School of Economics | June 2019 NET in Economics
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June 2019 NET in Economics

Direction: Read the passage given below and answer the questions that follow it:
Suppose that for a particular economy for some time period, investment was equal to 100, gov-ernment expenditure was equal to 75t, net taxes were fixed at 100 and consumption (C) was given by the consumption function: C = 25 + 0.8 YD ,Where YD is disposable income and Y is GDP.(Questions 1-3)
1. What is the value of tax multiplier (∆Y/∆T)?
A. -2
B. -3
C. -4 ✔
D. -5

2. What is the value of government expenditure multiplier (∆Y/∆G)?

C.5 ✔
3. What is the level of equilibrium

B. 700
C. 800
D. 850
4. Which of the following is an example of a public good ?

A. Residential building
B. National defence ✔
C. Restaurant meals
D. Swimming pool of a house
5. The excess supply of a commodity above the no-trade equilibrium price given one nation’s?

A. Import demand for the commodity
B. Export supply and import demand for the commodity
C. Export supply of the commodity ✔
D. Import supply of the commodity
6. As income falls, consumption declines but proportionately less than the decrease in income because the consumer desires to sustain previous standard of living. This is called?

A. Ratchet effect ✔
B. Wealth effect
C. Demonstration effect
D. Income effect
7. Which one is NOT axioms of inequality measures?A. Principles of scale invariance

B. Principle of equity ✔
C. Principles of translation invariance
D. Axiom of decomposability

8. Under non- cooperative games, it is :

A. Essential to understand one’s opponent’s point of view
B. Not essential to understand one’s opponent’s point of view
C. Essential to understand one’s
opponent’s point of view and to deduce the likely responses accordingly ✔
D. Essential to understand one’s
opponent’s likely responses
9. Which of the following statements are true regarding Cobb-Douglus production function?

a) It is long period production function
b) It is short period production function c) It is based on increasing returns to scale
d) Output elasticities with respect to factors are constant
Select the correct option:
A. (a) & (c)
B. (a) & (d) ✔
C. (b) & (c)
D. (c) & (d)
10. Which of the following methods of selecting strategies is consistent with risk averting behavior?

A. If two strategies have the same  
expected profit, select the one with smaller standard deviation ✔
B. If two strategies have the same standard deviation, select the one with smaller expected profit
C. If two strategies have the same standard deviation, select the strategy with larger coeff-icient of variation
D. If two strategies have different expected profits, select the one with the larger standard deviation
11. Match the following

List – I
(a) Various combinations that a consumer  can purchase
(b) Various combinations of two
commodities providing equal
satisfaction to consumer
(c) A set of indifference curves
(d) Point of tangency of a budget line on an indifference curve
List –II
(i) Indifference map
(ii) Indifference curve
(iii) Budget line
(iv) Consumer’s equilibrium
Choose the correct option from those given
A. a-i, b-ii, c-iv, d-iii
B. a-iv, b-iii, c-I, d-ii
C. a-ii, b-iii, c-iv, d-i
D. a-iii, b-ii, c-i, d- iv ✔

12. Which of the socially efficient level of
A. OX1
B. OX2✔
C. AX1
D. CX2

13. Deadweight loss is represented by the area of

D. BAC ✔

14. What price will be charged under

B. X2C
C. OE✔

15. The inconsistency of which one of the following criteria is labeled as Scitovsky Paradox?

A. Little criterion
B. Pareto criterion
C. Bergson criterion
D. Kaldor-Hicks criterion ✔

16. General equilibrium analysis

A. Prices & quantities in all markets
B. Prices & quantities in all markets
simultaneously and explicitly takes
feedback effects into account ✔
C. Feedback effects
D. Prices in all markets

17. The firms are competitive and profit maximizing the demand curve for labour is determined by

A. The opportunity cost of workers’ time
B. The value of marginal product of labour ✔
C. Offsetting income and substitution
D. The value of marginal product of capital

18. Pareto’s marginal condition for efficiency in composition of output

(product-mix) requires
ANS :3

19. Why do individuals act in riskier ways after being insured?

A. Due to the problem of adverse selection
B. Due to the problem of false confidence
C. Due to the problem of moral hazard✔
D. Due to the problem of screening costs

20. The concept of fiscal deficit implies which of the following?

A. Revenue and interest receipts minus
revenue expenditures
B. Revenue receipts and recovery of loans and other receipts minus total
expenditure ✔
C. Receipts minus disbursement in capital account
D. Total receipts minus total exp-enditure

