NATIONAL ECONOMICS OLYMPIAD 2018-19

SAMPLE PAPER

SECTION A: BASIC CONCEPTUAL UNDERSTANDING

This section has questions that will test the candidate’s understanding about the basic concepts of
economics.

Q1. New legislation setting a price ceiling will most likely cause:

a) A market surplus

b) A decrease in demand

c) A market shortage

d) No change in demand

Q2. Sachin’s preferences satisfy the non-satiation assumption. This means that he must prefer

the bundle consisting of two glasses of orange juice and one sandwich to which of the

following bundles?

a) One glass of orange juice and two sandwiches

b) Three glasses of orange juice and one sandwiches

c) One glass of orange juice and one sandwich

d) One sandwich and three glasses of orange juice

Q3. All of the following factors will cause a demand curve to shift EXCEPT changes in:

a) The cost of production for the product

b) The number of consumers in the market

c) The prices of related goods

d) Income of the consumer

 SECTION B: LOGICAL REASONING

The questions are designed to assess the candidate’s ability to interpret patterns, number sequences,
etc.

Q4. Look carefully for the pattern, and then choose which pair of numbers comes next.

2 3 60 5 9 60 17

a) 21 60

b) 60 27

c) 33 60

d) 33 22

Q5. Look carefully for the pattern, and then choose which pair of numbers comes next.

11 14 17 17 20 25 23

a) 25 29

b) 26 33

c) 25 28

d) 28 33

SECTION C: CASE STUDY BASED

In this section, the candidate is provided with short case studies based on current problems, and has to
answer the related questions. This is to test the application skills of the candidate.

Read the following case study below and answer the following questions from Q6 to Q8.

Venezuela has experienced the worst economic nightmare since 2014, with rapid erosion of economic
stability and democratic credibility. Triggered by the downturn in global oil prices, Venezuelan inflation
touched exorbitantly high levels. With barely 25 percent of the population able to maintain a regular
diet, growing crime levels, and raging humanitarian crisis, the poverty rate has shot up to a whopping 82
percent, thus making the Venezuela’s economy the worst performing economy in the world in 2017.
President Nicolas Maduro and his United Socialist Party of Venezuela held a firm grip on power, despite
growing resistance from both, within and outside the country. The cash-strapped economy has been
unable to sustain imports of basic necessities, even as the socialist government has unleashed a
crackdown on an angry opposition and activists. Worsening economic growth and massive price inflation
have pushed Venezuela into the worst-ever macroeconomic crisis of the century.
Q6. In the Venezuelan hyperinflation, which of these would be in the most advantageous position:

a) Shopkeepers

b) Creditors

c) Central Bank

d) Debtors

Q7. What definitely could NOT have led to the Venezuela crisis?

a) Increase in minimum wage

b) Oil prices plummeting from $96 in 2014 to $40 in 2016 (per barrel)

c) Increase in VAT from 4% to 16%

d) Increased spending on welfare programs and housing schemes for the poor

Q8. Which of the following statements are TRUE about the Venezuelan situation?

I. There is dearth of cash in the economy.

II. There is economic instability, but political stability.

III. Rise of the barter exchange system.

a) Only I and II

b) Only I and III

c) Only II and III

d) I, II and III
 SECTION D: DATA BASED

The candidate is given graphs and statistics in this section, and has to answer the related questions. This
is to test the critical thinking skills of the candidate.

Analyse the graph given below and answer the following questions from Q9 to Q12.

Q9. Which of the following could've led to led to the given changes in the value of Sri Lankan Rupee
assuming other factors to be constant?

a) Substantial increase in tourism to Sri Lanka.

b) Increase in Sri Lanka's exports.

c) Increase in Sri Lanka's imports.

d) Both (a) and (b)

Q10. In which year was the Sri Lankan Rupee the strongest?

a) 2004
b) 1993

c) 2000

d) It is not possible to determine this using the given graph.

Q11. Which of the following steps can the Sri Lankan government take to help slow down this trend?

a) Set up SEZs for MNCs

b) Purchasing US government bonds.

c) Decreasing import tariffs on American goods

d) None of the above

Q12. Let's say that Taylor Swift, an American pop star, took a loan of LKR 20,000 at 0% interest from
Malinga, a Sri Lankan cricketer, in 1995 and repaid the entire amount in 1999. Keeping the above
graph in mind who is at a disadvantage?

a) Malinga

b) Taylor Swift

c) Everyone is at an advantage

d) Sri Lanka’s central bank

ANSWER KEY

1.(c); 2.(c); 3.(a); 4.(c); 5.(b); 6.(d); 7.(c); 8.(b); 9.(c); 10.(b); 11.(a); 12.(a)