Time: 2\u00bd Hours<\/span> General Instructions to candidates<\/span><\/p>\n (Qn. No. 1 to 4) Choose the correct answer for the following. Each carries one score. (5 \u00d7 1 = 5)<\/span><\/p>\n Question 1. Question 2. Question 3. Question 4. Question 5. Answer:<\/p>\n Answer all questions from 6 to 14. Each question carries 2 Scores. (9 \u00d7 2 = 18)<\/span><\/p>\n Question 6. Question 7. Question 8. Answer: Question 9. Question 10. Answer: Question 11. Question 12. Question 13. Question 14. Answer any 6 questions from 15 – 21. Each carries 3 scores. (6 \u00d7 3 = 18)<\/span><\/p>\n Question 15. Question 16. Question 17. Question 18. Question 19. Question 20. Question 21. Long run production function:<\/p>\n Answer any 4 of the following from 22 – 27. Each carries 5 scores. (4 \u00d7 5 = 20)<\/span><\/p>\n Question 22. b) This leads to the following situations<\/p>\n Question 23. Question 24. Question 25. Question 26. Second stage: In this stage the marginal product decreases. Here the TP increases at a decreasing rate. This stage is known as diminishing returns to a factor.<\/p>\n Third stage: Here the marginal product becomes negative. Therefore the total product decreases. This stage is known as stage of negative returns to a factor.<\/p>\n Question 27. Features: Answer any 2 of the following from 28 – 30. Each question carries 8 scores. (8 \u00d7 3 = 24)<\/span><\/p>\n Question 28. The instruments which RBI uses for conducting monetary policy are as follows. 2) Bank Rate Policy: As mentioned earlier, RBI can affect the reserve deposit ratio of commercial banks by adjusting the value of the bank rate – which is the rate of interest commercial banks have to pay RBI – if they borrow money from it in case of shortage of reserves. A low (or high) bank rate encourages banks to keep smaller (or greater) proportion of their deposits as reserves, since borrowing from RBI is now less (or more) costly than before.<\/p>\n 3) Varying Reserve Requirements: Cash Re\u00acserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) also work through the rdr-route. A high (or low) value of CRR or SLR helps increase (or decrease) the value of reserve deposit ratio, thus diminishing (or increasing) the value of the money multiplier and money supply in the economy in a similar fashion.<\/p>\n 4) Sterilization by RBI: RBI often uses its instruments of money creation for stabilizing the stock of money in the economy from external shocks. This operation of RBI is known as sterilization.<\/p>\n c) Open market operations<\/p>\n Question 29. Amount
\nCool off time : 15 Minutes<\/span><\/p>\n\n
\nCentral problems of an economy arises due to which one of the following:
\na) Relative scarcity of resources.
\nb) Abundance of labour and capital.
\nc) Limited human wants.
\nd) None of the above.
\nAnswer:
\na) Relative scarcity of resources.<\/p>\n
\nThe GDP and GNP of an economy will be equal when:
\na) The value of Net Factor Income from abroad positive.
\nb) The value of Net Factor Income from abroad negative.
\nc) The value of Net Factor Income from abroad zero.
\nd) The value of Net Factor Income from abroad equals 1.
\nAnswer:
\nc) The value of Net Factor income from abroad zero.<\/p>\n
\nThe ratio between stock of money supply and stock of high powered money is:
\na) Currency Deposit Ratio (RDR)
\nb) Reserve Deposit Ratio (RDR)
\nc) Open Economy Multiplier
\nd) Money Multiplier
\nAnswer:
\nd) Money multiplier<\/p>\n
\nWrite the economic term for the following:
\na) The situation when people become more thrifty, the economy will end-up saving less.
\nb) The receipts of the Govt, which create liability or reduce financial assets.
