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SAMPLE QUESTION PAPER - 01

(2023-24)
ECONOMICS (THEORY)

MBA WT (ANALYTICAL WRITING

TEST) AT IIM

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SAMPLE QUESTION PAPER - 01 (2023-24)

ECONOMICS (THEORY)
Maximum Marks: 80 Time: 3 hours

General instructions:
1. This question paper contains two sections:
Section A – Macro Economics
Section B – Indian Economic Development
2. This paper contains 20 Multiple Choice Questions of 1 mark each.
3. This paper contains 4 Short Answer Questions of 3 marks each to be answered in 60 to 80 words.
4. This paper contains 6 Short Answer Questions of 4 marks each to be answered in 80 to 100 words.
5. This paper contains 4 Long Answer Questions of 6 marks each to be answered in 100 to 150 words.

SECTION A – MACRO ECONOMICS 6. What is the primary objective of the Monetary Policy
1. What characterizes the connection between Committee (MPC) in India?
aggregate demand (AD) and aggregate supply (AS) (a) Maximizing bank profits
that results in economic equilibrium? (b) Controlling inflation and promoting economic
(a) AD < AS (b) AD > AS growth
(c) Regulating foreign exchange rates
(c) AD = AS. (d) AD has no impact on AS.
(d) Managing government fiscal policies.
2. The value of ____ can be greater than 1.
7. Suppose for a given economy,
(a) Marginal propensity to consume.
S= -60 + 0.1Y
(b) Average propensity to consume I= ₹ 4,000 crore
(c) Average propensity to save. (Where S = Saving Function, Y = National Income and
(d) Marginal propensity to save. I = Investment Expenditure)
3. Which factor primarily determines the exchange rate Equilibrium level of Income would be ₹ ______ crore.
under a fixed exchange rate system?
(a) Supply and demand in the foreign exchange 8. What does the "current account" of the balance of
payments primarily represent?
market
(a) Capital flows related to investments
(b) Central bank intervention
(b) Exports and imports of goods and services
(c) Government fiscal policy
(c) Financial aid and grants received from foreign
(d) International trade agreements
governments
4. What is the primary function of money in an (d) Foreign exchange rate fluctuations
economy? 9. Which of the following is a part of normal resident of
(a) Storing value India?
(b) Facilitating barter transactions (a) Indian official working in Indian embassy in USA
(c) Generating interest income (b) Australian tourist staying for 5 days in India
(d) Promoting economic growth (c) Indians staying for medical treatment in UK
(d) None of the above
5. Graphically, Aggregate Demand function can be
obtained by vertically adding the _________ and _________ 10. In a floating exchange rate system, exchange rates are
function. primarily determined by:
(a) Consumption, saving (a) Market forces of supply and demand
(b) Consumption, investment (b) Government regulations and restrictions
(c) Investment, saving (c) International treaties and agreements
(d) Aggregate supply, consumption. (d) Central bank interventions

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11. Explain the leading functions of commercial banks?

12. On the basis of the given data, estimate the value of Domestic Income:
S. No. Items Amount (₹ in crore)
i. Household Consumption Expenditure 600
ii. Gross Fixed Capital Formation 200
iii. Change in stock 40
iv. Government Final Consumption Expenditure 200
v. Net Export (-)40
vi. Net Indirect Taxes 120
vii. Net Factor Income From Abroad 20

OR

B) State the meanings of the following:

(i) Externalities
(ii) Operating Surplus
(iii) Consumption goods
13. A) "In an economy, when ex-ante Aggregate Demand
exceeds ex-ante Aggregate Supply, it is essential to
explore the potential consequences on output,
income, and employment."
Discuss the potential effects of this imbalance on the
levels of output, income, and employment.
OR
B) "In an effort to combat inflation, the Reserve Bank
of India may encourage commercial banks to deposit
their excess funds with it."
Examine the reasoning behind the Reserve Bank of
India's decision to take this measure
14. How does money overcome the problems of barter
system?
15. In a fictional economy, the government decides to
increase its investment expenditure by 50 crores. If
the Marginal Propensity to Consume (MPC) is 0.75,
calculate the change in income resulting from this
expenditure increase.
16. (A) Provide sound justifications for how the following
would be accounted for when calculating domestic
income:
(i) The payment made by an American tourist for
goods bought in India.
(ii) Tomatoes cultivated by Ms. Pooja in her personal
garden.
OR
(B) "A machine acquired by a company is invariably
categorized as a capital asset." Do you concur with
this assertion? Support your response with cogent
rationales.

