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Economics Questions and Answers for Competitive Exams | Indian Economy Quiz Set 20

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Questions
1 Originally, the maximum and minimum limits of the Statutory Liquidity ratio prescribed in India was
1 40 percent and 20 percent
2 40 percent and 25 percent
3 30 percent and 25 percent
4 30 percent and 20 percent

Answer:40 percent and 25 percent
2 Who among the following economists considered the rate of interest to influence the transaction demand for money ?
1 P. Samuelson
2 W. J. Baumol
3 Keynes
4 I. Fisher

Answer: W. J. Baumol
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3 Among other things, which one of the following was the purpose for which Deepak Pareksh Committee was constituted ?
1 To study the socio-economic conditions of minority communities.
2 To suggest the measures for financing the development of infrastructure.
3 To frame the policies on genetically modified seeds.
4 To suggest measures to reduce the fiscal deficit in the Union Budget.

Answer: To suggest the measures for financing the development of infrastructure.
4 Which Finance Commission has used forest cover as a criterion for horizontal distribution of resources in India ?
1 10th Finance Commission
2 12th Finance Commission
3 13th Finance Commission
4 14th Finance Commission

Answer:14th Finance Commission
5 Who among of the following is associated with the theory of optimal taxation ?
1 H. Dalton
2 R.A. Musgrave
3 U.K. Hicks
4 G. Mankiw

Answer: G. Mankiw
6 To reach an economically efficient output level, the size of an excise tax imposed on a firm generating negative externality should be
1 the firm’s marginal cost
2 the social marginal cost
3 the difference between the social marginal cost and the firm’s marginal cost
4 the sum of the social marginal cost and the firm’s marginal cost.

Answer:the difference between the social marginal cost and the firm’s marginal cost
7 Which among the following is the reason for Convergence exhibited by the Solow growth model ?
1 Static capital-labour ratio.
2 Declining marginal productivity of capital.
3 Neutral technical progress.
4 Constant rate of growth of population

Answer:Declining marginal productivity of capital.
8 Who among the following economists was not concerned with the problem of surplus labour ?
1 W.A. Lewis
2 Gustav Renis and Fei
3 R. Nurkse
4 J.S. Mill

Answer:J.S. Mill
9 For the Harrod’s model of growth, which among the following production functions best matches with the assumptions of the model ?
1 Leontief production function
2 Homogeneous production function
3 C.E.S. production function
4 Well-behaved production function

Answer:Leontief production function
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10 New Keynesian economics challenges which among the following schools of thought regarding the full adaptability of a policy change on the part of economic agents ?
1 New classical economics
2 Neo Keynesians
3 Monetarists
4 Both (1) and (2) above

Answer:New classical economics
11 Who among the following developed the ‘Wage-goods model’ of planning ?
1 A.K. Sen
2 P.C. Mahalanobis
3 R. Nurkse
4 C.N. Vakil and P.R. Brahmanand

Answer:C.N. Vakil and P.R. Brahmanand
12 A key property of A.K. model is
1 absence of diminishing returns with respect to capital.
2 a sustained dose of autonomous investment.
3 a command economic system.
4 a high probability of the poorer economies to catch up with the developed economies.

Answer:absence of diminishing returns with respect to capital.
13 In Pasinetti’s model of growth the interplay among which variables is crucial ?
1 Profit rate, Economic growth, Savings.
2 Profit rate, Distribution of income and economic growth.
3 Profit rate, autonomous investment and economic growth.
4 Savings, Investment and technology.

Answer: Profit rate, Distribution of income and economic growth.
14 Which among the following will constitute Foreign Direct Investment (FDI) ?
1 Buying a company in the target country.
2 Expanding operations of an existing business in that country.
3 Investing in the shares and stocks of companies in the capital market.
4 Both (1) and (2).

Answer:Both (1) and (2).
15 When two or more countries enter into an agreement to eliminate import quota and tariffs and promote trade among themselves, such a group of countries are said to form a
1 Free Trade Area
2 Custom Union
3 A Common Market
4 Both (2) and (3)

Answer:Free Trade Area

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