Economics Questions and Answers for Competitive Exams | Indian Economy Quiz Set 27

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Questions
1 What does ‘Price Scissors’ refer to ?
1 Marshall’s example of forces of supply and demand.
2 Exports of two strategic raw materials from a country.
3 A sharp fall in price of a major export item accompanied by a sharp rise in price of a major import
4 Export basket of competitive local manufactures

Answer:A sharp fall in price of a major export item accompanied by a sharp rise in price of a major import
2 Hedging in the foreign exchange market refers to :
1 An act of devaluation.
2 Not covering a risk of foreign exchange in future.
3 Covering a risk of foreign exchange in future.
4 None of the above.

Answer: Covering a risk of foreign exchange in future.
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3 Tax incidence refers to :
1 Whether a tax is progressive, proportional or regressive.
2 How often a tax is collected.
3 The person or group who ends up paying a tax.
4 How a tax is collected.

Answer:The person or group who ends up paying a tax.
4 Given the production function Q52 K1 3 . L2 3 , find the output level when 8 units of capital and 27 units of labour are used.
1 36
2 54
3 18
4 24

Answer: 36
5 If OLS is applied separately to each equation that is part of a simultaneous interdependent system, the resulting estimates will be :
1 Unbiased and consistent
2 Biased and consistent
3 Biased and inconsistent
4 It is impossible to apply OLS to the equations that are part of a simultaneous system

Answer: Biased and inconsistent
6 Which one of the following is not a plausible remedy for multicollinearity ?
1 Use principal components analysis
2 Drop one of the collinear variables
3 Use a longer-run of data
4 Take logarithm of each of the variables

Answer:Take logarithm of each of the variables
7 In which one of the following market situations are the firms mutually interdependent in pricing and output decisions ?
1 Oligopoly
2 Monopsony
3 Monopoly
4 Monopolistic Competition

Answer:Oligopoly
8 A tax is said to be buoyant if tax revenue is proportionally :
1 More responsive to changes in output
2 Less responsive to changes in output
3 Equally responsive to changes in tax base
4 Less responsive to changes in tax base

Answer:More responsive to changes in output
9 “Value and Capital” is written by who among the following economists ?
1 Hanson
2 Philipes
3 Ursula
4 J.R. Hicks

Answer:J.R. Hicks
10 Giffen paradox occurs when income effect is :
1 Greater than the substitution effect
2 Equal to the substitution effect
3 Less than the substitution effect
4 Negative and is greater than the substitution effect

Answer:Negative and is greater than the substitution effect
11 Which one of the following curves will respond the supply curve of labour ?
1 Marginal product curve of labour
2 Marginal revenue product curve of labour
3 Value of marginal product curve of labour
4 Average product curve of labour

Answer:Marginal product curve of labour
12 Limit price refers to the :
1 Price which maximizes the profits of the firm
2 Price which prevents entry of new firms
3 Price at which firm just starts earning a surplus over cost
4 Maximum price which the firm is allowed to charge

Answer:Price which prevents entry of new firms
13 Intellectual property rights regime is managed by :
1 IMF
2 W.T.O.
3 European Union
4 SAARC

Answer:W.T.O.
14 According to Heckscher - ohlin theorem, a nation will export a commodity which is :
1 Intensive in its relatively abundant factor
2 Intensive in its relatively cheap factor
3 Both (1) and (2) are necessary
4 Neither (1) nor (2) in necessary

Answer:Both (1) and (2) are necessary
15 Customs union always leads to :
1 Trade diversion effect alone
2 Trade creation effect alone
3 Both trade creation and trade diversion effects
4 Neither trade diversion nor trade creation effect

Answer:Both trade creation and trade diversion effects

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