Kerala SET 2018 Feb Question Paper Economics

A
18206 120 MINUTES
1. Which among the following is a correct statement?
A) Marshall’s Substitution Effect > Slusky’s Substitution Effect > Hick’s Substitution
Effect
B) Marshall’s Substitution Effect < Slusky’s Substitution Effect < Hick’s Substitution
Effect
C) Marshall’s Substitution Effect > Slusky’s Substitution Effect = Hick’s Substitution
Effect
D) Marshall’s Substitution Effect = Slusky’s Substitution Effect = Hick’s Substitution
Effect

2. A risk loving person’s total utility curve of income is ……..to income axis
A) Concave B) Parallel
C) Convex D) None of the above

3. ………effect makes the demand curve positively sloped
A) Snob B) Bandwagon
C) Demonstration D) Veblen

4. The elasticity of demand is high when
A) Per cent of income spent on a commodity is relatively low
B) Lower is the price of the commodity
C) A commodity has more substitutes available
D) All the above

5. The theory of monopolistic competitive market is popularized by
A) Cournot B) Baumol C) Morris D) Chamberlin

6. Which of the following relations hold good?
A) MR = P (1- (1/e)) B) MR = P (1+ (1/e))
C) P = MR (1- (1/e)) D) P = MR (1+ (1/e))

7. In a Cobb Douglas Production function, elasticity of substitution equals
A) Two B) Unity
C) Infinity D) Zero

8. Who developed the concept of “Tragedy of the Commons?”
A) Garrett Hardin B) Kuznets
C) Ronald Harry Coase D) Samuelson

9. Lerner’s index of monopoly is …..
A) (P-AC)/P B) (P-MC)/P
C) (AC-P)/AC D) (MC-P)/M

10. When elasticity equals one --
A) MR is positive B) MR is negative
C) MR is zero D) MR is two

11. According to Alfred Marshall:
A) Economics is concerned with the nature and causes of Wealth of Nations.
B) Economics is the study of mankind in the ordinary business of life; it examines that
part of individual and social action which is most closely connected with the
attainment and use of material requisites of well-being.
C) Economics is the science which studies human behavior as a relationship between
ends and scarce means which have alternative uses.
D) Economics is a study of the allocation of scare means, capable of alternative uses,
among competing ends for the attainment of a maximum result in the achievement
of these ends.

12. For perfect substitutability between X and Y
A) MRSxy should be increasing
B) MRSxy should be decreasing
C) MRSxy should be constant
D) None of the above

13. ‘Kink’ in the kinked demand curve signifies
A) A sudden change in consumer’s tastes and preferences
B) A rigid price for the product
C) A shut down point for the firm
D) All of the above

14. If a commodity sold under monopoly is got free of cost, MC will be
A) Identical with the MR
B) Identical with the X axis
C) A horizontal straight line above X axis
D) Identical with the Y axis

15. The decrease in marginal propensity to save (MPS) lead to
A) Increase in the value of multiplier
B) Decrease in the value of multiplier
C) Value of multiplier remain the same
D) None of these

16. Rectangular hyperbola is the shape of
A) Total Fixed Cost B) Average Fixed Cost
C) Fixed Cost D) Marginal Fixed Cost

17. Which of the following is not correctly matched?
A) Marginal productivity theory of distribution – Clark
B) Ordinal measurement of utility – Hicks
C) Monopolistic Competition – Jevons
D) Law of equimarginal utility - Gossen

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18. Match List I with List II

List I List II

a. Differential Rent 1) Arrow
b. Quasi Rent 2) Marshall
c. Compensation Principle of Welfare 3) Hicks and Kaldor
d. Impossibility Theorem 4) Ricardo

a b c d
A) 4 2 3 1
B) 1 3 2 4
C) 1 2 3 4
D) 3 4 2 1

19. An increase in demand involves
A) A reduction in price
B) An increase in price
C) An actual shift of the entire demand curve to the left
D) An actual shift of the entire demand curve to the right

20. Kinked demand curve occurs in oligopoly because, the firm feels that
A) If he raises his price, other firms in the industry will leave their price low
B) If he lowers his price, other firms in the industry will follow suit
C) Both A and B
D) None of the above

21. Marginal Cost is given by
A) The slope of the Total Fixed Cost Curve
B) The slope of the Total Variable Cost Curve but not by the slope of the Total Cost
Curve
C) The slope of the Total Cost Curve but not by the slope of the Total Variable Cost
curve
D) Either the slope of the Total Variable Cost Curve or the slope of the Total Cost curve

22. In a two commodity(X and Y) and two individual (A and B) economy, the maximum Social
Welfare is reached at
A) Any point on the Grand Utility Possibility curve
B) Any point on the Social Welfare function
C) The point where MRTSxy = MRSxy for A and B
D) The point of tangency of grand utility possibility frontier with social welfare
function

23. The market situation where the monopsonistic buyer of an input faces the monopolistic
seller of the input
A) Bilateral Monopoly B) Oligopoly
C) Duopoly D) None of the above

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24. Under fixed exchange rate system, an expansionary Monetary Policy always lead to
……… in the Balance of Payments, and a contractionary Monetary Policy will always lead
to …….. in Balance of Payments.

