Economics Delhi (Set 2)

General Instructions:

Read the following instructions very carefully and strictly follow them:

1. Question paper comprises two Sections – A and B. All questions are compulsory.
2. Question number 1 – 10 and 18 – 27 are very short-answer questions carrying 1 mark each. They are required to be answered in one word or one sentence each.
3. Question number 11 – 12 and 28 – 29 are short-answer questions carrying 3 marks each. Answer to them should not normally exceed 60 – 80 words each.
4. Question number 13 – 15 and 30 – 32 are also short-answer questions carrying 4 marks each. Answers to them should not normally exceed 80 – 100 words each.
5. Question number 16 – 17 and 33 – 34 are long answer questions carrying 6 marks each. Answers to them should not normally exceed 100 - 150 words each.
6. Answer should be brief and to the point also the above word limit be adhered to as far as possible.

1. There is no overall choice. However, an internal choice has been provided

in 2 questions of one mark, 2 questions of three marks, 2 questions of four marks and 2 questions of six marks. Only one of the choices in such questions have to be attempted.

1. In addition to this, separate instructions are given with each section and question, wherever necessary.

Question 1

deficit includes interest payment by the Government on the past loans. (Fill up the blanks with correct answer.

Solution:

Fiscal deficit includes interest payment by the Government on the past loans.

Question 2

To reduce credit availability in the economy, the Centrla Bank may ______.

(Choose the correct alternative)

1. buy securities in the open market.
2. sell securities in the open market.
3. reduce reserve ratio.
4. reduce repo rate.

Solution:

To reduce credit availability in the economy, the Central Bank may sell securities in the open market.

Hence, the correct answer is option B.

Question 3

State, whether the following statement is true or false:

'Purchase of machinery by a producer is an intermediate good.'

Solution:

False, purchase of machinery is a capital good and it is a final good.

Question 4

In case of an underemployment equilibrium, which of the following alternative is not true?

(Choose the correct alternative)

1. Aggregate demand is equal to Aggregate supply.
2. There exist excess production capacity in the economy.
3. Resources are not fully and efficiently utilised.
4. Resources are fully and efficiently utilised.

Solution:

The resources are fully and efficiently utilised is not true in case of an underemployment equilibrium.

Hence, the correct answer is option D.

Question 5

Which of the following is not a 'factor payment?

(Choose the correct alternative)

1. Free uniform to defence personnel.
2. Salaries to the Members of Parliament.
3. Rent paid to the owner of a building.
4. Scholarship given to the students.

Solution: