Model question paper 1

Section A (30 marks)

PART I: Essay (12 marks)

Write an essay of 200-250 words on one of the topics given below. Marks will be
deducted for wrong grammar and spelling and poor punctuation and sentence construction. Use
technical terms only after defining them.

1) US Economic Subprime crises
2) Inflation mechanism in India (2009-2010)
3) National Rural Employment Guarantee scheme and distress migration

PART II: Multiple Choices (10 marks)

Choose the correct answer

1) What percentage of numbers from 1 to 70 have squares that end in the digit 1?
a) 1
b) 14
c) 20
d) 21

2) When the price of a product was decreased by 10 %, the number sold increased by
30%.What was the effect on the total revenue?
a) 13 % increase in revenue
b) 17% increase in revenue Continue
Contd. (Section A): Part III

c) 13% decrease in revenue
d) 17% decrease in revenue

3) The company purchased a machine for Rs. 80,000 and spent Rs. 5000 on repair and
Rs.1000 on transport and sold it with 25% profit. At what pricr did he sell the
machine?
a) Rs1,05,100
b) Rs.1,06,250
c) Rs.1,07,500
d) Rs.1,17,500

4) What annual instalment will discharge a debt of Rs. 1092 due in 3 years at 12%
simple interest?
a) Rs.300
b) Rs.225
c) Rs.400
d) Rs.325

5) The difference between a number and its three-fifth is 50. What is the number
a) 75
b) 100
c) 125
d) None of these
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Model question paper 1
Contd

6)
If
5
4
=
b
a
and
16
15
=
c
b
, then
2 2
2 2
a c
a c
+

is
a) 1/7
b) 7/25
c)
d) 2/7

7)
What is the value of
Q P
Q P

+
if 7 =
Q
P

a) 1/3
b) 1
c) 4/3
d) 12/7

8)
If 0< a <1 then
a
1
1+ is
a) less than 2
b) greater than 2
c) less than 4
d) greater than 4

9)
If 5 7 7 3
2
+ = + = + x P x x , what is value of P?
a)
b) 33/4
c) 67/4
d) Cannot be determined

10) Find the sum of all odd numbers up to 100
a) 2500
b) 2999
c) 3000
d) None of the above

Section B (1 X 40 = 40 marks)

1) Skilled worker earn more than unskilled worker because
a) they have higher marginal value
b) of compable- worth legislation
c) the supply of skill labour is more elastic
d) The demand of skill labour is more elastic

2) If goods A and B are complementary goods(in consumption) and the cost of
resources used in the production of A decreases then
a) the price of B will fall but price of A will rise
b) the price of b will fall but price of A will fall
c) the price of both A and B will rise
d) the price of both A and B will fall


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Model question paper 1

Contd

3) If your tax payments rises faster than your income rises, the tax is a
a) progressive tax
b) regressive tax
c) proportional tax
d) fate rate tax

4) Today, you may be buying from a regulated natural monopoly when you purchase,
a) a computer, a phone, or a camera
b) water, electric power or subway services
c) a house, or plot of land
d) a car, truck or a bicycle

5) The following is/are not example(s) of externality:
a) Pollution emanating from a factory chimney which is hazardous to the health of
people living nearby
b) Construction of roads for facilitating transportation to a factory
c) Traffic signal put up by the government
d) Both b)and c) above

6) If the demand function for a good is P = 100- 2Q, over the range of prices is demand
inelastic
a) Rs. 5 to Rs. 50
b) Rs. 0 to Rs. 50
c) Above Rs. 40
d) Above Rs. 50

7) Which object has a lowest elasticity of supply?
a) Luxury items
b) Necessities
c) Perishable goods
d) None of the above

8) If both income and substitution-effects are strong, this region of the demand curve
must be
a) relatively price elastic
b) relatively price inelastic
c) perfectly inelastic
d) unit elastic

9) Total cost function of a firm is given below:
TC = 200Q 9Q
2
+ .25 Q
3
The minimum possible marginal cost is
a) Rs. 92
b) Rs.96
c) Rs.120
d) Rs.126





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Model question paper 1

Contd

10) Of the production functions, which one of the following represents decreasing
returns to scale?
a) Q = 2K + 3L +KL
b) Q = 20K
0.6
L
0.5

c) Q = 100 + 3K +2L
d) Both a) and c) above

11) A kinked demand curve occurs in an oligopoly when a firm
a) increase its price and other do not follow it
b) decrease its price and other follow it
c) decrease its price and other do not follow it
d) both a) and b) above

