## ECONOMICS

Instructions :
(i) All questions in both the sections are compulsory.
(ii) Marks for questions are indicated against each question.
(iii) Question No. 1 − 5 and 16 − 20 are very short answer questions carrying 1 mark each. They are required to be
(iv) Question No. 6 − 8 and 21 − 23 are short answer questions carrying 3 marks each. Answers to them should not normally
exceed 60 words each.

(v) Question No. 9 − 11 and 24 − 26 are also short answer questions carrying 4 marks each. Answers to them should not
normally exceed 70 words each.
(vi) Question No. 12 − 15 and 27 − 30 are long answer questions carrying 6 marks each. Answers to them should not normally
exceed 100 words each.
(vii) Answers should be brief and to the point and the above word limit be adhered to as far as possible.

### Section – A

Q1.The demand of a commodity when measured through the expenditure approach is inelastic. A fall in its price will result in :
(choose the correct alternative)
(a) no change in expenditure on it.
(b) increase in expenditure on it.
(c) decrease in expenditure on it.
(d) any one of the above.

Q2.As we move along a downward sloping straight line demand curve from left to right, price elasticity of demand : (choose the correct
alternative)
(a) remains unchanged
(b) goes on falling
(c) goes on rising
(d) falls initially then rises

Q3.Define market demand.

Q4.Average revenue and price are always equal under : (choose the correct alternative)
(a) perfect competition only
(b) monopolistic competition only
(c) monopoly only
(d) all market forms

Q5.State any one feature of oligopoly.

Q6.Distinguish between microeconomics and macroeconomics.

Q7.State the meaning and properties of production possibilities frontier.

Q8.Show that demand of a commodity is inversely related to its price.Explain with the help of utility analysis.
Or
Why is an indifference curve negatively sloped ? Explain

Q9.Explain the conditions of consumer’s equilibrium under indifference curve approach.

Q10.State different phases of the law of variable proportions on the basis of total product. Use diagram.
Or
Explain the geometric method of measuring price elasticity of supply. Use diagram.

Q11.Explain the ‘free entry and exit of firms’ feature of monopolistic competition.

Q12.When price of a commodity X falls by 10 per cent, its demand rises from 150 units to 180 units. Calculate its price elasticity of
demand. How much should be the percentage fall in its price so that its demand rises from 150 to 210 units ?

Q13.Complete the following table : Q14.Good Y is a substitute of good X. The price of Y falls. Explain the chain of effects of this change in the market of X.
Or
Explain the chain of effects of excess supply of a good on its equilibrium price.

Q15.Given below is the cost schedule of a product produced by a firm. The market price per unit of the product at all levels of
output is Rs. 12. Using marginal cost and marginal revenue approach, find out the level of equilibrium output. Give reasons Q16.The ratio of total deposits that a commercial bank has to keep with
Reserve Bank of India is called : (choose the correct alternative)
(a) Statutory liquidity ratio
(b) Deposit ratio
(c) Cash reserve ratio
(d) Legal reserve ratio

Q17.Aggregate demand can be increased by : (choose the correct alternative)
(a) increasing bank rate
(b) selling government securities by Reserve Bank of India
(c) increasing cash reserve ratio
(d) none of the above

Q18.Give the meaning of involuntary unemployment.

Q19.What is primary deficit ?

Q20.Give the meaning of balance of payments.

Q21.Distinguish between final goods and intermediate goods. Give an example of each.

Q22.Explain the store of value function of money.
Or
State the meaning and components of money supply.

Q23.Explain the basis of classifying taxes into direct and indirect tax.Give examples.

Q24.Explain ‘banker to the government’ function of the central bank.
Or
Explain the role of reverse repo rate in controlling money supply.

Q25.Explain how government budget can be used to influence distribution of income ?

Q26.An economy is in equilibrium. From the following data about an economy calculate autonomous consumption.
(i) Income = 5000
(ii) Marginal propensity to save = 0.2
(iii) Investment expenditure = 800

Q27.Why does the demand for foreign currency fall and supply rises when its price rises ? Explain.

Q28.Explain ‘non-monetary exchanges’ as a limitation of using gross domestic product as an index of welfare of a country.
Or
How will you treat the following while estimating domestic product of a country ? Give reasons for your answer :
(a) Profits earned by branches of country’s bank in other countries
(b) Gifts given by an employer to his employees on independence day
(c) Purchase of goods by foreign tourists

Q29.Calculate (a) net domestic product at factor cost and (b) gross national disposable income : Q30.Assuming that increase in investment is Rs. 1000 crore and marginal propensity to consume is 0.9, explain the working of
multiplier.