21. Liquidity approach is also known by the name

A. Gurley – Shaw approach
B. Radcliffe approach ✔
C. Traditional approach
D. Monetarist approach

22. Vertical equity in taxation means that

A. People in different income groups
should be taxed equally
B. People in different income groups
should be taxed differently ✔
C. People in different groups should be
charged proportionately
D. Unequal people should be treated

23. The commodity or Net Barter Terms of trade are represented by the formula

A.Quantity of exports/Quantity of Import *100
B.Price×Quantity of exports/Price×Quantity of Import *100
C.Volume of exports/Volume of Import *100
D.Price index of exports/price index of Import *100✔

24. The long term chronic unemployment arising from imbalance between the skills and other charact-eristics of workers in the market and the need of employers is known as

A. Cyclical unemployment
B. Frictional unemployment
C. Structural unemployment ✔
D. Seasonal unemployment

25. According to Marshall – Lerner condition for the foreign exchange market to be stable, the sum of the elasticities of demand for imports and the demand for exports should be

A. Less than 1
B. Equal to zero
C. Equal to 1
D. More than 1 ✔

26. In J. Robinson’s growth model, capital accumulation depends on

A. Savings- income ratio
B. Profit-wage relation and labour
productivity ✔
C. Profit- income ratio and capital
D. Savings- investment ratio

27. Which of the following is NOT the method of debt redemption?

A. Refunding
B. Repudiation ✔
C. Sinking fund
D. Capital levy

28. A tax is said to be direct,when

A. Impact and incidence fall upon the
same person✔B. Only incidence falls upon the same person
C. Impact is shifted to another person
D. Person escapes from paying tax

29. In the Balance of Payment Account, the transfer payments are included in which one of the following?

A. Capital Account
B. Service Account
C. Current Account ✔
D. Official Reserve Account

30. Which one of the following items is included in the Capital Account of the balance of payment of a country?

A. Investment income
B. Invisibilities
C. Commercial borrowings ✔
D. Private transfer

31. Which of the following factors is NOT the cause for ‘market failure’?

A. Asymmetric information
B. Public good
C. Externality
D. Lack of demand ✔

32. ‘Immiserizing growth’ is the term given by

A. Amartya Sen
B. N Kaldor
C. Paul Krugman
D. Jagdish Bhagwati ✔

33. In efficiency wage model, the real wage is set to

A. Minimize the efficiency of worker per rupee of real wages received
B. Clear the labour market
C. Not to clear the labour market
D. Maximize the efficiency of workers per rupee of real wages received ✔

34. Which of the following is NOT the function of a capital market?

A. Mobilizing savings into investment
B. Channelizing funds from less profitable to more profitable
C. Mobilizing funds from surplus units to deficit units
D. Providing better returns to direct investors ✔

35. Which one of the following growth models takes technology as exogenous variable?

A. Solow model ✔
B. Robinson model
C. Lucas model
D. Todaro model

36. Three pillars of the Asia –Pacific Economic Cooperation (APEC) are

(a) Trade and investment liberalization
(b) Business facilitation
(c) Economic and technical cooperation
(d) Military cooperation
Choose the correct option:
A. a,b,d
B. a,b,c✔
C. a,c,d
D. b,c,d

37. During recession which of the following measures is initiated?

A. Cutting taxes and boosting government spending ✔
B. Increasing taxes and decreasing government spending
C. Keeping tax rates constant and
increasing government spending
D. Increasing tax rates and keeping government spending constant

38. A toll tax is a tax based on which of the following?

A. The benefit principles ✔
B. Horizontal equity
C. Vertical equity
D. Tax progressively

39. Calculate the rate of effective

protection by using the formula
g=t-ai×ti/1-ai,here g=0.3, ai = 0.8 and ti= 0, then the value of t is
A. 0.2
B. 0.3
C. 0.1✔ (Revised answer None)
D. 0.4

40. Match the following

List – I
a) Theory of big push
b) Warranted rate of growth
c) Social dualism
d) Endogenous growth theory
List – II
i) J H Boeke
ii) Paul Romer
iii) Rosenstein Rodan
iv) R F Harrod
Choose the correct option
A. a-ii, b-iii, c-iv, d-i
B. a-iii, b-I, c-iv, d-ii
C. a-iii, b-iv, c-I, d-ii✔
D. a-iv, b-ii, c-iii, d-i

41. By ‘financial crowding out’ economist mean

A. Credit rationing
B. What the government borrows cannot be used for private investment
C. Government borrowings drive up interest rate ✔
D. Reserve bank of India controls on commercial bank lendings