12) A consumer spends all is income only on two goods, X and Y. Budget constraint is
estimated as 100 = 4X +12Y. Absolute value of the slope of the budget line (when
good X is taken on X-axis and goods Y on Y-axis) is
a) Zero
b) .33
c) 3.00
d) 8.33

13) The demand for spring water is given by P = 1000- Q. Assume that the cost of
production to be zero. What is the equilibrium price for the industry if there are four
firms in the industry?
a) Rs. 800
b) Rs. 200
c) Rs.100
d) Rs.1000

14) Which statement is not correct in first degree price discrimination in a monopoly?
a) The monopolist will be able to extract the entire consumers surplus.
b) The price of each unit will be different.
c) By following first degree price discrimination, the monopolist earns more than
what he could otherwise earn at a single price per unit.
d) The price of the first unit will be less than that of the subsequent units.

Based on the following information answer the questions 17 to 18

Price Quantity demanded
X Y Z X Y Z
3.50
4.00
2.50
3.00
3.25
3.75
400
450
550
600
150
200
4.50
4.50
3.50
4.00
4.00
3.25
425
450
700
650
250
300
4.75
5.00
4.50
4.50
4.75
5.25
500
350
500
550
150
100


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Model question paper 1

Contd

15) Compute the cross elasticity of demand between X and Y from the above table
a) 0.50
b) 0.37
c) 0.42
d) 0.31


16) What is the cross elasticity of demand between Y and Z?
a) 0.50
b) 0.75
c) 0.36
d) None of the above


17) Which of the following is false with the reference to opportunity cost:
a) It is the value of next best use for an economic good.
b) It is the value of a sacrificed alternative.
c) It is useful in decision-making
d) It does not take into consideration, the cost of time.


18) Two countries with given quantities of labour and capital can produce only two
commodities and can trade only with each other. Country A can produce 10 tons of
coal or 10 tons of steel, but country B can produce only 8 tons of coal or 5 tons of
steel.
Assuming constant costs, Country B should:
a) import coal and export steel
b) export coal and import steel
c) export both coal and steel
d) import both coal and steel


19) Assume that there are 100 markets in an economy. Prices have adjusted so that 98
markets are in equilibrium. Then Walras Law implies that
a) also the remaining two markets are in equilibrium
b) it is impossible that both remaining markets display excess demand
c) the market prices in the remaining two markets have to fall
d) the market prices in the remaining two markets have to rise

20 The introduction of a minimum wage rate above the market equilibrium wage
a) increases unemployment the less the more wage-elastic the labor supply curve is
b) decreases employment the less the less wage-elastic the labor demand curve is
c) decreases employment the less the more wage-elastic the labor supply curve is
d) increase employment the less the more wage-elastic the labor supply curve is

21 The concept of marginal utility was introduced by
a) William S. Jevons
b) Adam Smith
c) Antoine A. Cournot
d) None of the above

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Model question paper 1
Contd
22 Human Development Index of an economy is a combined index of
a) Ault literacy, infant mortality and GNP
b) Adult literacy, primary and secondary enrolment ratio and GNP
c) Infant mortality, head count ratio and Gini coefficient
d) Life expectancy at birth, adult literacy, combined gross enrolment rates in
education and GDP per capita

23 Capability approach towards measuring development of an individual was put forth
by
a) Amartya Sen
b) G.Myrdal
c) Harrod and Domar
d) Karl Marx

24 The inverted u curve hypothesis was given by
a) Simon Kuznets
b) W.W.Rostow
c) Taodaro
d) None of the above.

25 Which of the following statements is not true?
a) Population principle states that cloning the entire population and their incomes
should not alter inequality.
b) Two Lorenz curves may cross sometimes
c) Income gap ratio is a measure of inequality
d) Lorenz curve displays cumulative shares of income earned by cumulatively
increasing fractions of the population arranged from poorest to richest

26 In Harris-Todaro model, migration takes place
a) Because there are good educational facilities in urban area
b) Because the working conditions are better in urban areas,
c) Because the expected income is higher than the income earned in rural areas.
d) none of the above

27 The Phillips curve assumes that inflation expectations are
a) changes in interest rates.
b) changes in unemployment.
c) changes in short-term output fluctuations.
d) changes in long-term inflation.

28 In the IS curve, consumption, government expenditure, exports, and imports are a
function of
a) expectations.
b) current output.
c) potential output.
d) the interest rate.