A) A deterioration, an improvement
B) An improvement , a deterioration
C) A deterioration, a deterioration
D) An improvement, an improvement.

25. According to the H theory of money supply, supply of money in an economy is determined
by
A) Monetary base B) Reserve deposit ratio
C) Currency deposit ratio D) All the above

26. If there is no discrepancy between expected rate and actual rate of inflation, Philips Curve
will be
A) Horizontal B) Downward sloping
C) Vertical D) Diagonal

27. At any point on the ………., the quantities of money supplied and demanded are equal.
A) IS curve B) LM curve
C) Total product curve D) Marginal product curve

28. If C = 30 + 0.90 Y, then
A) APC is 20 B) MPC is 20
C) APS is 80 D) Autonomous Consumption is 30

29. If Consumption function passes through the origin, (APC=MPC), it must be
A) Linear without any intercept
B) Nonlinear without any intercept
C) Linear with a negative intercept on the income axis
D) Linear with a positive intercept on the Consumption axis

30. Match List one with List two and select the correct answer
List I (Economists) List II (Concepts)

a. Keynes 1. Permanent Income Hypothesis
b. Milton Friedman 2. Liquidity Trap
c. Duesenbery 3. IS-LM model
d. Hicks 4. Ratchet Effect
Codes
a b c d
A) 2 1 4 3
B) 1 2 3 4
C) 4 3 1 2
D) 3 1 4 2

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31. Fisher effect describes the full adjustment of
A) Nominal GDP to a change in the price level
B) Nominal interest rate to a change in the inflation rate
C) Nominal exchange rate to change in price level
D) None of the above

32. J curve represents the phenomenon, where a depreciation of the currency causes
A) Trade balance to initially remain same
B) Trade balance to initially worsen
C) Trade balance to initially improve
D) None of the above

33. The ratio of the marginal value of the capital stock to the rental cost of capital is termed…
A) Tobin’s marginal Q B) Acceleration coefficient
C) Multiplier D) None of the above

34. Walras’ Law states that the sum of the excess demand for money, bonds, and current output
must equal ……….
A) Negative B) Positive
C) Zero D) None of the above

35. Impossible trinity refers to the dilemma that a country cannot simultaneously have control
over a
A) Fixed exchange rate, monetary policy, and maintain an open capital account
B) Budget deficit, current account and flexible exchange rate
C) Fiscal policy, monetary policy and budget policy
D) None of the above

36. How does expansionary monetary policy affect the rate of interest and level of income?
A) Lowers both the rate of interest and level of income
B) Raises the rate of interest but lowers the level of income
C) Raises the level of income but lowers the rate of interest
D) Increases the rate of interest and level of income

37. Keynes Effect arises because variation in price level changes
A) Real quantity of money B) Transactions velocity of money
C) Money wage rate D) None of the above

38. Which of the following statements are true?
1) GNP at factor cost = GDP at factor cost + Net factor income from abroad.
2) GNP at market prices = GNP at factor cost + Indirect taxes – Subsidies.
3) GDP at market prices = GDP at factor cost + Indirect taxes – Subsidies.

A) Both 1 and 2 B) Both 1 and 3
C) Both 2 and 3 D) All of 1, 2 and 3

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39. Velocity of money circulation means
A) The average turnover of money in a period, relative to national income
B) The ratio of money demand to interest rate
C) The ratio of money demand to supply of high powered money
D) The ratio of money demand to money supply

40. Which of the following is true of IS curve, when transfer payments are increased?
A) IS curve will shift to the left B) Slope of the IS curve will increase
C) IS curve will shift to the right D) IS curve will not be affected

41. Which among the following is not well matched?
Concept Economists

A) Dual decision hypothesis R.W.Clower
B) Theory of Capital BohmBawerk
C) Permanent Income Hypothesis J.M.Keynes
D) Input Output Model W. Leontiff

42. Consider the following statements describing the relationship between marginal propensity
to consume (MPC) and the value of the multiplier:
1. higher the MPC, lower the value of the multiplier
2. higher the MPC, higher is the value of the multiplier
3. if MPC =1, value of multiplier will be infinity
Which of the above statements is/are correct?