42. Direct credit programmes introduced

A. Security – oriented credit
B. Development – oriented credit
C. Purpose- oriented credit ✔
D. Welfare- oriented credit

43. Which of the following is NOT part of Wiseman and Peacock hypothesis?

A. Concentration effect
B. Displacement effect
C. Inspection effect
D. Taxation effect ✔

44. Which consideration a commercial bank does NOT keep in mind to manage its assets and liabilities?

A. Liquidity
B. Profitability
C. Solvency
D. Equity ✔

45. External drains leave which type of impact on commercial bank?

A. Lowers the reserves of bank ✔
B. Increase further deposits
C. Increase credit creation
D. Creates demand deposits

46. Assumes that an economy begins in macroeconomic equilibrium, then taxes are significantly decreased. As a result of this change

A. There is expansion and deflation in the economy
B. There is recession and deflation in the economy
C. There is expansion and deflation in the economy ✔
D. There is stagflation in the economy

47. An increase in money supply will increase the demand for goods and services by

A. Reducing government spending
B. Lowering the interest rate so that investment spending increases ✔
C. Raising interest rate so that investment spending reduces
D. Increasing government spending on
goods and services

48. The provision under the membership clause of the IMF is that any country can become a member if

A. The country is willing to be a member of the World bank and willing to pay
B. The country is willing to be a member of the WTO and willing to pay all subscriptions is glod
C. The country is willing to be a member of the World bank and willing to pay subscription ✔
D. The country is willing to be a member of UNO and willing to pay subscription

49. Match the following

(b) IRBI
(c) IFCI
(d) IDBI
List – II
(i) 1971
(ii) 1964
(iii) 1955
(iv) 1948
Choose the correct option A. a-i, b-ii, c-iii, d-iv
B. a-ii, b-iii, c-iv, d-i
C. a-iii, b-i, c-iv, d-ii✔
D. a-iii, b-ii, c-I, d-iv

50. An increase is fiscal spending leads to

A. A shift of Phillips curve to the left
B. A shift of Phillips curve to the right
C. Movement along the Phillips curve such that unemployment rises inflation also rises
D.Option not given by NTA
ANS: Marks to all
51. A foreign exchange risk involves the transaction exposure, the accounting
exposure and
A. The translation exposure ✔
B. The flexibility exposure
C. The rigidity exposure
D. The economic exposure

52. Which is NOT the main objective of credit control?

A. Stabilization of general price level
B. Promoting economic growth
C. Ensuring adequate flow of credit to
productive sectors
D. Promoting economic welfare ✔

53. Match the following

a) Accelerator and multiplier interaction
b) Cambridge approach
c) Life cycle hypothesis
d) Efficiency wage model
i) Modigliani, Ando and Brumberg
ii) Akerlof and Yellen
iii) Paul Samuelson
iv) Alfred Marshal and A C pigou
Choose the correct option
A. a-i, b-iv, c-ii, d-iii
B. a-iii, b-iv, c-i, d-ii✔
C. a-ii, b-i, c-iii, d-ii
D. a-iv, b-iii, c-ii, d-i

54. According to Marxian analysis the surplus value depends upon

A. Surplus and necessary labour time ✔
B. Necessary labour time only
C. Surplus labour time only
D. Nominal wage rate

55. The liquidity aggregates are classified as

A. L1,L2 and L3✔
B. M1,M2 and M3
C. NM3
D. M1, M2, M3 and M4

56. During a depression which of the following policy instruments should be used?

A. Taxes should be increased
B. Taxes are kept unchanged and public expenditure is increased ✔
C. Public expenditure is reduced
D. There should be a balanced budget

 57. Which one of the following does NOT determine the amount of years of schooling demanded by an individual to qualify for modern job?

A. The wage or income differential
B. The probability of success in finding modern sector empl_ oyment
C. Opportunity cost of schooling
D. Expansion of health care infrastructure in urban sector ✔

58. Who among the following is not associated with the endogenous growth

A. Robert Solow ✔
B. Paul Romer
C. Rebelo
D. Robert Lucas

59. Under which system the central bank is authorized by law to issue a fixed amount of notes against government securities and any excess is to be fully backed by gold/silver?

