UGC NET Economics Mock (January 2021) Leave a Comment / By admin / January 5, 2021 January 5, 2021 Welcome to the UGC NET Economics Online Mock Exam conducted by Economics Harbour. Pattern: 100 Questions Time: 2 hours Name Email Id 1. Consider the following statements: When MC curve is below the AC curve then the AC curve must be rising. When MC curve is above the AC curve, then the AC curve must be falling. MC curve intersects AC curve at the point where AC is constant. Which of the above statements is/are correct? a. 3 only b. 1 and 2 c. 1, 2 and 3 d. 1 and 3 2. In an Edgeworth production box, the only possible positions of equilibrium is a. the isoquants are tangent to one another b. the isoquants intersect each other c. the marginal products of the inputs are equal d. both B and c 3. Which one of the following statements in case of balanced budget multiplier is incorrect? a. The value of balanced budget multiplier is unity in case of autonomous taxes. b. The value of balanced budget multiplier is less than unity in case of proportional taxes. c. The value of balanced budget multiplier is always unity no matter whether the taxes are autonomous or proportional. d. The value of Government expenditure multiplier is more than the value of tax multiplier. 4. Given that C = currency with the public, DD = Demand Deposits, TD = Time Deposits and R = Cash balances with the commercial banks, then high powered money is defined as a. C + DD b. C + R c. C + TD d. C + DD + TD 5. Based on accelerator-multiplier interaction, whose theory of trade cycles generates constrained cycles? a. Hicks b. Kaldor c. Samuelson d. Baumol 6. The practices of transfer pricing in the open economy is resorted to by a. Mutual Funds b. Institutional Investors c. Multinational Corporations d. Private Banks 7. The Human Development Index was first developed by a. UNDP b. IMF c. UNICEF d. UNCTAD 8. Which one of the following is not an instrument of fiscal policy? a. Public Revenue b. Public Expenditure c. Public Borrowing d. Cash Reserve Ratio 9. The Law of Diminishing Returns to Scale holds true in the a. Market period b. Short period c. Long Period d. Secular Period 10. Raul Prebisch’s argument is concerned with the effects of business cycles on a. Terms of trade b. Balance of Payments c. Output d. Consumption 11. The difference between the export and import of services is called a. Balance of Trade b. Balance of Invisibles c. Balance of Current Account d. Balance of Capital Account 12. Assertion: Under monopolistic competition, the long run average revenue of a firm is tangent to the negatively sloping portion of the long run average cost curve. Reason: The demand curve facing the firm under monopolistic competition is relatively more elastic. a. Both A and R are true, but R is the correct explanation of A. b. A is true but R is false c. Both A and R are false d. Both A and R are true, but R is not the correct explanation of A. 13. Assertion: According to Gunnar Myrdal, there exists a circular and cumulative causation in under-developed countries. Reason: There is a mutually reinforcing interaction between low living levels and low productivity. a. Both A and R are true, but R is the correct explanation of A. b. A is true but R is false c. Both A and R are false d. Both A and R are true, but R is not the correct explanation of A. 14. Assertion: Laspeyer’s index has an upward bias. Reason: Paasche’s index has a downward bias. a. Both A and R are true, but R is the correct explanation of A. b. A is true but R is false c. Both A and R are false d. Both A and R are true, but R is not the correct explanation of A. 15. Assertion: In a bell-shaped distributive curve, the value of Mean, Median and Mode would be identical. Reason: There is no skewness in the series. a. Both A and R are true, but R is the correct explanation of A. b. A is true but R is false c. Both A and R are false d. Both A and R are true, but R is not the correct explanation of A. 16. Assertion: Colin Clark hypothesised that the safe upper limit of taxation is 25 per cent of national income. Reason: The excess burden of taxation will be very high if it goes beyond the 25 per cent limit. a. Both A and R are true, but R is the correct explanation of A. b. A is true but R is false c. Both A and R are false d. Both A and R are true, but R is not the correct explanation of A. 17. The sequence of operation of the transmission of a change in monetary policy is Changes in real money supply Adjustment in output Adjustment in spending Changes in interest rates and asset prices a. 1-2-4-3 b. 1-2-3-4 c. 1-4-3-2 d. 1-3-2-4 18. Assertion: Cumulative causation is an explanation