MAHA SET 2018 Question Paper 2 Economics

Test Booklet Code & Serial No.
A
ECONOMICS
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JAN - 11218 (To be filled by the Candidate)
Time Allowed : 1¼ Hours] [Maximum Marks : 100
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2

Economics
Paper II

II
Time Allowed : 75 Minutes] [Maximum Marks : 100
Note : This paper contains Fifty (50) multiple choice questions, each question
carrying Two (2) marks. Attempt All questions.
(50) (2)

1. Autonomous Demand indicates 1.
that .......................... .
(A)
(A) Commodity is used both for the
export and direct domestic
consumption

(B) Commodity is used both for the (B)

direct domestic consumption
and as an input to produce
another commodity
(C)
(C) Commodity is needed for direct
use but not as an input to
produce another commodity

(D) Commodity is needed as an (D)
input to produce another
commodity but not for the direct
use

3 [P.T.O.

2. Stay-out pricing approach 2.
.................. .
(A)
(A) Helps the firm to ascertain the
maximum possible price it can
charge from its consumers

(B) Helps the firm to ascertain the (B)
minimum possible price it can
charge from its consumers

(C) Helps the firm to ascertain the
(C)
maximum price it can pay to its
vendors

(D) Helps the firm to ascertain the
minimum price it can pay to its (D)
vendors

3. Profit maximising amount of inputs
occurs when .................. .
3.
(A) The slope of the Iso-profit line
equals the slope of the
production function (A)
(B) The slope of the Iso-profit line
exceeds the slope of the
(B)
production function

(C) The slope of the production
function exceeds the slope of the (C)
Iso-profit line

(D) The slope of the Iso-profit line
(D)
exceeds the slope of the Iso-
quant

4

4. The producer shall not produce in 4.

the third stage of production because

in that stage ................ .

(A) The total product is negative (A)

(B) The marginal product is
(B)
negative

(C) The average product is
(C)
stagnant

(D) The marginal product is falling (D)

5. If the commodities are perfect 5.

substitutes, the corresponding

indifference curves would be

................... . (A)

(A) Negatively sloping curves
(B)
(B) Positively sloping straight lines

(C) Negatively sloping straight (C)

lines

(D) L
(D) L-shaped straight lines

5 [P.T.O.

6. In the context of welfare economics, 6.
the social welfare function was put
forward by .................... .

(A) Hicks and Samuelson (A)

(B) Pigou and Samuelson (B)

(C) Robbins and Scitovszky (C)

(D) Samuelson and Bergson (D)

7. The average fixed cost (AFC) of 7.

production curve is denoted by
............................ .
(A)
(A) Rectangular hyperbola
(B)
(B) U-shaped curve
(C)
(C) L-shaped curve

(D) J-shaped curve (D)

8. In the context of demand theory, the 8.
expression ‘Choice reveals
preference’ is ascribed to .................. .

(A) Paul Samuelson (A)

(B) J.R. Hicks (B)

(C) F. Machlup (C)
(D) Robert Dorfman
(D)

6

9.
9. Risk-return trade off plays an

important role in whose theory of

money demand ?

(A) Tobin’s Portfolio Choice

(B) Friedman’s restated quantity (A)

theory

(B)
(C) Baumol’s inventory theoretic

choice
(C)
(D) Cambridge money demand

theory (D)

10. Ratchet effect relates to : 10.

(A) Life-cycle hypothesis
(A)
(B) Permanent income hypothesis
(B)

(C) Relative income hypothesis (C)

(D) Absolute income hypothesis (D)

7 [P.T.O.

