KUET 2023 Question Paper M.A. Economics

FOR KUET EXAM PREPARATION

KUET 2023
Question Paper · M.A.
Economics
EXAM YEAR TYPE SUBJECT

KUET 2023 Question Paper M.A. Economics

Notes · Sample Papers · Previous Year Papers · Mock Tests

co m .
. e
em las

as ag Sr. No. .............................

ENTRANCE TEST-2023
SCHOOL OF BUSINESS AND MANAGEMENT STUDIES

A .com
ECONOMICS

om
Question Booklet Series

.c em
Total Questions : 60

em a s
Time Allowed : 70 Minutes Roll No. :

a s g l
Test Roll Number in the space provided at the top of this page of Question a
l information
g
Instructions for Candidates :

a
1. Write your Entrance Booklet and
fill up the necessary in the spaces provided on the OMR Answer Sheet.
2. OMR Answer Sheet has an Original Copy and a Candidate’s Copy glued beneath it at the top. While making
entries in the Original Copy, candidate should ensure that the two copies are aligned properly so that the
entries made in the Original Copy against each item are exactly copied in the Candidate’s Copy.
3. All entries in the OMR Answer Sheet, including answers to questions, are to be recorded in the Original Copy
only.

m
c. o
4. Choose the correct / most appropriate response for each question among the options A, B, C and D and
darken the circle of the appropriate response completely. The incomplete darkened circle is not correctly

mcircle of correct/most appropriate response. In no case
read by the OMR Scanner and no complaint to this effect shall be entertained.

s e
l a
5. Use only blue/black ball point pen to darken the

g
6. Do not darken more than one circle ofaoptions for any question. A question with more than one darkened
gel/ink pen or pencil should be used.

response shall be considered wrong.
7. There will be ‘Negative Marking’ for wrong answers. Each wrong answer will lead to the deduction of
0.25 marks from the total score of the candidate.
8. Only those candidates who would obtain positive score in Entrance Test Examination shall be eligible for
admission.

m
c. o
9. Do not make any stray mark on the OMR sheet.

o m mbooklet.
. c e
10. Calculators and mobiles shall not be permitted inside the examination hall.

s
em12. OMR Answer Sheet must be handled carefully and it should not be folded orglmutilated
a in which case it will not
s
11. Rough work, if any, should be done on the blank sheets provided with the question

gla a
a
be evaluated.
13. Ensure that your OMR Answer Sheet has been signed by the Invigilator and the candidate himself/herself.
14. At the end of the examination, hand over the OMR Answer Sheet to the invigilator who will first tear off the
original OMR sheet in presence of the Candidate and hand over the Candidate’s Copy to the candidate.

SM-29585–A 1 [Turn over
*

m . c
c. o s e m
m a
se
For more Question Papers, Sample Papers, Notes & Syllabus visit
g l
Page 1 of 11

1. The slope of the production possibility frontier is 5. Which statement is true for a normal good? Choose
usually: your answer from the codes given at the end of this
(A) Negative and decreasing question.
(B) Negative and increasing I. The income and the substitution effects work in
(C) Positive and increasing the same direction.

(D) Positive and decreasing II. Income and the substitution effects work in the
opposite direction.
2. Assume two commodities X and Y. If commodity X
accounts for 75% of the budget and has an income III. Negative relationship between price and quantity
elasticity equal to 0.6, then the income elasticity of demanded.
commodity Y will be: IV. Positive relationship between price and quantity
(A) 1.6 demanded.
(B) 1.8 CODES
(C) 2.0 (A) I & IV
(D) 2.2 (B) II & III
3. Suppose that a consumer spends 50% of his income (C) I & III
on good X, the income elasticity of demand for good (D) II & IV
X is 2, and the elasticity of substitution between X
6. The Water-Diamond paradox implies that the things
and all other goods is also 2. The price elasticity of
with the greatest:
demand for good X will be:
(A) Value in use frequently have little value or no
(A) 1.0
value in exchange.
(B) 1.8
(B) Value in exchange frequently have little value or
(C) 2.0
no value in use.
(D) 2.8
(C) Either A or B
4. Demand for a firm’s product has been estimated to
(D) Both A and B
be: Qd = 600 – 100P. If the price of the product per
7. If the substitution effect outweighs the income effect,
unit is Rs. 2, what would be the price elasticity of
the labour supply curve:
demand at this price?
(A) 2.0 (A) Slopes downwards

