1.

When a consumer is neutral to good Y, the indifference curve will be,

A. Horizontal straight line
B. downward sloping
C. A single point in the commodity space
D. Vertical straight line

2. Suppose incomes double over a period of years. Which sorts of products will experience the
most significant increases in the price?
A. Those with a PES close to 0.0 and an IED well below 0.0
B. Those with a PES well above 1.0 and an IED well above 0.0
C. Those with a PES well above 1.0 and an IED well below 0.0
D. Those with a Price Elasticity of Supply(PES) close to 0.0 and an Income Elasticity of
Demand (IED) well above 0.0

3. Which of the following statements accurately describes the relationship between AP and MP
A) AP rises when MP is above it and falls when MP is below it
B) MP intersects AP at the maximum of MP
C) AP and MP are always parallel to each other
D) AP is always increasing when MP is falling and vice versa

4. Labour supply curve becomes backward bending when:

A. Substitution effect exceeds Income effect
B. Leisure becomes luxury good.
C. Any of the above situation
D. Income effect exceeds substitution effect.

5. As per the Keynesian theory, Aggregate demand can be increased by:

A. selling bonds by RBI
B. increasing bank rate
C. decreasing cash reserve ratio
D. none of these

6. Charging a different price in different markets where price elasticities are different is called
A. price discrimination
B. second-degree price discrimination
C. third-degree price discrimination
D. perfect price discrimination

7. All internationally traded services are covered under which of the following WTO
agreements?
A. TRIMS
B. TRIPS
C. GATS
D. PTA
8. The concept of the vicious circle of poverty is associated with
A. J.M. Keynes
B. Ragner Nurkse
C. Karl Marx
D. J.S. Mill

9. The imposition of an import tariff by a large nation

A. usually improves the nation’s terms of trade and increases the volume of trade.
B. worsens the nation’s terms of trade but increases the volume of trade
C. usually improves the nation’s terms of trade but reduces the volume of trade.
D. worsens the nation’s terms of trade and reduces the volume of trade.

10. Classical Theory implies

A. No possibility of over-or under-production in the economy

B. State of full employment in the economy
C. Both (a) and (b)
D. None of the above

11. Elasticity of substitution is

A. A measure of the responsiveness of input ratio to a change in input-price ratio.
B. The rate at which the inputs are substituted.
C. The substitution of cheaper inputs for dearer inputs.
D. A measure of the responsiveness of input prices and the substitution of cheaper
inputs.

12. Which of the following is not a condition for Pareto efficiency:

a. Exchange efficiency
B. Production efficiency
C. Product mix efficiency
D. None of the above

13. Which of the following is not an example of market failure?

A. Imperfect information
B. Imperfect competition
C. Externalities
D. Efficient Equilibrium
E. B and D

14. Which of the following is not a year of devaluation of the Indian currency?
A. 1966
B. 1991
C 1947
D. 1949