KUET 2021 Question Paper M.A. Economics

FOR KUET EXAM PREPARATION

KUET 2021
Question Paper · M.A.
Economics
EXAM YEAR TYPE SUBJECT

KUET 2021 Question Paper M.A. Economics

Notes · Sample Papers · Previous Year Papers · Mock Tests

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Sr. No. .............................

ENTRANCE TEST-2021
SCHOOL OF BUSINESS AND MANAGEMENT STUDIES

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ECONOMICS
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Question Booklet Series

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Total Questions : 60
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Time Allowed : 70 Minutes Roll No. :

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g l a Instructions for Candidates :
a
a Entrance Test Roll Number in the space provided at the top of this page of Question Booklet
1. Write your
and fill up the necessary information in the spaces provided on the OMR Answer Sheet.
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making entries in the Original Copy, candidate should ensure that the two copies are aligned properly
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Copy.
3. All entries in the OMR Answer Sheet, including answers to questions, are to be recorded in the Original

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Copy only.

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4. Choose the correct / most appropriate response for each question among the options A, B, C and D and

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darken the circle of the appropriate response completely. The incomplete darkened circle is not correctly

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read by the OMR Scanner and no complaint to this effect shall be entertained.
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response shall be considered wrong.
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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.
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9. Do not make any stray mark on the OMR sheet.

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10. Calculators and mobiles shall not be permitted inside the examination hall.
m booklet.
em12. OMR Answer Sheet must be handled carefully and it should not be folded l s
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11. Rough work, if any, should be done on the blank sheets provided with the question

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a will not be evaluated.
13. Ensure that your OMR Answer Sheet has been signed by the Invigilator and the candidate himself/
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14. At the end of the examination, hand over the OMR Answer Sheet to the invigilator who will first tear off
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1. Which of the following is an example of market 4. A 5% increase in the price causes no change
clearing or equilibrium price ?
in the total revenue that a firm earns ceteris
I. Auction Paribas, this implies that :
II. Bilateral bargaining
(A) Demand is price inelastic
III. Fixed price list
Choose you answer from following options : (B) Demand is perfectly price elastic
(A) Only I is correct
(C) Demand has unitary price elasticity
(B) Only I and II are correct
(C) Only II and III are correct (D) Nothing can be said about the demand curve
(D) All of them are correct
5. Marginal rate of substitution for a normal good
2. Given the demand function, Dx = a- ßPx, where
D is quantity demanded and P is the price of reflects which of following feature ?
commodity X, which of the following statements
is/are true ? (A) Transitivity

I. a indicates zero price (B) Consistency
∆Dx
II. ß = (C) Convexity
∆Px
III. the demand function is non-linear
(D) Rationality
IV. ß remains constant for all changes in prices
Choose you answer from following options : 6. If no additional satisfaction is yielded when
there is an increase in the quantity of one
(A) Only I, II and III are correct
commodity without a corresponding increase
(B) Only II and III are correct
in the quantity of other, the goods in an
(C) Only I, II and IV are correct
indifference curve refers to :
(D) All of them are correct.
3. Given the utility function , its own (A) Bads
price elasticity is equal to :
(A) 1 (B) Neuters

(B) –1 (C) Complementary goods
(C) 0
(D) Inferior goods
(D) –2

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7. Consider the following utility function 9. In production theory, during a given time period
U( X, Y ) = X + Y ; if price of good X is greater fixed inputs mean those inputs :

than price of good Y, then consumer equilibrium I. That can be varied
is at a : II. That cannot be varied
III. That can be varied only with excessive

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(A) Point where consumer spends all of his

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cost
income on good X
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. spends all of his
IV. That includes plant and machinery
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income onas
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(B) Point where consumer Choose you answer from following options

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(A) Only I and IV are correct

(C) Point where consumer spends his income (B) Only II is correct

equally on good X and good Y (C) Only II and IV are correct
(D) Only II, III and IV are correct
(D) Point where consumer spends all of his
10. Which of the following is/are false about
income on good X and good Y given by
isoquants ?
I. m smaller curvature mean the inputs can be
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their price ratios.

8. For a Cobb- Douglas utility function m
c
. substituted
s e II. two different levels of output of the same
g
U ( X , X ) = X X for a given income level
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a
1 2 1 2

and price of , which of the following commodity can be produced with the
is true ? identical input combination
III. isoquants are positively sloped in the
(A) The consumer does not exhaust all his income economic region

(B) The consumer spends all of his income on IV. ridge lines separate the relevant economic

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portion from irrelevant portion of the

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commodity X1

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isoquant

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(C) The consumer spends all of his income on

la false
Choose you answer from following options :

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2

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(A) Only I and II

ag (B) Only I, II and III false

on commodity X 2 (C) Only II and III false
(D) Only I and III false

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11. If a = ¾ and ß = ¼ for the Cobb-Douglas 14. A firm under perfect competition will shut down
production function Y = ALa Kß , then the returns its business in case where :
to scale are :
(A) Price > Average variable cost
(A) Constant
(B) Price < Average variable cost
(B) Increasing
(C) Decreasing (C) Price < Short run marginal cost

(D) First increasing and then decreasing (D) Price < Marginal average cost

12. Which of the following statement is true ? 15. Short run supply curve of a firm under perfect
(A) If marginal cost is rising then average cost competition lies :
must be also rising (A) Below average variable cost curve
(B) If marginal cost is falling then average
(B) Above average variable cost curve
cost must be also falling
(C) Below average fixed cost curve
(C) Both (A) and (B)
(D) Neither (A) nor (B) (D) Above average fixed cost curve

13. Consider the following statements for a firm in 16. Which among the following assumptions
equilibrium under perfect competition : seperates perfect competition from that of pure
I. The slope of marginal cost curve must be competition ?
rising after cutting marginal revenue curve (A) Perfect mobility of factors and no
from below
transportation charges
II. Marginal cost curve under perfect
(B) Perfect knowledge and homogenous goods
competition is a horizantal straight line
parallel to X-axis (C) Perfect mobility of factors and perfect
III. Average revenue at point of equilibrium is knowledge
equal to marginal revenue (D) Perfect knowledge and zero transporation
IV. Profits and loses of the firm are depicted charges
through AR and MR curves
17. Suppose a monopolist is operating under zero
Which among the following statement is/are
costs of production, equlibrium for a monopolist
not true? Choose from codes given below
in this case will lie at :
Choose you answer from following options :
(A) Elastic point of demand curve
(A) Only I and II
(B) Unit elastic point of demand curve
(B) Only II and III
(C) Only III and IV (C) Inelastic point of demand curve

(D) Only II and IV (D) The above information given is incomplete

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18. If the total cost function for a monopolist is 21. Which of the following is not a cause of market
TC= 10+5Q, and the price elasticity of demand failure ?
for his product is –2. What will be the price
(A) Monopoly
charged by him for his product ?
(B) Externalities
(A) 8

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(C) Perfect signalling

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(B) 10

(C) 12.5
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(D) 14.5
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22. Which among the following is not a defined

19. Downward g
a sloping approach for internalizing an externality

under monopolistic competition is due to : (A) Imposition of taxes and subsidies
(A) Advertisement (B) Assigning Property Rights
(B) Selling costs
(C) Direct government regulations
(C) Product differentiation
(D) Monopoly
(D) Large number of buyers and sellers
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23. The theorem/problem which states that people
20. Consider the following statements regarding
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Cournot’s Duopoly model :
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I. Each firm will take its rival’s outputaconstant
or enjoying benefits from them is known as :

(A) Coase theorerm
II. Each firm will take its value’s price
constant (B) Free rider problem

III. Each firm will produce 1/3 of total output (C) Externality

IV. Each firm will produce 1/2 of total output. (D) Economic efficiency

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Choose correct answer from below given 24. The theory of social choice was propounded

c.(A)o Only I and II are correct e m
codes : by which among the following

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(A) Michael Spence
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(C) Only II and IV are correct (C) Prof. Arrow
(D) Only I and IV are correct (D) Bergson and Samuelson

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25. The backward bending of labour supply curve 29. Consider the following consumption function
occurs at a point where : Ct = Ca + bYd , where Ct, Ca , b, Yd represents
present consumption, autonomous consumption,
(A) Income effect outweighs substitution effect
marginal propensity to consume and current
(B) Substitution effect outweighs Income effect disposable income respectively. Then which of
the following statement is true ?
(C) Substitution effect equals Income effect
(A) MPC < APC and APC increases with
(D) Both (B) and (C)
increase in income
26. Quasi rent is a _______ phenomena and is (B) MPC > APC and APC increases with
equal to _______. increase in income

(A) Short run and TR – TVC (C) MPC < APC and APC decreases with
increase in income
(B) Short run and AR - TR
(D) MPC > APC and APC decreases with
(C) Long run and TFC – TFC
decrease in income.
(D) Both (A) and (C) 30. Consider the following saving function
27. The Abstinence theory of interest was propounded St = Sa + (1 – b)Yd, where St, Sa, Yd and

by : 1 – c represents current savings, autonomous
savings, personal disposable income and
(A) N. Senior marginal propensity to save respectively and
(B) Cantillon Yd = Y –T, where Y is current income and T
is lump sum tax. Suppose that government
(C) J.S. Mill
increases lump sum taxes by 10%, then which
(D) Turgot of the following holds ?

