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

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Questions
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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