11. The Samuelson-Hicks type business 11.

cycle models will show stability as
well as cyclical fluctuations only :
(A) Income movement equation (A)
shows complex roots whose
magnitudes are less than one
(B)
(B) Income movement equation
shows real roots whose
magnitudes are less than one
(C)
(C) Income movement equation
shows complex roots whose
magnitudes are more than one
(D)
(D) Income movement equation
shows real roots whose
magnitudes are more than one
12. In simple Keynesian model of output 12.
determination, government
expenditure will have a bigger
impact if :
(A) Marginal propensity to consume
is lower
(A)
(B) Marginal propensity to consume
is higher (B)
(C) Marginal propensity to save is
constant (C)
(D) Marginal propensity to consume
is zero (D)

8

13. Match the following : 13.

Statement 1 Statement 2 1 2

(a) Inventory (i) Edmund (a) (i)

approach to Phelps

money demand
(b) (ii)

(b) Adaptive (ii) William

expectation Baumol
(c) (iii)
(c) Upper turning (iii) John Hicks

point
(d) (iv)
(d) Permanent (iv) Milton

income Friedman
:
Codes :
(a) (b) (c) (d)
(a) (b) (c) (d)
(A) (i) (ii) (iii) (iv)
(A) (i) (ii) (iii) (iv)

(B) (ii) (iii) (i) (iv)
(B) (ii) (iii) (i) (iv)

(C) (ii) (i) (iii) (iv) (C) (ii) (i) (iii) (iv)

(D) (ii) (i) (iv) (iii) (D) (ii) (i) (iv) (iii)

9 [P.T.O.

14. According to Cambridge version of 14.

demand for money, money demand

will increase if :
(A)

(A) Velocity of money increases
(B)
alone

(B) GDP in the economy decreases
(C)
alone

(C) GDP in the economy and velocity

increase at the same rate

(D) Velocity in the economy (D)

decreases alone

15. If investment becomes totally 15.

interest insensitive, then :

(A) Fiscal policy is ineffective (A)

(B) Fiscal policy is effective (B)

(C) Monetary policy is effective (C)

(D) Both fiscal and monetary policy (D)

are ineffective

10

16. Long-run Phillips curve will not be 16.
vertical if :
(A) Price inflation partially takes
(A)
into account expected price
inflation
(B) Price inflation fully takes into
(B)
account expected price inflation
(C) Price inflation does not take into
account expected price inflation (C)
at all
(D) Expected price inflation is
always zero (D)

17. Prof. Mahalanobis developed ........... 17.
model in 1955 which was later used
in Five Year Plans of India.
(A) Four sector (A)
(B) Two sector (B)
(C) Single sector (C)

(D) Three sector (D)

18. World Bank has indicated GDP 18.
growth rate in India is 7.6 percent GDP
in 2016 and will be .................. in
2017.
(A) 7.8% (A) 7.8
(B) 7.7% (B) 7.7
(C) 7.9% (C) 7.9
(D) 8.0% (D) 8.0
11 [P.T.O.

19. In which strategic sector of Indian 19.
Economy hundred percent Foreign
Direct Investment (FDI) is allowed
recently ?
(A)
(A) Science and technology
(B)
(B) Space

(C) Defence sector (C)

(D) Critical medicines (D)

20. Which one of the following has 20.
propounded the modern theory of
distribution ?
(A)
(A) Nicholas Kaldor
(B)
(B) David Ricardo
(C)
(C) Mrs. Joan Robbinson

(D) J.S. Mill (D)

21. Cost-Benefit Analysis was developed 21.
in USA for appraisal of investments
in ..................... .

(A) Agriculture and Health projects
(A)
(B) Health and Garden projects
(B)
(C) Irrigation and Transportation
(C)
project

(D) Technology and Health project (D)

12

22. Quaternary Sector involves 22. (Quarternary)
.................. .
(A) Research and development (A)

(B) Provision of services (B)

(C) Industry and manufacturing (C)

(D) Agricultural services (D)

23. Match the following : 23.
Theory
(a) Theory of stages of economic
(a)
growth
(b)
(b) Theory of unlimited supplies of
labour (c)

(c) The Big Push Theory (d)
(d) Theory of unbalanced growth
P ropounder (i)
(i) Arthur Lewis (ii)
(ii) W.W. Rostow (iii)
(iii) A.O. Hirschman
(iv)
(iv) Rosenstein Rodan
:
Codes :
(a) (b) (c) (d) (a) (b) (c) (d)

(A) (iv) (iii) (i) (ii) (A) (iv) (iii) (i) (ii)

(B) (iii) (iv) (ii) (i) (B) (iii) (iv) (ii) (i)

(C) (ii) (i) (iv) (iii) (C) (ii) (i) (iv) (iii)

(D) (i) (ii) (iii) (iv) (D) (i) (ii) (iii) (iv)
13 [P.T.O.

