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25. Assertion (A) : For fiscal discipline, expenditure cap is quite desirable. Reason (R) : A widening fiscal deficit adversely impacts finances of the Central Government. Codes : (A) Both (A) and (R) are correct, but (R) is not the correct explanation of (A). Both (A) and (R) are correct and (R) is the correct explanation of (A). (C) (A) is true, but (R) is false. (D) (R) is true, but (A) is false. 26. Assertion (A) : The debt-GDP ratio of the State Governments witnessed a decline after reaching the peak level in 2004. Reason (R) : 'Debt swap' scheme was introduced and interest rates were reduced. Codes : (A) Both (A) and (R) are correct and (R) is the correct explanation of (A). (B) (A) is true, but (R) is not the correct explanation of (A). (C) (A) is false, but (R) is true. (D) (R) is true, but (A) is false. 27. Taxes in List - I of the Union Government as per the Constitution of India include : 1. Taxes on consumption and sale of electricity II. Taxes on sale or purchase of newspapers and on advertisements published therein III. Taxes on capital value of assets IV. Duties in respect of succession to property Codes : (A) I, II and IV are correct. (B) I, II and III are correct. (C) II, III and IV are correct. (D) II and III are correct. 28. Assertion (A) : There is automatic change in net tax revenue when level of output changes. Reason (R) : Automatic stabilizers moderate aggregate spending in times of boom and slow down. Codes : (A) Both (A) and (R) are correct and (R) is the correct explanation of (A). (B) Both (A) and (R) are true, but (R) is not the correct explanation of (A). (C) (A) is true, but (R) is false. (D) (A) is false, but (R) is true.20. In the steady state growth situation in the Solow's model of growth, the upper limit to growth would be determined by the growth rate of (A) Population (Labour supply) (B) Capital (C) Output (D) Capital and output 21. Which one of the following pairs is not well matched ? Concept Economist a. Learning by Doing 1. B.S. Minhas b. Disembodied Technical Progress II. J Joan Robinson C. Golden Age III. Kenneth Arrow d. CES Production Function IV. R.M. Solow Codes : (A) II III IV (B) IV II III (C) II III 1 II (D) III IV II I 22. A tax is said to be progressive, when the marginal rate of tax is (A) greater than the average rate (B) less than the average rate (C) equal to the average rate (D) equal to the marginal sacrifice 23. Assertion (A) : Relatively few private goods are totally rival and excludable. Reason (R) : Most consumption (and production) has at least some shared aspects. Codes : (A) Both (A) and (R) are correct. (B) Both (A) and (R) are not correct. (C) (A) is correct, but (R) is not the correct reason of (A). (D) (A) is correct and (R) is the correct reason for (A). 24. Methods of debt-redemption include (A) Capital levy (B) Sinking fund (C) Debt repudiation (D) All the above15. Which of the following is the correct assumption for the Lewis two sector model ? (A) High unemployment in urban sector (B) Rising real wages (C) High marginal productivity in the rural sector (D) Surplus labour in the rural sector 16. Which of the following is a major indivisibility of Rosenstein-Rodan Model of development ? (A) Services (B) Agriculture (C) Infrastructure (D) Supply 17. Which among the following statement is true for Marxian model of development ? (A) Change in Mode of production and Relations in production happen simultaneously. (B) Change in Mode of production follows change in Relations in production. (C) Change in Mode of production precedes the change in Relations in production. (D) Relations in production are not important. 18. Consider the following statements about the Kaldor's model of economic growth : 1. Investment is a function of profit rate. II. Capital is homogeneous. III. Marginal propensity to save is same for wage earners and profit earners. Of the above statements which are true ? Answer from the code below : Codes : (A) All the three statements above are correct. (B) II and III are correct. (C) Only 1 is correct. (D) I and III are correct. 19. Which one of the following is true for disguised unemployment ? (A) It has savings potential. (B) It has investment potential. (C) It is a source of expanding production. (D) It is a source of social unrest.11. Which of the propositions of the past income hypothesis of Duesenberry are correct ? Choose from the code below : Statements : I. The current consumption is a function of not only current income, but also the past income. II. There is asymmetrical relationship between income and consumption during contraction and expansion. III. Consumption income relationship is irreversible. IV. Consumption falls less than income during depression, but the rise in consumption is much more during expansion. Codes : (A) I and III (B) I, II and III (C) I, II and IV (D) All the above statements are true. 12. An increase in the quantity of money in the classical macro system will result in : I. Increase in price level II. No change in price level III. Level of output and employment do not change IV. An increase in employment and output Select the answer from the codes given below : Codes : (A) II and IV (B) I and II (C) I and IV (D) I & III only 13. Given below is the well-known LM Curve and its range is marked in three parts. In which of the marked range Keynes effect does not operate ? Rare of Interest A Turame (A) In the range AB (B) In the range BC (C) In the range CD (D) In the range AB and BC 14. The theoretical proposition of stable velocity of money is being weakened by the recent researchers. This has the effect of weakening the position of (A) Keynesians (B) Monetarists (C) New Classicals (D) Utopians6. Even as fixed average cost continues to fall, the average variable cost begins to rise because (A) returns to factors start diminishing (B) returns to factors start rising (C) input prices start rising (D) producers budget starts shrinking 7. Consider the following statements : 1. The lowest point on the long run average cost curve is known as minimum efficient scale. II. It is the output at which long run average cost curve stops falling. Choose the correct option from the code given below : Codes : (A) Both I and II are correct. (B) Both are wrong. (C) Only I is correct. (D) Only II is correct. 8. Which among the following is not a characteristic of Imperfect Competition ? (A) Perfect knowledge (B) Free transport (C) Free Entry of firms (D) Homogeneous product 9. Which among the following conditions are true for Golden Rule of Accumulation of Edmund Phelps for optimum capital accumulation ? Choose from the code below : Savings rate is unique. II. Marginal productivity of capital be equal to capital depreciation. Codes : (A) Both are true. (B) None of these are true. (C) Only I is true. (D) Only II is true. 10. Which among the following were neglected by Keynes in his theory of employment ? (A) Role of expectations (B) Role of capital stock (C) Role of consumption (D) Role of government
