ECONOMICS SAMPLE PAPER

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SAMPLE PAPER 1

1.Currency, notes coins and ---------are the components of M1 measures of money supply ?

2. Define disinvestment.

3.If MPC is 0.25 then MPS will be::

(A)0.75   (B)0.25  (C)1.25   (D)0

4.State one limitation of using GDP at constant price as an index in the measurement of social welfare ?

 OR

 Define capital goods.

5.Accomodating items are those item of BOP which

(a)  are not determined by profit motive

(b) are conditioned by profit or negative BOP status

(c)deal and capital only

(d) both a and b

6. If an investment of 10^th crore result in increase in income by 50 crores then the value of multiplier will be-------- crores .

7.State whether the statement is true or false.

“If  RS150 are required to buy $2, Instead of 100$ earlier” than rupee value of import bill will increase.

8. Primary deficit is-------minus Net interest payment.

9. From the set of statement given in column I and II to the correct match

COLUMN I	COLUMN II
A.MPS=0.8 B.BREAK EVEN POINT C.REPO RATE D MPC=0.8	(I)  CONSUMPTION  EXPENDITURE IS ZERO (II)RATE AT WHICH RBI TAKES LOAN FROM COMMERCIAL BANK (III)INVESTMENT MULTIPLIER =5 TIMES (IV)INVESTMENT EXPENDITURE IS ZERO

10.Regulate the monetary policy in India.

11.Estimate the value of EX  -ANTE AD, when autonomous investment and consumption expenditure(A) is 50 crores, MPS is 0.2 and level of income is 300 crores.

                                                            OR

.Calculate multiplier when MPC is 4/5 and 1/2 from the calculations established the relation between size of multiplier and the size of MPC?

12. Use following information of an imaginary country:

YEAR	2014-2015	2015-2016	2016-2017
NOMINAL GDP	6.5	8.4	9
GDP DEFLATOR	100	140	125

(A)for which year is real GDP and nominal GDP same and why?

(B)calculate real GDP for the given years. Is there any year for which real GDP Falls?

13. illustrate with the help of an hypothetical numerical example the process of credit creation.

14. Elaborate ‘economic growth’ as in objective of government budget.

15.” Devaluation and Depreciation of currency are one and the same thing” Do you agree? How do they affect the export of country?

                                                           OR

 what is meant by “official reserve transaction” Discuss their importance in balance of payments.

16. State whether the following statement are true or false. Give valid reason for your answers.

(A) unplanned inventory accumulate when planned investment is less than planned saving (B)deflationary gap exist when aggregate demand is greater than aggregate supply in full employment level

(C) Average propensity to save can never be negative.

17. Define externality

18. Find National income from the following using EXPENDITURE method

S.NO	ITEMS	(IN CRORES)
1.	Current transfer from rest of the world	50
2	net indirect taxes	100
3	net export	-25
4	rent	90
5	private final consumption expenditure	900
6	net domestic capital formation	200
7	Compensation of employees	500
8	net factor income from abroad	-10
9	government final consumption expenditure	400
10	profit	220
11	Mixed income of self employed	400
12	interest	230

                                               OR

will the following factors income be included in domestic factor income of India?

 Give reason for your answer ::

(a)compensation of employees to the resident of Japan working in Indian embassy in Japan. (b)payment of fees to a chartered accountant by a firm

(c)rent received by an Indian resident from Russian Embassy in India

(d)compensation given by insurance company to An injured worker .

                                    SECTION B ( INDIAN ECONOMIC DEVELOPMENT )

18. WTO stands for World---------------- organization.

19. State whether the statement is true or false.

“ an arrangement in which a worker uses his own resources to make a living is known as wage employment.”

20. From the set of statement given in column 1 and column 2, match the following

COLUMN I	COLUMN II
SWARANJAYANTI GRAM SWAROJGAR YOJNA	(I)LAUNCHED IN2012
SAMPOORNA GRAMIN ROJGAR YOJNA	LAUNCHED IN 1999
SAWARNJAYANTI SHAHRI ROJGAR YOJNA	LAUNCHED IN 1997
NATIONAL RURAL LIVELIHOOD MISSION	LAUNCHED IN 2001

21. In which year ,did the Indian government make education free and compulsory for children of 6 14 year of age?

(A)2001(B)2005(C)2007(D)2009

                                                        OR

 Five year plan recognised the importance of human capital

(A)  7th (B)8th (C)3^rd(D)6

22.TO  protect goods produced in India from IMPORTS government made use of tarrifs and----------

23. India ,China and Pakistan------------ has the highest life expectancy at birth?

24 state whether the following statement is true or false

 “subsistence farming reduce marker risk”

25. Quality of life is influenced by income --------and Health.

26. which of the following is not a non institutional sources of credit?