29 The explanation for the upward sloping supply of labor curve is that
a) the marginal product of capital is positive.
b) as the wage rises the opportunity cost of leisure rises, so people work more.
c) as the wage rises, people want to work less.
d) the marginal product of labor is diminishing.
Continue
Model question paper 1

Contd

30 If the percent change in the price level is __________ than the percent change in
__________, __________.

a) smaller; nominal GDP; real GDP shrinks
b) greater; nominal GDP; real GDP shrinks
c) greater; real GDP; nominal GDP shrinks
d) greater; real GDP; nominal GDP stays the same

31 If the available workers are unaware of the job being offered and the employers are
not aware of the available workers, such type of unemployment is called
a) Frictional unemployment
b) Structural unemployment
c) Cyclical unemployment
d) Disguised unemployment

32 From the following National income data, what will be the value of net factor
income from abroad?

GNP at factor cost 172250
Subsidies
NNP at market price
Depreciation
NDP at factor cost
520
163740
12180
157170


a) 2750
b) 2600
c) 2900
d) 2850

33 For an economy, goods market equilibrium is : 0.5 Y = 3125 25 i
If expansionary monetary policies decrease the rate of interest in the economy by one
percentage point, the equilibrium income will
a) decrease by 25
b) increase by 25
c) decrease by 50
d) insufficient data

34 In the last few months the forex reserves in India have been increasing. Which of the
following sterilization policies would the RBI should adopt?
a) Increase CRR
b) Decrease CRR
c) Decrease discount rate
d) Buy government securities





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Model question paper 1

Contd

Based on the following information answer questions 35 and 36
LM Function Y = 500+200 i
Investment function (I) 100 10 i
Transaction demand for Money (Mt) 0.50 Y
Speculative Demand for Money (Ma) 350 100 i
Supply of money (Ms) 500 Rs.
Current equilibrium rate of interest (i) 10 %


35 If expansionary fiscal policies increase the equilibrium rate of interest to 12 % , the
crowding out in the economy is :
a) 10 Rs.
b) 15 Rs.
c) 20 Rs.
d) 25 Rs.

36 If the government would like to avoid the crowding out as in above question, what
should be new money supply in the economy?
a) 100 Rs.
b) 600 Rs.
c) 650 Rs.
d) 700 Rs.

37 Suppose there is full employment and a vertical aggregate supply schedule. An
increase in the nominal money supply
a) causes the real money supply to increase, which changes the compositions of
output.
b) has no effect on the real money supply or the composition of output.
c) causes a proportional increase in real output.
d) reduces the rate of interest and changes the compositions of output.

38 Which among the following provides estimates for gross domestic product (GDP) of
India?
a) National Sample Survey (NSS)
b) Indian Statistical Institute (ISI)
c) Central Statistical Organisation (CSO)
d) None of these

39 The real rate of interest
a) Equals the nominal rate plus the rate of inflation
b) Equals the rate of inflation minus the nominal rate
c) Equals the nominal rate minus the rate of inflation
d) Tends to increase when inflation rises

40 If potential GDP is greater than actual GDP, then
a) Exports must be greater than imports
b) Inflation has increased from the year before
c) Production is less than it could be if all resources were fully employed
d) Compensation should be made in normal terms
Continue
Model question paper 1

Contd

Section C
(1 X 3= 30 marks)

1 Find the all 2 digit numbers divisible by 3.
a) 1500
b) 1665
c) 2000
d) NoNone of the above.

2 51+52+53++100) is equal to
a) 2525
b) 2975
c) 3225
d) 3775

3
If 1.5x = 0.04y, then the value of
(

x y
x y
is equal to
a) 730/77
b) 73/77
c) 7.3/77
d) None of the above

4
=

7 . 0 5 . 14 0073 . 0
92 . 2 0203 . 0
?
a) 0.8
b) 1.45
c) 2.40
d) 3.25

5 In a certain town, 3 people are born every 7 seconds and 7 people die every 11
seconds. Therefore the birth and death rates account for a population growth rate of
one person every
a) 3/11
b) 16/21
c) 7/11
d) 3/17

6 4
61
+ 4
62
+4
63
+4
64
+4
65
is divisible by
a) 9
b) 11
c) 17
d) 19



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Model question paper 1

Contd

7 What is the value of (0.00032)
0.6
?
a) .08
b) .008
c) .0008
d) .004

8 Find least number which when divided by 6, 15, 17 leaves remainder 1, but when
divided by 7 leaves no remainder.
a) 81
b) 1111
c) 211
d) 511