\nAnswer:
\na) Paradox of thrift
\nb) Capital receipts<\/p>\n
\nMatch column B and C with A.<\/p>\n\n\n
\n A<\/td>\n B<\/td>\n C<\/td>\n<\/tr>\n \n a) Monopolistic Competition<\/td>\n i) Single Seller<\/td>\n i) Differentiated products<\/td>\n<\/tr>\n \n b) Monopoly<\/td>\n ii) A few sellers<\/td>\n ii) Homogeneous or Differentiated products<\/td>\n<\/tr>\n \n c) Oligopoly<\/td>\n iii) Fairly large number of cells<\/td>\n iii) Absence of substitutes<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \n\n
\n A<\/td>\n B<\/td>\n C<\/td>\n<\/tr>\n \n a) Monopolistic Competition<\/td>\n i) Fairly large number of cells<\/td>\n i) Differentiated products<\/td>\n<\/tr>\n \n b) Monopoly<\/td>\n ii) Single Seller<\/td>\n ii) Absence of substitutes<\/td>\n<\/tr>\n \n c) Oligopoly<\/td>\n iii) A few sellers<\/td>\n iii) Homogeneous or Differentiated products<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
\nTwo short run product curves of a firm are given below:
\n![\"Plus](\"https:\/\/www.aplustopper.com\/wp-content\/uploads\/2019\/01\/Plus-Two-Economics-Previous-Year-Question-Paper-March-2018-1.png\")
\na) Name the curve (1) and curve (2) in the diagram
\nb) Write any one relationship between the two curves.
\nAnswer:
\na) MP curve (1) and AP curve (2)
\nb) When the value of MP is greater than \u2018AP\u2019 then AP increases.
\nWhen the of MP is less than the value of \u2018AP\u2019 then AP decreases.<\/p>\n
\nThe demand and supply function of a commodity are given below:
\nqD<\/sup> = 80 – 2P
\nqS<\/sup> = 60 + 2P
\nFind the equilibrium price and equilibrium quantity.
\nAnswer:
\nAt equilibrium qD = qs
\n80 – 2P = 60 + 2P
\n80 – 60 = 2P + 2P
\n20 = 4P
\nqD<\/sup> = 80 – 2p = 80 – 2 \u00d7 5 = 80 – 10 = 70
\nequilibrium price = 5
\nequilibrium quantity = 70<\/p>\n
\nFollowing data shows the level of total expenditure of an economy during a particular year. Calculate GDPMP<\/sub><\/p>\n\n\n
\n Items<\/td>\n \u20b9 in crores<\/td>\n<\/tr>\n \n a) Private final consumption expenditure (C)<\/td>\n 6,500<\/td>\n<\/tr>\n \n b) Government consumption and investment expenditure (G)<\/td>\n 5,000<\/td>\n<\/tr>\n \n c) Private Final Investment Expenditure (I)<\/td>\n 4,000<\/td>\n<\/tr>\n \n d) Export (X)<\/td>\n 600<\/td>\n<\/tr>\n \n e) Import (M)<\/td>\n 900<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
\nGDPMP<\/sub> = C + I + G + (X – M)
\n= 6500 + 5000 + 4000 + 600 – 900
\nGDPMP<\/sub> = 15200<\/p>\n
\nCalculate price elasticity of demand at point A and B by using geometric equation from the following linear demand curve.
\n![\"Plus](\"https:\/\/www.aplustopper.com\/wp-content\/uploads\/2019\/01\/Plus-Two-Economics-Previous-Year-Question-Paper-March-2018-2.png\")
\nAnswer:
\nA = |eD<\/sub>| > I
\nB = |eD<\/sub>| < I<\/p>\n
\nFollowing data shows the money supply of an economy. Calculate M1<\/sub> and M3<\/sub>.<\/p>\n\n\n
\n Items<\/td>\n \u20b9 in crores<\/td>\n<\/tr>\n \n a) Total currency notes and coins with the public<\/td>\n 20,000<\/td>\n<\/tr>\n \n b) Net demand deposits with commercial banks<\/td>\n 40,000<\/td>\n<\/tr>\n \n c) Savings deposits with post office Savings Bank<\/td>\n 1,000<\/td>\n<\/tr>\n \n d) Net time deposits with the commercial banks<\/td>\n 3,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
\nM1<\/sub> = Cu + DD
\nCu = Currency and coins held by the public
\nDD = Demand deposits in commercial banks
\n= 20,000 + 40,000 = 60,000
\nM3<\/sub> = M1<\/sub> + Net time deposits with the commercial banks.