(A) money lender (B)relative (C)traders and agent (D) Land Development Bank

27.who introduced the concept of “Jail cost of living”

(A)Mahatma Gandhi (B) Dadabhai naoroji (C)PT Nehru (D)none of these

28. The two fold policy of British rule was enforced to ensure the maximum advantage of their home country .comment

29. How is human development a broader concept as compared to human capital?

 OR

 write a short note on Operation Flood.

30. what is unemployment? what are its types?

31. what are some of the reason behind the successful performance of China as the leading economy of the world?

32 Mention some of the challenges to the mechanism of Agriculture Marketing

                                                        OR

what are the some of the criticism of the concept of poverty line with respect to the monthly per capita expenditure method?

33.

ITEM	1960-61	1980-81	2008-09
RICE	35	54	99.2
WHEAT	11	36	80.6
(A)TOTAL CEREALS	69	119	219.6
(B)TOTAL PULSES	13	11	14.7
(C)TOTAL FOOD GRAINS	82	130	233.9

Shows increase in the production of food crop since 1960-61 in million tones

Study the table given above carefully and identify the phenomenon being talked about in the figurers. Give its features with respect to India.

                                                           OR

 Import substitution was the major elements of India trade industrial policy.

34. what is organic farming how does it promote sustainable development ?

               SAMPLE PAPER  2

                             SECTION A (MACROECONOMICS)
1. To increase money supply in the economy, RBI will------------ the government
securities. (1)

2. Define fiscal deficit.  (1)

3. State the difference between depreciation and capital loss on basis of “Provision".  (1)

4. What is not true about the term National Income?
(a) National Income excludes NFIA.
(b) National Income excludes transfer income.
(c) National Income excludes depreciation.
(d) National income excludes indirect taxes.   (1)
                                             Or
Two-sector economy consists of
(a) household and government
(b) household and firm
(c) firm and government
(d) household and external sector  (1)

5. In which of the following categories are economic transactions of balance of trade
recorded?
(a) Visible items
(b) Invisible items
(c) Capital transfers
(d) All of the above  (1)

6. APC + ANS =-------------  (1)

7. State whether he following statement is true or false  (1)

“Flexible exchange rate is also known as pegged exchange rate.'”

8. Capital Receipt are those receipts which either----------or------------  (1)

9. From the set of statements given in column I and Column II, match the following: (1)

COLUMN I	COLUMN II
a. GDP at current prices	(i) Revenue Receipts
b. GST collection of government	(ii) Real GDP
c. Disinvestment by government	(iii) Nominal GDP
d. GDP at constant prices	(iv) Capital Receipts

                                         
                             
                                    
10. If MPS is 0.6, AS will be------------when income increases by 100.  (1)

11. Explain with the help of an example, the basic of classifying goods into final goods
and intermediate goods. (3)

12. An economy is in equilibrium. From the following data about an economy calculate
autonomous consumption.
(a) Income = 5000
(b) Marginal propensity to save = 0.2
(c) Investment expenditure = * 800  (3)
                                                         Or
An economy is in equilibrium. From the following data, calculate the marginal
propensity to save:
(a) Income = 10,000
(b) Autonomous consumption = 500
(c) Consumption expenditure = 8,000   (3)

13. Explain the "banker's bank" function of the central bank.
                                                  Or
Explain the process of credit creation by commercial bank.  (4)

14. Explain how government budget can be used to influence distribution of income  (4)

15. Distinguish (a) between current account and capital account, and (b) between
autonomous transactions and accommodating transactions of balance of payments
account.  (4)

16. Assuming that increase in investment is  1000 crores and marginal propensity to
consume is 0.9, explain the working of multiplier  (6)

17. Explain non-monetary exchanges' as a limitation of using gross domestic product
as an index of welfare of a country  (6)
                                                           Or
How will you treat the following while estimating domestic product of a country?
Give reasons for your answer:
(a) Profits earned by branches of country's bank in other countries
(B) Gifts given by an employer to his employees on Independence Day
(c) Purchase of goods by foreign tourists (6)

                             SECTION B (INDIAN ECONOMIC DEVELOPMENT)
18. WTO was the successor organisation of which of the following?
(a) Generic Agreement on Trade and Tariff
(b) General Agreement on Trade and Tariff
(c) General Association of Trade and Tariff
(d) Gestational Agreement on Trade and Tariff  (1)
                                Or
When was the New Economic Policy announced?  (1)
(a) June 1991
(b) May 1991 (c) July 1991 (d) January 1991

