Series OSS/1 Code No. 58/1/1
ECONOMICS
Time allowed : 3 hours Maximum marks :100
General Instructions :
(i) All questions in both the sections are compulsory.
(ii) Marks for questions are indicated against each.
(iii) Question No's. 1-5 and 17-21 are very short-answer questions carrying 1 mark each. They are required to be answered in one sentence each.
(iv) Question No's. 6-10 and 22-26 are short-answer questions carrying 3 ,narks each. Answers to them should normally not exceed 60 words each.
(v) Question No's. 11-13 and 27-29 are also short-answer questions carrying 4 marks each Answers to them should normally not exceed 70 words each.
(vi) Question No's. 14-16 and 30-32 are long-answer questions carrying 6 marks each. Answers to them should normally not exceed 100 words each.
(vii) Answers should be brief and to the point and the above word limit should be adhered to as far as possible.
SECTION A
1. Define an indifference curve. 1
2. Name the characteristic which makes monopolistic competition different from perfect competition. 1
3. Why is demand for water inelastic ? 1
4. State one feature of oligopoly. 1
5. In which market form demand curve of a firm is perfectly elastic ? 1
6. Distinguish between ‘increase in demand’ and ‘increase in quantity demanded’ of a commodity. 3
7. Explain the law of diminishing marginal utility with the help of a utility schedule. 3
OR
Goods X and Y are substitutes. Explain the effect of fall in price of Y on demand for X.
8. At a price of Rs. 5 per unit of commodity A, total revenue is Rs. 800. When its price rises by 20 percent, total revenue increases by Rs. 400. Calculate its price elasticity of supply. 3
9. Explain the implications of freedom of entry and exit of firms under perfect competition. 3
10. Given below is the cost schedule of a firm. Its average fixed cost is Rs. 20 when it produces 3 units.
| Output (units) | 1 | 2 | 3 |
| Average variable cost (Rs.) | 30 | 28 | 32 |
Calculate its marginal cost and average total cost at each given level of output. 3
11. Explain the problem of ‘what to produce’. 4
OR
Explain any two main features of a centrally planned economy.
12. When the price of a commodity falls by Rs. 2 per unit, its quantity demanded increases by 10 units. Its price elasticity of demand is (-) 1. Calculate its quantity demanded at the price before change which was Rs. 10 per unit. 4
13. Explain the effect of increase in income of buyers of a ‘normal’ commodity on its equilibrium price. 4
14. Using indifference curves approach, explain the conditions of consumer’s equilibrium. 6
15. State whether the following statements are true or false. Give reasons for your answer. 6
(a) When total revenue is constant average revenue will also be constant.
(b) Average variable cost can fall even when marginal cost is rising.
(c) When marginal product falls, average product will also fall.
16. Explain the law of variable proportions with the help of total product and marginal product curves. 6
OR
Explain producer’s equilibrium with the help of a marginal cost and marginal revenue schedule.
For Blind candidates in lieu of Q. No. 16.
Explain the law of variable proportions with the help of a total and marginal product schedule. 6
OR
Explain producer’s equilibrium with the help of a marginal cost and marginal revenue schedule.
SECTION B
17. State the components of money supply.
18. Give the meaning of ex-ante savings. 1
19. How is primary deficit calculated ? 1
20. Give the meaning of deflationary gap. 1
21. State two sources of supply of foreign exchange. 1
22. Explain how distribution of gross domestic product is its limitation as a measure of economic welfare. 3
OR
Explain the basis of classifying goods into intermediate and final goods. Give suitable examples.
23. Explain the ‘lender of last resort’ function of the Central Bank.
24. How can Government budget be helpful in altering distribution of income in an economy ? Explain.
25. Explain the meaning of deficit in balance of payments.
26. Distinguish between devaluation and depreciation of domestic currency. 3
27. Explain the process of money creation by Commercial Banks.
OR
How do changes in bank rate affect money creation by Commercial Banks ? Explain.
28. State whether the following statements are true or false. Give reasons for your answer : 4
(a) When marginal propensity to consume is greater than marginal propensity to save, the value of investment multiplier will be greater than 5.
(b) The value of marginal propensity to save can never be negative.
29. Distinguish between : 4
(a) Capital receipts and revenue receipts.
(b) Direct tax and indirect tax.
30. How will you treat the following while estimating national income of India ? 6
(a) Dividend received by an Indian from his investment in shares of a foreign company.
(b) Money received by a family in India from relatives working abroad.
(c) Interest received on loans given to a friend for purchasing a car.
31. From the following data, calculate (a) Gross Domestic Product at Factor Cost and
(b) Factor Income To Abroad : 6
(Rs. in 000 crore)
(i) Compensation of employees 800
(ii) Profits 200
(iii) Dividends 50
(iv) Gross national product at market price 1,400
(v) Rent 150
(vi) Interest 100
(vii) Gross domestic capital formation 300
(viii) Net fixed capital formation 200
(ix) Change in stock 50
(x) Factor income from abroad 60
(xi) Net indirect taxes 120
OR
Calculate Net National Product at Factor Cost and Gross National Disposable Income from the following :
(Rs. in crore)
(i) Saving of non-departmental enterprises 50
(ii) Income from property and entrepreneurship
accruing to the government administrative departments 70
(iii) Personal tax 90
(iv) National debt interest 20
(v) Retained earnings of private corporate sector 10
(vi) Current transfer payments by government 40
(vii) Consumption of fixed capital 60
(viii) Corporation tax 30
(ix) Net indirect-tax 80
(x) Net current transfers from rest of the world (-) 10
(xi) Personal disposable income 1000
32. In an economy 75 percent of the increase in income is spent on consumption. Investment is increased by Rs. 1,000 crore. Calculate :
(a) total increase in income
(b) total increase in consumption expenditure.