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2014 June UGC NET Solved Question Paper in Economics, Paper III

2014 June UGC NET Solved Question Paper in Economics, Paper III

01. Which of the following are the basic assumptions of cardinal utility
      analysis ?
    I. Utility is a measurable and quantifiable entity.
    II. Marginal utility of money changes with changes in real income.
    III. Utilities derived from various goods are inter-dependent.
    IV. The use of introspective method in judging the
          behaviour of marginal utility.
    Codes :
    (A) I and II are correct.
    (B) I and III are correct.
    (C) I and IV are correct.
    (D) I, III and IV are correct.
02. Engel Curve denotes
    (A) various amounts of a good which a consumer would be
          willing to purchase at various price levels.
    (B) various amounts of a good which a consumer would be
          willing to purchase at various income levels.

    (C) various amounts of a good purchased when the price of its
          substitutes tend to rise.
    (D) the relationship between income effect and substitution effect.
03. A producer is said to be operating with excess capacity
    (A) when he produces an output greater than that given by the
          minimum Average Total Cost
    (B) when he produces an output greater than at given by the
          maximum Average Total Cost
    (C) When he produces an output equal to that given by the
           minimum Average Total Cost
    (D) When he produces an output smaller than that given by the
          Minimum Average Total Cost

04. Assertion (A) : Harvey Leibenstein asserted that marginal
                             conditions required for economic efficiency are not
                             usually satisfied in practice.
      Reason (R) : People are not fully motivated towards
                          maximization or minimization.
    Codes :
    (A) Both (A) and (R) are correct and (R) is the correct explanation of (A).
    (B) (A) is correct, but (R) is not correct.
    (C) Both (A) and (R) are correct, but (R) is incorrect explanation
          of (A).
    (D) (R) is correct, but (A) is incorrect.
05. A graphical illustration used to explain efficiency conditions and
     demonstrates how the allocations of some goods and resources can be
     improved through exchange is called
    (A) production possibility curves
    (B) social indifference curves
    (C) Edgeworth box diagram
    (D) Phillips curve
06. Match the following :
           List – I                                   List - II
    a. A double Kaldor-Hicks
       Test                                        1. A. Bergson
    b. Compensation Principle          2. K.J. Arrow
    c. Social Welfare function           3. T. Scitovsky
    d. Impossibility theorem             4. Kaldor- Hicks
    Codes :
           a b c d
    (A) 4 1 3 2
    (B) 3 4 1 2
    (C) 3 4 2 1
    (D) 4 3 2 1
07. The oligopoly model in which the businessman assumes that his
      competitors output are fixed and simultaneously decide how much to
      produce is
    (A) Cournot oligopoly model
    (B) Stackelberg oligopoly model
    (C) Chamberlin’s oligopoly model
    (D) Bertrand oligopoly model
08. According to Game Theory, if increased advertising, raises costs
      more than revenues and the profits of both firms decline, we have a
    (A) Positive-sum game
    (B) Non zero-sum game
    (C) Zero-sum game
    (D) Negative-sum game
09. Arrows impossibility theorem implies
    (A) Any social decision rule should not violates the requirements of
          rational choice.
    (B) Any social decision rule must violate atleast one of the
          requirements of rational choice.