19. In India,----------------regulate the health sector (1)

20. State whether the following statement is true or false
“The first passenger train in India ran between Bombay and Pune'.”  (1)

21. Mention two causes of inflation.  (1)

22. The Planning Commission set up in the year  (1)

23. Which one of the following is not a regional grouping?  (1)

(a) SAARC (b) BRICS
(c) ASIAN
(d) European Union

24. From the set of statements given in column I and Column II, match the following:
(1)

Column I a. Open unemployment b. Self Employment c Disguised unemployment d. Full employment

Column II (i) More people are engaged in work than required (ii) Able people fail to get work (iii) Zero involuntary unemployment (iv) Worker uses his own skills for living

25. Infant mortality rate includes:
(a) Number of infants dying       (b) The base taken is 1000 live births
(c) The criteria are children before 1 years of age
(d) All of the above  (1)

26. Seasonal unemployment occurs mainly in-------------- sector  (1)

27. The scheme of Micro finance is extended through-
(a) Self Help Groups
(b) Land Development Banks
(c) NABARD
(d) Regional Rural Banks  (1)

28. The introduction of railways in India by the Britishers was a noble step. De
agree or disagree?  (3)

29. Bring out the importance of Animal Husbandry.  (3)
Or
Discuss the two main types of wage employment.  (3)

30. What are the differences between the poor in urban and the poor in rural a
Or
What is global warming? What are its effects?  (4)

31. What are the landmark developments that took place in Indian economy post
independence? Answer with respect to highlighting India's policies in relation
its neighbours.  (4)

32. What is economic and social infrastructure. Highlight their relation with each
other.  (3)

33. List down some of the goals of the five-year plans that were a key pillar of toe
Economic Planning.  (6)

34. What are some of the challenges faced by the health infrastructure in India? (6)
                                  Or

RANK	COUNTRY	SCORE
1	SWEDEN	85.6
2	DENMARK	84.2
3	FINLAND	84
4	NORWAY	83.9
5	CZECH REPUBLIC	81.9
6	GERMANY	81.7
7	AUSTRIA	81.4
8	SWITZERLAND	81.2
9	SLOVENIA	80.5
116	INDIA	58.1

Source: SDG Index and Dashboards Report
The above data shows India's dismal performance on the parameters of sustainab
development. Suggest some ways to improve the situation.  (6)

EXTRA QUESTIONS

Ques 1. Define consumption of fixed capital

Ques 2. Who are normal residents of India?

a) Border workers of Nepal who daily cross the border to work in India

b) WHO located in India

c) American officials working in US embassy in India

d) Indian officials working in Indian embassy in China

Ques3. Is there any difference between depreciation and consumption of fixed capital? Explain

Ques4. Giving reasons classify the following into stock and flow;

a) Depreciation

b) Production

c) Capital

d) Income

Ques 5. Define expected obsolescence

Ques 6. Distinguish between consumer goods and capital goods. Which of these are final goods?

Ques 7. Give example of leakages and injections

Ques 8. Money flows are opposite to real flows. Explain

Ques 9. Define nominal GDP. Why do we need to convert it to real GDP?

Ques 10. “NFIA can be positive, negative or zero” Defend or refute

Ques 11. Distinguish between domestic product and national product. When can domestic product be more than national product?

Ques 12. How will you treat the following while estimating national income of India? Give reasons for your answer.

a) Salaries received by Indian residents working in Russian Embassy in India

b) Profits earned by an Indian bank from its branches abroad

c) Salaries received by an Indian working in a branch of foreign bank in India

Ques 13. Should the following be treated as final expenditure or intermediate expenditure? Give reasons

a) Purchase of furniture by a firm

b) Expenditure on uniforms for nurses by a hospital

c) Expenditure on maintenance of an office building

d) Expenditure on improvement of a machine in a factory

Ques 14. How is intermediate expenditure of the government treated while estimating national income?

