)  C+V     B)  C/(C+V)
C) S/ (C+V)   D) S/V
20.  A good is ------------- if for any given level of production, the Marginal Cost of
providing it to an additional consumer is zero
A)  Non-excludable   B)  Exclusive
C)  Non rival    D)  Rival
21.  Which of the following variable(s) will come under stock variable(s)?
A)  Consumer Price Index  B)  GDP
C)  Money supply   D)  Both A and C
22.  Which of the following method(s) is/are used for measuring national income in
India?
A)  Output method   B)  Expenditure method
C)  Income method   D)  All the above
23.  The demand for money is
A)  Positively related to output and interest rate
B)  Negatively related to output and interest rate
C)  Negatively related to output and positively related to interest rate
D)  Positively related to output and negatively related to interest rate
24.  In which of the following situation will an increase in supply have no effect upon
output?
A)  LM is steeply sloped and IS is relatively flat
B)  LM is vertical and IS is steeply sloped
C)  LM is steeply sloped and IS is vertical
D)  LM is relatively flat as is IS
25.  The user cost of capital is
A)  The real interest rate
B)  The nominal interest rate
C)  The real interest rate plus the rate of depreciation
D)  The nominal interest rate plus the rate of depreciation


4
26.  An economy which is functioning at the full employment level wishes to maintain
the existing rate of growth. Keynes theory of rate of interest suggest that
government should
A)  Decrease the supply of money over time
B)  Increase the supply of money over time
C)  Leave the supply of money unchanged
D)  Encourage households and firms to increase their holdings of idle balances
27.  A tax will have an automatic stabilizing effect on the economy if its yield
A)  Increases with a fall in income
B)  Decreases with a rise in income
C)  Decreases with a decrease in income
D)  Remains constant as income rises
28.  The Keynesian theory of the rate of interest suggest that the monetary authorities
will lose their power to lower interest rates by varying the money supply when
A)  Interest rates are rising
B)  Interest rates are falling
C)  Interest rates are not expected to fall any lower
D)  Interest rates are not expected to rise any higher
29.  The LM curve becomes vertical at high rates of interest because
A)  The speculative demand for money disappears
B)  National Income falls as the rate of interest rises
C)  The transaction and precautionary demand for money vanishes
D)  Investment diminishes as the rate of interest rises
30.  Which one of the following is most likely to lead to an increase in the level of
investment?
A)  A small rise in the rate of interest
B)  An increase in the level of unemployment
C)  Improved profit expectation of entrepreneurs
D)  A fall in the general level of prices
31.  Gross National expenditure less indirect taxes, plus subsidies equals
A)  GNP at market prices  B)  GNP at factor cost
C)  National Income   D)  Personal disposable income
32.  Insider- outsider model is a feature of
A)  New Keynesian economics  B)  New Classical economics
C) Post Keynesian economics D) Monetarism
33.  In the equation C=Co+cY, Co is
A)  The autonomous part of consumption, independent of the level of income, Y
B) The behavioral coefficient
C)  The dependent variable
D)  A parameter whose value depends on the level of disposable income


5
34.  Permanent income hypothesis is associated with
A) Keynes    B) Friedman
C)  Modigliani    D)  Duesenbery
35.  Stagflation is a period of
A)  High inflation and high unemployment
B)  Low inflation and low unemployment
C)  High inflation and low unemployment
D)  Low inflation and high unemployment
36.  The Philips Curve shows
A)  The inverse relationship between the rate of inflation and the rate of
unemployment
B)  A positive relationship between nominal wage and rate of unemployment
C)  A positive relationship between rate of inflation and nominal wage
D)  The inverse relationship between real and nominal wage
37.  According to Life Cycle hypothesis, consumption is related to
A)  Current income   B)  Past peak income
C)  Expected life time income  D)  Price expectation over life time
38.  When the MPC is 0.8, the MPS is
A)  0.2   B)  0.02   C)  2   D)  1
39.  --------------emphasise the direct role of money in influencing aggregate spending
and are against discretionary policy action
A)  Monetarists    B)  Supply side economists
C)  Keynesians    D)  None of the above
40.  In an open economy with flexible exchange rate and perfect capital mobility, an
expansionary monetary policy
A)  Causes domestic currency to appreciate
B)  Is very effective in affecting output
C)  Increases capital flows into the country
D) Is ineffective
41. If Y=3x
2
-2x+1, then the value of dy/dx at x=2 will be equal to
A)  34   B)  10   C)  1   D)  36
42.  Which of the following is a positional average?
A)  Arithmetic Mean   B)  Geometric Mean
C)  Harmonic Mean   D)  Mode
43.  For a normal curve, which of the following is true?
A)  75% of the observations are contained within 2 standard deviation of the mean
B)  68.27% of the observations are contained at within 3 standard deviation
of the mean
C)  99.73% of the observations are contained at within 3 standard deviation
of the mean
D)  None of the above


