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TEST BOOKLET
(ECONOMICS)
Time Allowed: 2 Hours Full Marks: 100
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The capital of Bangladesh is
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What is the primary focus of Economics as a branch of study?
(A) Analysing consumer behaviour and preferences (B) Studying money and financial markets (C) Exploring government policies and regulations (D) Analysing the allocation of scarce resources to fulfil unlimited human wants
The correct answer is (D) Analysing the allocation of scarce resources to fulfil unlimited human wants.
Explanation: Economics is a social science that studies how individuals, businesses, governments, and societies allocate resources to meet their unlimited wants and needs. The primary focus of economics is to analyze how scarce resources (such as labor, capital, and natural resources) are allocated to produce goods and services that satisfy human wants. This involves understanding concepts such as: - Scarcity: The fundamental problem of economics, which arises from the fact that human wants are unlimited, but resources are limited. - Opportunity cost: The value of the next best alternative that is given up when a choice is made. - Allocation of resources: The process of assigning resources to their most valuable uses.
Which of the following countries is not member of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Co- operation (BIMSTEC)?
(A) Sri Lanka. (B) Myanmar (C) Maldives (D) Thailand
The correct answer is (C) Maldives.
Explanation: The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) is a regional organization that aims to promote economic and social development among its member countries. The member countries of BIMSTEC are: - Bangladesh - Bhutan - India - Myanmar - Nepal - Sri Lanka - Thailand Maldives is not a member of BIMSTEC. However, it is a member of the South Asian Association for Regional Cooperation (SAARC), which is a separate regional organization.
The crowding-out’ effect refers to
(A) an increase in government. spending leading to increased private investment (B) an increase in government spending due to increased private spending (C) an increase in government. spending leading to decreased private investment (D) None of the above
The correct answer is (C) an increase in government spending leading to decreased private investment.
Explanation: The crowding-out effect refers to the phenomenon where an increase in government spending leads to a decrease in private investment. This occurs because government spending can absorb a significant portion of the available resources in the economy, such as labor, capital, and raw materials, leaving fewer resources available for private investment. As a result, private investors may find it more difficult to access resources, leading to a decrease in private investment. This can offset some of the stimulatory effects of government spending, making it less effective in boosting economic activity.
When a central bank increases the interest rate, it is likely to implement which type of monetary policy?
The correct answer is (A) Contractionary.
Explanation: When a central bank increases the interest rate, it is implementing a contractionary monetary policy. This is because higher interest rates make borrowing more expensive, reducing consumption and investment, and thus slowing down economic growth.
The marginal rate of substitution between two perfect substitutes.
(A) decreases. (B) increases (C) remains constant. (D) All of the above
The correct answer is (C) remains constant.
Explanation: The marginal rate of substitution (MRS) is the rate at which a consumer is willing to substitute one good for another. For perfect substitutes, the MRS remains constant, as the consumer is indifferent between the two goods and can substitute them at a constant rate.
An autonomous increase in government expenditure should result in an increase in a country’s real GDP if and only if
(A) the country’s balance of trade is negative (B) the country’s economy is working under conditions of less than full employment. (C) the multiplier is at least 2 (D) the private expenditure also increases along with government expenditure
The correct answer is (B) the country's economy is working under conditions of less than full employment.
Explanation: An autonomous increase in government expenditure can lead to an increase in real GDP if the economy is operating below full employment. This is because the increased government spending can create new demand, stimulate production, and reduce unemployment. However, if the economy is already at full employment, the increased government spending may simply lead to inflation.
The ‘Atal Amrit Abhiyan Scheme of the Government of Assam providing cashless treatment and coverage of critical care targets.
(A) rural household of Assam (B) senior citizens of Assam (C) below poverty line population and low-income households (D) urban poors of Assam
The correct answer is option (C) below poverty line population and low-income households
In game theory, what does the “Nash equilibrium’ represent?
(A) One player dominates the other (B) Both players have strategy same (C) Both players have optimal strategies given the other plaver’s choices (D) No player has optimal strategy
The correct answer is (C) Both players have optimal strategies given the other player's choices.
Explanation: In game theory, the Nash equilibrium is a concept introduced by John Nash that describes a situation where no player can improve their payoff (or outcome) by unilaterally changing their strategy, assuming all other players keep their strategies unchanged. In other words, a Nash equilibrium is reached when both players have chosen strategies that are optimal given the other player's choices, and no player can benefit from changing their strategy if the other player's strategy remains the same.
If the income elasticity of demand for good is greater than one, the good is considered to be
(A) normal good (B) necessary good (C) an inferior good (D) a luxury good
The correct answer is (D) a luxury good.
Explanation: Income elasticity of demand measures how responsive the demand for a good is to changes in income. If the income elasticity of demand for a good is greater than one, it means that as income increases, the demand for the good increases at a faster rate. This is characteristic of luxury goods, which are goods that people buy more of as their income increases, and are considered discretionary or non-essential. Examples of luxury goods might include designer clothing, jewelry, or high-end electronics.
The Durbin-Watson statistic is used for testing
(A) autocorrelation (B) heteroscedasticity (C) multicollinearity (D) endogeneity of the dependent variable
The correct answer is (A) autocorrelation.