of backwardness of developing nation. It is a hypothesis of geographical dualism. Reason: Expansion in a favoured region has a backwash effect on other regions causing regional disparities. a. Both A and R are true, but R is the correct explanation of A. b. A is true but R is false c. Both A and R are false d. Both A and R are true, but R is not the correct explanation of A. 19. The value of Special Drawing Right at present is determined in the international market by a. The price of gold. b. The value of US dollar c. The average value of the basket of a set of convertible currencies d. Euro 20. The geometric mean of the numbers 2, 4, 0, 16, 32 will be equal to a. 3.2 b. 4.0 c. 2.0 d. 0 21. A weighted price index that uses the arithmetic average of the base period and given period quantities as weights is known as a. Paasche’s index b. Marshall-Edgeworth index c. Fisher’s ideal index d. Laspeyer’s index 22. Pareto Optimality can take place at any point on a. Laffer curve b. Engel curve c. Contract curve d. Lorenz curve 23. In case of proportional relation between consumption and income a. APC > MPC b. APC = MPC c. APC < MPC d. APC = MPS 24. Taxes raised are credited into a. Consolidated Fund b. Contingency Fund c. Public Accounts d. Private accounts 25. Assertion: Giffen goods have a positively sloped demand curve. Reason: The positive substitution effect in their case is more than offset by negative income effect. a. Both A and R are true, but R is the correct explanation of A. b. A is true but R is false c. Both A and R are false d. Both A and R are true, but R is not the correct explanation of A. 26. Assertion: According to Hicks, trade cycle occurs due to the interaction etween multiplier and accelerator. Reason: In Hicksian business cycle theory, accelerator is impotent in the depression phase. a. Both A and R are true, but R is the correct explanation of A. b. A is true but R is false c. Both A and R are false d. Both A and R are true, but R is not the correct explanation of A. 27. Paul Sweezy used kinked demand curve to explain a. Price determination in oligopoly. b. Price rigidity in oligopoly c. Profit maximisation in oligopoly d. Price output determination in oligopoly 28. According to Milton Friedman quantity theory of money is the theory of a. Prices b. Income c. Demand for money d. Supply of money 29. Your new question! 30. According to Marx increase in the organic composition of capital leads to a. increase in the rate of growth of economy b. increase in employment c. decrease in the rate of profit d. increase in the rate of profit 31. Excess burden of tax means a. the net welfare loss from a tax b. very heavy burden c. burden over and above the money burden d. money burden and real burden 32. The probability distribution in which mean and variance are equal a. Poisson b. Binomial c. Normal 33. Assertion: In the heydays of planning, Amartya Sen advocated the advocated the adoption of capital intensive technique for Indian. Reason: India was a relatively labour abundant country. a. Both A and R are true, but R is the correct explanation of A. b. A is true but R is false c. Both A and R are false d. Both A and R are true, but R is not the correct explanation of A. 34. Assertion: Neutral taxes are feasible. Reason: Neutral taxes have no excess burden. a. Both A and R are true, but R is the correct explanation of A. b. A is true but R is false c. Both A and R are false d. Both A and R are true, but R is not the correct explanation of A. 35. Chamberlin introduced the concept of cost known as a. fixed cost b. floating cost c. selling cost d. variable cost 36. Knife-edge problem arises in a. Solow model b. Kaldor model c. Joan Robinson model d. Harrod-Domar model 37. The term of Hindu rate of growth was coined by a. Gadgil b. Chakravarty c. Bhagwati d. Raj Krishna 38. Assertion: An individual values mean return on investment, but dislikes variance. Reason: Individuals are generally averse to risk. a. Both A and R are true, but R is the correct explanation of A. b. A is true but R is false c. Both A and R are false d. Both A and R are true, but R is not the correct explanation of A. 39. Assertion: Indifference curve are convex to the origin. Reason: The Law of Diminishing Marginal Utility is excepted in the discipline of Economics. a. Both A and R are true, but R is the correct explanation of A. b. A is true but R is false c. Both A and R are false d. Both A and R are true, but R is not the correct explanation of A. 40. Assertion: Price leadership is tacit. Reason: Open collective agreements are illegal in most countries. a. Both A and R are true, but R is the correct explanation