A. Maximum fiduciary system
B. Minimum reserve system
C. Fixed Fiduciary system ✔
D. Maximum and minimum fiduciary system

60. The rational expectations hypothesis suggests that the forcasts that people

make concerning future inflation rates
A. Consistently over estimates the actual rate of inflation in the future
B. Are always correct
C. Consistently under estimates the actual rate of inflation in the future
D. Are correct on an average but are subject to errors that are distributed
randomly ✔
61. Estimate of head count ratio in state –A and state – B are
A. State A : 0.375 ; B: 0.375✔
B. State A : 0.475 ; B: 0.375
C. State A : 0.575 ; B: 0.575
D. State A: 0.385; B: 0.425

62. From the table calculate the estimates of Square Poverty Gap Ratio (SPGR) and then show that the SPGR in state A is

A. Same as in state B
B. Higher than that in state B
C. Lower than that in state B✔
D. Significantly different from zero

63. From the table calculate the estimate of Poverty Gap Ratio (PGR) for state A and state B and select the correctoption

A. State A : 0.133 ; B: 0.0119
B. State A : 0.153 ; B: 0.0135
C. State A: 0.0133 ; B: 0.119✔
D. State A: 0.0153 ; B: 0.135

64. In an open economy input output model, the viability is examined by

A. Hawkins- Simon conditions ✔
B. Kuhn – Tucker conditions
C. Dickey – fuller test
D. Goldfeld Quandt test

65. When the null hypothesis is there as an equality the level of significance is the probability of making

A. Type –II error
B. Type – I error ✔
C. Type I & II errors
D. Type I & III errors

66. In 2011 the proportion of urban population was more than 40% in the states of

A. Tamil Nadu, Punjab, Andra Pradesh,Gujarat
B. Tamil Nadu, Haryana, Gurajat,
C. Tamil Nadu, Kerala, Andra Pradesh,West Bengal
D. Tamil Nadu, Kerala, Maharastra, Gujarat ✔

67. A Linear programming problem can be solved by using

A. ARIMA techniques
B. Simplex method ✔
C. Unit root method
D. None of the above

68. Which age structure is important for demographic dividend?

A. 0-14
B. 15-59✔
C. 60 and above
D. 0-14 and 60 and above

69. The correct relationship among Arithmetic Mean (AM), Geometric Mean (GM) and Harmonic Mean (HM) is

A. GM = AM + HM
B. AM < HM
C. (GM)2= HM* AM ✔

70. In a two variable (X and Y ) regression analysis, the regression coefficient are bxy= 0.6 and byx= 0.8. If y is dependent variable and x is indep-endent variable, what is the percentage of variations in Y explained by X?

A. 47%
B. 48%✔
C. 49%
D. 36%

71. The RBI made Indian rupee fully convertible in current account transactions related to goods and services in the year

A. 1985
B. 2002
C. 1994✔
D. 2011

72. Standard Error (SE) of sample mean in random sampling from an infinite population or in random sampling with replacement is given by


73. The IRR is the discount rate thatequates the project NPV to ____ and benefit- cost ratio to ____

A. 1,0
B. 0,1 ✔
C. 0,0
D. 1,1

74. Difference equation is concerned with

A. Discrete changes ✔
B. Continuous changes
C. Both of the above
D. None of the above

75. Multiplicative Decomposition model is used to

A. Deseasonalise the time series data ✔
B. Build cost of living index
C. Test a hypothesis
D. Estimate probability

76. Match the following

Type –I
a) Thomas Doubleday
b) Thomas Sadler
c) Leibenstein
d) Herbert Spencer
Type –II
i) Destiny theory
ii) Biological theory
iii) Diet theory
iv) Motivation theory of population
Choose the correct option
A. a-i, b-ii, c-iii, d-iv
B. a-iii, b-I, c-iv, d-ii✔
C. a-iv, b-iii, c-ii, d-i
D. a-iv, b-ii, c-I, d-iii

77. “Education as investment in human resources plays an important role among the factors which contribute to economic growth”. This statement was given by

A. New Education policy, 1985
B. Education Commission, 1966 ✔
D. Supreme Court of India

78. Under TRIPS protection for copyrights is for

A. 20 years after the death of the author
B. 30 years after the death of the author
C. 40 years after the death of the author
D. 50 years after the death of the author ✔

79. Second National Commission on labour has recommended a three tier system including

A. Lok adalats, labour courts and labour commissions
B. Lok adalats, labour courts and labour relations commissions ✔
C. Lok adalats, labour courts and judicial courts
D. Lok adalats, labour courts and labour inspectors

80. The ‘Hedonic Price’ method measures the value of environmental assets through

A. Using ‘existence’ of an environmental asset
B. Using linkages between variations of Inhouse prices ✔
C. Using WTP to value of environmental assets
D. Using WTA TO value of envionmental assets

