RAS Pre Exam Economics Sample paper 1.Keynesian Liquidity Preference theory explains the: (a) operation of the money market in an economy. (I interaction between the real and monetary sectors. (c) motivation of a speculator. (d) process of adjustment in money and capital markets for bringing about changes in the interest rate. Ans: a Q.2. Which one of the following conditions is assumed by Euler in his adding up theorem?Elasticity of substitution is: (a) equalto zero. (b) greater than zero but less than one. (c) greater than one. Ans: b Q. 3. The cars used by the police department of the government for patrolling should be treated as: (a) final goods because these are sold by business sector to government. (b) consumers goods because these are not re- sold by the government. (c) capital goods because these add to the capital formation in the country. (d) intermediate goods because police services are consumed through the use of these cars. Ans: d Q.4 Which one of the following consumption functions corresponds to the income multiplier, R= 4?(a) C=24+0.5 Y (b) C=240+0.25Y (c) C= 24+ 0.55Y (d) C = 240 + 0.75Y Ans: d 5. Given that GNP at market prices = Rs. l92866 crores Consumption of fixed capital = Rs. 13371 crqres Net factor income from abroad = Rs-975 crores the NDP at market prices will be: (a)Rs. 178520 crores (b) Rs. 207212 crores (c)Rs. 180470 Crores (d) Rs. 205262 crores Ans: a 6. In the theory of investment decision the most appropriate Internal Rate of Return (IRR) is the one which makes the: (a) net present value, the maximum. (b) gross present value, the maximum. (c) net present value, zero. (d) gross present value, zero. Ans: c Q. 7. In Keynes General Theory, investment and savings are brought to equality primarily through changes in the: (a) rate of interest. (b) income velocity of money. (c) national income (d). level of prices. Ans: c Q. 8 During a recession, consumers typically react to falling incomes by: (a) increasing the fraction of consumption devoted to durable goods. (b) reducing the fraction of durables quickly before incomes fall further. (c) reducing the worn-out durables quickly before incomes goods. (d) reducing the fraction of non-durables and services more quickly than purchases of durables. Ans: b Q. 9. Consider the following statements: 1. Points to the left of the IS curve indicate excess supply of goods. 2. Points to the right of the LM curve indicate excess demand for money. 3. ?oints to the right of the IS curve indicate excess supply of money. 4.. Points to the right of the IS curve indicate excess supply of goods. Of these statements (a)2 and 4 are correct (b)1 and 3 are correct (c)2 and 3 are correct (d)1, 2 and 3 are correct Ans: a Q.10 . Suppose, MPC falls. The IS curve shifts to the left. Then what happens ceteris paribus?(a) The level of equilibrium becomes lower (b) The level of equilibrium becomes higher (c) There is no change in equilibrium (d) Only the rate of interest becomes lower Ans: a Q 11. The author of employment multiplier is: (a) Lord Beveridge (c) R. V Kahn (b) J. M . Keynes (d) J.R. Hicks Ans: c Q. 12 In a two sector economy, the saving and investment functions are as follows: S=—10+0.2Y I= —3+0.1 Y What will be the equilibrium level of income?(a) 70 (b) 80 (c) 90 (d) 100 Ans: a Q. 13 The IS-LM model has been formulated by: (a) J.R. Hicks (b) E Modigliani (c)P.A. Samuelson (d) J.M. Keynes Ans: a Directions The following item consist of two statements, one labelled the Assertion (A) and the other labelled the Reason (R,). You are to exam inc these two statements carefully and decide if the Assertion (A) and the Reason (R) are individually true and if so, whether the Reason is a correct explanation of Assertion. Select your answer to these using the codes given below Q. 14. Assertion (A): The level of employment in an economy, according of Keynes, is a function of GNP. Reason (R): GNP is determined by aggregate demand, which in turn depends upon consumption of the households and investment decisions of business. Codes: (a) Both A and R is true
Posted on: Thu, 11 Jul 2013 06:40:12 +0000