Explanation: The Durbin-Watson (DW) statistic is a test used to detect the presence of autocorrelation in the residuals of a regression analysis. Autocorrelation occurs when the residuals are correlated with each other, often due to the presence of a lagged dependent variable or a missing variable. The DW statistic ranges from 0 to 4, with a value of 2 indicating no autocorrelation. Values close to 0 or 4 indicate positive or negative autocorrelation, respectively.
Inventory is a concept whereas the change in inventory is a concept.
The correct answer is (D) stock, flow.
Explanation: Inventory refers to the quantity of goods or materials held in stock at a particular point in time, which is a stock concept. The change in inventory, on the other hand, refers to the increase or decrease in inventory over a period of time, which is a flow concept.
Identify the cash crop produced in Assam from the following.
(A) Rice (B) Jute (C) Wheat (D) Potato
The correct answer is (B) Jute
The balance of trade of a country refers to the difference between.
(A) exports and imports of goods and services (B) exporta and imports of financial ansets (C) current account surplus and deficit (D) capital and current account
The correct answer is (A) exports and imports of goods and services.
Explanation: The balance of trade (BOT) is a statistical measure that calculates the difference between a country's exports and imports of goods and services over a specific period of time. It's a key component of a country's balance of payments (BOP) and is used to assess the country's trade performance and its impact on the overall economy.
According to Assam Budget 2023- 2024, the Gross State Domestic Product (GSDP) at current prices in projected to grow over the year 2022-2023 at a rate of
(A) 9% (B) 10% (C) 12% (D) 15%
The correct answer is (D) 15%
The ‘Make in India’ initiative aims to boost employment by focusing on
(A) attracting foreign tourists (B) promoting agriculture (C) encouraging manufacturing and industrial growth. (D) expanding IT sector
The correct answer is (C) encouraging manufacturing and industrial growth.
Explanation: The Make in India initiative was launched by the Government of India in 2014 to promote India as a manufacturing hub and boost employment opportunities. The initiative aims to encourage foreign and domestic investment in various sectors, including manufacturing, infrastructure, and industrial growth.
Seigniorage’ refers to
(A) profit earned by a government by issuing currency (B) revenue generated. government bonds from (C) profit earned by commercial banks by lending (D) cost of holding money in circulation
The correct answer is (A) profit earned by a government by issuing currency.
Explanation: Seigniorage refers to the profit earned by a government from issuing its own currency. It is the difference between the face value of the currency and the cost of producing it. In other words, seigniorage is the revenue generated by a government from the issuance of new money, which is essentially a monopoly profit.
A fall in the price of one complementary good is likely to
(A) reduce the demand for the other complement. (B) increase the demand for the other complement (C) put no effect on the demand for the other complement (D) increase the demand for substitute good
The correct answer is (B) increase the demand for the other complement.
Explanation: Complementary goods are products that are used together, such as peanut butter and jelly, or computers and software. When the price of one complementary good falls, it becomes cheaper for consumers to buy the bundle of goods together. As a result, the demand for the other complementary good is likely to increase.
If a dataset has a highly skewed distribution, which measure of central tendency is considered to be the most appropriate to use?
(A) Mean (B) Median (C) Mode (D) Variance
The correct answer is (B) Median.
Explanation: When a dataset has a highly skewed distribution, the mean can be heavily influenced by outliers and may not accurately represent the central tendency of the data. In such cases, the median is considered a more robust and appropriate measure of central tendency, as it is less affected by outliers and provides a better representation of the middle value of the data.
The slope of an isoquant is a measure of the
(A) marginal cost of production (B) marginal rate of technical substitution (C) marginal revenue (D) marginal rate of substitution between outputs
The correct answer is (B) marginal rate of technical substitution.
Explanation: The slope of an isoquant represents the rate at which one input can be substituted for another while keeping output constant. This is known as the marginal rate of technical substitution (MRTS), which measures the rate at which one input is substituted for another in the production process.
Which among the following situations will be profitable for a borrower?
(A) The nominal rate of interest is 15% and inflation is 10% (B) The nominal rate of interest. and inflation rate are the same (C) The nominal rate of interest is 10% and inflation is 15% (D) The nominal rate of interest is 10% and inflation is 5%
The correct answer is (C) The nominal rate of interest is 10% and inflation is 15%.
Explanation: When the inflation rate exceeds the nominal interest rate, the real interest rate becomes negative. This means that the borrower is effectively paying back less than the original amount borrowed, adjusted for inflation. In this scenario, the borrower benefits from the difference between the nominal interest rate and the inflation rate, making it a profitable situation for the borrower.
Dumping means
(A) tariff reduction (B) increasing tariff (C) sale of good at lower prices. locally and higher prices abroad (D) sale of good at higher prices locally and at lower prices abroad
The correct option is (D) Sale of goods at higher prices locally and at lower prices abroad
Explanation: Dumping refers to the practice of selling goods at higher prices in the domestic market and at lower prices in foreign markets to gain a competitive advantage.
Which of the following statements about Gini coefficient is correct?
(A) Gini coefficient is calculated using the Lorenz curve. (B) Gini coefficient can vary between 0 [perfect equality) to 1 (perfect inequality). (C) Gini coefficient is a measure of inequality. (D) All of the above
The correct option is (D) All of the above
Explanation: The Gini coefficient is a measure of inequality calculated using the Lorenz curve, and it ranges from 0 (perfect equality) to 1 (perfect inequality).