9 In an entrance examination, there are 200 questions with 4 alternatives each. A
student marks first alternative as answer to all questions. What is the students
probable net score if each answer fetches +1 and each wrong answer fetches -1/4
marks?
a) 10
b) 0
c) 12.5
d) -25

10 The rent of a hostel for the first 3 days was 50 Rs per day for the first 3 days, Rs 100
per day for the next 5 days and Rs 300 per day for other days. Te registration fee in
the beginning is Rs 50 if a person has to pay 1600 rupees. Than how many days did
he stayed at the hostel?
a) 11
b) 10
c) 32
d) 16

11 Which of the following are true for a Poisson distribution?
a) Mean is 2 times variance.
b) Mean is of variance.
c) Mean is equal to variance.
d) Mean is small fraction of variance.

12 If P[Eh] = 0.6, P[Ec] = 0.7 and P[Eh Ec] = 0.4 then P[Eh U Ec] is,
a) 0
b) 1
c) 0.9
d) 0.7

13 If A & B are independent, P(A) = 0.4 and P(B) = 0.6 then P(A U B) is,
a) 0.24
b) 0.76
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Model question paper 1

Contd

c) 0.6
d) 1

14 Let, X : 0 1 2 3
Freq: 5 10 5 2
Then E(X) is close to
a) 2.5
b) 3.5
c) 1.2
d) 5.5

15 Which of the following is not continuous distribution?
a) Exponential Distribution
b) Pareto Distribution
c) Geometric Distribution
d) Gamma Distribution

16 Let X is an event that a student chosen at random from certain class which are
appearing for certain examination and Y be an event that he/ she has passed
previous examination. Then what will be symbol for probability of a student not
appearing for examination.
a) P(X)
b) 1 P(X)
c) P(X| Y)
d) 1- P(X|Y)

17 Geometric distribution is a particular case of
a) Binomial Distribution
b) Negative Binomial Distribution
c) Uniform Distribution
d) Hyper geometric Distribution

18 (5
2
)
1/2
. 5
2
.5
-3

a) 1
b) 5
c) 5225
d) 25

19 Let 1 + 0.1 + 0.1
2
+ 0.1
3
+ 0.1
4
+ .. = x , then x close to,
a) 0.1
b) 1.1
c) 2.1
d) 1



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Model question paper 1

Contd

20 Find the value of the constant k such that P(x ) is the Probability Mass Function
(p.m.f.) of X P(x) = k (1/3)
x
x = 1,2,3
a) 3
b) 1/3
c) 1
d) 2

21 Which of the following relation is true if r is the correlation coefficient?
a) 0 r 1
b) -1 r 1
c) r 0
d) 1 r

22 What is the range of multiple correlation (R)?
a) -1 R 1
b) 0 R 1
c) R 1
d) R > 0

23 For X ~ N(0, 1) P (X 0) = ?
a) 0.25
b) 0.05
c) 0.5
d) 0

24 Which of the following discrete distribution has forgetfulness property?
a) Binomial Distribution
b) Poisson Distribution
c) Geometric Distribution
d) Exponential Distribution

25 Which of the following measure of central tendency affected by extreme value?
a) Mean
b) Mode
c) Median
d) None

26 Negative Binomial distribution is general case of :
a) Binomial Distribution
b) Geometric Distribution
c) Poisson Distribution
d) None of the above



Continue

Model question paper 1
Contd

27 Which of the following scatter plot shows linear relationship between X and Y?
a)


b)


c)


d) All of the above



Continue
0
2
4
6
8
10
12
14
16
18
0 2 4 6 8 10
X
Y
0
10
20
30
40
50
60
70
0 2 4 6 8 10
X
Y
0
500
1000
1500
2000
2500
3000
3500
0 2 4 6 8 10
X
Y
Model question paper 1

Contd

28 Which of the following statements related to expectation of random variable are
true?
a)
( ) X E X
E
1 1
=
|

\
|

b)
If X and Y are independent random variables then,
( )
( ) Y E
X E
Y
X
E =
|

\
|

c) Both are true
d) All of the above are false

29 If X ~ B(n, p ) n is number of trials and p is the probability of success, then
standard deviation of binomial distribution is:
a) Np
b)
) 1 ( p np
c) np(1-p)
d) p(1-p)

30 Which of the following statement is false
a) Statistics theory aggregates, without assigning importance to units
b) Statistics is a dangerous tool for those who know fully about the method of its
use
c) Statistical inferences can be reliable only under specific limitations
d) Statistics has universal utility


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