28. Among the following which School of (A) Marginal propensity to save will increase
Economics stated that interest is determined by 10%.

by demand and supply for money ? (B) Marginal propensity to save will decrease
by 10%.
(A) Classical School
(C) Marginal propensity to save will remain
(B) Keynesian School same.
(C) Monetarist School (D) Marginal propensity to save will decrease

(D) New-classical School by less than 10%.

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31. Paradox of thrift states that : 35. The purchase of short term bills from the general
(A) Increased spending in the short run leads public by the central bank will :
to an eventual fall in savings (A) Decrease the supply of money
(B) Increasing savings in the short run leads (B) Increase the supply of money
to an eventual fall in savings (C) Increase interest rate
(C) Increased investment in the short run leads
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(D) Decrease bank reserves.

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to an eventual fall in savings
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36. Presently which of the following year is used

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(D) None of the above as a base year for compilation of national income

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32. If GDP deflator is raised by 30% then which statistics by the Central Statistical Organization
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of the following statement is correct ? (CSO) in India ?
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(A) Nominal GDP increases by 30% (A) 2011-12
(B) 2012-13
(B) Real GDP increases by 30%
(C) Both nominal and real GDP will increase (C) 2013-14
by 30% (D) 2018-19
(D) Nominal GDP will increase by 30% and 37. The most common form of price discrimination
real GDP will decrease by 30% in international trade is :

m Non-tariff barriers
33. Commodity terms of Trade is defined as the (A) Tariff barriers
ratio of :
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. (C) Preferential trade agreements
(B)
(A) Price index of exports to price index of
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imports s
laof 38. For an open economy equilibrium, which of the
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(B) Price index of imports to price index
exports
following is true ?
(C) Volume index of exports to volume index
(A) S = I
of imports
(B) S = I + NX
(D) None of the above
(C) S = I – NX
34. In the quantity theory of money, which of the
following is assumed ? (D) S > I + NX

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(A) Falling velocity of circulation of money 39. If the consumption function is given by
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C = 100 + 0.6(Y – T) and Autonomous investment

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and constant real output

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is 200, government spending is 50 and lump

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(B) Rising real output and constant velocity of
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sum tax is 100, then equilibrium income is :

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circulation of money

g
(A) 750
a (C) Constant real output and constant velocity
of circulation of money
(B) 725
(C) 800
(D) Falling real output and rising velocity of
money (D) 790

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40. Compared to the closed economy Keynesian 44. Compared to month of Jan 2021, if the prices
model, the open economy model in which imports
of food & fuel increase by 2% and the prices
are function of income has an investment
of all other goods and services increase by 3%
multiplier that is :
in June 2021, then which of the following holds
(A) Smaller than closed economy
true ?
(B) Greater than closed economy
(C) Equal to closed economy (A) Headline inflation in the economy is 3%

(D) Both are equal to one (B) Core inflation in the economy is 2%
41. M3 measure of money supply compiled by (C) Headline inflation in the economy is 5%
Reserve Bank of India (RBI) does not include :
(D) Core inflation in the economy is 5%
(A) Net RBI credit to Government
45. Which one of the following is false with respect
(B) Net RBI credit to commercial sector
to the effects of inflation ?
(C) Net foreign exchange assets of RBI
(D) Total Gold reserves with RBI (A) Inflation decreases the shoe-leather costs
of people
42. Which of the following variables is a stock
variable ? (B) Inflation increases the menu costs for firms
(A) Gross domestic product (C) Inflation leads to tax distortions
(B) Money supply
(D) Inflation makes debtors better off as
(C) Exports
compared to creditors
(D) Imports
46. If during 2020, India’s total exports to the rest
43. If in a country A, it takes one unit of labor to
of world are $200, Imports from the rest of
produce 6 units of wheat and 4 units of cloth
while as in country B, it takes one unit of labor world are $150, remittances to the other countries
to produce 1 unit of wheat and 2 units of cloth are $50, remittances from the other countries
respectively, then : are $60, capital inflows are $40 and capital
(A) Country A has comparative advantage in outflows are $100, then which of the following
cloth and wheat
holds true ?
(B) Country B has comparative advantage in
(A) Balance of trade account is $60
wheat and cloth.
(C) Country A has comparative advantage in (B) Balance of Capital account is $50
wheat and Country B in Cloth
(C) Current account balance is $10
(D) Country A has comparative advantage in
(D) Overall Balance of BOP account is zero
cloth and country B in wheat.