According to the Coase theorem, externalities can be removed
(A) by voluntary between parties negotiations (B) by imposing new taxes (C) by internalising externalities (D) by providing subsidies
The correct option is (A) By voluntary negotiations between parties
Explanation: According to the Coase theorem, externalities can be removed through voluntary negotiations between the involved parties without government intervention, provided transaction costs are low.
If nominal GDP for the current year is 1,500 crore and real GDP is 1,300 crore, what is the value of GDP deflator?
(A) 86.7 (B) 110 (C) 115 (D) 120
The correct option is (C) 115.
Explanation: GDP Deflator = (Nominal GDP / Real GDP) * 100 Given: Nominal GDP = 1,500 crore Real GDP = 1,300 crore
The principal regulator of capital market in India is
(A) RBI (B) SBI (C) Government of India (D) SEBI
The correct option is (D) SEBI
Explanation: The Securities and Exchange Board of India (SEBI) is the principal regulator of the capital market in India.
In the sampling without replacement, sample unit can be selected
(A) only once (B) more than once (C) less than once (D) None of the above
The correct option is (A) Only once
Explanation: In sampling without replacement, a sample unit can be selected only once.
In the consumption function C-50+0-8Y the value of investment multiplier will be
(A) 2 (B) 10 (C) 0-5 (D) 5
The correct option is (D) 5
Explanation: The investment multiplier (K) is calculated as 1 / (1 - MPC). Here, MPC = 0.8, so K = 1 / (1 - 0.8) = 5.
The formula to calculate the degree of monopoly power is
(A) P-MC/MC (B) MC-P/MC (C) P-MC/P (D) MC-P/P
The correct option is (C) (P - MC) / P
Explanation: The degree of monopoly power is measured as (P - MC) / P, where P is the price and MC is the marginal cost.
Which of the following is considered as savings of the private corporate sector?
(A) Total profits (B) Undistributed profits (C) Dividends paid to shareholders (D) Interest received.
The correct option is (B) Undistributed profits
Explanation: The savings of the private corporate sector include undistributed profits, which are retained earnings.
Which of the following rate structures of taxation imposes greater burden on the poor?
The correct option is (C) Regressive tax
Explanation: A regressive tax imposes a greater burden on the poor as it takes a higher proportion of income from low-income individuals.
What does an Engel curve represent ?
(A) Relationship between price and income (B) Relationship between price and demand (C) Relationship between income and utility (D) Relationship between income and demand
The correct option is (D) Relationship between income and demand
Explanation: An Engel curve represents the relationship between a consumer’s income and the quantity of a good demanded.
Devaluation of a country’s currency leads to
(A) expensive imports and cheap exports (B) expensive exports and cheap imports (C) Both imports and exports will be cheaper (D) Both imports and exports will be expensive
The correct option is (A) Expensive imports and cheap exports
Explanation: Devaluation makes a country's exports cheaper and imports more expensive, improving trade balance.
The term ‘liquidity trap refers to a situation where
(A) interest rates are very high (B) interest rates are very low (C) money supply is high (D) money supply in low
The correct option is (B) Interest rates are very low
Explanation: A liquidity trap occurs when interest rates are very low, and monetary policy becomes ineffective in stimulating demand.
As per 2011 Census, which district has shown the maximum density of population in Assam?
The correct option is (A) Kamrup Metropolitan
Explanation: As per the 2011 Census, Kamrup Metropolitan district had the highest population density in Assam.
Which among the following in a characteristic of a free good?
(A) Opportunity cost is zero (B) Opportunity cost is maximum (C) Opportunity cost is minimum. (D) It has rivalry and excludability
The correct option is (A) Opportunity cost is zero
Explanation: A free good has zero opportunity cost because it is available in abundance and does not require sacrificing other resources.
Which of the following must be true when marginal is negative?
(A) Average is positive (B) Average is negative (C) Total in decreasing (D) Total is negative
The correct answer is (C) Total in decreasing
Explanation: When marginal is negative, it means the additional output is decreasing, thus total output is also decreasing.
Standard deviation of the sampling distribution of a statistic is called
(A) standard error (B) sample standard deviation (C) covariance (D) sample error
The correct answer is (A) standard error
Explanation: The standard deviation of the sampling distribution of a statistic is called the standard error.
Investment demand depends on
(A) rate of interest (B) marginal efficiency of capital (C) Both (A) and (B) (D) None of the above
The correct answer is (C) Both (A) and (B)
Explanation: Investment demand depends on both the rate of interest and the marginal efficiency of capital.
The estimated tree cover in Assam is
(A) 3-4% of her geographical area (B) 1-99% of her geographical area (C) 2-67% of her geographical area (D) 4-33% of her geographical area
The correct answer is (A) 3-4% of her geographical area
Explanation: The estimated tree cover in Assam is around 3-4% of its geographical area.
What is the income elasticity of demand for inferior goods?
(A) 1 (B) Greater than 1 (C) 0 (D) Less than 0
The correct answer is (D) Less than 0
Explanation: The income elasticity of demand for inferior goods is less than 0, indicating that demand decreases as income increases.
In India, which government agency is responsible for collecting and publishing unemployment data?
(A) Reserve Bank of India (B) Planning Commission of India (C) National Sample Survey Office (D) Ministry of Finance
The correct answer is (C) National Sample Survey Office
Explanation: The National Sample Survey Office (NSSO) is responsible for collecting and publishing unemployment data in India.
