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Economics Questions and Answers for Competitive Exams | Indian Economy Quiz Set 22

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(1) The share of food expenditure in total expenditure for Urban consumer and Rural consumer in India was 56% and 64% respectively in (1987-88) and which changed to 41% and 54% in (2009-10). This is appropriately explained by which of the following ?
(1) Decline in food production.
(2) Decline in purchasing power of consumers.
(3) Operation of Engel’s Law.
(4) Operation of law of diminishing marginal utility.
Answer: Operation of Engel’s Law.
(2) For demand function P = 15 – 2X – X2, what is consumer’s surplus at X = 2 ?
(1) 6
(2) 28/3
(3) 7/4
(4) 11/3
Answer: 28/3

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(3) If the targets for an economy are fixed in terms of final demand vector F, then the compatible levels of output vector X, in terms of input-output analysis will be determined according to which of the following ?
(1) A + F = X
(2) AX – F = X
(3) (I – A)–1 F = X
(4) (I – A) F = X
Answer: (I – A)–1 F = X
(4) In a two-variable regression, Y is dependent variable and X is independent variable. The correlation coefficient between Y and X is 0.8. For this, which of the following is correct ?
(1) 8% variations in Y are explained by X.
(2) 64% variations in Y are explained by X.
(3) 0.8% variations in Y are explained by X.
(4) None of the above.
Answer: 64% variations in Y are explained by X.
(5) If OLS is applied separately to each equation that is part of a simultaneous equation system, the resulting estimates will be
(1) Unbiased and consistent
(2) Biased and consistent
(3) Biased and inconsistent
(4) Unbiased and inconsistent
Answer: Biased and consistent
(6) Transfer payments by the government are not included in the net domestic product because :
(1) These are gifts from the government to the recipients
(2) They are not counted as commodities
(3) No corresponding production of goods and services has taken place to match such payments
(4) There may be leakages in such payments
Answer: No corresponding production of goods and services has taken place to match such payments
(7) Phillips curve sets up a relation between :
(1) Taxes and inflation
(2) Inflation and unemployment
(3) Money supply and aggregate demand
(4) Price and cost of production
Answer: Inflation and unemployment
(8) If economy is operating at potential GDP, an increase in money supply will lead to :
(1) Stagflation
(2) Structural inflation
(3) Demand-pull inflation
(4) Cost-push inflation
Answer: Demand-pull inflation
(9) In the long sum, the transitory consumption will :
(1) Be infinity
(2) Remain unchanged
(3) Decline but will remain positive
(4) Be zero.
Answer: Be zero
(10) In which of the following market situations/forms, firms are able to maximise profits ?
(1) Price leadership
(2) Cartel
(3) At the kink point
(4) Monopolistic competition
Answer: Monopolistic competition
(11) Logical extension of Cournot model is
(1) Bertrand model
(2) Stackelberg model
(3) Sweezy model
(4) None of the above
Answer: Stackelberg model
(12) Slutsky equation deals with decomposition of :
(1) price effect into substitution and income effects
(2) goods into superior and inferior goods
(3) goods into necessities and luxuries
(4) consumer and producer surplus
Answer: price effect into substitution and income effects
(13) A discriminating monopolist will charge a higher price in the market in which the price elasticity of :
(1) demand is greater
(2) supply is smaller
(3) supply is greater
(4) demand is smaller
Answer: demand is smaller
(14) Inclusive growth objective was given for the first time in which Plan of India ?
(1) 9th Five Year Plan
(2) 10th Five Year Plan
(3) 11 th Five Year Plan
(4) 12th Five Year Plan
Answer: 11 th Five Year Plan
(15) Which of the following is credited with introduction of LPG model of economic development in India ?
(1) Dr. C. Rangarajan
(2) Dr. Montek Singh Ahluwalia
(3) Dr. Amartya Sen
(4) Dr. Manmohan Singh
Answer: Dr. Manmohan Singh

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