UGC NET Economics Solved Question Paper 2012

UGC–NET/JRF Examination, 2012
Economics (Paper–III) Solved Paper
(Held in December 2012)

1. A demand curve, which is parallel to the horizontal axis, showing quantity, has the price elasticity equal to–
(A) Zero (B) Infinity
(C) Less than one (D) One
Ans : (B)

2. Although a monopolist can charge any price he likes, but does not charge a higher price than his equilibrium price because–
(A) Higher price means fall in total revenue
(B) Higher price can be charged only on that segment of firm's demand curve which is price inelastic implying that the marginal revenue will be negative
(C) It is inconsistent with profit maximization goal under mono-poly
(D) Marginal cost will be negative over the relevant range of output
Ans : (A)

3. Which of the following is not relevant in case of Sweezy's oligopoly model ?
(A) A price cut by a firm is followed by the price cut by the rival firms
(B) Price hike is not followed by the rival firms
(C) Firms do not react to price change made by one of the firms
(D) Firms react to all kinds of price changes made by the rival
Ans : (D)

4. Quasi rent is the reward to a factor of production which is–
(A) Economic rent in the short run but transfer earnings in the long run
(B) Transfer earnings in the short run
(C) Transfer earnings both in the short and long run
(D) Economic rent both in the short and long run
Ans : (A)

5. According to the Loanable Funds Theory, the rate of interest is a function of–
(A) Investment (B) Desire to hoard money
(C) Quantity of money (D) All the above
Ans : (D)

6. While analyzing the marginal productivity theory of distribution, Clark gave more emphasis on–
(A) Demand for Labour (B) Supply of Labour
(C) Both Demand as well as Supply of Labour (D) Profit Maximization
Ans : (A)

7. A general equilibrium is defined as a state in which all economic units maximize their respective objective functions, all prices are simultaneously in equilibrium and all markets are cleared. The statement is–
(A) Correct (B) Not correct
(C) Perfectly correct (D) None of the above
Ans : (A)

8. According to Mundell in an optimum currency area, the achievement of internal and external balance is possible through–
(A) Capital flows (B) Inflow of funds from abroad
(C) Official development assistance (D) The mobility of factors
Ans : (D)

9. An agreement between two countries to maintain a free trade area, a common external tariff, free mobility of capital and labour and degree of unification in government policies and monetary policy is called–
(A) Common market (B) Free trade area
(C) Economic union (D) Customs union
Ans : (C)

10. The core principles of multi lateral trading system are–
I. Non-Discrimination II. Reciprocity
III. Protectionism IV. Domestic Safeguards
Select the right code form the list given below–
(A) I, II and IV are correct
(B) II and III are correct
(C) II, III and IV are correct
(D) I and II are correct
Ans : (A)

11. Assertion (A) : Many developing countries contend that labour standards constitute a barrier to free trade.
Reason (R) : Their competitive advantage in the global economy is cheap labour.
(A) Both (A) and (R) are true, but (R) is not the correct explanation of (A)
(B) Both (A) and (R) are true and (R) is the correct explanation of (A)
(C) (A) is false, but (R) is true
(D) (A) is true, but (R) is false
Ans : (B)

12. Arrange in order the WTO ministerials–
I.  Geneva II. Doha
III. Hong Kong IV. Seattle
(A) II, IV, III, I  (B) III, IV, I, II
(C) IV, II, III, I  (D) I, IV, II, III
Ans : (D)

13. What does Hedging mean ?
(A) The acceptance of a foreign exchange risk
(B) The covering of a foreign exchange risk
(C) Foreign exchange speculation
(D) Foreign exchange arbitrage
Ans : (B)

14. In which terms a unit of SDR was originally denominated ?
(A) The world marked value of U.S. Dollar
(B) The gold value equivalent of one US Dollar
(C) the Pound-Sterling
(D) The German Mark
Ans : (B)

15. Which of the following is an adverse effect of Euro Currency Market ?
(A) International Capital Market
(B) Decrease in World's Nominal Money Supply
(C) Integration of International Capital Markets
(D) Meeting BOP Deficit
Ans : (B)

16. Employment Guarantee Scheme was first introduced in–
(A) Gujarat (B) Madhya Pradesh
(C) Maharashtra (D) Tamil Nadu
Ans : (C)

17. According to Weber's Theory of Location, the important factors influencing location are–
1. Transport Cost 2. Land Cost
3. Labour Cost 4. Innovation Cost
Choose tile correct code–
(A) 1 and 2  (B) 2 and 3
(C) 1 and 3  (D) 1 and 4
Ans : (C)