A lower capital-output ratio indicates that
(A) capital efficiently is being utilised (B) capital is being underutilised. (C) labour is being underutilised (D) the economy is experiencing inflation
The correct answer is (A) capital efficiently is being utilised
Explanation: A lower capital-output ratio indicates that capital is being efficiently utilized.
The correct answer is (C) imposing taxes
Explanation: Negative externalities can be addressed by imposing taxes to internalize the external costs.
In India, small-scale industries are defined based on
(A) sales by the unit (B) investment (C) market coverage (D) volume of exports
The correct answer is (B) investment
Explanation: In India, small-scale industries are defined based on investment in plant and machinery.
The way total output changes due to change in all inputs in same proportion is known as the law of
(A) diminishing return. (B) returns to a factor (C) returns to scale (D) increasing return
The correct answer is (C) returns to scale
Explanation: The law of returns to scale explains how total output changes when all inputs are increased in the same proportion.
Primary deficit is defined as the difference between
(A) fiscal deficit and interest. payment (B) capital receipt and interest payment (C) total expenditure and revenue (D) revenue receipt and revenue expenditure
The correct answer is (A) fiscal deficit and interest payment
Explanation: Primary deficit is the difference between fiscal deficit and interest payment, showing the government's borrowings excluding interest obligations.
Consider the following liquid assets:
I. Demand deposits with the banks II. Time deposits with the banks III. Savings deposits with the banks IV. Currency
The correct sequence of these assets in decreasing order of liquidity is
(A) IV, II, III, I (B) II, III, I, IV (C) I, III, II, IV (D) III, II, I, IV
The correct answer is (C) I, III, II, IV
Explanation: The correct sequence of assets in decreasing order of liquidity is: Demand deposits, Savings deposits, Time deposits, and Currency.
The price at which the government purchases food grains for maintaining the Public Distribution. System is known as
The correct answer is (A) minimum support price
Explanation: The price at which the government purchases food grains for maintaining the Public Distribution System is known as the minimum support price.
Muli, Dalu, Khang, Kaligoda and Pecha are the names of which species found in Assam?
The correct answer is (A) Bamboo
Explanation: Muli, Dalu, Khang, Kaligoda, and Pecha are names of different species of bamboo found in Assam.
High-powered money is
(A) commercial bank’s deposit with the central bank (B) all loans and advances of banks (C) currency held by the public and reserves with the central bank (D) total bank deposits
The correct answer is (C) currency held by the public and reserves with the central bank
Explanation: High-powered money includes the currency held by the public and reserves with the central bank.
An expenditure that has been made. and cannot be recovered in called
The correct answer is (B) sunk cost
Explanation: A sunk cost is an expenditure that has already been made and cannot be recovered.
Consider the following statements. about Net National Product (NNP):
I. NNP is the purest form of income of a nation. II. By dividing NNP by total population, we get per capita income
Based on the above statements, select the correct option.
(A) I only (B) Both I and II (C) II only (D) None of the above
The correct answer is (B) Both I and II
Explanation: Both statements are correct. NNP is considered the purest form of income, and dividing it by the total population gives per capita income.
Match List-I with List-II and select the correct answer using the codes given below the Lists:
The correct answer is option (A).
Offer curve is associated with Reciprocal demand. Laffer curve is associated with Public revenue. Lorenz curve is associated with Inequalities. Kinked demand curve is associated with Sticky price. The correct code that matches these associations is: a: 3 b: 1 c: 4 d: 2 .
Which of the following States is the largest producer of bamboo in India?
The correct answer is (B) Assam
Explanation: Assam is the largest producer of bamboo in India, contributing a major share of the country’s bamboo production.
The Tragedy of the Commons’ refers to
(A) free rider problem (B) excessive taxation of common resources (C) depletion of common resources. due to individual self-interest (D) inefficient resource allocation
The correct answer is (C) depletion of common resources due to individual self-interest
Explanation: 'The Tragedy of the Commons' refers to the overuse and depletion of shared resources when individuals act in their own self-interest rather than considering the long-term effects on the community.
Stagflation’ means
(A) high inflation and high economic growth (B) high inflation and low unemployment (C) low inflation and high economic growth (D) high inflation and high unemployment
The correct answer is (D) high inflation and high unemployment
Explanation: Stagflation refers to an economic situation where there is high inflation combined with high unemployment.
The LM curve shows equilibrium of which of the following markets?
The correct answer is (A) Money market
Explanation: The LM curve shows equilibrium in the money market, indicating the relationship between interest rates and the level of income in an economy.
The relationship between AR, MR and elasticity of demand (e) is given by
(A) e = MR/AR-MR (B) e = AR-MR/AR (C) e = MR-AR/MR (D) e = AR/AR-MR
The correct answer is (B) e = AR-MR/AR
Explanation: The relationship between Average Revenue (AR), Marginal Revenue (MR), and elasticity of demand (e) is represented by the formula: e = (AR - MR) / AR.
Which of the following is correct?
(A) If national income rises, per capita income also rises. (B) If population increases, per capita income falls (C) If national income rises, welfare and standard of living of the people also rine (D) None of the above
The correct answer is (B) If population increases, per capita income falls
Explanation: When the population increases, if the national income doesn’t increase proportionately, per capita income will decrease.
