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ECONOMICS

PAPER-III

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This paper is of two hundred (200) marks containing four (4) sections.
Candidates are required to attempt the questions contained in these sections
according to the detailed instructions given therein.

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NOTE:

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D-0105

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SECTION- I

"""~'
Note:

Answer the five questions from the para given below_ Each answer
should not exceed 30 words_ Each question carries five marks_
(5x5=25 marks)

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(5x5=25 ~)

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"The whole of a man's income is expended in the purchase of services and of

commodities_ It is indeed commonly said that a man spends some portion of his iru:ome
and saves another_ But it is a familiar economic axiom that a man purchases labour
and commodities with that portion of his income which he saves just as much as he
does with what he is said to spend_ He is said to spend when he seeks to obtain present
enjoyment from the services and commodities he purchases_ He is said to save when
he causes the labour and the commodities which he purchases to be devoted to the
production of wealth from which he expects to derive the means of enjoyment in the
future_"
-Alfred J\.farshall

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To which school of thought does the author belong ?

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D-0105

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P.T.O.

2.

How is a man said to spend that part of his iru:ome which he saves ?

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Can there be defideny of demand in the light of the above principle ?

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Name the law underlyllig this passage.

5.

Do you agree with the economic axion referred to here? Give Onf< reason in support of
your answer.

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4.

D-0105

P.T.O.

SECTION- II
"UI"'rn'- II

Note:

The part has fifteen (15) definitional questions of (5) marks each to be
answered in upto (30) words_

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(5x15=75 marks)

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"B<: (30) 'lli"iil ij ~ I

What are discretionary profits?

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D-0105

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7.

What is meant by capital- output ratio ?

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Definf. Pareto Optimality.

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D-0105

P.T.O.

Defi"" capital-embodied technical progress:

10.

Distinguish between progressive and regressive methods of taxation.

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9.

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D-0105

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11.

What is linear prograrrunillg?

12.

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Definf. the coru:ept of multiplier?

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P.T.O.

13.

Defi"" l<f<ynesian notion of aggregate demand.

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What is consumers surplus ?

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D-0105

15.

Definf. the long-tenn Phillips curve.

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What is meant by 'Coumot Point' ?

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D-0105

P.T.O.

Distinguish between capital deepening and capital-widening processes.

18.

Identify different compoTif<nts of money supply.

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17.

19.

Definf. Total Factor Productivity (TFP).

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Countries of the world are given ranKs according to (a) per capita income, x, and
(b) population density per square kilometer, y,. How do you correlate x, andy, ?
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D-0105

P.T.O.

SECTION - III
~-III

The part has five short-essay type questions of (12) marks each to be
answered in upto (200) words_ The candidstesmay select OTif< elective
and answer all five (5) questions_
(Ux5=60 marks)

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Elective- I

Given the following least-squares estimates :

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c,_1 ~constant + 0.78 Y, + e3t

+ 0.55 c,_1 + e4t

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Y,~constant

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Calculate the least-squares estimates of 13 2 and 13 3 in

Y, ~ ~ + 0.55
f'q-;:;q

{1'1<li{"l

C:,_1 + e4t

ij 132 if<: l33 i'!;- ~ qi; iW~ <# T(!!Fil ~

C,= 131 +13 2Y,+I3 3C:,_1 +U,

D-0105

22.

Consider the Cobb-Douglas production furu:tion:

Y,=

/31 X,,m X~"

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(1)

Where Y,= output, Xz= labour input and

equation becomes :

X:J =capital input.

Written in log fonn, the

Where

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(1)

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How does one find out if there are constant returns to scale ?

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The empirical results based on the data for 1946-1975 were as follows (standard errors
in the parenthesis) :

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23.

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Ct = 26 19 +0 6248GNPt -0 43'JBDt
(2 73) (0 OCBJ)
(0 0736)

(a)

What assumption is mad by the authors about the nature of heteroscedasticity?

(b)

Compare the results of the two regressions. Has the transfonnation of the original
model improved the results, that is reduced, the estimated standard errors ?

(c)

Can you compare the two R 2 values ?

D-0105

P.T.O.

1946-1975 #;- f~ #;- ill1'H 'n f'q-;:;q illFJ:'U~ (p>f1fJi<_1) ~

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Ct = 26 19 +0 6248 GNPt -0 43SSD 1

(2 73) (0 OCBJ)
(0 073S)
R

=0999

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Ct/GNP =25.92 (lfGNPJ+0.6246-0A315 (DtfGNPt)

(a)

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(b)

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Given the two equation system :

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(2..22)

13nY1t+I312Y2t+All x1,+A12 x2t=u1t---(1)

13n Y1t + 1322 Y2t + A21 x1t + A22 x2t = u2t -----(2)

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Following restrictions are imposed

A12 =0, A21 =0,

(b)

A12 =0, A22 =0,

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(a)

Discuss the identification problem of equations (1) and (2) with respect to
restrictions in (a) and (b).