6
44.  If one event is unaffected by the outcome of another event, the two events are said
to be
A) Dependent   B) Independent
C)  Mutually exclusive   D)  Both (B) and (C)
45.  In a sampling technique, the first element is randomly selected and there after all
other elements are selected based on a predetermined plan, this sampling
technique can be described as
A)  Simple random sampling
 B)  Stratified random sampling  C) Systematic sampling
D) Judgement sampling
46.  If the null hypothesis is rejected in spite of it being true, then it results in a
A)  Type I error    B)  Type II error
C)  Type III error   D)  Type IV error
47.  In a regression line Y=A+BX, if B=0, then the regression line will
A)  Pass through the origin  B)  Be parallel to X axis
C)  Be parallel to Y axis   D)  None of the above
48.  For a given correlation coefficient, the coefficient of determination
A)  Is always negative
 B)  Is always positive  C)  Has the same sign as correlation coefficient
D)  Is always higher in magnitude of the coefficient of correlation
49.  A square matrix which has one for every element on the principal diagonal from
left to right and zero everywhere is called
A)  Identity matrix   B)  Symmetric matrix
C)  Null matrix    D)  Triangular matrix
50.  Which of the following is not true relating to determinants?
A)  If two rows or columns are identical, the determinant is equal to one
B)  If all the elements of any row or column are zero, the determinant is zero
C)  Multiplying the element of any row or column by a constant will cause the
 determinant to be multiplied by the constant  D)  Adding or subtracting any non-zero multiple of one row (or column) from
another row (or column) will haveno effect on the determinant
51.  The overall significance of regression is tested using
A) Z test B) F test
C)  Chi-square test   D)  t test


7
52.  Multiplication of two matrices requires that
A)  The number of columns in first matrix (lead matrix) equals the number of
rows in the second matrix (lag matrix)
B)  The number of rows in first matrix (lead matrix) equals the number of
columns in the second matrix (lag matrix)
C)  The number of columns in first matrix (lead matrix) equals the number of
columns in the second matrix (lag matrix)
D)  The number of rows in first matrix (lead matrix) equals the number of
rows in the second matrix (lag matrix)
53.  Ogive is a
A)  Frequency polygon   B)  Cumulative frequency curve
C)  Measure of central tendency  D)  None of the above
54.  Graph of variables having linear relation will be
A)  Curved    B)  Hyperbola
C)  Straight line    D)  None of the above
55.  The derivative of a constant is equal to
A) 0 B) 1
C)  -1     D)  A positive number if the constant is
positive
56.  Lack of symmetry is
A)  Kurtosis    B)  Skewness
C)  Moments    D)  Mean
57.  The Unique Identification Project to give the residents of India a unique
identification number has been renamed as
A) Aadhaar    B) Sasam
C)  Bharat Nirman   D)  None of the above
58.  The 2010 Nobel Prize for economics was awarded to Peter Diamond, Dale
Mortensen and Christopher Pissarides for the work related to
A)  Labour market   B)  Money market
C)  Capital market   D)  Bond market
59.  The period of first five year plan of India
A)  1951-56    B)  1956-61
C) 1953-58    D) 1960-65
60.  The law which states that the portion of income spend on food diminishes as
income increases is called
A)  Engel’s law    B)  Gresham’s law
C)  Keynes law    D)  None of the above
61.  According to 2001 census, urban- rural population rate in India is
A) 35:65 B) 32:68
C) 28:72 D) 40:60