Which of the following regions is known as a rain shadow zone in Assam?
(A) Nagaon district in Central Assam and adjoining parts of Karbi-Anglong (B) Sonitpur district. (C) Hailakandi district (D) Biswanath district
The correct answer is (A) Nagaon district in Central Assam and adjoining parts of Karbi-Anglong
Explanation: The region of Nagaon district in Central Assam and adjoining parts of Karbi-Anglong is known as a rain shadow zone, where less rainfall occurs due to the geographic conditions.
Suppose price of a product increases from 4 to 5 and the quantity. demanded falls from 50 to 40. What is price elasticity of demand?
(A) 08 (B)-0.8 (C) 1.2 (D)-1.2
The correct answer is (D) -1.2
Explanation: The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. In this case, the price elasticity is -1.2, indicating that demand is elastic.
In the short run, which of the following always gets smaller as output increases?
(A) Average fixed cost (B) Average variable cost (C) Short-run average cost (D) Short-run marginal cost
The correct answer is (A) Average fixed cost
Explanation: In the short run, average fixed cost decreases as output increases because fixed costs are spread over more units of output.
Which city hosted the first Youth 20 (Y20) Inception Meeting 2023 under G207
(A) Kolkata (B) Guwahati (C) Shillong (D) Kohima
The correct answer is (B) Guwahati
Explanation: Guwahati hosted the first Youth 20 (Y20) Inception Meeting in 2023 under G20.
In the simple Keynesian model, consumption is a function of
(A) rate of interest (B) price level (C) investment (D) level of income
The correct answer is (D) level of income
Explanation: In the simple Keynesian model, consumption is a function of the level of income, meaning that as income increases, consumption also increases.
Which is not added in the calculation of national income in India?
(A) The value of goods and services (B) Winning of a lottery (C) Services rendered by housewife (D) Both (B) and (C)
The correct answer is (D) Both (B) and (C)
Explanation: Winning of a lottery and services rendered by a housewife are not included in the calculation of national income in India, as they are either non-market transactions or transfers.
If goods X and Y are substitutes, then which of the following could be the value of the cross-price elasticity of demand for good Y?
(A) -1 (B) -2 (C) Neither (A) nor (B) (D) Both (A) and (B)
The correct answer is (C) Neither (A) nor (B)
Explanation: If goods X and Y are substitutes, the cross-price elasticity of demand for good Y would be positive, not negative. Hence, neither -1 nor -2 are correct values for cross-price elasticity.
The rate at which RBI lends money to the commercial bank is called
(A) cash reserve ratio (B) rate of interest (C) repo rate (D) reverse repo rate
The correct option is (C) repo rate.
Explanation: Repo rate is the rate at which the Reserve Bank of India (RBI) lends money to commercial banks for a short period, usually overnight. When commercial banks face a shortage of funds, they can borrow from the RBI by selling securities to the RBI with an agreement to repurchase them at a later date. The interest rate charged by the RBI on these loans is called the repo rate. The other options are not correct: (A) Cash Reserve Ratio (CRR) is the percentage of deposits that commercial banks are required to keep with the RBI. (B) Rate of interest is a general term that refers to the interest rate charged on loans or deposits. (D) Reverse Repo Rate is the rate at which the RBI borrows money from commercial banks.
Which of the following statements about professional tax is correct?
(A) It is direct tax (B) It is levied by the State government. (C) None of (A) or (B) (D) Both (A) and (B)
The correct answer is (B) It is levied by the State government.
Explanation: Professional tax is a tax that is levied by the State government, and it is charged on the income earned by individuals and professionals. It is considered an indirect tax because the employer usually deducts it from the employee's salary.
The correct option is (A) exchange rate.
Explanation: Purchasing Power Parity (PPP) theory is a concept in economics that relates to the exchange rate between two currencies. It states that the exchange rate between two currencies should be equal to the ratio of the two countries' price levels. In other words, PPP theory suggests that the exchange rate should adjust to equalize the purchasing power of the two currencies. For example, if a basket of goods costs $100 in the US and ₹7,000 in India, the exchange rate should be approximately 1 USD = 70 INR. Therefore, PPP theory is closely related to exchange rates.
Which of the following is not an anti inflationary fiscal remedy?
(A) Reduction of effective demand (B) Surplus budget (C) Reduction of tax rates (D) Reduction expenditure of government
The correct option is (C) Reduction of tax rates. Explanation: Anti-inflationary fiscal remedies aim to reduce aggregate demand and curb inflation. The options can be analyzed as follows: (A) Reduction of effective demand: This is an anti-inflationary measure, as it reduces the demand for goods and services, thus helping to control inflation. (B) Surplus budget: A surplus budget means that the government's revenue exceeds its expenditure. This can help reduce aggregate demand and combat inflation. (D) Reduction of government expenditure: Reducing government expenditure can also help reduce aggregate demand and curb inflation. (C) Reduction of tax rates: Reducing tax rates would increase disposable income and aggregate demand, which could exacerbate inflation. Therefore, this option is not an anti-inflationary fiscal remedy.
Which one of the following receipts of public authority is not a capital receipt?
(A) Borrowings (B) Interest receipts (C) Recovery of loans (D) Both (A) and (C)
The correct answer is (B) Interest receipts
Explanation: Interest receipts are classified as current receipts, not capital receipts. Capital receipts include borrowings and recovery of loans, while interest receipts are income generated from investments.