of A. b. A is true but R is false c. Both A and R are false d. Both A and R are true, but R is not the correct explanation of A. 41. Read the passage given below and answer the following questions The more difficult task of ensuring global economic stability was assigned to the IMF. Those who convened Bretton Woods had the global depression of the 1930s very much on their minds. Almost three quarters of a century ago, capitalism faced the most severe crisis to date. The Great Depression enveloped the whole world and led to unprecedented increases in unemployment. At the worst point, a quarter of America’s workforce was unemployed. The British Economist John Maynard Keynes, who would later be a key participant at Bretton Woods, put forward a simple explanation, and a corresponding simple set of prescriptions; lack of sufficient aggregate demand explained economic downturns; government policies could help stimulate aggregate demand. In cases where monetary policy is ineffective, governments could rely on fiscal policies, either by increasing expenditures or cutting taxes. While the models underlying Keynes’ analysis have subsequently been criticised and refined, bringing a deeper understanding of why market forces do not work quickly to adjust the economy to full employment, the basic lesions remain valid. The IMF was assigned a. the tax of accelerating economic growth of the world. b. the task of controlling inflation in the world economy. c. the task of ensuring economic stability in the world economy d. the task of removing imbalances from USA. 42. During the Great Depression a. Unemployment rate in the world was 25% b. Unemployment rate in England was 20% c. Unemployment rate in USA was 25% d. Unemployment rate in India was 20% 43. According to Keynes, the cause for the unprecedented global depression of the 1930s was a. High interest rate in USA b. Low interest rate in UK c. Breakdown of the gold standard d. Lack of sufficient aggregate demand 44. Keynes’ prescription to fight global depression was that a. The government should pursue active monetary policy. b. The government should pursue a combination of fiscal policy and monetary policy. c. The government should pursue fiscal policy where monetary policy is ineffective. d. The government should have a policy of balanced budget. 45. A ridgeline is a locus of such points where marginal productivity of a factor input is a. equal to zero b. greater than zero c. negative d. equal to one 46. Square root formula for money demand was developed by which of the following Milton Friedman James Tobin A.C. Pigou William Baumol a. 1 and 2 b. 1 and 3 c. 2 and 4 d. 2 and 3 47. Disposable income in national accounts is calculated as a. GDP + Net Income from abroad + Transfer Payments – Taxes – Undistributed profit b. GNP + Net Income from abroad + Transfer Payments – Taxes + Undistributed profit c. GDP – Net Income from abroad + Transfer Payments – Taxes + Undistributed profit d. GNP – Net Income from abroad + Transfer Payments – Taxes + Undistributed profit 48. Physical Quality of Life Index was calculated by a. Mahboob-Ul-Haq b. G.M. Meier c. Morris D. Morris d. None of the above 49. Which one of the following is NOT an objective of fiscal policy? a. Fixing ‘statutory liquidity ratio’ b. Influencing consumption-saving ratio c. Checking inflation and depression d. Reducing disparities in distribution of income and wealth 50. The numerical value of balanced budget multiplier is a. One b. between zero and one c. more than one d. zero 51. If taxes are levied according to ability-to-pay theory it leads to a. proportional taxes b. progressive taxes c. regressive taxes d. equal amount of tax on all the persons 52. Given the two regression lines Y on X and X on Y as follows: 3X + 2Y = 26.0 6X + Y = 31.0 Then their ‘r’ will be equal to a. 0.4 b. 0.5 c. 0.6 d. 0.7 53. In testing a given hypothesis the maximum P with which we would be willing to risk a type I error is known as a. null hypothesis b. point estimate c. level of significance d. interval estimate 54. Mesokurtic distribution is also known as a. Gamma distribution b. Chi-Square distribution c. Beta distribution d. Normal distribution 55. The firms in the modern world, use reserve capacity to a. ensure greater flexibility in operations b. reduce costs c. reduce wages d. reduce taxes 56. If demand curve assumes the shape of a rectangular hyperbola, price elasticity is equal to a. zero b. less than one c. greater than one d. one 57. The concept of multiplier was introduced for the first time by a. R.F. Kahn b. J.M. Keynes c. R.F. Harrod d. V.K.R.V. Rao 58. For a planner, in the context of choice of