(B) 2.5 (B) Bends backward

(C) 1.0 (C) Slopes upwards

(D) 0.5 (D) Bends backward and then slopes downward

SM-29585–A 2
*

For more Question Papers, Sample Papers, Notes & Syllabus visit Page 2 of 11

co m .
. e
em las

as 8. ag
The equilibrium quantity in a market could remain 12. Consider the production function of the form: Q =
unchanged if there were a/an ____ in demand offset 10XY - 2X2 -Y2 , where Q is output, X and Y the
by a/an ______ in the supply. inputs. This production function shows:
(A) Increase, decrease (A) Decreasing returns to scale
(B) Increase, increase (B) Constant returns to scale

o m
(C) Decrease, decrease (C) Increasing returns to scale

m . c
co is true about the 13. Consider the marginal cost function of the form:sMCm
(D) None of the above (D) None of these
. e
emmarginal product (MP) and = 200 - 18Q + 0.75Q , where MC is theglmarginala
9. Which one of the following

s
la(AP)?
relationship between
cost, and Q is the output. What will beathe level of
2

g
a MP > AP, AP decreases
average product
(A) When, output at which MC is minimum?
(B) When AP = MP, AP reaches its maximum (A) 10
(C) AP reaches its maximum point earlier than MP (B) 14
reaches its own (C) 16
(D) MP is at its maximum at the point of its (D) 12

m
c. o
intersection with AP
14. The break-even quantity of output (Qb ) produced and

em total fixed costs (TFC), price of output (P), and the
10. Which one of the following is true about the sold by a perfectly competitive firm is determined by

a s
relationship between short-run Marginal Cost (MC)

g l
a
and short-run Average Cost (AC)?
variable cost per unit of output (AVC). Choose the
(A) When MC is above AC, AC is decreasing. correct equation that represents Qb :
(B) When MC is below AC, AC is increasing. (A) Qb = TFC ÷ (P – AVC)
(C) MC intersects AC at the minimum point of AC. (B) Qb =AVC ÷ (P – TFC)
(D) After the point of intersection AC exceeds MC. (C) Qb =P ÷ (TFC – AVC)
11. Consider the short-run production function of the (D) None of these

m
form: Q = 6L2 - 0.4L3 where Q is output and L is the

c. o
15. The upward-sloping long-run supply curve of an
m
c. o
quantity of labour. What would be the value of L that

e m
industry is associated with:

s
maximizes Q?

em la
(A) Decreasing cost industry

las ag
(A) 10

g
(B) Constant cost industry

a
(B) 12
(C) Increasing cost industry
(C) 15
(D) None of these
(D) 20

SM-29585–A 3 [Turn over
*

m . c
c. o s e m
m a
se
For more Question Papers, Sample Papers, Notes & Syllabus visit
g l
Page 3 of 11

16. For a firm in the long run when equilibrium price = 20. The profit maximization condition(s) required for a
short-run marginal cost = short-run average cost = discriminating monopolist in a two sub-market system
long-run average cost, then: is (are):
(A) Profits are zero (A) Aggregate Marginal Revenue = Marginal Cost
(B) Profits are positive of the total output
(C) Profits are negative (loss) (B) Marginal Revenue in market A = Marginal
(D) Firm is operating at below most efficient scale Revenue in market B = Marginal Cost
17. In the Kinked demand theory of oligopoly each
(C) Both (A) & (B)
oligopolist believes that if he ______________ the
(D) Neither (A) nor (B)
the prices, his competitors will ___________ the
prices. 21. The type of price leadership under which an old,
(A) Lower, increase experienced, largest or most respected firm assumes
the role of a custodian who protects the interests of
(B) Lower, lower
all is referred to as:
(C) Increase, increase
(D) None of the above (A) Price leadership by the dominant firm