    (C) Any social decision rule must violate all the requirements of
          rational choice.
    (D) It is impossible to violate social decision rules.
10. ‘Bandwagon effect’ is found in
    (A) Relative Income hypothesis
    (B) Permanent Income hypothesis
    (C) Life cycle Hypothesis
    (D) Absolute Income hypothesis 
12. Complete the statements given in List – I with there given in List – II :
               List – I                            List – II
    a. Instantaneous
        adjustment of
        income with
       occurs in                          1. MPC is smaller
    b. Consumption
        lags income by
        one period in                   2. increase in investment
                                                  expenditure is once-forall
    c. Value of
        multiplier is
        zero when                      3. state multiplier
    d. Major portion
       of multiplier is
       realized in
       fewer periods when        4. dynamic multiplier
    Codes :
          a b c d
    (A) 3 4 1 2
    (B) 3 4 2 1
    (C) 4 3 1 2
    (D) 2 3 1 4
13. Assertion (A) : The individual speculative demand for money
                              is a discontinuous one.
      Reason (R) : Because the aggregate speculative demand for money
                          function is smooth downward sloping with liquidity trap at
                          extremely low interest rates.
    Codes :
    (A) Both (A) and (R) are correct and (R) is the correct explanation of (A).
    (B) Both (A) and (R) are correct but (R) is not the correct explanation of (A).
    (C) (A) is correct, but (R) is incorrect.
    (D) (A) is incorrect, but (R) is correct.
14. Transaction Cost is also called
    (A) Shoe Leather Cost
    (B) Menu Cost
    (C) Opportunity Cost of holding cash
    (D) All of the above
15. Given the consumption function, C = 0.8Y, and the investment function
       I = 102 – 0.2i, then the IS-curve is
    (A) Y = 500 – 10i               (B) Y = 450 – i
    (C) Y = 510 – i                   (D) Y = 505 – 2i
16. Match the premise given in List – I with that in List – II :
                List – I                                          List – II
    a. Price expectations are static            1. Okun’s law
    b. Price expectations are adaptive       2. Phillips Curve
    c. People do not make systematic
       errors                                              3. Natural Rate of unemployment
    d. Deviations of output from its
        natural rate is inversely related
        to the deviation of unemployment
        rate from its natural level                  4. Rational expectations hypothesis
    Codes :
          a b c d
    (A) 2 3 4 1
    (B) 4 3 2 1
    (C) 1 3 4 2
    (D) 4 2 1 3

18. When the aggregate supply schedule is positively sloped, continuous
      increases in the nominal money supply, ceteris parilus, result in
    (A) No change in the price level and proportional increases in
          real output.
    (B) No change in real output and proportional increases in the price level.
    (C) An increase in the price level and real output.
    (D) An increase in the price level and a decrease in real output.
19. “Golden Age” as per Mrs. Joan Robinson is (where ΔN/N
        is growth rate of population and ΔK/K is growth rate of capital)
    (A) ΔN/N=ΔK/K
    (D) None of the above
20. A technical change is neutral if MPK/ MPL
      remains unchanged at constant K/L
      ratio :
    (A) Harrod             (B) Hicks
    (C) Solow              (D) Kaldor
21. Concept of disembodied technical change is associated with
    I. Abramovitz      II. Kaldor
    III. Kendrick      IV. Solow
    (A) I and II                   (B) III and IV
    (C) I, III and IV            (D) II, III and IV
22. Joan Robinson’s growth model deals with
    I. Desired growth rate
    II. Possible growth rate
    III. Natural growth rate
    IV. Warranted growth rate
    Codes :
     (A) I and III           (B) II and IV
     (C) I and II            (D) III and IV
23. Assertion (A) : To Marx, it is surplus labour that lead to capital accumulation.
      Reason (R) : The difference between actual labour and subsistence
                           labour that a labourer puts in for which he receives nothing
                           is surplus labour.
    Codes :
    (A) (A) is correct, but (R) is not the correct reason for (A).
    (B) (A) is correct and (R) is incorrect.
    (C) Both (A) and (R) are correct.
    (D) Both (A) and (R) are incorrect.
24. Arrange the “Structural Development Processes” in a sequential order :
    I. Resource Allocation Processes
    II. Accumulation Process
    III. Distributional Processes
    IV. Demographic Processes
    Codes :
    (A) I, IV, II, III         (B) II, I, IV, III
    (C) III, II, I, IV         (D) IV, III, I, II
25. Match the items in List – I with List – II :
                    List – I                                    List – II
    a. MPL is zero in overpopulated
        economies                                        1. Gunnar Myrdal
    b. Two gap model                                 2. J.E. Mead
    c. Critical growth rate                           3. Arthur Lewis
    d. Backwash effects                             4. Hollis Chenery & others
    Codes :
          a b c d
    (A) 1 3 4 2
    (B) 3 4 2 1
    (C) 2 1 3 4
    (D) 4 2 1 3
26. Match the items in List – I with List – II :
                    List – I                                         List – II
    a. Learning by doing                                 1. Kaldor
    b. Biased Technical Progress                    2. Karl Sax
    c. Co-efficient of sensitivity of
        income distribution                               3. Kenneth J. Arrow
    d. Theory of Demographic
        Transition : Four stages of
        Population growth                                4. Joan Robinson
    Codes :
          a b c d
    (A) 3 4 1 2
    (B) 1 3 2 4
    (C) 2 1 4 3
    (D) 4 2 3 1
27. Assertion (A) : Solow model is a major improvement over
                              Harrod-Domar Model.
      Reason (R) : Solow built a model of long run growth without the
                          assumption of fixed proportion in production.
    Codes :
    (A) (A) is correct, but (R) is not the correct reason of (A).
    (B) (A) is not correct, but (R) is correct.
    (C) Both (A) and (R) are correct.
    (D) Both (A) and (R) are not correct.
28. The concentrations effect explained in Peacock-Wiseman hypothesis
    (A) public expenditure does not increase in smooth and continuous manner
    (B) public expenditure increases the necessity of increased revenue
    (C) the Central Government’s economic activity to grow
          faster than that of subnational Governments