8
62.  National Seed Policy is based on the recommendation of
A)  Kelker Committee   B)  M.V. Rao Committee
C)  Y.B.Reddy Committee  D)  Prof. Abhijit Sen Committee
63.  As per Tendulkar Committee report  --------------- is the poorest State in India
having 72% of BPL people
A) Bihar B) Chandigarh
C)  Madhya Pradesh   D)  Tamil Nadu
64.  World population Day is on
A)  July 11    B)  June 12
C)  September 12   D)  December 11
65.  India is the --------------largest producer of tea in the world
A) First B) Second
C) Third D) Fourth
66.  Blue revolution refers to revolution in
A) Oil seeds   B) Fertiliser
C) Egg D) Fish production
67.  RBI was established in the year
A)  1935   B)  1940   C)  1930   D)  1945
68.  The Committee constituted by RBI for recommendations for consumer service
improvements in banks
A)  M.N. Goiporia Committee  B)  Narasimham Committee
C)  Raja Chelliah Committee  D)  Tendulkar Committee
69.  As per Economic Review 2010, the contribution of primary sector to GSDP of
Kerala in the year 2008-2009
A)  16 %   B)  25 %   C)  30 %   D)  35 %
70.  Kerala’s literacy rate as per 2001 census is
A)  90.92%  B)  82.34%  C)  85.29%  D)  74.90%
71.  The district having the second largest population in Kerala according to 2001
census is
A)  Malappuram    B)  Thiruvananthapuram
C) Ernakulam   D) Palakkad
72.  The district in Kerala having the lowest per capita income during 2008-2009 is
A)  Malappuram    B)  Thiruvananthapuram
C) Ernakulum   D) Palakkad
73.  The highest amount of development expenditure of Kerala State during 2009-2010
is on
A) Education   B) Health
C)  Agriculture and co-operative D)  Industry, labour and employment


9
74.  The PQLI combines three indicators. They are
A)  Infant mortality rate , life expectancy rate and adult literacy rate
B)  School enrolment rate, clean environment, and quality of housing
C)  Health, education and environment
D)  Air pollution rate, water pollution rate and sanitation
75.  As economic development proceeds, income inequality tends to follow -------------curve
A)  Convex    B)  Inverted U shaped
C) U shaped   D) S shaped
76.  The Harrod- Damor growth model suggests that growth is
A)  Directly related to saving and inversely related to capital output ratio
B)  Directly related to capital output ratio and inversely related to saving
C)  Indirectly related to saving and capital output ratio
D)  Directly related to saving and capital output ratio
77.  The Protestant Ethic and the Sprit of Capitalismis written by
A)  Adam Smith    B)  Max Weber
C) J.Schumpeter   D) William Baumol
78.  If Gini ratio is equal to zero, income distribution is
A)  Perfectly equal   B)  Perfectly unequal
C)  Relatively equal   D)  Relatively unequal
79.  The classical economist who gives importance to effective demand
A) Smith B) J.B.Say
C)  Ricardo    D)  Malthus
80.  Dutch disease refers to
A)  A boom in a traded good sector leading to a boom in other traded good
sector
B)  A boom in a traded good sector leading to a decline in other traded good
sector
C)  A recession in a traded good sector leading to a recession in other traded
good sector
D)  A recession in a traded good sector leading to a boom in other traded good
sector
81.  The full form of UNFPA
A)  United Nations Fund for Population Activities
B)  United Nations Fertility Planning Association
C)  United Nations Family Planning Association
D)  United Nations Fund for Poverty Alleviation
82.  Census day in India is observed on
A)  February 9    B)  July 10
C)  June 15    D)  March 10