A singular matrix is one which.
(A) has no inverse (B) is an identity matrix (C) has only one element (D) None of the above
The correct answer is (A) has no inverse
Explanation: A singular matrix is one that does not have an inverse. This typically occurs when the determinant of the matrix is zero.
Consider the following statements about determinant:
I. The value of a determinant does not change if the rows and columns are interchanged. II. If two rows for columns) of a determinant are identical, the value of the determinant will be zero
Choose the correct answer.
(A) Only statement I is correct (B) Only statement Il is correct (C) None of the statements is correct (D) Both statements are correct
The correct answer is (B) Only statement II is correct
Explanation: Statement II is correct because if two rows or columns of a determinant are identical, its value becomes zero. Statement I is incorrect, as the value of a determinant changes when rows and columns are interchanged.
Hedging’ means
(A) simultaneous buying and selling of foreign currency in two markets (B) taking of a foreign exchange risk or an open position in the hope of making profit. (C) an agreement to buy or sell the required foreign exchange at today’s agreed rate (D) None of the above
The correct answer is (A) simultaneous buying and selling of foreign currency in two markets
Explanation: Hedging is a financial strategy used to reduce risk, which involves the simultaneous buying and selling of foreign currency or other financial instruments to offset potential losses.
The short-run shutdown point of a perfectly competitive firm is determined when
The correct answer is (A) Price =AVC
Explanation: The short-run shutdown point for a perfectly competitive firm occurs when the price is equal to average variable cost (AVC). At this point, the firm cannot cover its variable costs and should cease production in the short run.
Choose the wrong statement about tariff
(A) A tariff reduces the demand for imported goods by reducing imports. (B) The imposition of a tariff improves the terms of trade of the imposing country. (C) The positive effect of a tariff is that it increases the volume of trade. (D) Imposition of a tariff protects the domestic industry from foreign competition.
The correct answer is (C) The positive effect of a tariff is that it increases the volume of trade
Explanation: The imposition of a tariff generally reduces the volume of trade because it raises the price of imported goods, making them less attractive. The other statements about tariffs are true.
Quasi-rent equals
(A) total revenue earned – total variable cost (B) marginal revenue + marginal cost (C) total revenue earned = total cost (D) total revenue earned + average cost
The correct answer is (A) total revenue earned - total variable cost
Explanation: Quasi-rent is the difference between total revenue earned and total variable cost in the short run. It is a form of temporary rent that arises when a factor of production has a fixed supply.
Utility possibility curve represents
(A) locus of Pareto optimum points (B) locus of the combinations of various utilities obtained by two persons from the consumption of a bundle of goods. (C) locus of various combinations of utilities obtained by a person from the consumption of various bundles of goods. (D) None of the above
The correct answer is (B) locus of the combinations of various utilities obtained by two persons from the consumption of a bundle of goods
Explanation: The utility possibility curve represents the different combinations of utility that two individuals can achieve through the consumption of a specific bundle of goods. It is used to analyze economic efficiency and fairness in resource distribution.
The correct option is (D) downward.
Explanation: The short-run Phillips curve shows the relationship between inflation and unemployment. It is typically downward-sloping, indicating that: - As unemployment decreases (moves to the left on the horizontal axis), inflation increases (moves up on the vertical axis). - As unemployment increases (moves to the right on the horizontal axis), inflation decreases (moves down on the vertical axis). This downward-sloping relationship is due to the idea that as the labor market tightens (unemployment falls), workers demand higher wages, leading to higher production costs and, ultimately, higher inflation.
The empirical relationship between. mean, median and mode is given by
(A) mean – mode = 3(mean – median) (B) mean – median = 3(mean – mode) (C) mean – mode = 1/3(mean – median) (D) mean – median = 1/3(mean – mode)
The correct option is (B) mean - median = 3(mean - mode).
Explanation: This empirical relationship is known as Pearson's First Coefficient of Skewness. It describes the relationship between the mean, median, and mode in a skewed distribution. Pearson's Coefficient states that: Mean - Median = 3(Mean - Mode) This relationship helps in understanding the direction and extent of skewness in a distribution.
As per Human Development. Report 2021-2022, what is the HDI rank of India?
(A) 131 (B) 132 (C) 150 (D) 151
The correct answer is (B) 132
Explanation: As per the Human Development Report 2021-2022, India ranks 132nd in the Human Development Index (HDI), indicating moderate human development.
Fisher’s quantity theory of money is explained by the equation
(A) MP= PT (B) MP= VT (C) MV= PT (D) PM= MT
The correct answer is (C) MV = PT
Explanation: Fisher’s quantity theory of money is expressed by the equation MV = PT, where M is the money supply, V is the velocity of money, P is the price level, and T is the volume of transactions.
Which of the following is not an essential condition for perfect competition?
(A) Homogeneous product (B) Many sellers (C) Freedom of entry and exit (D) None of the above
The correct answer is (D) None of the above
Explanation: All the listed conditions—homogeneous product, many sellers, and freedom of entry and exit—are essential for perfect competition. Therefore, the correct answer is 'None of the above.'
In India, monetary policy formulated by
(A) Planning Commission (B) RBI (C) Ministry of Finance (D) SEBI
The correct option is (B) RBI.