    (D) absolute level of public expenditure increases
29. A tax imposed upon monopoly profits
    (A) can be shifted forward
    (B) can be shifted backward
    (C) can be shifted both forward and backward
    (D) cannot be shifted
30. The plan expenditure on Revenue Account of the Union Government
    I. Economic Services
    II. Social and community services
    III. Grants-in-aid to States and Union Territories
    IV. Loans and Advances to finance public enterprises
    Codes :
    (A) I and II are correct.
    (B) I, II and III are correct.
    (C) I, II and IV are correct.
    (D) I, II, III and IV are correct.
31. Debt obligations of Government of India (Government liabilities)
    I. State Provident Funds
    II. Small Savings
    III. Reserve Funds and Deposits
    IV. Consolidated Fund of India
    Codes :
    (A) II and III are correct.
    (B) I, II and III are correct.
    (C) II, III and IV are correct.
    (D) I, III and IV are correct.
32. Identify the chronology of the following Committees on tax reforms
      in India :
    I. Committee on Taxation of Agricultural Income and Wealth
    II. Kaldor Proposal for Tax Reform in India
    III. Taskforces on Direct and Indirect Taxes
    IV. Direct Taxes Administration Enquiry Committee
    Codes :
    (A) II, I, IV, III            (B) II, IV, I, III
    (C) II, III, I, IV           (D) I, III, IV, II
33. Which of the following are the role of Finance Commissions in India ?
    I. To make recommendations on the distribution of tax proceeds
        between Centre and States.
    II. To make Recommendations on levying, removing or
          restructuring of taxes.
    III. To recommend Grants-in-aid under Article 275 of the
    IV. To recommend plan and other grants under Article 282 of the
    Codes :
    (A) I and II are correct.
    (B) I and III are correct.
    (C) I, III and IV are correct.
    (D) All are correct.
34. Under a managed floating exchange rate system, the nation’s monetary
      authorities intervene in foreign exchange markets to
    (A) smooth out short-run and longrun fluctuations in exchange rates
    (B) keep exchange rates fixed among a group of nations
    (C) smooth out short-run fluctuations in exchange rates
    (D) keep exchange rates flexible
35. Euro currency market is a part of a larger global market known as
      Eurodollar market.
    (A) Above statement is correct.
    (B) Above statement is not correct.
    (C) Above statement is partially correct.
    (D) Above statement is partially incorrect.
36. Match the following :
                       List – I                                       List – II
    a. WTO                                            1. Provide finance to correct
                                                                disequilibrium in balance of
    b. IMF                                              2. Generally forbids
                                                                 the use of quantitative
                                                                 restrictions in trade.
    c. SAARC                                         3. Sanction of soft loans
    d. IDA                                               4. Promotes trade among South
                                                                  Asian Countries
    Codes :
          a b c d
    (A) 1 2 3 4
    (B) 2 3 4 1
    (C) 2 1 4 3
    (D) 3 2 4 1
37. A sudden shift from import tariffs to free trade may induce short term
      unemployment in
    (A) import competing industries
    (B) industries that are only exporters
    (C) industries that sell domestically as well as export
    (D) industries that neither import nor export
38. The immediate cause for the collapse of the Bretton woods system was
    (A) the expectation that the U.S.A. would soon be forced to
         devalue the dollar
    (B) the massive flight of liquid capital from the U.S.A.
    (C) the attempt by three small European Central Banks to
          convert part of their dollar holding into gold at the Federal
          Reserve Bank.
    (D) All of the above
39. A feasible effect of international trade is that
    (A) a monopoly in the home market becomes an oligopoly in the
          world market