A) 2 alone B) 2 and 3 C) 3 alone D) 1 alone

43. If Central Bank wants to ‘sterilize’ an inflow of foreign exchange, it should
A) Lower the bank rate
B) Sell government securities in the open market
C) Buy government securities in the open market
D) Lower the CRR

44. The price level and purchasing power of money
A) are always equal B) are not related in any immediate way
C) vary directly D) vary inversely

45. When the Central Bank changes the bank rate?
A) It affects the amount of borrowings by the commercial banks
B) It affects the amount of borrowings by the public from the banks
C) It affects the lending rate of the commercial banks
D) All the above

46. The Reserve Bank of India was established in
A) 1945 B) 1951 C) 1935 D) 1949

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47. Monetarists would say that the primary cause of inflation is
A) The lack of fiscal responsibility
B) Too fast a rate of increase in money supply
C) High interest rates, which increase the cost of borrowings
D) Unstable investment demand

48. Fisher index uses……
A) Arithmetic average B) Geometric average
C) Harmonic average D) All the above

49. Square of Standard Deviation is ……..
A) Correlation B) Mean Deviation
C) Variance D) None of the above

50. Geometric Mean of two regression coefficients is
A) Mean B) Dispersion
C) Variance D) Correlation

51. Coefficient of correlation is independent of
A) Change of scale B) Change of origin
C) Both A and B D) None of the above

52. A contract curve
A) Is a locus of points of intersection of two individual indifference curve
B) Is locus of all points of tangency of two individual indifference curve in an
Edgeworth box
C) Is a locus of all Pareto inefficient points in an Edgeworth box
D) None of the above

53. In a normal curve approximately
A) 94.55 per cent of the items in the distribution fall within the range of mean plus or
minus two standard deviation
B) 99.73 per cent of the items in the distribution fall within the range of mean plus or
minus three standard deviation
C) 91.55 per cent of the items in the distribution fall within the range of mean plus or
minus two standard deviation
D) 94.55 per cent of the items in the distribution fall within the range of mean plus or
minus one standard deviation

54. If a pair of dice is thrown, find the probability that the sum is neither 7 nor 11?
A) 7/9 B) 2/9 C) 1/3 D) 4/9

55. The feasible region in a graphical representation of a linear programming problem is
indicated by the
A) Objective function B) Structural constraints
C) Non-negativity constraints D) Both B and C

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56. Correlation between the explanatory variables in a regression model is known as
A) Heteroscedasticity B) Multicollinearity
C) Autocorrelation D) Simultaneous Equation Bias

57. Frisch’s Confluence analysis is used to detect
A) Heteroscedasticity B) Errors in Variables
C) Multicollinearity D) Autocorrelation

58. Which among the following is not an assumption for the application of Ordinary Least
Squares?
A) Non zero mean value of the random term
B) No correlation among the explanatory variables
C) Homoscedasticity
D) No correlation among the random terms

59. Probability of Type I error refers to the
A) Probability of accepting a false hypothesis
B) Probability of rejecting a true hypothesis
C) 1-probability of accepting a false hypothesis
D) 1- Probability of rejecting a true hypothesis

60. Coefficient of Variation is given by
A) (standard deviation / mean) x 100 B) (mean /standard deviation) x 100
C) (mean x standard deviation x 100) D) None of the above

61. The coefficient of Kurtosis is greater than three, the curve will be
A) Mesokurtic B) Leptokurtic
C) Platykurtic D) None of the above

62. Find the Marginal Revenue function for the Total Cost function TC= 3Q2 + 7Q +12
A) MC = 3Q +7 B) MC = 6Q + 7
C) MC = 7Q + 12 D) MC = 6Q + 12

63. Which among the following is not a property of determinant?
A) If two rows or columns are identical or proportional, the determinant is zero.
B) If all the elements of any row or column are zero, the determinant is zero.
C) If two rows or columns are identical or proportional, the determinant is one.
D) Interchanging any two rows or columns of a matrix, will change the sign, but not the
value of the determinant.