10
83.  The term Intermediate Technology is firstly introduced by
A)  J.R. Hicks    B)  E.F. Schumacher
C)  R.F. Harrod    D)  A. Lewis
84.  Which of the following is an example of tragedy of commons?
A)  Over fishing    B)  Smoking in a public place
C)  Excessive rain   D)  Common use of public toilet
85.  The government levying taxes on polluters or charging a surcharge for pesticide
use are
A)  Examples of Coase theorem
B)  Internalisation of negative spillover effects
C)  Marginal abatement cost
D)  Examples of a free rider
86.  According to Coase theorem, when property rights are well defined and legally
enforceable and transaction costs are not prohibitive
A)  Population growth leads to rigid land rights
B)  Participants will organize their transaction voluntarily to achieve efficient
outcome
C)  Violence, displacement, erosion and poverty are minimized
D)  Individual’s overuse of the biosphere is curtailed
87.  According to Myrdal, the main cause of regional inequalities is
A)  A strong backwash effect
 B)  A weak spread effect  C)  A strong backwash effect and a weak spread effect
D)  A weak backwash effect and a strong spread effect
88.  Wage good strategy has been developed by  A) Wagner  
B) Mahalanobis
C)  Vakil and Brahmananda
D)  Rao and Brahmananda
89.  The stability condition in the Kaldor model is  A)  Sp < Sw    B)  Sp > Sw
C)  Sp = Sw    D)  Sp ≤Sw
90.  Dirty float refers to
A)  Freely floating exchange rate system
B)  Fixed exchange rate system
C)  Managed floating exchange rate system
D)  Gold standard system
91.  Balance of current account includes
A)  Balance of Trade
B) Balance of invisibles
C) Balance of unilateral
D)  All the above


11
92.  SDR is the currency of
A)  IBRD  B)  WTO   C)  IMF   D)  ADB
93.  According to Schumpeter economic development is
A)  Continuous and steady change
B)  Sudden and discontinuous change
C)  Sudden and continuous change
D)  Continuous and expansion of the system
94.  Under floating exchange rate system and perfect capital mobility
A)  Only fiscal policy is effective
B)  Both monetary and fiscal policies are effective
C)  Only monetary policy is effective
D)  Both monetary and fiscal policies are ineffective
95.  Soft loan stands for
A)  Loan from international agencies
B)  Loan to poor countries
C)  Loan with no rate of interest
D)  Loan backed by no securities
96.  Consider the following statements:
The effect of devaluation is that it
1.  Changes the relative price
2.  Increases the foreign value of the domestic currency
3.  Increases the competitiveness of the domestic exports in the foreign
markets
4.  Improves the trade balance provided that domestic demand for import is
highly inelastic.
Of these statements
 A)  1,3,and 4 are correct   B)  2 and 4 correct  C)  1 and 3 are correct   D)  2 and 3 are correct
97.  When the foreign offer curve has an elasticity equal to unity, the optimum tariff
will be
A) Unity B) Infinity
C) Zero D) Less than unity
98.  The Organisation of Petroleum Exporting Countries (OPEC) is a ----------------whose members have agreed to limit output and fix prices  A) Duopoly  
B)  Genaralised system of tariff preferences
C) Cartel
D)  Free trade system
99.  The terms of trade are defined as
A)  The degree of competition existing in international trade
B)  The differences between exports and imports
C)  The differences in value between exports and imports
D)  The rate at which exports exchange for imports


12
100.  The extent to which a change in exchange rate leads to changes in import and
export prices is known as
A)  J curve effect   B)  Marshall – Lerner effect
C)  Absorption effect   D)  Pass through effect
101.  To be considered a good candidate for an export cartel, a commodity should
A) Be a manufactured good
 B)  Be a primary product  C)  Have a high price elasticity of demand
D)  Have a low price elasticity of demand
102.  Duty or other charges levied on an item on the basis of its value and not on the
basis of its quantity, size or weight is:
A)  Ad valorem tariff   B)  Compound tariff
C)  Effective tariff   D)  None of the above
103.  The product cycle theory of trade is essentially a
A)  Static, short run trade theory  B)  Dynamic, long run trade theory
C)  Zero sum theory of trade  D) Negative sum theory of trade
104.  If the international terms of trade settle at a level that is between each country’s
opportunity cost
A)  There is no basis for gainful trade for either country
B)  Both countries gain from the trade
C)  Only one country gains from the trade
D)  One country gains and the other country looses from the trade
105.  If no imported inputs go into the domestic production of a final product, the
A)  Nominal tariff rate on the final product equals the effective rate on the
product
B)  Nominal tariff rate on the final product is greater than the effective rate on
the product
C)  Nominal tariff rate on the final product is less than the effective rate on the
product
D)  None of the above
106.  Which of the following is an NBFI?
A)  SBI     B)  LIC of India
C)  State co-operative bank  D)  RRB
107.  Agricultural income tax is levied by
A)  Central government   B)  Local bodies
C)  State government   D)  All the above
108.  In India the fiscal year is
A)  From January 1 to December 31
B)  From March 1 to February 28
C)  From June 1 to May 31
D)  From April 1 to March 31