\n= 60,000 + 3,000 = 63,000<\/p>\n
\n\u201cTotal Revenue curve of a firm under perfect competition is an upward sloping straight line passing through origin.\u201d Give two points to support the statement.
\nAnswer:<\/p>\n\n
\nFollowing are the two statements that the consumers and investors of an economy can enjoy with foreign trade.
\nStatement 1: Consumers and firms have the opportunity to choose between domestic and foreign goods.
\nStatement 2: Investors have the opportunity to choose between domestic and foreign assets.
\nIdentify the linkages that corresponding to each statement.
\nAnswer:
\nStatement 1: Product market linkage
\nStatement 2: Financial market linkage<\/p>\n
\nClassify the following items into Revenue Receipts and Capital Receipts.
\n(i) Government collected \u20b9 20 crores as Goods and Service Tax (GST).
\n(ii) Govt, borrowed \u20b9 50 crores from RBI by selling treasury bills.
\n(iii) Govt. raised an amount of \u20b9 10 crores through disinvestment.
\n(iv) Govt, received \u20b9 5 crores as interest receipts of loans given by Central Govt.
\nAnswer:
\nRevenue receipts: (i), (iv)
\nCapital receipts: (ii), (iii)<\/p>\n
\nDraw an imaginary production possibility Frontier and mark a point which represents fuller utilization of resources and a point which represents under utilization of resources.
\nAnswer:
\n![\"Plus](\"https:\/\/www.aplustopper.com\/wp-content\/uploads\/2019\/01\/Plus-Two-Economics-Previous-Year-Question-Paper-March-2018-3.png\")
\nPont A indicates the efficient utilization of available resources.
\nPoint B shows that the available resources of the economy are not fully utilized.<\/p>\n
\nGraphically illustrate the determination of equilibrium exchange rate under flexible exchange rate system.
\nAnswer:
\nFlexible Exchange Rate
\nIt is also known as floating exchange rate determination. Here the exchange rate is determined by the forces of demand and supply of foreign exchange. The central bank has no role in the determination of exchange rate. They do nothing to directly affect the level of the exchange rate. It can be illustrated with the help of figure.
\n![\"Plus](\"https:\/\/www.aplustopper.com\/wp-content\/uploads\/2019\/01\/Plus-Two-Economics-Previous-Year-Question-Paper-March-2018-4.png\")
\nThe exchange rate is determined at the point where the DD curve for foreign exchange cuts the supply curve.<\/p>\n
\nCalculate price elasticity of supply at points \u2018s\u2019 in the following diagrams.
\n![\"Plus](\"https:\/\/www.aplustopper.com\/wp-content\/uploads\/2019\/01\/Plus-Two-Economics-Previous-Year-Question-Paper-March-2018-5.png\")
\nAnswer:
\nA) S Elastic supply
\nB) S Unitary elastic supply
\nC) S Inelastic supply<\/p>\n
\n\u201cModern Macro economics is the off shoot of the Great Depression of 1929.\u201d – Write any three points to support the statement.
\nAnswer:<\/p>\n\n
\nThe diagram represents the profit maximizing level of output in a particular market structure.
\n![\"Plus](\"https:\/\/www.aplustopper.com\/wp-content\/uploads\/2019\/01\/Plus-Two-Economics-Previous-Year-Question-Paper-March-2018-6.png\")
\na) Identify the market structure mentioned in the diagram.
\nb) Name the curves labelled as curve (1) and curve (2).
\nc) Identify the profit maximizing level of output.