18. Given below are two statements, one labelled as assertion (A) and the other labelled as reason (R).
Assertion (A) : India's Public sector helped in the development of a sound industrial base.
Reason (R) : Public sector is under State control. The role of State in formulating appropriate policies and providing financial and other support has helped the public sector.
(A) (A) is correct, but (R) is wrong
(B) Both (A) and (R) are correct
(C) (A) is wrong, but (R) is correct
(D) Both (A) and (R) are wrong
Ans : (B)

19. Match labour force with the appropriate item from amongst the following–
(A) Workforce  (B) All educated
(C) Employed+ Unemployed (D) All rural workers
Ans : (C)

20. There are four phases of a business cycle. Identify the correct sequence of the occurrence of these phases–
(A) Recovery, Recession, Expansion, Depression
(B) Recovery, Expansion, Depression, Recession
(C) Depression, Expansion, Recession, Recovery
(D) Recovery, Expansion, Recession, Depression
Ans : (D)

21. The production of ‘finished steel’ in India, since independence, has increased over–
(A) 10 times  (B) 20 times
(C) 30 times  (D) 50 times
Ans : (D)

22. The concept of 'Effective Revenue Deficit' has been. used for the first time in the Union Budget for–
(A) 2009-10  (B) 2010-11
(C) 2011-12  (D) 2008-09
Ans : (C)

23. Which tax is likely to contribute maximum to the Central Government tax revenue during the year 2011–12 ?
(A) Central Excise Duty (B) Customs Duties
(C) Income Tax (D) Corporate Tax
Ans : (D)

24. Gross fiscal deficit of the State Governments is financed by–
I. Market Borrowings
II. Printing of Currency
III. Loans from the Central Government
IV. External Borrowings
Find the correct answer from the given codes–
Codes :
(A) I, II and III are correct (B) II, III and IV are correct
(C) I and III are correct (D) II and IV are correct
Ans : (C)

25. Match the items of List–I with the items of List–II from the given codes–
(a) Canons of Taxation
(b) Canons of Public Expenditure
(c) Effective incidence of Tax
(d) Benefits received approach of Public Expenditure
1. U.K. Hicks 2. Adam Smith
3. Findlay Shirras 4. Erik Lindahl
 (a)  (b)  (c)  (d)
(A)  2  3  1  4
(B)  1  2  3  4
(C)  2  3  4  1
(D)  4  1  2  3
Ans : (A)

26. Assertion (A) : During the financial year 2011-12, the Central Government is not likely to achieve the target of raising Rs. 40,000 crores through disinvestment policy .
Reason (R) : Policy of increased public borrowing to bridge the fiscal gap is justified.
In the context of the above two statements, which one is correct from the given ?
(A) Both (A) and (R) are correct and (R) is the correct explanation of (A)
(B) Both (A) and (R) are correct, but (R) is not the correct explanation of (A)
(C) (A) is correct, but (R) is incorrect
(D) (R) is correct, but (A) is incorrect
Ans : (C)

27. Arrange the following Reports in chronological order from the given codes–
I. Direct taxes Enquiry Committee Final Report
II. Final Report on Rationalizing and Simplification of the Tax Structure
III. Indian Tax Reforms-Report of a Survey
IV. Taxation Enquiry Commission
Codes :
(A) IV, III, II, I  (B) I, II, III, IV
(C) III, I, IV, II  (D) II, III, I, IV
Ans : (A)

28. The most important characteristics of a federation is–
(A) Centre's Supremacy over States
(B) Non-correspondence between the functions and resources of the Centre and State Governments
(C) Perfect match between the functions and resources of the Central and State Governments
(D) None of the above
Ans : (B)

29. Which of the following statement is false ?
(A) In dynamic multiplier there is lagged relationship between consumption and disposable income
(B) The dynamic multiplier process can be presented as a decreasing geometric series of change in income in the following period
(C) A major portion of the multiplier effect is realized in fewer periods when the marginal propensity to consume is smaller
(D) A major portion of the multiplier effect is realized in fewer periods when the marginal propensity to consume is larger
Ans : (C)

30. According to which of the following hypotheses, consumption is irreversible ?
(A) Absolute Income Hypothesis (B) Relative Income Hypothesis
(C) Permanent Income Hypothesis (D) Life Cycle Hypothesis
Ans : (B)

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