13
109.  Which one of the following is not a canon of taxation propounded by
Adam Smith?
A)  Canon of Ability   B)  Canon of Certainty
C)  Canon of Economy   D)  Canon of Productivity
110.  Zero base budgeting was first adopted by
A) France B) England
C) USA D) Germany
111.  Which one of the following is a feature of ‘club good?’
A)  The exclusion principle is possible
B)  It is shared by public
C)  It is an intermediate between public good and private good
D) All the above
112.  When a specified selective tax per unit of a commodity is imposed the effect on
the amount exchanged will be greater if
A)  Demand is elastic, supply is elastic
B)  Demand is elastic,supply is inelastic
C)  Demand is inelastic, supply is elastic
D)  Demand is inelastic, supply is inelastic
113.  Taxes which may be shifted from the person upon whom they are originally
imposed, to another person
A)  Specific taxes    B)  Double taxes
C)  Proportionate taxes   D)  Indirect taxes
114.  Budget deficit may be defined as
A)  Revenue expenditure minus revenue receipts
B)  Total expenditure minus total receipts
C)  Total expenditure minus total receipts minus capital receipts
D)  Fiscal deficit minus interest payments
115.  The concept of functional finance was developed by
A)  Fisher    B)  Dalton
C) Bastable   D) Lerner
116.  Which of the following committees examined and suggested tax reforms?
A)  Malhotra Committee   B)  Narasimham Committee
C)  Chelliah Committee   D)  Rangarajan Committee
117.  The Wanchoo Committee (1971) probed into
A)  Direct taxes    B)  Indirect taxes
C)  Agricultural holding tax  D)  Non-tax revenue


14
118.  The zero based budgeting approach has been adopted from
A)  April 1, 1988   B)  April 1, 1987
C)  April 1, 1986    D)  April 31, 1987
119.  The type of note issue system followed in India is
A)  Maximum fiduciary system  B)  Minimum reserve system
C)  Proportional Fiduciary system D)  Fixed fiduciary system
120.  The thirteenth Finance Commission has recommended the vertical share of tax
devolution to the tune of
A)  32 percent    B)  30.5 percent
C)  31 percent    D)  33.5 percent
*************** 

LITERACY RATE...KERALA CENSUS 2011

Literacy Rates by Sex for State and Districts : 2001 and 2011
State/ District Code	State/District	Literacy rate*
		Persons		Males		Females
		2001	2011	2001	2011	2001	2011
1	2	3	4	5	6	7	8
32	Kerala	90.86	93.91	94.24	96.02	87.72	91.98
01	Kasaragod	84.57	89.85	90.36	93.93	79.12	86.13
02	Kannur	92.59	95.41	96.13	97.54	89.40	93.57
03	Wayanad	85.25	89.32	89.77	92.84	80.72	85.94
04	Kozhikode	92.24	95.24	96.11	97.57	88.62	93.16
05	Malappuram	89.61	93.55	93.25	95.78	86.26	91.55
06	Palakkad	84.35	88.49	89.52	92.27	79.56	84.99
07	Thrissur	92.27	95.32	95.11	96.98	89.71	93.85
08	Ernakulam	93.20	95.68	95.81	97.14	90.66	94.27
09	Idukki	88.69	92.20	92.33	94.84	85.02	89.59
10	Kottayam	95.82	96.40	97.34	97.17	94.35	95.67
11	Alappuzha	93.43	96.26	96.27	97.90	90.82	94.80
12	Pathanamthitta	94.84	96.93	96.41	97.70	93.43	96.26
13	Kollam	91.18	93.77	94.43	95.83	88.18	91.95
14	Thiruvananthapuram	89.28	92.66	92.64	94.60	86.14	90.89
* Literacy rate is the percentage of literates to population aged 7 years and above