18. In Cournot’s duopoly model, there are two firms (B) Barometric price leadership
operating with: (C) Exploitative price leadership
(A) Homogenous product (D) Price leadership by a low-cost firm
(B) Zero cost 22. Choose the correct answer with regard to public
(C) Linear demand curve goods characteristics :
(D) All of the above
(A) They are non-rival
19. Which of the below-mentioned conditions are true in
(B) They are non-excludible
the case of a monopolist?
(C) Both (A) & (B)
I. Demand curve is downward sloping
II. Marginal revenue curve lies below the average (D) Neither (A) nor (B)
revenue curve 23. The proposition that “no system of aggregating
III. Demand curve is perfectly elastic individual preferences into social decisions will
IV. Marginal revenue curve lies above the average always yield consistent, nonarbitrary results”
revenue curve relates to:
Choose the correct option given below: (A) Impossibility theorem
(A) I & II (B) Coase Theorem
(B) II & III (C) Tiebout Hypothesis
(C) I & IV
(D) Moral Hazard
(D) III & IV

SM-29585–A 4
*

For more Question Papers, Sample Papers, Notes & Syllabus visit Page 4 of 11

co m .
. e
em las

as 24. Choose the INCORRECT statement from below: ag
28. The innovations theory of profit was introduced by:
(A) Moral hazard can occur when a buyer/seller (A) Alfred Marshall
enters into an exchange with another party who (B) G.J. Stigler
has more information (C) David Ricardo
(B) Free rider problem is intrinsic to public goods (D) Joseph Schumpeter

m
co
(C) Rent-seeking is a problem intrinsic to the public 29. In J.M. Keynes’s rate of interest theory, the supply of

(D) For public goods,co
m .
choice money function is:

. e m
m a s
market demand is the (A) Perfectly inelastic

s e g l
a
horizontal sum of individual demand curves
a
(B) Perfectly elastic

g l the owners of the firm want to
maximize a
25. The fact that while (C) Upward sloping
the total profits of the firm, the managers (D) Downward sloping
want to maximize their own personal interests, refers 30. The account that measures a country’s trade in
to: currently produced goods and services along with
(A) Problem of Moral Hazard unilateral transfers between countries is called:
(B) Problem of Adverse Selection (A) Capital account

m Financial account
(C) Principal-Agent Problem (B) Current account
(D) None of these
. c o
(C)
26. Which condition is NOT an underlying assumption in m (D) Trade account
s e 31. The theory of comparative advantage states that:
g l a
a is very (A) Specialization and free trade will benefit only
a perfectly competitive labour market?
(A) The number of both buyers and sellers
large the more efficient producers
(B) There are barriers to exit and entry for both (B) More efficient producers will have an advantage
buyers and sellers over others and will not seek to trade

(C) Both buyers and sellers possess perfect (C) Specialization and free trade will benefit all
information trading partners

m
c. o
(D) A producer must have an absolute advantage in

m
(D) The labour is homogenous and the buyers are

c o m
order to have comparative advantage

27.m.The concept of Quasi-Rent relates to: e
identical (from the sellers viewpoint)

e (A) Capital equipment la s
32. A country enjoys a comparative advantage in the

s
la (B) Land ag
production of a good if it can produce that good at:

ag (A) Lower cost in terms of other goods.
(B) Higher cost in terms of other goods
(C) Labour
(C) Lower cost but not in terms of other goods
(D) All of these
(D) The same cost as in other countries

SM-29585–A 5 [Turn over
*

m . c
c. o s e m
m a
se
For more Question Papers, Sample Papers, Notes & Syllabus visit
g lPage 5 of 11