64. Which percentile is equivalent to the median?
A) 50th B) 75th C) 25th D) 100th

65. The summation of the linear deviations from the mean for a set of data will always be
A) A negative number B) The absolute value of the mean
C) Zero D) None of the above

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66. The distribution for which mean and variance are equal is
A) Poisson B) Gamma C) Normal D) Binomial

67. Which is the highest populated state in India according to 2011 census?
A) Madhya Pradesh B) Bihar
C) Uttar Pradesh D) Kerala

68. Country with the highest Human Development Index rank in2014
A) Norway B) Switzerland
C) U.S. D) Netherlands

69. In 1868, the first attempt to measure National Income was made by
A) Dadabhai Naoroji B) Findlay Shiraz
C) Wadia and Joshi D) Dr. V.K.R.V.Rao

70. Grey revolution is associated with the objective of achieving self-dependence in the
production of
A) Oilseeds B) Fertilizers
C) Eggs D) Meat

71. Under ………., interest rate is increased which helps in controlling inflation in the
economy.
A) dear money policy B) cheap money policy
C) expansionary monetary policy D) None of the above

72. Bharat NirmanYojana is aimed at developing
A) Rural education system B) Rural health system
C) Rural infrastructure D) None of the above

73. Second Five Year Plan in India is based on
A) Solow Model B) Harrod Domar Model
C) Meade Model D) Mahalanobis Model

74. Annual Plans in India were implemented during the period
A) 1962-65 B) 1965-67 C) 1966-69 D) 1967-70

75. The gilt edged market deals with
A) Currency notes B) Bullion
C) Government securities D) Corporate bonds

76. ‘The Golden Quadrilateral project’ is the road network to be constructed under the
supervision of National Highway Authority of India (NHAI)
A) Mumbai – Pune- Ahmedabad –Jammu
B) Delhi – Nasik-Hyderabad –Bhuvaneswar
C) Delhi – Mumbai- Chennai – Kolkotta
D) Srinagar – Goa – Kanyakumari – Patna

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77. Child sex ratio in Kerala according to 2011 census
A) 1084 B) 964 C) 981 D) 830

78. Kerala State Horticulture Mission was formed in
A) 2000 B) 1995 C) 2005 D) 2006

79. The Securities and Exchange Board of India (SEBI) was set up in
A) 1985 B) 1986 C) 1987 D) 1988

80. The second stage of the theory of demographic transition is characterized by
A) High Birth Rate and high Death Rate
B) High Birth Rate and falling Death Rate
C) Low Birth Rate and low Death Rate
D) Falling Birth Rate and falling Death Rate

81. Which among the following state has the smallest per cent of urban population as per
Census 2011?
A) Maharashtra B) Tamil Nadu
C) Gujarat D) Bihar

82. Yashaswini Rural Healthcare Scheme is being implemented in which among the following
state of India?
A) Andhra Pradesh B) Karnataka
C) Himachal Pradesh D) Tamil Nadu

83. Economic Survey is published by
A) Indian Statistical Institute B) Government of India
C) Ministry of Finance D) Planning Commission

84. Which among the following district in Kerala has the highest literacy rate, as per 2011
census?
A) Pathanamthitta B) Kottayam
C) Thiruvananthapuram D) Kollam

85. At current prices, the per capita GSDP in Kerala in 2015-16 , according to Kerala’s
Economic Review was
A) Rs.1, 72,268 B) Rs. 1, 63,387
C) Rs.1, 93,456 D) Rs.1, 45,345

86. Density of population for 2015-16 in Kerala as per Kerala’s Economic Review 2016 is
A) 860 B) 655 C) 768 D) 678

87. Sidney Alexander’s contribution is in relation to ………..approach to Balance of Payments
A) Monetary B) Absorption
C) Elasticity D) None of the above

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88. Imposing of an import tariff
A) Increases the domestic production of import competing commodity
B) Increases the domestic prices of the importable commodity
C) Decreases the domestic consumption of importable commodity
D) All of the above

89. Which among the following is not correctly matched?
A) Law of Comparative Advantage David Ricardo
B) Factor Proportion and Trade Leontiff
C) Effect of tariff on factor prices Stopler Samuelson
D Effect of tariff on domestic prices G.Myrdal

90. The GATT came into existence in
A) 1953 B) 1962 C) 1948 D) 1950

91. According to Marshall Lerner condition, devaluation shall improve the trade balance of a
country provided the sum of elasticities of demand for a country’s exports and its demand
for imports is ….
A) Between one and two B) Two
C) Greater than one D) Less than one

92. The Hecksher Ohlin theorem of trade pattern assumes
A) Perfect Competition in both product and factor market
B) Perfect Competition in the factor market but not in the product market
C) Perfect Competition in the product market but not in the factor market
D) Unemployment in the labour market

93. Prebisch Singer Hypothesis argues that primary product export orientation of Less
Developed Countries result in secular………………in terms of trade
A Improvement B) Stagnation
C) Deterioration D) None of the above