Explanation: The Reserve Bank of India (RBI) is the central bank of India, responsible for formulating and implementing the country's monetary policy. The RBI's Monetary Policy Committee (MPC) sets the policy interest rates, including the repo rate, reverse repo rate, and cash reserve ratio (CRR), to achieve the objectives of price stability, economic growth, and financial stability. The other options are not correct: (A) Planning Commission: Although it played a role in formulating India's Five-Year Plans, it was abolished in 2014 and replaced by the NITI Aayog. (C) Ministry of Finance: While the Ministry of Finance provides inputs and guidance, it is not directly responsible for formulating monetary policy. (D) SEBI: The Securities and Exchange Board of India (SEBI) is the regulator of India's securities market, but it is not involved in monetary policy formulation.
Transfer of consumer surplus to monopolist is called
(A) consumer exploitation (B) consumer welfare (C) consumer profit (D) None of the above
The correct answer is (A) consumer exploitation
Explanation: The transfer of consumer surplus to the monopolist is referred to as 'consumer exploitation' because the monopolist captures the consumer surplus through higher prices.
Choose the wrong statement about the inflationary gap’.
(A) Inflationary gap causes the price to rise. (B) Inflationary gap occurs when aggregate demand Aggregate supply at full employment level of output. exceed (C) Inflationary gap can be interpreted as excess of investment over desired saving (D) None of the above.
The correct answer is (D) None of the above
Explanation: All the statements regarding the inflationary gap are correct. An inflationary gap occurs when aggregate demand exceeds aggregate supply at full employment, which can cause price rises and result from excess investment over desired saving.
Which of the following is not a feature of the budget line?
(A) On the budget line, total expenditure of the consumer is equal to the total income (B) The budget line is also known as a trade-off curve (C) The slope of the budget line is equal to the marginal rate of substitution (D) When income of the consumer changes, the budget line shifts parallelly
The correct answer is (C) The slope of the budget line is equal to the marginal rate of substitution
Explanation: The slope of the budget line represents the rate at which the consumer can trade one good for another while maintaining the same level of utility, which is the marginal rate of substitution. The budget line itself is not a trade-off curve.
What is the relationship between Marginal Revenue Product (MRP) and Value of Marginal Product (VMP) under imperfect competition in the product market?
(A) MRP =VMP (B) MRP =VMP (C) MRP =VMP (D) They are not related
The correct answer is (B) MRP = VMP
Explanation: Under imperfect competition in the product market, the Marginal Revenue Product (MRP) is equal to the Value of Marginal Product (VMP), as MRP accounts for both the additional product produced and the price at which it can be sold.
There will be no shifting of tax if
(A) supply of a commodity is perfectly inelastic (B) supply of a commodity is perfectly elastic (C) demand of a commodity is perfectly inelastic (D) demand of a commodity is perfectly elastic
The correct answer is (A) supply of a commodity is perfectly inelastic
Explanation: When the supply of a commodity is perfectly inelastic, there will be no shifting of tax because the quantity supplied does not change regardless of the price. The burden of tax is entirely on the consumers.
Law of diminishing returns to factors is relevant to
(A) long period (B) short period (C) Both (A) and (B) (D) None of the above
The correct option is (B) short period.
Explanation: The Law of Diminishing Returns (LDR) states that as more units of a variable factor (such as labor or capital) are added to a fixed factor (such as land or technology), the marginal output of the variable factor will eventually decrease. This law is most relevant in the short period, where: 1. At least one factor of production is fixed. 2. Firms can vary the quantity of the variable factor. In the short period, firms can increase production by adding more units of the variable factor. However, beyond a certain point, the marginal output of the variable factor will start to decrease, leading to diminishing returns. In the long period, all factors of production are variable, and firms can adjust their scale of production. The LDR is less relevant in this context, as firms can escape diminishing returns by adjusting their production technology or scale.
The correct option is (A) Edgeworth box.
Explanation: Pareto optimality is a concept in welfare economics that refers to a situation where no individual can be made better off without making another individual worse off. The Edgeworth box, named after Francis Ysidro Edgeworth, is a graphical representation used to illustrate the concept of Pareto optimality in a two-person, two-good economy. The box represents the set of all possible allocations of two goods between two individuals. Pareto optimality is achieved when the indifference curves of the two individuals are tangent to each other within the Edgeworth box. This represents a situation where no further trades can make one person better off without making the other person worse off.
PM Mitra Park is related to which of the following?
(A) Skill development (B) Tourism (C) Solar energy (D) Textiles
The correct option is (D) Textiles.
Explanation: PM Mitra is a scheme initiated by the Indian government to support the textile sector. PM Mitra stands for Prime Minister Mega Integrated Textile Regions and Apparel Parks. The primary objective of PM Mitra is to establish integrated textile parks with world-class infrastructure, including plug-and-play facilities, to boost the growth of the textile industry in India.
Priority sector lending in India constitutes lending to
(A) micro and small enterprises (B) agriculture (C) weaker sections (D) All of the above
The correct option is (D) All of the above.
Explanation: Priority sector lending (PSL) in India refers to lending to specific sectors or categories of borrowers that are considered priority areas. These sectors include: 1. Agriculture 2. Micro and small enterprises (MSEs) 3. Weaker sections, including: - Scheduled Castes and Scheduled Tribes - Minority communities - Backward classes - Economically weaker sections Banks in India are mandated to allocate a certain percentage of their lending to these priority sectors.
