Economics All India (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.

1. 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.
2. 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

is the agent and adviser to the Government of India.

(Fill in the blank with correct answer)

Solution:

Reserve Bank of India is the agent and advisor to the Government of India.

Question 2

State whether the following statement is true or false:

"To reduce inflation, the Central Bank should reduce Cash Reserve Ratio (CRR)."

Solution:

False, in order to reduce inflation, the money supply should fall. For this, the Cash Reserve Ratio should increase.

Question 3

Define Aggregate Demand.

Solution:

Aggregate demand implies the total demand of final goods and services by all the people in an economy. It can be defined as the actual aggregate expenditure incurred by all the people in an economy on different goods and services.

Question 4

Government expenditure incurred on defence items is a type of _____ expenditure in the Government Budget.

(Fill in the blank with correct answer)

Solution:

Government expenditure incurred on defence items is a type of capital expenditure in the government budget.

Question 5

A car purchased by a household is a _____.

(Choose the correct alternative)

1. single use capital good
2. single use consumer good
3. durable consumer good
4. semi-durable consumer good

OR GNP deflator is represented by which of the following formulae?

(Choose the correct alternative)

1. <math>\frac{\text{Nominal GNP}}{\text{Real GNP}} \times 100</math>
2. <math>\frac{\text{Real GNP}}{\text{Nominal GNP}} \times 100</math>
3. <math>\frac{\text{Real GNP}}{\text{Change in Rate of Inflation}} \times 100</math>
4. <math>\frac{\text{Change in Rate of Inflation}}{\text{Real GNP}} \times 100</math>

Solution:

A car purchased by a household is a <u>durable consumer good</u>. Hence, the correct answer is option (c).