    (B) an oligopoly in the home market becomes a monopoly in
          the world market
    (C) a purely competitive firm in the home market becomes an
    (D) a purely competitive firm in the home market becomes a
40. The European Union has achieved all of the following, except
    (A) adopted a common fiscal policy for member nations
    (B) established a common system of agricultural price supports
    (C) disbanded all tariffs between its member countries
    (D) levied common tariffs on products imported from nonmembers
41. A Foreign Trade Zone (FTZ) is
    (A) a regional area within which trade with foreign nations is allowed
    (B) a free trade agreement among several nations
    (C) designed to promote exports by deferring import duties on
          intermediate inputs and waving such duties if the final product
          is re-exported rather than sold domestically

    (D) designed to limit exports of manufactured goods by placing
          import taxes on goods made within the zone
42. The formula that shows the correct relationship between
    I. The supply of high powered money (H)
    II. The currency (C)
    III. The money supply (M)
    IV. Required Reserves (RR)
    V. Excess Reserves (ER)
    VI. Demand deposits (D), is
    (A)M/H = D + C/C + RR + ER
    (B)H/M = D + C/C + RR + ER
    (C)M/D + C = C + RR + ER/H
    (D)H/M = C + RR + ER/D
43. Which of the following will act as the ‘lender of intermediate resort’ ?
    (A) RBI
    (B) NABARD
    (C) SBI
    (D) None of the above
44. According to Gurley and shaw, the various substitutes of currency and
      commercial bank demand deposits should be assigned different weights
      according to
    (A) their degree of replacement
    (B) their degree of substitutability
    (C) their share in the money market
    (D) their share in money supply
45. Assertion (A) : Primary financial markets deals in new financial claims.
      Reason (R) : It mobilises savings and supplies new capital to the business units.
    Codes :
    (A) Both (A) and (R) are correct and (R) is the correct explanation of (A).
    (B) Both (A) and (R) are correct and (R) is not a correct explanation of (A).
    (C) (A) is true, but (R) is false.
    (D) (A) is false, but (R) is true.
46. Margin requirement specified under which instruments of monetary policy ?
    (A) Variable Reserve Requirement
    (B) Statutory Liquidity Requirement
    (C) Selective Credit Controls
    (D) Open Market Operations
47. As per Micro, Small and Medium Enterprise Development Act, 2006,
      Medium Enterprises are defined as those with investments :
    (A) < 25 lakhs
    (B) 25 lakhs to 5 crores
    (C) 5 crores to 10 crores
    (D) > 10 crores
48. Theory of Industrial Location is associated with the names of
    I. Losch
    II. Weber
    III. Christaller
    IV. Lerner
    Codes :
    (A) I & II
    (B) I only
    (C) I, II and III
    (D) I, II, III and IV
49. The Committees related to industrial licensing policy are
    I. Arjun Sengupta Committee
    II. D.G. Karve Committee
    III. Subimal Dutt Committee
    IV. R.K. Hazari Committee
    Codes :
    (A) I and II
    (B) II and III
    (C) III and IV
    (D) I, II and III
50. Which Industrial Policy Resolution gave the public sector a strategic role
       in the Indian Economy ?
    (A) 1948                 (B) 1956
    (C) 1977                 (D) 1980
51. Average industrial growth rate during Tenth Plan period was
    (A) 5.3%               (B) 8.8%
    (C) 10.2%             (D) 15.3%
52. Suggest the correct choices about the nature of the Environmental
      Economics :
    I. Nature of Market failure is similar to public goods under
       public finance.
    II. Willingness to pay can be negative.
    III. It deals for items which are not used.
    IV. It deals for items which are used.
    Codes :
    (A) I, II, III & IV
    (B) I, II & III
    (C) II, III & IV
    (D) II & IV
53. Which of the following methods would be used for estimation of price
     change of a house due to either pollution or good environment like
     existence of park and scenic beauty ?
    (A) Hedonic Method
    (B) Contingent Valuation Method
    (C) Externality Effects
    (D) All of the above
54. In a life table which of the following does not fit ?
    (A) There are eight columns in a life table.
    (B) It tells the age-specific mortality rate.
    (C) Age-specific birth rate can be derived from a life table.
    (D) Age-specific life expectancy can be estimated
55. Optimum theory of population tells about the relationship between
    (A) Population and food supply
    (B) Population and overall resources
    (C) Dependent population and working population
    (D) Present population and growth rate of population
56. What is meant by ‘population neutralism’ ?
    (A) Impact of population growth on economic growth is negligible.
    (B) Growth rate of population is hovering around stationary
    (C) Impact of population growth on food supply is neutral.
    (D) Due to population growth, change in age structure is
          almost neutral.
57. What is the essence of wage goods model explained by Professor P.R.
      Brahmananda in the Indian economy context ?
    (A) It tells about low wage rate in the agriculture.
    (B) It tells about low wage rate for labour in the economy.
    (C) It tells about shift of labour from agriculture to industry.
    (D) It tells about the impact of the shortage of food items on the
          wage rate and growth rate of the economy.