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13nY1t+I312Y2t+All x1,+A12 x2t=u 1,-----(1)

13n Y1t + 1322 Y2t + A21 x1t + A2 2 x2t = u 2, -----(2)

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(a)

A12 =0, A21 =0,

(b)

A12 =0, A22 =0,

(a) ill'R: (b) ;i(p:jj\ #,- f1'<:>\ ij (1) "il'.ll (2) {1'1O<Ji{Ojj ,P i)lf\;fOpj\{!!1 m<i\ ,P fqih+

D-0105

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Discuss the coru:ept of stationarity and unit roottest in the context of time series analysis.
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ze:r~re) <P <1'W"ll "il'.ll ~ 1R" m <P fqihHi <R: 1

OR

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Elective- II

21.

Explain the maximum rule in a 2-person zero-sum game.

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25.

What is meant by equilibrium growth in the neo-classical growth model? How is it

achieved ?

23.

Explain the problem of economic inefficieru:y under monopoly.

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What is acceleration priru:iple ? Explain the working of super-multiplier?

25.

Why the equilibrium growth rate is unstable in the Harrod-Damar model ? Explain

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Elective - III

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21.

Discuss the lessons which could be drawn by the developing countries from the
break down of the Bretton Woods System finally in 1973. ExalYlinf< the role of lli/!F in
putting the international monetary system on a sound footing in the Post-Bretton Woods
period.

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D-0105

P.T.O.

22.

What are the major features of Singapore issues under VI/TO? How do these affect the
developing countries including India ?
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fin:! 'NH 'J'119"il <8# '&!

Distinguish between equilibrium exchange rate and exchange rate overshooting. Explain
the factors that influeru:e the exchange rate overshooting under the fluctuating exchange
rate system.

24.

Discuss the major features of the Euro-Currency market and International bond markets.
Explain their rapid growth in tenns of size and the range of services during the last
three decades.

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Examine the role of structural adjusbnent programmes initated by Ill/IF/ World Bank
during 1980..85 in reducing the incideru:e of poverty in developing countries iru:luding
India.

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Account for regional differentials in the productivity of non-food crops in India. How
can these differentials be narrowed ?

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21.

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Examine the rationale behind the introduction of public distribution system in India.

D-0105

23.

"Availability of credit is the major bottleneck in the attainment of sustainable

development of Indian Agriculture". In this context evaluate the role of co operative
credit institutions in the country.

'nit'! ~ili"i'"i<JB'9 ~nil nrw<P ~Fn 'T<l''J'!Wi":f'T '&1' B1 *'1 il "t"$ il "l:1T<Bfi"
mw w.r<i\ <P 1fl:J<B <B "lf"'!i<F~ ~ 1
What major changes in agrarian structure would you suggest to make Indian agriculture
globally competitive?
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iB 'l~ 11: 'n '.fowf'<i"i'1ili" q=r"f it" ftTI '1+1''1~''1 ;;;N i! iJPT %or '1fEi~\

Account for the failure of land refonns in India in improving incentive-structure in

agriculture.
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Explain the rationale of plarming in the context of &anomie Development.

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What are the effects of economic refonns on reduction of poverty in India ?

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22.

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What are the environmental issues emerging as a result of &anomie Refonns in

India ?
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25.

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Explain the effects of liberalisation on the Indian Industrial Sector.

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Highlight the importance of women empowerment in the context of Economic

Development.
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D-0105

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SECTION- IV

"UI"'rn'- I V
The part has one question of (40) marks to be answered in upto 1000
words_
(40x1=40 marks)
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(1000)~-ij~l

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Why does the problem of heteroscedasticityislikely to be more common incross-sectional

than time series dsta? Discuss a test for detection of heteroscedssticity_ Briefly, explain
the consequeru:es of using OLS in the presence of heteroscedasticity_
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How does a sales revenue mailinizer achieve an optimal combination of inputa and
outputa_

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<:f'il-r; lim 'JiB{ 'JIB ili13 '& (

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Discuss the underlying factors responsible for the 1997 East Asian finaru:ial crisis_ In
what way it was different than 1982 Latin American debt crisis ?
1997 'FiL~ finlb:j ~ #;- ~

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Discuss the problems and prospects of agricultural marketing in Indian Agriculture_

0Rj3JW:IT
Discuss the major recommendstions of the Narasimham Committee on Financial Sector
Refonns in India_

D-0105

FOR OFFICE USE ONLY

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Total l\1arks Obtailled (in words) _

(in figures) _
Signature & Name of the Coordinator _
(Evaluation)

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Date_

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Marks Obtained