94. As a result of imposition of tariff, a nation’s offer curve will
A) Remain unaffected
B) Shift towards axis measuring exports
C) Shift towards axis measuring imports
D) None of the above

95. Nominal interest rate is equal to
A) Real interest rate plus inflation rate
B) Real interest multiplied by inflation rate
C) Real interest rate minus inflation rate
D) Real interest rate divided by inflation rate

96. Tax on the basis of value of a product is called
A) Ad valorem rate B) Specific rate
C) Value added rates D) None of the above

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97. The speculative demand for money is very sensitive to
A) Income B) Interest rate
C) Employment D) None of these

98. Which among the following is not a quantitative credit control method?
A) Bank Rate policy B) Repo rate policy
C) Open market operations D) Moral suasion.

99. Which of following is not a liability of commercial banks?
A) Time deposits B) Borrowing from Central Bank
C) Security holding D) Demand and time liabilities of bank

100. The shape of Long Run Philips Curve is
A) Horizontal straight line B) Vertical straight line
C) Downward sloping D) Upward sloping

101. The concept of functional finance was developed by
A) Fisher B) Dalton C) Bastable D) Lerner

102. Tax incidence refers to
A) How often tax is collected
B) The person or group who ends up paying a tax
C) Whether a tax is progressive, proportional or regressive
D) How tax is collected

103. Concepts of displacement and concentration effect in public expenditure are attributed to
1) A.C. Pigou and J.K.Mehta
2) Alan T Peacock and Jack Wiseman
3) Kenneth Arrow and Paul A. Samuelson
4) A.R. Prest and I.M.D. Little

Which of the statements given above is/are correct?
A) 1 and 2 B) Only 2 C) 1, 2 and 3 D) All of these

104. Tobin tax is a tax on
A) Imports B) Exports
C) Sales D) Transactions in foreign exchange

105. When the rate of tax goes up with increase in income it is called?
A) Proportional tax B) Regressive tax
C) Progressive tax D) Presumptive tax

106. Unbalanced growth strategy was propounded by
A) Ragnar Nurkse B) H. Leibenstein
C) A.O. Hirschman D) Hecksher Ohlin

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107. The concept of sustainable development was first given by
A) Keynes B) Kindleberger
C) Raul Prebisch D) Brundtland

108. Chairman of the thirteenth Finance Commission
A) Dr. Vijay Kelkar B) Dr. M. GovindRao
C) Dr. C. Rangarajan D) Dr. Atul Sharma

109. Arrange the following in the order in which they appeared?
1. An Enquiry into the Nature and Cause of Wealth of Nations
2. Principles of Economics
3. General Theory of Employment, Interest and Money
4. Price of Inequality

A) 1,2,3,4 B) 4,3,2,1
C) 1,4,2,3 D) 2,3,4,1

110. The proposition that autonomous investment depends on resource discovery and
technological progress is made by
A) Harrod B) Schumpeter
C) Hansen D) Rosenstein Rodan

111. ‘ Capability to function’ argument is made by
A) Myrdal B) AmartyaSen
C) Michael P. Todaro D) Marx

112. Water extracted from a stream for irrigation is an example for
A) Option value B) Use value
C) Nonuse value D) None of these

113. Identify the direct method of valuation
A) Market price B) Travel cost
C) Hedonic property value D) Avoidance expenditure

114. Pollutants for which the environment has some absorptive capacity are called?
A) Stock pollutants B) Fund pollutants
C) E – waste D) None of these

115. In which year was Environment Protection Act enacted in India?
A) 1975 B) 1990
C) 1986 D) 1980

116. Author of ‘Principles of Political Economy and Taxation’
A) David Ricardo B) J. S. Mill
C) Alfred Marshall D) Adam Smith

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117. Among the following which is not included in HDI?
A) Life expectancy B) Education
C) Maternal mortality rate D) Percapita income

118. Which of the following items are included within the definition of Total Economic Value?
1) Existence Value
2) Labour Value
3) Use Value
4) Option Value

A) 1, 3 and 4 B) 2 and 3
C) 1 and 2 D) 1 and 3

119. Which of the following is referred to as the ‘hedonic price’ method for valuing
environmental assets?
A) Using ‘willingness to pay’ to value an environmental asset
B) Using ‘existence value’ to estimate the value of an environmental asset
C) Using linkages between variations in house prices and geographical proximity to an
environmental asset
D) Using travel costs to estimate the value of an environmental asset.

120. Social dualism is propounded by
A) Benjamin Higgins B) Arthur Lewis
C) Hala Myint D) Julius Herman Boeke

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