24. To ensure fiscal autonomy to states, 24.

14th Finance Commission

recommended to increase its share
from :
(A) 32% 42%
(A) 32% to 42%

(B) 30% to 42% (B) 30% 42%

(C) 30% to 40% (C) 30% 40%

(D) 35% to 40% (D) 35% 40%

25. An Integrated Goods and Services
25.
Tax (IGST) would be collected by :

(A) State Governments
(A)
(B) Central Government
(B)
(C) Municipal Corporations
(C)
(D) Finance Commission
(D)
26. Who is not the member of 14th
26.
Finance Commission ?
(A)
(A) Sushma Nath
(B)
(B) Sudipto Mundle

(C) M. Govind Rao (C)

(D) C.H. Hanumanta Rao (D)

14

27. Which one of the following is not a 27.
Non-Debt Capital Receipts ?
(A) Disintvestment receipts (A)
(B) Dividend receipts (B)
(C) Short-term borrowing (C)
(D) Tax Revenue (D)

28. A public good is ..................... . 28.
(A) A good that the public must pay
(A)
for
(B)
(B) Non-rival in consumption
(C) More costly than a private good (C)

(D) Paid for by a government (D)

29. Reduction in consumer’s welfare as 29.
a result of tax is referred to :
(A) Equity in taxation (A)
(B) Dead weight loss (B)

(C) Efficiency in taxation (C)

(D) Incidence of tax (D)

30. Which one of the following is the 30.
major component of revenue
expenditure of Central Government ?
(A)
(A) Pensions
(B) Interest payments (B)

(C) Defence expenditure (C)

(D) Expenditure on education (D)

15 [P.T.O.

31. All transactions of ............... nature 31.
are included in the current account
of Balance of Payments.

(A) Stock (A)

(B) Volatile (B)

(C) Flow (C)

(D) Fluctuating (D)

32. The commodity in which a nation 32.
has the least absolute disadvantage
represents its area of :

(A) Comparative disadvantage (A)

(B) Comparative advantage (B)

(C) Absolute advantage (C)

(D) Cannot say without additional (D)
information

33. Ricardo’s theory of comparative 33.
advantage is based on :

(A) The opportunity cost theory (A)
(B) The labour theory of value
(B)
(C) The law of diminishing returns
(C)
(D) The psychological law of
(D)
consumption

16

34. We can best understand Smith’s 34.
views on trade if we regard them as
a reaction to :

(A) The law of comparative
(A)
advantage
(B)
(B) The mercantilist view on trade

(C) Ricardo’s views on trade (C)

(D) The law of absolute advantage (D)

35. Uniformity in exchange rate occurs 35.
due to :

(A) Foreign exchange arbitrage (A)

(B) Devaluation (B)

(C) Hedging (C)

(D) Speculation (D)

36. If a country can produce 10 units 36.
of good x or 4 units of good y, the
opportunity cost of 1 y is :

(A) 1 x
(A)
(B) 0.4 x (B)

(C) 2.5 x (C)

(D) 10 x (D)

17 [P.T.O.

37. Match the following : 37. :

(a) Infant industry argument (a)
(b) Import substituting industrial-
(b)
ization
(c)
(c) Reduction in the rates of
protection for manufacturing by
developing countries (d)

(d) Industrialization of high
performance Asian economies
(i)
(i) Domestic industries are
established under the protection
(ii)
of tariffs or import quotas

(ii) New industries need a temporary
period of protection (iii)

(iii) Not via import substitution but
via export of manufactured goods (iv)
(iv) Rapid growth of trade
:
Codes :
(a) (b) (c) (d)
(a) (b) (c) (d)
(A) (iii) (i) (iv) (ii)
(A) (iii) (i) (iv) (ii)

(B) (iv) (i) (ii) (iii) (B) (iv) (i) (ii) (iii)

(C) (iii) (iv) (i) (ii) (C) (iii) (iv) (i) (ii)

(D) (ii) (i) (iv) (iii) (D) (ii) (i) (iv) (iii)