33. Which choice below is true? 37. Which among the following is NOT a component of
(A) A tariff is a tax on exports GDP according to the income approach?
(B) A quota is usually a limit on the quantity of (A) Compensation to employees
exports (B) Interest
(C) Dumping occurs when a firm or industry sells (C) Profits
products above the cost of production on the (D) Net exports
world market
38. Usually, the largest component of GDP is:
(D) Protection is the practice of shielding a sector
(A) Personal consumption expenditure
of the economy from foreign competition
(B) Government consumption expenditure
34. When the prices of a country’s imports increase,
then: (C) Gross private domestic investment

(A) The price of domestic goods may decrease in (D) Gross government investment
response 39. You are given the equation: S = –100 + 0.40Y;
(B) The price of domestic goods may increase in I = 300. Choose the correct value of the equilibrium
response level of national income from the values given below:

(C) The price of domestic goods will not change (A) 820
(D) The countries aggregate supply curve will shift (B) 920
to the right (C) 1020
35. You are given the below information: (D) 1000
GDP at market price = 20,000; Depreciation = 400; 40. Using the information in Q.No.39 above, what would
Net Indirect Taxes (i.e., Indirect Taxes less Subsidies) be the level of consumption?
= 300; Net Factor Payments to the rest of the world (A) 700
= 200. What would be the value of the Net National
(B) 600
Product at factor cost or National Income?
(C) 500
(A) 19700
(D) 400
(B) 19500
41. The difference between the government expenditure
(C) 19100
multiplier and the transfer payments multiplier is always
(D) None of these
equal to:
36. Disposal personal income plus personal taxes equals:
(A) –1
(A) National income
(B) 1
(B) Personal income
(C) 2
(C) GNP
(D) –2
(D) GDP

SM-29585–A 6
*

For more Question Papers, Sample Papers, Notes & Syllabus visit Page 6 of 11

co m .
. e
em las

as ag
42. Given the consumption function C = 100 + 0.75Yd , 46. If the marginal propensity to import is 0.2 and income
the value of the government expenditure multiplier is: rises from Rs. 800 to Rs. 1000, then the change in
(A) 4 imports in Rs. is

(B) 3 (A) 40

(C) 2 (B) 35

m
co
(D) 1 (C) 30

.c om m .
(D) 20

e
43. Given the marginal propensity to import=0.5 and the

e m
marginal propensity to save = 0.5. What is the value 47. The Classical school of economics considers:
l a s
l a s ag
ag
of the foreign trade multiplier? (A) Money is non-neutral
(A) ¥ (B) Money acts as a store of value
(B) 0 (C) Money acts as a medium of exchange
(C) 1 (D) All of these
(D) None of these 48. Ml + Time Deposits with the Banks corresponds to
44. Given the values of marginal propensities to import which measure of money supply?

m M3
and save as stated in Q.No. 43, choose the correct (A) M2

c
expenditure multiplier (GEM), transfer payment . (C) M4
sequence relating to the strength of the government
o
(B)

e m
l a s (D) None of these
ag 49. A common component between high-powered money
multiplier (TPM), tax multiplier (TAM), and foreign
trade multiplier (FTM).
(A) GEM > TPM > FTM > TAM
and money supply is:
(B) GEM > TPM = FTM > TAM
(A) Currency held by the public
(C) GEM < TPM > FTM < TAM (B) Demand deposits held by the public
(D) None of the above
(C) Cash reserves held by the banks with RBI

m
45. According to Keynes’s consumption theory, which

c. o
(D) Cash reserves held by the banks with themselves

m
c. o
one of the below-given factors is believed to have

m
50. The money supply will decrease, if:

s e
uncertain effects on consumption?

em (A) General price level la
(A) Supply of high-powered money increases

l as (B) Fiscal policy ag
ag
(B) Currency-deposit ratio of the public decreases
(C) Reserve-deposit ratio of the banks falls
(C) Change in expectations
(D) None of these
(D) Rate of interest

