CPT: Economics

TEST PAPER-2
1. Full capacity is utilized only when there is (a) Monopoly (b) Perfect competition (c) Price discrimination (d) Oligopoly (d) 30-35%

2. In July 1991, India devalued the rupee by about (a) 10-12% (b) 15-16% (c) 18-20%

3. To economists, the main difference between the short-run and the long-run is that (a) in the short run all inputs are fixed, while in the long run all inputs are variable (b) in the short run the firm varies all of its inputs to find the least cost combination of inputs (c) in the short-run, at least one of the firms input levels is fixed (d) in the long run, the firm is making a constrained decision about how to use existing plant and equipment efficiently 4. The population of India living below the poverty line (a) is rising in relative and absolute terms (b) is falling in relative terms but rising in absolute terms
(c) is falling in both relative and absolute terms (d) has not changed at all over the years

5. Population per bank in India is (a) around 5000 (b) around 20000

(c) around 16000

(d) around 45000

6. The marginal product of a variable input is best described as: (a) total product divided by the number of units of variable input (b) the additional output resulting from a one unit increase in the variable input (c) the additional output resulting from a one unit increase in both the variable and fixed inputs (d) The ratio of the amount of the variable input that is being used to the amount of the fixed input that is being used. 7. National income of a country is also known as (a) Gross National Product at market prices (c) Gross Domestic Product at factor cost (b) Net National Product at factor cost (d) Net Domestic Product at Market prices

8. Which one of the following is the most profitable but least liquid asset of a commercial bank? (a) Loans and advances (b) Money at call and short notice (c) Bills discounted and purchased (d) Investment in government securities. 9. FRBM Act Stands for (a) Foreign responsibility and Business Management (b) Foreign Responsibility and Budget Management
(c) Fiscal Revenue and Budget Management (d) Fiscal Responsibility and Budget Management

10. The demand for a factor of production is said to be a derived demand because (a) it is a function of the profitability of an enterprise (b) it depends on the supply of complementary factors (c) its arises from the demand for the final product (d) it arises out of means being scarce in relation to wants. 11. Which of the following statements is correct? (a) Excise duty is levied on sales volume (b) Custom duties have been drastically cut down since 1991 (c) VAT has been adopted by all the states in India (d) Agriculture contributes the maximum to the direct tax revenues in India

12. In the short run, when the output of a firm increases, its average fixed cost: (a) increases (b) decreases (c) remains constant (d) first declines and then rises

13. The cost of one thing in terms of the alternative given up is known as: (a) production cost (b) physical cost (c) real cost (d) opportunity cost 14. Contraction of demand is the result of (a) decrease in the number of consumers (c) increase in the prices of other goods (b) increase in the price of the good concerned (d) decrease in the income of purchasers (d) infinite

15. The elasticity of substitution between two perfect substitutes is (a) zero (b) greater than zero (c) less than infinity

16. A vertical supply curve parallel to Y axis implies that the elasticity of supply is: (a) zero (b) infinity (c) equal to one (d) greater than Zero but less than infinity 17. Elasticity of supply refers to the degree of responsiveness of supply of a good to changes in its: (a) demand (b) price (c) costs of production (d) state of technology 18. An isoquant slopes (a) downward to the left (c) upward to the left (b) downward to the right (d) upward to the right

19. The consumer is in equilibrium when the following condition is satisfied (a) MUx /MU> Px/Py (b) MUx /MUy <Px/Py (c) MUx /MUy = Px/Py (d) None of the above 20. Generally an economy is considered underdeveloped if (a) the standard of living of people is low and productivity is also considerably very low. (b) agriculture is the main occupation of the people and productivity in agriculture is quite low (c) the production techniques are backward (d) all of the above 21. Which of the following is not a characteristic of land? (a) its supply for the economy is limited (c) its usefulness depends on human efforts 22. Who is the official lender of the last resort in India? (a) SBI (b) PNB (c) RBI (b) it is immobile (d) it is produced by our forefathers V (d) OBC

23. Which of the following statements is correct? (a) Employment and economic growth are studied in micro economics. (b) Micro economics deals with balance of trade. (c) Economic conditions of a section of the people is studied in Micro Economics. (d) External value of money is dealt with in micro-economics 24. Which of the following statements is correct? (a) The disinvestments programme: has been successfully carried out in India. (b) Privatisation upto 100 percent has been carried out in all the PSUs in India. (c) Under strategic sale method of disinvestments,, the government sells major share, to strategic buyer (d) None of the above 25. Which of the following is not a condition of perfect competition? (a) Large number of firms (b) Perfect mobility of factors (c) Informative advertising to ensure that consumers have good information (d) Freedom of entry and exit into and out of the market 26. FRBM Act stands for
(a) Fiscal Revenue and -Budget Management (b) Foreign Revenue and Business Management

