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Economics Questions and Answers for Competitive Exams | Indian Economy Quiz Set 3

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(1) If marginal propensity to import is 0.1 and the marginal propensity to consume is 0.7, the value of the income multiplier will be :
(1) 1.25
(2) 2.33
(3) 2.5
(4) 3.33
Answer: 2.5
(2) According to neo-classical theory of distribution, constancy in the wage share in national income would come about only when the elasticity of factor substitution :
(1) is less than one
(2) is equal to one
(3) is zero
(4) is greater than one
Answer: is equal to one

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(3) Which amongst the following is not a feature of J.E. Meade’s model ?
(1) Perfect competition prevails.
(2) Economy produces consumption goods and producer goods.
(3) Perfect substitution is possible between consumption and capital goods.
(4) It examines the relationship between the growth rate of population and growth rate of savings.
Answer: It examines the relationship between the growth rate of population and growth rate of savings.
(4) Which of the following statements about the AK model (Y=AK) of growth is false ?
(1) This is a part of endogeneous growth theories.
(2) The model assumes that an increase in the physical stock of capital will shift the production function upwards.
(3) The model assumes diminishing returns to capital.
(4) The model suggest that if the level of investment is higher than depreciation, there would be sustained growth.
Answer: The model assumes diminishing returns to capital.
(5) Which of the following is not a correct feature for the absolute convergence to hold good ?
(1) Same population growth rate
(2) Same savings propensity
(3) Same capital - labour ratio
(4) Different capital - labour ratio
Answer: Same capital - labour ratio
(6) In Solow’s growth model, the output per capita is a function of :
(1) Labour - Output ratio
(2) Capital - Output ratio
(3) Technical progress
(4) Capital - Labour ratio
Answer: Capital - Labour ratio
(7) Dusenberry was of the opinion that less developed countries will have serious and adverse effect on their balance of payments due to :
(1) demonstration effect
(2) multiplier effect
(3) backwash effect
(4) spread effect
Answer: demonstration effect
(8) Leibenstein in his critical minimum effort thesis treats population as a factor that is :
(1) Income - generating
(2) Investment - inducing
(3) Income - depressing
(4) Market - expanding
Answer: Income - depressing
(9) ‘Workers must own the capital to which their savings has given rise.’ This is an important assumption of the growth model, developed by :
(1) L. Pasinetti
(2) N. Kaldor
(3) R. Solow
(4) J.E. Meade
Answer: L. Pasinetti
(10) Which one of the following is true for demand side vicious circle of poverty ?
(1) Low income → Low demand → Low investment → Capital deficiency → Low productivity → Low income
(2) Low productivity → Low income → Low savings → Low investment → Capital deficiency
(3) Low income → Low investment → Low demand → Low Capital deficiency
(4) Low demand → Low saving → Low productivity → Low investment → Capital deficiency
Answer: Low income → Low demand → Low investment → Capital deficiency → Low productivity → Low income
(11) Which of the following is the cause of disequilibrium between warranted rate of growth and actual rate of growth in the Harrod model ?
(1) Discrepancy between Ex-ante investment and Ex-post investment.
(2) Discrepancy between Ex-ante investment and Ex-ante savings.
(3) Discrepancy between Ex-ante savings and Ex-post savings.
(4) Discrepancy between Ex-post investment and Ex-post savings.
Answer: Discrepancy between Ex-ante investment and Ex-post investment.
(12) Which one of the following committees recommended to establish the National Bank for Agriculture and Rural Development (NBARD) in India ?
(1) Narsimham Committee
(2) Chakravarti Committee
(3) Abhijit Sen Committee
(4) Shivaraman Committee
Answer: Shivaraman Committee
(13) Which of the following option(s) is/are true for National Action Plan for Climate Change ?
(1) It was launched in 2008
(2) It has 8 vertical missions for pollution control.
(3) Both (1) and (2) are true
(4) Neither (1) nor (2) is true
Answer: Both (1) and (2) are true
(14) Which of the following is portrayed in the population pyramid of a country ?
(1) Rural - urban distribution of population
(2) Young - old distribution of population.
(3) Age and sex distribution of population.
(4) Gender distribution of population.
Answer: Age and sex distribution of population.
(15) In the long period, which one of the following curves would aptly represent the time path of population for a developing economy ?
(1) Exponential curve
(2) Logistic curve
(3) Lorenz curve
(4) Hyperbolic curve
Answer: Logistic curve

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