ECONOMICS
(Maximum Marks: 80)
(Time allowed: Three hours)
(Candidates are allowed additional 15 minutes for only reading the paper.
They must NOT start writing during this time.)
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Answer Question 1 (compulsory) from Part I and five questions from Part II.
The intended marks for questions or parts of questions are given in brackets [ ].
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PART I (20 Marks)
Answer all questions.
Question 1
Answer briefly each of the following questions (i) to (x): [10 2]
(i) What is meant by ex-ante demand and ex-post demand?
(ii) What is short run production function? Explain how is short run production
function different from long run production function.
(iii) Explain one main feature of each:
(a) Monopsony market.
(b) Monopoly market.
(iv) How is elasticity of supply different from supply of a commodity?
(v) What is direct tax?
(vi) Give two differences between time deposit and demand deposit.
(vii) Explain with the help of an example, the problem of double counting while
calculating national income.
(viii) Give a reason for each of the following:
(a) The demand for a good increases when the income of the consumer
increases.
(b) X and Y are substitute goods. A rise in the price of X results in a rightward
shift of the demand curve of Y.
(ix) Write any two differences between balance of trade and balance of payment.
(x) Explain the shape of MC curve.
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PART II (60 Marks)
Answer any five questions.
Question 2
(a) Explain with the help of a diagram the relationship between total utility and [3]
marginal utility.
(b) Find the elasticity of demand of x and y on the basis of the demand schedule given [3]
below and specify which one is more elastic:
Good x Good y
Px (Rs.) Dx (units) Py (Rs.) Dy (units)
8 10 8 10
4 12 6 25
(c) Explain any four reasons for the demand curve to be downward sloping. [6]
Question 3
(a) The difference between AC curve and AVC curve decreases with increase in output [3]
but the two curves never touch each other. Justify the statement with the help of a
diagram.
(b) Explain any two characteristics of an indifference curve. [3]
(c) Discuss producer’s equilibrium in perfect competition, using MR and MC approach. [6]
Question 4
(a) Fill the blanks in the table given below: [3]
No. of workers T.P. A.P. M.P.
1 -- 150 --
2 230 -- --
3 -- -- 120
(b) What is meant by floor price? Explain its impact on producers. [3]
(c) Explain any four features of oligopoly market. [6]
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Question 5
(a) Explain two causes of increasing returns to a factor. [3]
(b) Differentiate between real cost and money cost with the help of examples. [3]
(c) Discuss four determinants of supply of a commodity. [6]
Question 6
(a) Explain how fiscal policy measures can be used to reduce excess demand in an [3]
economy.
(b) Define marginal propensity to consume. How is it different from marginal [3]
propensity to save?
(c) Explain how equilibrium level of income can be determined with the help of [6]
aggregate demand curve and aggregate supply curve.
Question 7
(a) What is meant by budget of the government? Give two differences between revenue [3]
expenditure and capital expenditure.
(b) Discuss the following methods of debt redemption: [3]
(i) Refunding
(ii) Debt conversion
(c) Explain four measures to correct disequilibrium in the balance of payment. [6]
Question 8
(a) What is meant by repo-rate and reverse repo-rate? [3]
(b) Explain the following contingent functions of money: [3]
(i) Employment of factor inputs.
(ii) Basis of credit system.
(c) Discuss four qualitative measures of the Central Bank to control credit in the [6]
economy.
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Question 9
(a) Distinguish between real GDP and nominal GDP. Which of these is a better [3]
indicator of economic welfare and why?
(b) Draw a diagram to show the circular flow of income in a two sector model with [3]
leakage and injection.
(c) Calculate GNP at FC from the following data by using income method and [6]
expenditure method:
Item ₹ in crores
(i) Operating surplus 600
(ii) Exports 30
(iii) Imports 60
(iv) Private final consumption expenditure 1000
(v) Net indirect tax 60
(vi) Compensation of employees 900
(vii) Mixed income of self employed 160
(viii) Gross domestic capital formations 330
(ix) Depreciation 30
(x) Net factor income from abroad (-20)
(xi) Govt. final consumption expenditure 450
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