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17. A) Based on the provided data, compute the following values:

(i) Fiscal deficit
(ii) Primary deficit
Given information for the fiscal year 2021-22 (in ₹in crore):
(i) Revenue Receipts: ₹25 crore
(ii) Capital Expenditure: ₹18 crore
(iii) Revenue Deficit: ₹12 crore
(iv) Non-debt creating capital receipts: 60% of revenue receipts
(v) Interest Payments: ₹5 crore
B) State any two features of public goods.
OR
C) What is a balanced government budget? Explain any two multiplier effect of a balanced budget.
D) Explain the objectives of resource allocation and income distribution in a government budget.
(a) Economic indicator (b) Liberty indicator
SECTION- B (c) Health indicator (d) Demographic indicator
INDIAN ECONOMIC DEVELOPMENT
23. New agricultural strategy was also known as?
18. Determine the accurate pairing of the 'Objectives of (a) White revolution
Indian Five Year Plans. (b) Agricultural revolution
(a) Growth, Equality, Modernisation, Self-Reliance (c) Green revolution
(b) Development, Equality, Modernization, (d) Land revolution
Sustainability
24. Which agency in India is responsible for
(c) Good Health, Education, Modernization,
implementing the Mid-Day Meal Scheme to promote
Sustainability
human capital formation among schoolchildren?
(d) Growth, Equity, Modernization, Self-Reliance
(a) Ministry of Health and Family Welfare
19. What was the primary goal of Indian Five Year Plans (b) Ministry of Education
during the period from 1950 to 1990? (c) Ministry of Women and Child Development
(a) Achieving self-sufficiency in food production (d) Ministry of Rural Development
(b) Promoting rapid industrialization
25. What is the significance of Gross Enrollment Ratio
(c) Expanding the service sector
(GER) in the context of human capital formation?
(d) Enhancing international trade
(a) It measures the proportion of children attending
20. Micro credit programmes play a vital role in ensuring primary school.
an overall development of the rural economy as (b) It assesses the percentage of the population with
they____________. access to healthcare.
(i) provide financial support (c) It indicates the percentage of eligible students
(ii) Lead to women empowerment enrolled in higher education.
(iii) Enhance the reach of formal credit system. (d) It quantifies the labor force participation rate.
Alternatives:
26. Read the following statements carefully:
(a) (i) and (ii) (b) (ii) and (iii)
Statement 1: The nature of unemployment problem
(c) (i) and (iii) (d) (i), (ii) and (iii)
in India is uni-faceted.
21. What is the poverty line based on in India? Statement 2: Worker-Population ratio is an indicator
(a) International income standards used for analyzing the employment situation in a
(b) Average expenditure on food country.
(c) Average expenditure on non-food items In light of the given statements, choose the correct
(d) Per capita income of the country alternative from the following:
(a) Statement 1 is true and Statement 2 is false.
22. _______may is defined as the measure of the extent of
(b) Statement 1 is false and Statement 2 is true.
demographic participation in the social and political
(c) Both Statements 1 and 2 are false.
decision making.
(d) Both Statements 1 and 2 are true.

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27. When the price index increases, what does it b) Green revolution transformed India from a
imply? subsistent food grain economy to a food surplus
(a) Value of currency increases economy.” Justify the statement, giving reasons in
(b) No effect on value of currency support of your
(c) Value of currency decreases answer
(d) None of these
OR
28. The Zamindari system of land settlement was c) "In India, significant land reforms were
responsible for the stagnation of Indian agriculture. implemented extensively following the year
Explain. 1947."
OR Please choose one of these land reforms for
Explain the various systems of collecting land discussion based on the provided statement."
revenue prevalent under the British rule. d) Differentiate between social and economic
infrastructure.
29. Why calorie based norm is not adequate to identify
the poor? 32. Write a brief note on SAARC.
30. Discuss briefly the meaning of economic reforms. 33. Since independence, the government has been
Explain the main economic reforms. playing an important role in generating employment
directly or indirectly.” Discuss in detail.
31. a) Explain how infrastructure impacts productivity
and induces investment?
34. Direction: Read the following hypothetical text and answer the given questions:
Infrastructure is often called as the lifeline of the economy of a nation. It comprises of a well established and well knit
network of power, telecom, ports, airports, roads, civil aviation, railways and road transport in a country. Countries need
adequate infrastructure so that various economic activities in an economy are executed efficiently, smoothly and above
all in time. The deficiencies in the of infrastructural needs of a nation cannot be made up through imports rather the best
approach is that it must be created within the domestic economy to put it on through the higher growth trajectory.
However, building of infrastructure requires large and lumpy investment and has a relatively long gestation period. Due
to this fact, infrastructural facilities are either built or run by the government and public sector enterprises and if private
sector is permitted to make investment and run infrastructural projects, they must be regulated in order to ensure quality
infrastructure to one and all in the society.
I. Identify the main category of infrastructure mentioned in the above paragraph.
(choose the correct alternative)
(a) Social (b) Economic
(c) Personal (d) Financial
II. The demand-supply gap of major infrastructural facility like power, transport can be met through__________ (fill up
the blank with correct answer)
III. State whether the given statement is true or false: ‘Infrastructure is often called as the lifeline of the economy of a
country, as it helps in increasing the productivity of the factors of production and enhancing the quality of life’.
IV. State reasons as to why infrastructural facilities are mainly built or run by the government and public sector
enterprises?

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