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Economics Questions and Answers for Competitive Exams | Indian Economy Quiz Set 20

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(1) Originally, the maximum and minimum limits of the Statutory Liquidity ratio prescribed in India was
(1) 40 percent and 20 percent
(2) 40 percent and 25 percent
(3) 30 percent and 25 percent
(4) 30 percent and 20 percent
Answer: 40 percent and 25 percent
(2) Who among the following economists considered the rate of interest to influence the transaction demand for money ?
(1) P. Samuelson
(2) W. J. Baumol
(3) Keynes
(4) I. Fisher
Answer: W. J. Baumol

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(3) Among other things, which one of the following was the purpose for which Deepak Pareksh Committee was constituted ?
(1) To study the socio-economic conditions of minority communities.
(2) To suggest the measures for financing the development of infrastructure.
(3) To frame the policies on genetically modified seeds.
(4) To suggest measures to reduce the fiscal deficit in the Union Budget.
Answer: To suggest the measures for financing the development of infrastructure.
(4) Which Finance Commission has used forest cover as a criterion for horizontal distribution of resources in India ?
(1) 10th Finance Commission
(2) 12th Finance Commission
(3) 13th Finance Commission
(4) 14th Finance Commission
Answer: 14th Finance Commission
(5) Who among of the following is associated with the theory of optimal taxation ?
(1) H. Dalton
(2) R.A. Musgrave
(3) U.K. Hicks
(4) G. Mankiw
Answer: G. Mankiw
(6) To reach an economically efficient output level, the size of an excise tax imposed on a firm generating negative externality should be
(1) the firm’s marginal cost
(2) the social marginal cost
(3) the difference between the social marginal cost and the firm’s marginal cost
(4) the sum of the social marginal cost and the firm’s marginal cost.
Answer: the difference between the social marginal cost and the firm’s marginal cost
(7) Which among the following is the reason for Convergence exhibited by the Solow growth model ?
(1) Static capital-labour ratio.
(2) Declining marginal productivity of capital.
(3) Neutral technical progress.
(4) Constant rate of growth of population
Answer: Declining marginal productivity of capital.
(8) Who among the following economists was not concerned with the problem of surplus labour ?
(1) W.A. Lewis
(2) Gustav Renis and Fei
(3) R. Nurkse
(4) J.S. Mill
Answer: J.S. Mill
(9) For the Harrod’s model of growth, which among the following production functions best matches with the assumptions of the model ?
(1) Leontief production function
(2) Homogeneous production function
(3) C.E.S. production function
(4) Well-behaved production function
Answer: Leontief production function
(10) New Keynesian economics challenges which among the following schools of thought regarding the full adaptability of a policy change on the part of economic agents ?
(1) New classical economics
(2) Neo Keynesians
(3) Monetarists
(4) Both (1) and (2) above
Answer: New classical economics
(11) Who among the following developed the ‘Wage-goods model’ of planning ?
(1) A.K. Sen
(2) P.C. Mahalanobis
(3) R. Nurkse
(4) C.N. Vakil and P.R. Brahmanand
Answer: C.N. Vakil and P.R. Brahmanand
(12) A key property of A.K. model is
(1) absence of diminishing returns with respect to capital.
(2) a sustained dose of autonomous investment.
(3) a command economic system.
(4) a high probability of the poorer economies to catch up with the developed economies.
Answer: absence of diminishing returns with respect to capital.
(13) In Pasinetti’s model of growth the interplay among which variables is crucial ?
(1) Profit rate, Economic growth, Savings.
(2) Profit rate, Distribution of income and economic growth.
(3) Profit rate, autonomous investment and economic growth.
(4) Savings, Investment and technology.
Answer: Profit rate, Distribution of income and economic growth.
(14) Which among the following will constitute Foreign Direct Investment (FDI) ?
(1) Buying a company in the target country.
(2) Expanding operations of an existing business in that country.
(3) Investing in the shares and stocks of companies in the capital market.
(4) Both (1) and (2).
Answer: Both (1) and (2).
(15) When two or more countries enter into an agreement to eliminate import quota and tariffs and promote trade among themselves, such a group of countries are said to form a
(1) Free Trade Area
(2) Custom Union
(3) A Common Market
(4) Both (2) and (3)
Answer: Free Trade Area

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