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47. The Philips curve establishes the following with 49. If the economic agents decided to save less for
respect to the role of money : any income change such that their marginal

(A) Money is Neutral in short run and Philips propensity to consume rises. This change in

curve is upward sloping behavior on part of people would make :

(A) IS curve steep
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(B) Money is Non-Neutral in short run and

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(B) LM curve steep

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Philips curve is vertical

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(C) Money is Neutral in long-run and Philips (C) LM curve flat
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curve is downward sloping (D) IS curve flat
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(D) Money is Non-Neutral in short run and 50. Any point above LM curve and below IS curve
Philips curve is downward sloping would indicate :
48. Consider the equation of LM schedule given (A) Money supply > Money demand and
as, M = M = c0 + c1Y − c 2 r , where the c1 is
s
0
d
Aggregate demand > Aggregate output
the income elasticity of money demand, c 2 is
(B) Money supply < Money demand and

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c. o(C) Money supply > Money demand and
interest elasticity of money demand, Y and r
Aggregate Demand > Aggregate output

M and M constitute the supply of money andem
denote income level and interest rate and

a s
s d

demand for money respectively. If in lone
0

g
Aggregate Demand < Aggregate output

a
situation, c = 0 and in another situation c = ∞ ,
2
(D) Money supply < Money demand and
2

then which of the following holds true with Aggregate Demand < Aggregate output

respect to LM Curve ? 51. If the economy is expected to face recession in

(A) LM curve is perfectly elastic to interest 2022 and the firms are likely to bankrupt. There

rate changes under both the cases would be a loss of confidence in bonds and

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hence a rightward shift in liquidity preference.
m In that case which of the .following is true ?
c. o rate changes under both the cases
(B) LM curve is perfectly inelastic to interest

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(A) LM curve will sshift upwards
s em(C) LM curve is perfectly elastic if c = 0 g la
gla (B) IS curveawould shift to downwards
2

a and perfectly inelastic if c = ∞ 2

(C) LM curve would shift to downwards
(D) LM curve is perfectly elastic if c 2 = ∞
and perfectly inelastic if c 2 = 0 (D) IS curve would shift to upwards

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52. Effect of change in lump sum tax and proportional 55. In case of aggregate demand curve, an increase
tax rate on IS curve would be : in the general level of prices will lead to :
(A) Both will change only the slope of IS curve (A) Upward movement along AD curve and
(B) Both will change only the position of IS upward shift of LM curve
curve
(B) Upward movement along AD curve and
(C) Proportional tax will change both slope downward shift of LM curve
and position while lump sum will change
(C) Upward movement along AD curve and
only position of IS curve.
downward shift of IS curve
(D) Lump sum taxes will change both slope
and position while proportional tax will (D) Upward movement along AD curve and
change only position of IS curve upward shift of IS curve

53. Which of the following does not shift Aggregate 56. Consider the following with respect to the money
demand curve ? supply process :

(A) Change in supply of money 1. Value of money multiplier is less than the
(B) Change in the interest elasticity of demand deposit multiplier
for money
2. Value of money multiplier is inversely
(C) Change in autonomous investment related to cash reserve ratio
(D) Change in lump sum tax. 3. Value of money multiplier is directly related
54. The point of intersection in aggregate demand to currency deposit ratio
– aggregate supply model framework correspond
4. Value of money multiplier is directly related
to :
to excess reserve ratio
(A) Simultaneous Equilibrium in money and
Choose you answer from following options :
goods market

(B) Simultaneous equilibrium in money and (A) Only 1 & 2 are correct

labour market. (B) Only 2 & 3 are correct
(C) Simultaneous equilibrium in goods and
(C) Only 1 & 3 are correct
labour market
(D) Only 2 & 4 are correct
(D) Simultaneous equilibrium in all the three

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57. With the introduction of e-money like credit 59. The Mercantilists were not in favor of :
cards, smart cards and e-wallets (Bhim, UPI,
Paytm, googlepay; airtel money; amazon pay (A) Restricting imports
etc.), velocity of circulation of money in the
economy would : (B) Stimulating exports
(A) Increase
(C) Free trade
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(B) Decrease

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(C) Remain Unchanged (D) Accumulation of gold by their nations

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(D) Only decrease slightly

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60. Dead weight of a tariff means :

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58. Which of the following is true with regard to
g a by
a
speculative demand for money ?
(A) It is relatively inelastic at both higher and
(A) Loss in consumer welfare gained
domestic producer in the form of producer
lower interest rate surplus
(B) It is relatively elastic at both lower and
(B) Loss in consumer welfare gained by
higher interest rate
government in the form of revenue
(C) It is relatively inelastic at higher interest

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c. o(D) Neither (A) nor (B)
rate and elastic at lower interest rate (C) Both (A) and (B)

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(D) It is relatively inelastic at lower interest
rate and elastic at higher interest rate
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ROUGH WORK

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