(c) Fiscal Responsibility and Budget Management

(d) Foreign. Responsibility and Budget Management

27. In terms of generation of power _________s contribution, is the maximum (a) hydel (b) nuclear (c) thermal (d) others 28. _______ is the apex bank for agriculture credit in India. (a) RBI (b) SIDBI (c) NABARD 29. Price discrimination is not possible (a) under monopoly situation (c) under monopolistic competition 30. NTPC stands for (a) National Thermal Power Corporation (c) National Theological Power Corporation 31. Most of the unemployment in India is (a) voluntary (b) structural 32. What is Indias rank in world population? (a) First (b) Second (d) ICICI

(b) under any market form (d) under perfect competition (b) National Tidal Power Corporation (d) National Talent and Potential Corporation (c) frictional (c) Third (d) technical (d) Fourth

33. In both the Chamberlin and kinked demand curve models, the oligopolists (a) recognize their independence (b) do not collude (c) tend to keep prices constant (d) all of the above 34. Personal disposable income refers to: (a) the income of the person after all personal taxes are deducted (b) total income earned by the person (c) personal taxes paid to the government (d) personal and indirect taxes paid to the government 35. Which one of the following has NOT been a part of the land reforms programme in India? (a) Ceiling on holding (b) Consolidation of holdings (c) Agricultural holding tax (d) Zamindari abolition 36. Which of the following statements is incorrect regarding Disinvestment? (a) Government has not failed to raise the budget disinvestments in the capital market (b) The procedure adopted for disinvestment has suffered from adhocism in the absence of a, long term policy (c) It means selling of Govt. Share in the PSU to other PSU or Private Sector or Banks (d) It has been too insignificant to affect either the structure of management or the working environment of the PSU in India 37. Disguised unemployment in India is maximum in (a) agricultural sector (b) secondary sector 38. Which of the following is an economic activity?
(a) Listening to music on the radio (c) Medical facilities rendered by a charitable dispensary (b) Teaching own son at home (d) A housewife doing household duties

(c) tertiary sector

(d) none of the above

39. Which of the following is incorrect? (a) GDP at market price = GDP at factor cost plus net indirect taxes (b) NNP at factor cost = NNP at market price minus indirect taxes (c) GNP at market price = GDP at market puce plus net factor income from abroad (d) None of the above 40. A monopolist is able to maximize his profits when: (a) his output is maximum (b) he charges a high price

(c) his average cost is minimum

(d) his marginal Cost is equal to marginal revenue.

41. The Twelfth Five Year Plan (2012-2017) outlines a strategy to achieve a GDP growth rate of (a) 6 per cent (b) 8 per cent (c) 10 percent (d) 12 per cent 42. A Central Bank differs from a commercial bank in that (a) it has no branches (b) It is the banker of the government (c) It deals with general public (d) None of the above 43. Open market operations by a Central bank involve (a) sale and purchase of government securities (b) increase and. decrease of discount rate
(c) changing the reserve ratio up and down (d) raising or lowering of the margin requirements

44. At shut down point (a) price is equal to AVC (c) total loss of the firm is equal to TFC

(b) total revenue is equal to TVC (d) all of the above

45. Which one of the following agencies in India is responsible for computation of national income? (a) NCAER (b) CSO (c) NSS (d) RBI 46. The IC curve approach assumes (a) rationality (b) consistency (c) transitivity (d) all of the above

47. The majority of Central Government enterprises belongs to the (a) Public corporations (b) Public limited companies (c) Private Limited companies (d) Departmental organizations 48. The indifference curve approach does not assume (a) Rationality on the parts of consumers (b) Ordinal measurement of satisfaction (c) Consistent consumption pattern behaviour of consumers (d) Cardinal measurement of utility 49. All of the following are characteristics of a monopoly except? (a) there is a single firm (b) the firm is a price taker (c) the firm produces a unique product (d) the existence of some advertising 50. Which of the following is not a characteristic of a Price taker? (a) TR= PXQ (b) AR Price (c) Negatively sloped demand curve (d) Marginal Revenue = Price