SM-29585–A 7 [Turn over
*

m . c
c. o s e m
m a
se
For more Question Papers, Sample Papers, Notes & Syllabus visit
g lPage 7 of 11

51. The short-run rate at which RBI lends overnight funds 56. Which among the below-given conditions is NOT a
to the banks against securities refers to: feature of the classical aggregate supply curve?
(A) Bank rate I. Perfectly inelastic and positioned at full
(B) Repo rate employment equilibrium
(C) Reverse repo rate II. Money wage rate is perfectly flexible downward
(D) Open market operations III. Based on the assumption that money wage is
52. If the interest elasticity of investment is relatively high, fixed
then:
IV. Upward sloping and positioned at below full
(A) LM schedule will be relatively flat
employment equilibrium
(B) LM schedule will be relatively steep
Choose the correct option given below:
(C) IS schedule will be relatively flat
(A) I & II
(D) IS schedule will be relatively steep
(B) III & IV
53. If the tax rate declines, then:
(C) I & III
(A) IS schedule will shift to the right
(B) IS schedule will shift to the left (D) II & IV

(C) IS schedule will become flatter 57. In regard to the expectation augmented Phillips curve,

(D) IS schedule will become steeper the designated variables follow as: p = actual inflation,
pe = expected inflation, u = actual unemployment
54. The Keynesian ISLM model in a liquidity trap situation
shows a configuration in which: rate, u– = natural rate of unemployment. Given this
information, choose the correct code given at the end
(A) Slopes of the IS and LM curves approach infinity
of the question.
(B) Slopes of the IS and LM curves approach zero
(C) Slope of the IS curve is quite steep and the LM I. If u < u– then p > pe
curve is quite flat II. If u > u– then p < pe
(D) Slope of the LM curve is quite steep and the IS III. If u < u– then p < pe
curve is quite flat IV. If u > u– then p > pe
55. In a Keynesian-type ISLM model, which statement
CODES
is NOT true?
(A) I & II
(A) Price level is variable
(B) III & IV
(B) Money supply is exogenous
(C) I & IV
(C) Rate of interest is endogenous
(D) Level of income is endogenous (D) None of these

SM-29585–A 8
*

For more Question Papers, Sample Papers, Notes & Syllabus visit Page 8 of 11

co m .
. e
em las

as ag
58. Which statement is true regarding the Phillips curve? 60. A rapid and decisive reduction in growth of money
(A) Downward sloping in the short-run supply aimed at reducing rate of inflation is known as:
(B) Vertical straight line in the long-run (A) Seignorage
(C) Shows trade-off between inflation and (B) Sacrifice ratio
unemployment in the short-run (C) Cold turkey

m
co
(D) All of the above (D) Taylor rule

.c om m .
59. Other things remaining constant, the exchange rate

m s e
e a
would depreciate due to:

a s g l
lin demand for domestic goods a
(A) Increases in domestic income

ag
(B) Increase
(C) Increase in domestic real interest rate
(D) Decrease in the foreign real interest rate

m
. co
s em
g l a
a

m
m c. o
c. o s e m
s em la
gla ag
a

SM-29585–A 9 [Turn over
*

m . c
c. o s e m
m a
se
For more Question Papers, Sample Papers, Notes & Syllabus visit
g lPage 9 of 11

ROUGH WORK

SM-29585–A 10
*

For more Question Papers, Sample Papers, Notes & Syllabus visit Page 10 of 11

co m .
. e
em las

as ROUGH WORK ag

m
om . co
.c e m
e m l a s
l a s ag
ag

m
. co
s em
g l a
a

m
m c. o
c. o s e m
s em la
gla ag
a

SM-29585–A 11 100
[Turn over
*

m . c
c. o s e m
m a
se
For more Question Papers, Sample Papers, Notes & Syllabus visit
g l
Page 11 of 11