\nAnswer:
\na) Perfect competitive market
\nb) Curve (1) TC and curve (2) TR
\nc) q2<\/p>\n
\nIn an economy, if marginal propensity to consume (MPC) = 0.6 and marginal propensity to import (MPM) = 0.05, calculate:
\na) Tax Multiplier
\nb) Govt. Expenditure Multiplier
\nc) Open Economy Multiplier
\nAnswer:
\n![\"Plus](\"https:\/\/www.aplustopper.com\/wp-content\/uploads\/2019\/01\/Plus-Two-Economics-Previous-Year-Question-Paper-March-2018-7.png\")
\n![\"Plus](\"https:\/\/www.aplustopper.com\/wp-content\/uploads\/2019\/01\/Plus-Two-Economics-Previous-Year-Question-Paper-March-2018-8.png\")
<\/p>\n
\nGovernments have mostly depend on borrowings for meeting its budgetary deficits. But this Govt, debt act as a burden on future generation. Do you agree with this statement? Substantiate.
\nAnswer:
\nI agree with this statement. If the government borrow more, it may lead to a situation that the private investors cannot get enough fund from the capital market for investment. This is known as crowding out effect. So this may help the private sector to borrow more in future. The government can reduce budget deficit either through increasing taxes or by reducing public expenditure.<\/p>\n
\nClassify the followings into short run and long run production function:
\na) Law of variable proportion
\nb) Returns to scale
\nc) All inputs are variable
\nd) Some inputs kept constant
\ne) Factors are changing proportionately
\nf) Law of diminishing marginal product
\nAnswer:
\nShort run production function:<\/p>\n\n
\n
\na) Illustrate graphically the price fixation action of the government to protect the consumers from huge price rise.
\nb) State any two consequences of this action on consumers.
\nAnswer:
\na) The price determined in the market by the forces of demand and supply is very high, the common man will find it very difficult to purchase the goods. Then the government will interfere in the market. The government will fix a price that is less than the market determined price. This is known as price ceiling.
\nThis can be explained with the help of figure.
\n![\"Plus](\"https:\/\/www.aplustopper.com\/wp-content\/uploads\/2019\/01\/Plus-Two-Economics-Previous-Year-Question-Paper-March-2018-9.png\")
\nIn the diagram, \u2018ep\u2019 is the market determined equilibrium price. If this price is very high then the govt, will fix price \u2018p\u2019 which is less than market price ‘ep’.<\/p>\n\n
\nIn a two sector economy, consumption function C = 80 + 0.6 y, Autonomous Investment \\(\\overline{\\mathrm{I}}\\) = 50 crores.
\na) Calculate the value of output multiplier
\nb) Find the aggregate demand and equilibrium income in the economy.
\nc) If investment increases to \u20b9 60 crores calculate its effect on equilibrium income.
\nAnswer:
\na) Output multiplier = [\/latex]\\frac{I}{I-C}\\( = 2.5<\/p>\n
\na) List out two features of public goods.
\nb) How does private goods differ from public goods?
\nc) Give two appropriate examples for each
\nAnswer:
\na) i) Non-rivalry ii) Non-excludability
\nb) Public good is very difficult to charge price but in private good, charge price for the use.
\nc) Example of public goods are Road and National defence
\nExample of private goods are car and clothes.<\/p>\n
\nGiven the demand curve of a firm:
\n![\"Plus](\"https:\/\/www.aplustopper.com\/wp-content\/uploads\/2019\/01\/Plus-Two-Economics-Previous-Year-Question-Paper-March-2018-10.png\")
\na) Identify the market strcuture represented on the figure.
\nb) Show grahically the profit maximizing condition of the above market in the short run:
\ni) With normal profit
\nii) With abnormal profit
\nAnswer:
\na) Perfect competitive market
\nb) i) The point at which total revenue (TR) equals total cost (TC) is known as break even point.