58. Match the highest crop production states given in List – I with List – II
      from the given code :
              List – I                                       List – II
             (States)                          (Highest crop production)
    a. West Bengal                       1. Total course cereals
    b. Uttar Pradesh                     2. Rice
    c. Maharashtra                       3. Potato
    d. Gujarat                              4. Groundnut
    Codes :
          a b c d
    (A) 2 3 1 4
    (B) 3 2 1 4
    (C) 4 2 3 1
    (D) 1 3 4 2
59. About minimum support price, find out the correct combinations :
    I. If market price is higher, farmers will sell to the government.
    II. It ensures minimum assured price for the produce of the farmers.
    III. It helps in food security mission.
    IV. This is highly rewarding to farmers because they earn huge
          profits on their produce.
    Codes :
    (A) I, II & IV                  (B) II, III & IV
    (C) II & III                      (D) II & IV
60. Which of the followings have been important in growth of rice and wheat
       output in India after initiating green revolution programme ?
     I. Changes in cropping pattern
     II. Improved yields
    III. Crop insurance
    IV. Increased area under cultivation
    Codes :
    (A) II, III & IV               (B) I, II & IV
    (C) I, II & III                  (D) I, III & IV
61. ‘Green agriculture’ involves
    (A) organic farming and emphasis on horticulture
    (B) avoiding pesticides, chemical fertilizers while focussing on
          horticulture and floriculture
    (C) integrated pest management, integrated nutrient supply and
          integrated natural resource management