The Gross Barter Terms of Trade (GBTT) is the ratio of
(A) export prices to import prices (B) value of export to import (C) quantity of import to export (D) value of export to import prices
The correct option is (A) export prices to import prices.
Explanation: Gross Barter Terms of Trade (GBTT) is a measure of a country's trading position. It represents the ratio of the average price of a country's exports to the average price of its imports. GBTT = (Index of export prices) / (Index of import prices) A GBTT greater than 1 indicates that the country is receiving more for its exports than it is paying for its imports, which is favorable. A GBTT less than 1 indicates the opposite.
Which of the following statements is not true about fiat money?
(A) Fiat money is a type of convertible paper money (B) Its intrinsic value is less than its face value. (C) Fiat money is also known as token money. (D) Both (A) and (B)
The correct option is (D) Both (A) and (B).
Explanation: Fiat money is a type of currency that has no intrinsic value but is instead backed by a government's decree or fiat. Here's why options (A) and (B) are incorrect: (A) Fiat money is not a type of convertible paper money. Convertible paper money can be exchanged for a commodity, such as gold or silver, whereas fiat money cannot. (B) Its intrinsic value is zero, not less than its face value. Fiat money has no inherent value but derives its value from the government's guarantee. (C) Fiat money is indeed also known as token money, as it serves as a token or substitute for commodity-based currencies.
A uniform die is thrown at random. What is the probability that the number on it is greater than 4?
(A) 1/6 (B) 1/3 (C) 1/2 (D) 2/3
The correct option is (B) 1/3.
Explanation: A standard die has six faces, numbered 1 to 6. To find the probability of getting a number greater than 4, we need to count the favorable outcomes (numbers greater than 4) and divide it by the total number of possible outcomes. Favorable outcomes: 5, 6 (2 outcomes) Total possible outcomes: 1, 2, 3, 4, 5, 6 (6 outcomes) Probability = Number of favorable outcomes / Total number of possible outcomes = 2/6 = 1/3
Consider the following statements:
I. Frequency polygons of different distributions can be drawn on the same single graph..
II. Frequency polygon cannot be constructed for frequency distributions with open-end classes
Choose the correct option.
(A) Only I is correct (B) Only 11 is correct. (C) None of the statements are correct (D) Both I and II are correct
The correct option is (D) Both I and II are correct.
Explanation: I. Frequency polygons of different distributions can be drawn on the same single graph: True Frequency polygons are graphical representations of frequency distributions. Multiple frequency polygons can be drawn on the same graph, allowing for visual comparisons between different distributions. II. Frequency polygon cannot be constructed for frequency distributions with open-end classes: True A frequency polygon requires midpoints of classes to plot the graph. Open-end classes (e.g., 0-10, 10-20, 20+) do not have well-defined midpoints, making it impossible to construct a frequency polygon.
Which one of the following is not a feature of the Keynesian theory of employment?
(A) Government intervention in the economy has no role to play (B) It deals with all levels of employment including full employment and unemployment (C) It is a short-run theory (D) Volume of employment depends upon effective demand
The correct option is (A) Government intervention in the economy has no role to play.
Explanation: Keynesian theory emphasizes the importance of government intervention in the economy to stabilize output and employment. In fact, Keynes argued that government intervention is necessary to correct market failures and stabilize the economy. The other options are features of Keynesian theory: (B) Keynesian theory does deal with all levels of employment, including full employment and unemployment. (C) Keynesian theory is indeed a short-run theory, focusing on the determination of output and employment in the short run. (D) The volume of employment in Keynesian theory does depend on effective demand, which is the aggregate demand for goods and services in the economy.
Profitability of price discrimination by a monopolist depends on
(A) nature of the commodity (B) geographical distance between the two markets (C) difference in elasticity of demand between the two markets (D) preferences of buyers
The correct option is (C) difference in elasticity of demand between the two markets.
Explanation: Price discrimination by a monopolist involves charging different prices for the same product in different markets or to different customers. The profitability of price discrimination depends on the difference in elasticity of demand between the two markets. If the demand is more elastic in one market (i.e., more responsive to price changes), the monopolist will charge a lower price in that market. Conversely, if the demand is less elastic in another market, the monopolist will charge a higher price. The other options are not directly related to the profitability of price discrimination: (A) Nature of the commodity: While the type of product can influence demand elasticity, it is not the primary factor determining the profitability of price discrimination. (B) Geographical distance between the two markets: Distance can affect transportation costs and market segmentation, but it is not a direct determinant of the profitability of price discrimination. (D) Preferences of buyers: Buyer preferences can influence demand, but they are not the primary factor determining the profitability of price discrimination.
The upper portion of the kinked demand curve is relatively
(A) more elastic (B) more inelastic (C) less clastic (D) less inelastic
The correct option is (B) more inelastic.
Explanation: The kinked demand curve is a model used to describe the behavior of oligopolistic firms. The curve has a kink or bend at the current price level. The upper portion of the kinked demand curve, which represents prices above the current level, is more inelastic. This means that a small increase in price will lead to a relatively small decrease in quantity demanded. In contrast, the lower portion of the curve, representing prices below the current level, is more elastic.
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