SPSC Lecturer Economics Past Paper 31-01-2011

1- An Isoquant is convex to the origin because of:

A. Law of diminishing returns 
B. Diminishing marginal rate of substitution between factors
C. Law of increasing returns
D. None of these 

Answer : B. Diminishing marginal rate of substitution between factors

2- When a country imposes an import tariff, the effect on its offer curve is:

A. Nil
B. To shift it away from the export-commodity axis 
C. To shift it away from the import-commodity axis
D. None of these 

Answer : C. To shift it away from the import-commodity axis

3- One of the following is included in Personal Income, but excluded from National Income, which one is that?

A. Dividends
B. Wages
C. Interest on Public Debt
D. None of these 

Answer : C. Interest on Public Debt

4- By warranted rate of growth is meant:

A. The rate of growth desired by the community 
B. The rate of growth planned by the planning authority of the country
C. The rate of growth which would make planned investment equal to realized investment
D. None of these 

Answer : C. The rate of growth which would make planned investment equal to realized investment

5- The assumption which makes the "Indifference Curve" convex to the origin is:

A. A diminishing Marginal Rate of substitution
B. Ordinality of utility 
C. Cardinality of utility
D. None of these 

Answer : A. A diminishing Marginal Rate of substitution

6- For the Cobb-Douglas Production Function:

A. The law of diminishing returns to scale holds 
B. The law of constant returns to scale holds
C. The law of increasing returns to scale holds
D. None of these 

Answer : B. The law of constant returns to scale holds

7- In Keynesian theory equality between saving and investment is brought about by changes in the:

A. Level of income
B. Rate of interest 
C. Supply of money
D. None of these 

Answer : A. Level of income

8- During Inflation, a recipient of dividend income will, normally, enjoy a real income which is:

A. More than before 
B. Less than before
C. Unaffected
D. None of these 

Answer : B. Less than before

9- Which one of the following tax systems will move in the direction of reduction of economic disparities?

A. Progressive
B. Regressive
C. Proportional
D. All of these 

Answer : A. Progressive

10- Backward Effect of International Trade occurs:

A. Between two different countries only 
B. Between two different regions of the same country 
C. Between two different sectors of the same region
D. None of these 

Answer : C. Between two different sectors of the same region

11- Which of the following is the best indicator of economic growth of a country?

A. Per capita calories intake 
B. Income of the family 
C. Housing and clothing facilities
D. None of these 

Answer : A. Per capita calories intake

12- Demand for money for transaction motive depends on current level of:

A. Profit
B. Income
C. Rate of interest
D. None of these 

Answer : B. Income

13- The direct exchange of goods and services for other goods and services is known as:

A. Primitive trade 
B. Barter
C. Non market trade
D. None of these 

Answer : B. Barter

14- The crucial determinant of the size of the market is:

A. Productivity
B. Savings
C. Monetary expansion
D. None of these 

Answer : A. Productivity

15- For money to serve as an efficient medium of exchange, it must have all but which of the following characteristics:

A. General acceptability 
B. Convertibility into precious metals
C. High value relative to its weight 
D. Divisibility

Answer : B. Convertibility into precious metals

16- The doctrine of comparative advantages says that there are gains from international trade:

A. If opportunity costs are the same in the countries involved 
B. Only if both comparative and absolute advantages are present in both countries
C. Only if there are economies of scale available 
D. If countries specialize in the production of goods in which they are relatively more efficient

Answer : D. If countries specialize in the production of goods in which they are relatively more efficient

17- If the marginal social benefits of a good exceed its marginal social costs:

A. The government should subsidize its production
B. The Pareto-optimal quantity of the good exceeds the equilibrium quantity 
C. An external diseconomy exists
D. Then its private benefits must also exceed its private costs

Answer : A. The government should subsidize its production

18- The inclusion of both external costs and external benefits will cause a good's equilibrium price to be:

A. Higher than it otherwise would have been
B. Lower than it otherwise would have been 
C. The same, and its equilibrium quantity will be larger
D. None of the above

Answer : A. Higher than it otherwise would have been

19- The measure of change in buyer's demand as a result of price changes is called:

A. Price elasticity of demand
B. Income elasticity of demand 
C. Cross elasticity of demand
D. None of these 

Answer : A. Price elasticity of demand

20- IMF related drawing rights are known as:

A. Special Drawing Rights (SDRs)
B. General Drawing Rights (GDRs)
C. International Drawing Rights (IDRs)
D. None of these 

Answer : A. Special Drawing Rights (SDRs)

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