techniques, the property of technique is dictated by a. the factor endowments b. the level of development c. the character of technical progress d. the plan objective 59. Unlimited supply of labour presumes a. inelastic supply of labour b. infinitely elastic supply of labour c. redundancy of labour d. disguised unemployment 60. Devaluation, will improve the balance of payment deficit, if sum of elasticity of exports and imports of the devaluing country is a. greater than one b. less than one c. equal to zero d. negative 61. Which of the following is not a measure of dispersion? a. Mean of deviation b. Variance c. Range d. Inter-quartile range 62. If a change in price gives us different values of elasticity for a rise and fall in price, we are then using a. point method b. arc method c. total outlay method d. expenditure method 63. Assertion: When the IS curve is not vertical, monetary policy cannot change the level of aggregate demand. Reason: Monetary policy depends on the existence of some interest-sensitive spending for its success. a. Both A and R are true, but R is the correct explanation of A. b. A is false but R is true c. Both A and R are false d. Both A and R are true, but R is not the correct explanation of A. 64. Marshallian demand curve can be derived with the use of revealed preference theory if one of the following is ignored a. Price effect b. Income effect c. Substitution effect d. Demand effect 65. A given total outlay on factor inputs available at given prices is reflected by a. iso-revenue line b. iso-cost line c. isoquant d. production possibility curve 66. Utility function for a consumer is monotonically increasing in the quantities consumed of a single available commodity. Such a utility function is always: a. concave function b. strictly quasi-concave function c. strictly concave function d. linear function 67. Which among the following does not constitute a source of growth in potential output? a. capital expansion b. labour expansion c. improvement in technology d. improvement in the monetary system 68. If there are no demand or supply shocks a. actual inflation will decline to near zero b. actual inflation will decline below the expected rate c. actual inflation will rise above expected rate d. actual inflation will be equal to the expected rate 69. Capital per person decreases if investment per person a. is less than the population growth rate b. exceeds the population growth rate c. exceeds savings per person d. is less than savings per person 70. The economist who said that international trade was based on the principle of absolute advantage is a. J.S. Mill b. Adam Smith c. Bertil Ohlin d. David Ricardo 71. If one of two countries has an absolute advantage in the production of every commodity, then a. there is no comparative advantage and therefore no trade. b. trade would benefit efficient country but not the inefficient one. c. trade would benefit inefficient country, but not the efficient one. d. none of the above 72. A one rupee coin and a five rupee coin are tossed simultaneously. If one of the coins has turned up heads, then the probability that both coins turn up heads is a. ½ b. 1/3 c. ¼ d. 2/3 73. Fisher’s formula for constructing index numbers is termed as ideal because a. it takes into account both the current as well as the base year prices and quantities. b. it satisfies both the time reversal and factor reversal tests. c. it is based on geometric mean, which is suitable for studying the rates of variations between two periods d. all of the above 74. Which of the following factors does not stall the entry of other firms in an oligopolistic industry? a. Huge advertising expenditure incurred by existing firms b. economies of scale c. technology d. increase in demand 75. The most comprehensive measure of the aggregate price level is the a. consumer price index b. producer price index c. GNP deflator d. wholesale price index 76. Keynesian economics lays more emphasis on a. monetary policy b. fiscal policy c. interest rate determination d. free market mechanism 77. The trade-off between inflation and unemployment remains stable only a. during periods of stagflation b. when the initial rate of inflation remains unchanged c. during the periods of slack demand d. in the long run 78. If the rupees per US dollar exchange rate changes from Rs. 44 to Rs. 46 in a year by the market forces, it implies a. appreciation of the rupee b. depreciation of the rupee c. devaluation of the rupee d. exchange rate remains more or less the same 79. The Bretton-Woods System finally collapsed at the global level in the year a. 1970 b. 1971 c. 1972 d. 1973 80. Hecksher-Ohlin theory