\nAt the break even point the firm will get normal profit
\n![\"Plus](\"https:\/\/www.aplustopper.com\/wp-content\/uploads\/2019\/01\/Plus-Two-Economics-Previous-Year-Question-Paper-March-2018-11.png\")
\nIn the short run \u2018B\u2019 is the break even point or normal profit.
\nii) Profit maximisation conditions are :<\/p>\n\n
![\"Plus](\"https:\/\/www.aplustopper.com\/wp-content\/uploads\/2019\/01\/Plus-Two-Economics-Previous-Year-Question-Paper-March-2018-12.png\")
<\/p>\n
\nExplain the relationship between TP, AP and MP in the short-run with the help of a diagram.
\nAnswer:
\nThe three stages of returns to a factor can be explained through the following diagram.
\n![\"Plus](\"https:\/\/www.aplustopper.com\/wp-content\/uploads\/2019\/01\/Plus-Two-Economics-Previous-Year-Question-Paper-March-2018-13.png\")
\nFirst stage: The marginal product (MP) increases i.e. total product (IP) increases at an increasing rate. This stage is known stage of increasing returns to a factor.<\/p>\n
\nSometimes duopoly firm behave like a monopoly firm. Some other times they are competing each other. Explain the behaviour and features of Oligopoly\/Duopoly firm.
\nAnswer:
\nOligopoly:
\nThe term oligopoly has derived from two terms oligo (small) and poly (seller). Thus oligopoly is a market situation characterized by a competition among few sellers. In simple terms, it is a competition among few sellers in the market selling either homogenous or differentiated product. The industries manufacturing car, motor cycle, scooter etc. are some of the examples for oligopolistic competition.<\/p>\n
\nThe main features of oligopolistic competition are as follows:<\/p>\n\n
\nRBI reduces its rate of lending to commercial banks at 25 point basis in its third monetary policy review of 2017-18.
\na) Which policy instrument is used by RBI in the above context?
\nb) Briefly explain the operation of any three monetary policy instruments that RBI would adopt during inflation.
\nc) Name the instrument that RBI often uses for stabilizing the stock of money from external shocks.
\nAnswer:
\na) Bank rate policy
\nb) Instruments of Monetary Policy and the Reserve Bank of India.<\/p>\n
\n1) Open Market Operations: It refers to the sale and purchase of government securities by the central bank. RBI purchases government securities to the general public in a bid to increase the stock of high powered money in the economy.<\/p>\n
\na) Write down the identities of calculating GDP of an economy using three methods.
\nb) There are only 2 producting units, A and B in the economy. Calculate:
\ni) GVAMP<\/sub> of firm A.
\nii) GVAMP<\/sub> if firm B.
\nc) Calculate GDPMP<\/sub><\/p>\n\n\n
\n Items<\/td>\n \n
\n(\u20b9 in Crores)<\/p>\n<\/td>\n<\/tr>\n\n i) Sales by firm A<\/td>\n 10,000<\/td>\n<\/tr>\n \n ii) Sales by firm B<\/td>\n 20,000<\/td>\n<\/tr>\n \n iii) Change in stock of firm B<\/td>\n 2,000<\/td>\n<\/tr>\n \n iv) Change in stock of firm A<\/td>\n 500<\/td>\n<\/tr>\n \n v) Purchase of raw materials by firm A<\/td>\n 5,000<\/td>\n<\/tr>\n \n vi) Purchase of raw materials by firm B<\/td>\n 6,000<\/td>\n<\/tr>\n \n vii) Consumption of fixed capital by firm A & B<\/td>\n 1,800<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
![\"Plus](\"https:\/\/www.aplustopper.com\/wp-content\/uploads\/2019\/01\/Plus-Two-Economics-Previous-Year-Question-Paper-March-2018-14.png\")
<\/p>\n![\"Plus](\"https:\/\/www.aplustopper.com\/wp-content\/uploads\/2019\/01\/Plus-Two-Economics-Previous-Year-Question-Paper-March-2018-15.png\")