Ques 15. Calculate national income by expenditure method and Income method from the following data:

Items	Crores
Net Domestic Capital Formation	500
Compensation of employees	1800
Consumption of fixed capital	100
GFCE	1200
PFCE	2500
Rent	450
Interest	200
Net exports	-100
Profit	1100
NFIA	-50
Net Indirect Taxes	250

                                                                                                                                                                                Ans: 3800

Ques 16. Will the following factor income be included in domestic factor income of India? Give reasons for your answer:

a) Compensation of employees to residents of Japan working in Indian Embassy in Japan

b) Profits earned by a branch of foreign bank in India

c) Rent received by an Indian resident from his building rented out to Russian Embassy in India

d) Profits earned by a branch of SBI in England

Ques 17. Calculated GNP­_FCby income method and expenditure method using the following data:

Opening stock	30
Profit	60
Closing Stock	20
Interest	470
Consumption of Fixed Capital	20
PFCE	460
Mixed Income	100
Net Imports	10
NFIA	5
COE	300
Net Capital Formation	500
Net Indirect Taxes	20
GFCE	100
Rent	100

                                                                                                                                                                                Ans: 1045

Q1State the meaning and components of money supply

Q2. Identify the components of money supply amongst the following:

a) Coins and notes held by the public

b) Net Demand deposits held by the commercial banks

c) Interbank deposits

d) Time deposits with the commercial banks

Q3. Explain the effect of bank rate on credit creation by commercial banks.

Q4. How does a central bank influence credit creation by commercial banks by open market

operations? Explain.

Q5. Explain the effect of CRR on credit creation by commercial banks

Q6. What are margin requirements? How does lowering or raising of margin requirements affect the

availability of credit?

Q7. Explain the distinction of SLR and CRR.

Q8. Explain the functions of Central Bank.

Q9. Currency is issued by the central bank, yet we say that commercial banks create money. Explain.

How is this money creation by commercial banks likely to affect the national income? Explain with a

numerical example.

Q10. What is meant by repo rate? How does the central bank use this measure to control

inflationary conditions in an economy?

Q11. How does the introduction of plastic money enhance the convenience of both the depositor

and the bank? Explain

Q12. What are the quantitative and qualitative instruments of credit control in the monetary policy

of RBI?

Q13. What is money multiplier? How will you determine its value?

Q14. What is high powered money?

Q15. Differentiate between commercial banks and central bank.

Unit 3- Determination of Income and Employment

Q1. If APC of an economy is 0.8, then what will be the saving at income level of 1000 ?

Q2. Derive the saving function from the following consumption function: C=100+0.6Y

Q3. Define aggregate demand. State its components.

Q4. Distinguish between APC and MPC. Can the value of APC be greater than 1? Explain

Q5. State whether the following statements are true or false and give reasons.

a) Sum of APC and MP is always equal to 1

b) Value of APC is always less than 1

c) The value of MPS can never be negative

d) When value of APS is negative then value of MPS will also be negative

e) If MPS is 1 then k is also equal to 1

f) Inventories accumulate when planned investment is less than the planned saving

g) According to Keynes there always exists a state of full employment in the economy

Q6. What is full employment? Can there be some unemployment under the situation of full

employment?

Q7. Estimate the value of AD in an economy if

a) Autonomous Investment= 120 crores

b) MPS= 0.2

c) Autonomous Consumption Expenditure= 50

d) National Income= 2000 (Ans; 1770 crore)

Q8. Define Ex- Ante consumption. Explain the distinction between autonomous consumption and

induced consumption.

Q9. Derive Consumption curve from the saving curve and explain the method of derivation.

Q10. If the ration between MPC and MPS is 3:1 then what will be the value of multiplier?

Q11. Explain the relationship between Investment multiplier and MPC

Q12. Calculate investment expenditure from the following data about an economy which is in

equilibrium:

National Income = 700

MPC = 0.8

Autonomous Consumption Expenditure= 70 (Ans: 70)

Q13. Why must AD equal to AS at the equilibrium level of income? Explain with the help of a

diagram.

Q14. Explain the concept of under employment equilibrium with the help of a diagram. Show on the

same diagram the additional investment expenditure required to reach full employment equilibrium.

Q15. Explain the meaning of investment multiplier. What can be the minimum value and why?

Q16. In an economy 75% of the increase in income is spent on consumption. Investment is increased

by 1000 crore. Calculate a) total increase in income b) Total increase in consumption expenditure

Ans: a)4000 b)3000

Q17. Define deflationary gap.

Q18. Explain the role of taxation in reducing excess demand.

Q19. What is deficient demand? Explain the role of ‘Bank rate” in removing it.

Q20. Distinguish between inflationary gap and deflationary gap. Show deflationary gap on the

diagram. Can the gap exist at equilibrium level of income? Explain

Q21. What is excess demand? Explain the role of reverse repo rate in removing it.

Q22. Explain how government spending be helpful in removing deficient demand?

Q23. Fill in the blanks:

a) _____________ demand does not affect the level of output

b) Deficient demand may be caused by ____________ in government spending.

c) _________ causes general price level to fall.

d) To control the situation of excess demand, government should ___________ its expenditure.