“Daily Practice Paper”

Economics | 27th May 2023

1. A company located in India receives a loan from a company located abroad. How is this
transaction recorded in India’s balance of payments account?
(Choose the correct alternative)
(a) Credit side of current account
(b) Debit side of current account
(c) Credit side of capital account
(d) Debit side of capital account

2. Which of the following can be used as a tool under fiscal measure taken by Indian
Government to correct the situation of deflationary gap which arises due to Covid-19?
i. Increase in Cash reserve ratio
ii. Increase in credit rates
iii. Increase in Public spending
iv. Decrease in tax rate
v. Decrease in margin requirement

Options:
(a) (i) and (ii)
(b) (i) and (iii)
(c) (iii) and (iv) are true
(d) (i), (ii) and (iii) are true

3. The price of a commodity is reduced by Rs. 5 to Rs. 5 per unit, consequently, the total
outlay decreases by Rs. 100 to Rs. 300. Which of the following values represents the
value of price elasticity of demand?
(a) 1.25 (b) 1
(c) 0.75 (d) 0.5

4. Underemployment level in an economy may exist at a situation when-

(a) Aggregate Demand (Expected) < Aggregate Demand (Full employment)
(b) Aggregate Demand (Expected) > Aggregate Demand (Full employment)
(c) Aggregate Demand (Expected) ≥ Aggregate Demand (Full employment)
(d) Aggregate Demand (Expected) ≤ Aggregate Demand (Full employment)

5. Upward Movement along a demand takes place due to

(a) Increase in price of a commodity.
(b) Decrease in price of a commodity.
(c) Increase in price of its complementary goods
(d) Increase in price of its substitute goods

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6. Identify the facts related to involuntary employment situation lying in an economy.
I. Y = C + S
II. It is also known as deflationary situation.
III. Actual Aggregate demand is less than Aggregate supply at full employment level.
IV. Under-utilisation of resources
V. Problem of excess demand arises.

Choose the correct option:

(a) (i) and (ii) (b) (ii), (iii) and (iv)
(c) (ii), (iv) and (v) (d) (iii) and (v)

7. Which of the following is not an exception of law of demand?

(a) Giffin goods
(b) Necessity goods
(c) Inferior goods
(d) Veblen goods

8. Which of the following countries initiated its process of Economic Reforms in the year
1978? (Choose the correct alternative)
(a) India (b) Russia
(c) China (d) Pakistan

9. From the set of the events given in column I and corresponding facts given in Column II,
Match the following:
Column I Column II
A. Commune System (i) To attract foreign Direct Investment
Great Proletarian Cultural Students and Professionals were sent
B. (ii)
Revolution to work and learn to the countryside
Setting up of Special Economic
C. (iii) Collective Farming
Zones in China
D. Dual Pricing (iv) Economic Reforms of 1991

Choose the correct alternative from the following:

(a) A-(iii), B-(ii), C-(i), D-(iv)
(b) A-(ii), B-(iii), C-(i), D-(iv)
(c) A-(iii), B-(ii), C-(iv), D-(i)
(d) A-(ii), B-(iv), C-(i), D-(iii)

10. Identify which of the following statements is not true about Consumption Curve:
(a) Consumption curve starts from a positive intercept on Y-axis.
(b) Consumption curve is an upward sloping curve.
(c) Consumption curve intersects income curve at the point of equilibrium.
(d) Marginal propensity to consume measures the slope of consumption curve.

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