of international trade explains the emergence of trade among the partners based on a. intra-regional trade b. imperfect competition c. inter-regional trade d. changes in tastes and technology 81. Psychological law of consumption is associated with the name of a. J.M. Keynes b. Milton Friedman c. J.R. Duessenberry d. F. Modigliani 82. IRR is the rate of discount which makes a. PVC = PVB b. PVC > PVB c. PVC < PVB d. PVB/PVC > 1 83. Which of the following is inconsistent with steady state growth? a. Harrod neutrality b. Hicks neutrality c. Harrod non-neutrality d. Hicks non-neutrality 84. Which of the following is a type of probability sampling? a. Convenience sampling b. Purposive sampling c. Systematic sampling d. Quota sampling 85. Assertion: Devaluation, other things being equal, helps in reducing the deficit in the balance of payments of a country. Reason: It lowers down the prices of exports and increase the prices of imports. a. Both A and R are true, but R is the correct explanation of A. b. A is true but R is false c. Both A and R are false d. Both A and R are true, but R is not the correct explanation of A. 86. Assertion: Global per capita incomes are showing divergence. Reason: The saving ratios and rates of population growth differ across the nations a. Both A and R are true, but R is the correct explanation of A. b. A is false but R is true c. Both A and R are false d. Both A and R are true, but R is not the correct explanation of A. 87. Payment of interest as a factor reward is explained by a. Productivity theory b. Abstinence theory c. Time preference theory d. all of the above 88. Assertion: At lower rate of interest, there is greater inducement to invest, according to Keynes. Reason: At lower rate of interest, supply price of capital is low. a. Both A and R are true, but R is the correct explanation of A. b. A is true but R is false c. Both A and R are false d. Both A and R are true, but R is not the correct explanation of A. 89. Which of the following does not affect the volume of money supply in the economy a. Household cash holding b. Bank’s deposits with the central bank c. Bank’s cash holdings d. Cash-reserve ratio 90. Which of the following equation satisfies the condition of stable growth in Harrod-Domar model a. Actual growth rate = Warranted rate of growth b. Actual growth rate = Natural rate of growth c. Warranted rate of growth = Natural rate of growth d. Actual rate of growth = Warranted rate of growth = Natural rate of growth 91. The shape of Laffer Curve is a. U-Shaped b. Inverted U-Shaped c. L-shaped d. J-shaped 92. If the elasticity of demand for a good is greater than the elasticity of supply for the good, then a. the burden of tax on buyers would be higher than that on sellers. b. the burden of tax on buyers would be lower than that on sellers c. the burden of tax on buyers would be equal to that on sellers d. incidence cannot be shifted. 93. When marginal propensity to consume is 0.75, the value of the balanced budget multiplier is a. 1 b. 2 c. 3 d. 4 94. According to Leontief’s study a. USA’s exports consisted of capital intensive goods. b. USA’s exports consisted of labour intensive goods. c. USA’s imports consisted of labour intensive goods. d. None of the above 95. If MPC is 0.8, and marginal propensity to import is 0.3, an autonomous increase in exports of Rs 100 will lead to an increase in national income by a. Rs. 100 b. Rs. 200 c. Rs. 300 d. Rs. 400 96. When the fluctuations of two time series are negatively correlated, then a. the trends may be in the same direction b. the trends may be in the opposite direction c. there is no trend at all d. it is difficult to estimate a meaningful trend 97. Assertion: For large samples, mean can be tested using standard normal distribution. Reason: When original population has normal distribution, mean of a sample from this population has t-distribution. a. Both A and R are true, but R is the correct explanation of A. b. A is true but R is false c. Both A and R are false d. Both A and R are true, but R is not the correct explanation of A. 98. Two alternatives X an Y have equal expected value but Y has higher variance than X, A person choosing Y over X is a a. Risk lover b. Risk averse c. Risk neutral d. Speculator 99. For two events A and B, P(A or B) = P(A) + P(B), when a. A and B are independent events b. A and B can occur simultaneously c. A and B are mutually exclusive events d. None of the above 100. Monetary expansion can still be effective in getting out of liquidity trap if it is combined with a. Restrictions on bank loans b. Increased taxes c. Contractionary fiscal policy d. Expansionary fiscal policy