    (D) emphasis on food crops, horticulture and floriculture
62. The average cost function is given as
     AC = 1/3χ 2 – 10 x + 9. The level of output at which average cost is equal
     to marginal cost is :
    (A) 18              (B) 12
    (C) 15              (D) 21
63. The demand and supply functions are given as : Pα = 30 – 5 x and
      Ps = 3 x– 10 respectively ( x = quantity). The consumer surplus is
     (A) 125               (B) – 62.5
     (C) 62.5              (D) –125
64. The linear programming problem specified as
    Max : Z = 3x 1 + 5x 2 + 10x 3
    Sub to: x 1 + x 2 + x 3 ≤ 100
               9x 1 + x 2 + 8x 3 ≤ 95
                x 1 + 8x 2 + 3x 3 ≤ 60
                2x 1 + 7x 2 + x 3 ≤ 150
    and x 1≥  0, x 2 < 0 and x 3 > 0 has
    (A) a feasible solution
    (B) an optimal solution
    (C) multiple solutions
    (D) no solutions
65. The estimated regression equation of a firm producing scooter tyres is :
       ln y = – 3.56 + 0.31 ln X1 – 0.05 ln X2 + 0.53 ln X3 + 0.37 ln X4,ü
      –R 2 = 0.89 (Y = output and X1 to X4 are factor inputs).
     Assuming that all the estimated parameters are statistically
     significant from zero, the firm has
    (A) constant returns to scale
    (B) decreasing returns to scale
    (C) increasing returns to scale
    (D) neutral returns to scale
66. The test statistic used to test the significance of the adjusted
     coefficient of multiple determination ( –R2) is :
    (A) t–test            (B) Z–test
    (C) χ 2 –test         (D) F–test
67. Given that the CES production function as :
     Y = A[αL–β + (1 –α ) K–β] – γ β
     Match List – I with List – II and select the answer from the codes
     given below :
                List – I                       List – II
    a. A                              1. Factor intensity
    b. α                               2. Elasticity of substitution
    c. β                               3. Factor homogeneity
    d. γ                               4. Efficiency parameter
    Codes :
           a b c d
    (A) 1 4 2 3
    (B) 2 4 1 3
    (C) 1 2 3 4
    (D) 1 4 3 2
68. The technique used to estimate the over-identified system of
      simultaneous equations is
    (A) ordinary least squares
    (B) maximum likelihood
    (C) limited information maximum likelihood
    (D) two stage least squares
69. Which of the following assumptions are required to show the consistency,
       unbiasedness and efficiency of the OLS estimates
    I. E (νt) = 0
    II. Var (νt) = s2
    III. cov (νt, νt – j) = 0 for all values of j ¹ 0
    IV. νt ~ N(0, σ2)
     Codes :
    (A) II and IV only.
    (B) I and III only.
    (C) I, II and III only.
    (D) All the above four
70. The sources of auto correlation among the following are :
    I. Omitted explanatory variables
    II. Interpolation in the statistical observation
    III. Mis-specification of the true random term ‘n’
    IV. Economic variables to move together over time
    Codes :
    (A) I and II only
    (B) I, II and III only
    (C) I, III and IV only
    (D) All of the above
71. Arrange the following sub-sectors of the services sector of the Indian
      economy in ascending order of their contributions to the GDP in recent
      years :
    I. Trade, hotels and restaurants
    II. Transport, storage and communication
    III. Financing, insurance, real estate and business services
    IV. Community, social and personal services
    Codes :
    (A) I, II, III, IV
    (B) II, IV, III, I
    (C) II, I, III, IV
    (D) I, III, IV, II
72. Which of the following can be linked with those providing method for
      estimating black money in India ?
    I. Kaldor’s approach
    II. NIPFP method
    III. O.P. Chopra’s method
    IV. Arjun Sengupta
    Codes :
    (A) I, II & III
    (B) II, III & IV
    (C) I, III & IV
    (D) I & II
73. What is the share of single lane/intermediate lane in the total
      length of National Highways ?
    (A) 12 percent              (B) 15 percent
    (C) 22 percent              (D) 29 percent
74. During which year, gross domestic savings of the public sector turned
      negative in the Indian economy ?
    I. 1990 – 91
    II. 1995 – 96
    III. 1999 – 2000
    IV. 2002 – 2003
    Codes :0
    (A) I and II             (B) II and ü III
    (C) III and IV         (D) I and IV
75. What has been the projected investment ratio for the infrastructure
      development for the Eleventh Five Year Plan of India ?
    (A) 5.43 percent
    (B) 6.53 percent
    (C) 7.60 percent
    (D) 9.34 percent
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