81. Assertion (A): The share of the non commodity sector in the national income has been increasing in India

Reason (R): Industry and agriculture have been growing at a relatively slower pace in India
A. Both (A) and (R) are true and R explains (A) ✔
B. Both (A) and (R) are true but R does not explain (A)
C. (A) is true but (R) is false
D. (A) is false but (R) is true

82. Market failure occurs in case of most of the environmental goods, because

A. Environmental goods are rival products
B. Environmental goods are excludable products
C. Environmental goods are non rival in production
D. Environmental goods are non rival and non excludable in consumption ✔

83. Which of the following is NOT an instrument of capital market with special reference to India

A. Equity share
B. Debenture
C. Gold ETF
D. Commercial paper ✔

84. Match the following

List – I
a) Gauss – Markov
b) Coefficient of determination
c) H0 : B2 = 0, H1: B2= 70
d) Heteroscedasticity
i) R^2
ii) One sided test
iii) Goldfeld – Quandt test
iv) BLUE
Choose the correct option
A. a-iv, b-i, c-ii, d-iii ✔
B. a-I, b-ii, c-iv, d-iii
C. a-ii, b-iii, c-i, d-iv
D. a-iii, b-I, c-ii, d-iv

85. Which of the following items completes the life table?

86. What is the equation of corrected
Ans :A

87. Match the following

List –I
a) Skewness
b) Variance
c) Earthquake
d) F –test
List – II
i) Dispersion
ii) Random Variations
iii) Ratio of variances
iv) Lack of symmetry
Choose the correct option
A. a-iii, b-iv, c-i, d-ii
B. a-iv, b-I, c-ii, d-iii✔
C. a-i, b-iii, c-iv, d-ii
D. a-ii, b-I, c-iv, d-iii

88. If AR = 15 MR= 5, the price elasticity of demand is

A. 2.3
B. 1.5✔
C. 1.75
D. 1

89. In a binomial distribution, the

probability of x successes in n trials in any order is given
ANS: 1
90. The cost function of a monopolist is C = 40+ 12X. Write the demand function as P = 60- 3X. What is his profit maximizing output level?
A. 12
B. 11
C. 8 ✔
D. 9

91. “Under some conditions, it makes no difference to efficiency whether the polluter has a right to pollute or the victim has a right to clean air”. This statement is related to the work of:

A. G Hardin
B. R Coase ✔
C. N Kaldor
D. Julian Simon

92. Applying OLS to simultaneous equations results in the parameters being

A. Inefficient
B. Inconsistent
C. Biased
D. Biased and Inconsistent ✔

93. Match the following

List –I
a) World environment day
b) World wildlife day
c) World water day
d) World population day
List –II
i) 11th July
ii) 5th June
iii) 3rd March
iv) 22nd March
Choose the correct option
A. a- i, b-ii, c-iii, d- iv
B. a-iii, b-i, c-iv, d-ii
C. a-iv, b-iii, c-ii, d-i
D. a-ii, b-iii, c-iv, d-i ✔


A. 15
B. 16
C. 27✔
D. 20

95. Which of the following is NOT correct with reference to the service sector of Indian economy? 

A. Service sector has the largest share in the GDP 
B. Service sector has the largest share in employment ✔
C. Service sector’s growth has been higher than growth of agriculture sector 
D. Productivity per worker in service sector is highest 

96. A simultaneous equation model is exactly identified, if 

A. Unique numerical values of structural parameters can be obtained ✔
B. More than one numerical value can be obtained for some of the parameters of the structural equation 
C. Unique solution of all structural coefficients is not possible 
D. Structural coefficient cannot be estimated 

97. National Food Security law covers 

A. 65% of rural population 
B. 70% of rural population 
C. 75% of rural population ✔
D. 80% of rural population 

98. Which of the following is NOT part of the “PM Kisan Samman Nidhi” scheme as announced on 1-02-2019?

A. All farmers having land holdings up to 2 hectares are eligible under the scheme 
B. The scheme will be applicable from 1st April, 2019 ✔
C. The government will transfers Rs. 6000 per annum in to the bank account of eligible beneficiaries 
D. The money will be given in three equal installments of Rs. 2000 each 

99. For a moderately skewed distribution,the value of mode is 10 and value of median is 20. Then the mean is 

A. 15
B. 30
C. 25✔
D. 35

100.Who propounded optimum theory of population? 

A. Robbins 
B. Dalton 
C. Cannan ✔
D. Carr Saunders 

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