18

38. What can you say about the 38.
following statements pertaining to
Foreign Direct Investment in India ?
(i)
(i) FDI through automatic route
does not require prior govt.
approval.
(ii) FDI through government route
(ii)
requires approval of the
government through Foreign
Investment Promotion Board.
(A) Both statement ( i ) and (A) (i) (ii)
statement (ii) are incorrect
(B) Statement (i) is incorrect and
statement (ii) is correct (B) (i) (ii)

(C) Both statement ( i ) and (C) (i) (ii)
statement (ii) are correct
(D) Statement (i) is correct and
(D) (i) (ii)
statement (ii) is incorrect
39. Which of the following is not a tool 39.
used by RBI for regulating money
supply in India ?
(i) Open market operations (i)
(ii) Repo rate (ii)
(iii) Statutory Liquidity Ratio (iii)
(iv) Disinvestment (iv)
(A) (iv) (A) (iv)
(B) (i) (B) (i)
(C) (iii) (C) (iii)

(D) (ii) (D) (ii)

19 [P.T.O.

40. Which of the following are examples 40.
of a direct tax in India ?

(i) Excise duty (i)

(ii) Service tax (ii)

(iii) Income tax (iii)

(A) (i), (ii), (iii) (A) (i), (ii), (iii)

(B) Only (iii) (B) (iii)

(C) (i) and (iii) (C) (i) (iii)

(D) (ii) and (iii) (D) (ii) (iii)

41. In the year 1966, the exchange 41.
value of rupee against American
dollar was devalued by ................ .

(A) 75% (A) 75%

(B) 65%
(B) 65%
(C) 48%
(C) 48%
(D) 57%
(D) 57%

42. The All India Rural Credit Survey 42.

Committee, 1954 was chaired by :

(A) D.R. Gadgil (A)

(B) V.K.R.V. Rao (B)

(C) A.D. Gorawala (C)

(D) Vaikunthlal Mehta (D)

20

43. Among top fifteen fastest growing 43.
service sector countries ........... share
of services in its total GDP is less GDP
than 50 percentage.

(A) France (A)

(B) Germany (B)

(C) China (C)

(D) Australia (D)

44. Which is the correct descending 44.
order of India’s software export
destination in recent times ?

(i) Asia Pacific, North America,
Europe (i)
(ii) Europe, Asia Pacific, North
(ii)
America

(iii) Europe, North America, Asia (iii)
Pacific
(iv)
(iv) North America, Europe, Asia
Pacific (A) (iv)

(A) (iv)
(B) (iii)
(B) (iii)
(C) (i)
(C) (i)

(D) (ii) (D) (ii)

21 [P.T.O.

45. The abbreviation ICOR suggests : 45. ICOR
(A) International Credit Output
(A)
Ratio

(B) Incremental Capital Output
(B)
Ratio

(C) Incremental Capital Output (C)
Range

(D) Indian Capital Output Rules (D)

46. Statistic is a numerical quantity 46.
which is calculated from :

(A) Population (A)
(B) Sample (B)
(C) Universe (C)

(D) Hypothesis (D)

47. Which of the following is used in 47.
chain indices ?

pn pn
(A) p0
100 (A) 100
p0

pn pn
(B) 100 100
pn 1 (B)
pn 1

pn pn
(C) 100 (C) 100
p0 p0

pn q n pn q n
(D) 100 (D) 100
p0 q0 p0 q0

22

48. The most suitable average for 48.
qualitative measurements is
..................... .
(A)
(A) Arithmetic mean
(B)
(B) Median

(C) Correlation coefficient (C)

(D) Geometric mean (D)

49. The strength (degree) of the 49. (x)
relationship between a set of
(y)
independent variable x and
dependent variable y is measured
by : (A)

(A) Coefficient of correlation
(B)
(B) Coefficient of determination
(C)
(C) Standard Error of estimate
(D)
(D) All of the above

50. Consumer Price Index number is 50.

also known as :

(A) Wholesale Price Index number (A)

(B) Cost of Living Index (B)

(C) Sensitive (C)
(D) Composite
(D)
23 [P.T.O.

ROUGH WORK

24