UGC NET Mock Test 25 on Economics - 20 Questions for Practice

1. In the context of IS-LM framework, which of the following statements is false?

a.The Pigou effect restores the effectiveness of monetary policy even under the liquidity trap.

b.Is curve is steeper, the lower the value of the Keynesian multiplier and the lower the interest sensitiveness of investment demand.

c.The fiscal policy is least effective and the monetary policy is most effective, the higher the interest sensitiveness of money demand and the lower the interest sensitiveness of investment demand.

d.Crowding out is effective when money demand is perfectly interest inelastic and investment is perfectly interest elastic.

2. Identify the correct chronology of implementation of the following taxes in India : I. Service taxes II. Fringe benefits tax III. Personal income-tax IV. Expenditure tax

a.IV, III, II, I

b.III, I, II, IV

c.III, IV, I, II

d.III, II, I, IV

3. Arrange the concepts of Endogenous growth model in a sequential order : I. Production of ideas by research. II. Learning by doing. III. Learning by investment. IV. Learning by watching.

a.II, IV, III, I

b.IV, III, I, II

c.III, I, II, IV

d.I, II, IV, III

4. Assertion (A): Innovations in one field rarely induce innovations in related fields. Reason (R): Once an innovation becomes profitable, other entrepreneurs follow it in “Swarm like clusters”.

a.Both (A) and (R) are correct.

b.Both (A) and B are not correct.

c.(A) is not correct and (R) is correct.

d.(A) is correct and (R) is not correct.

5. The taxes which Kaldor proposed for India in 1956 to check tax evasion, supplementing income tax are I. Capital gains tax II. Annual tax on wealth III. Personal expenditure tax IV. Gift tax

a.II and III are correct.

b.I, II and III are correct.

c.All are correct.

d.II, III and IV are correct.

6. Assertion (A): The fiscal policy is less effective in an open economy than in a closed economy. Reasoning (R): Because the value of the multiplier in an open economy is less than that in a closed economy.

a.(A) is correct, but (R) is incorrect.

b.Both (A) and (R) are incorrect.

c.Both (A) and (R) are correct and (R) is the correct explanation of (A).

d.Both (A) and (R) are correct, but (R) is not the correct explanation of (A).

7. “A technical change is neutral if at a constant rate of profit or interest, the capital output ratio also remains constant.” This concept was propounded by

a.Solow

b.Kaldor

c.Harrod

d.Hicks

8. Select the correct statement out of the following:

a.Multilateral Trade Negotiations are a process of increasing nontariff barriers to trade.

b.Multilateral Trade Negotiations are a process of reducing tariff and non-tariff barriers to trade among member countries of GATT or WTO.

c.Multilateral Trade Negotiations are a process of increasing tariffs but decreasing non-tariff barriers to trade.

d.Multilateral Trade Negotiations are a process of increasing tariffs to trade among member countries.

9. Which one of the following is not a correct interpretation of the Golden Rule of Accumulation? It is that capital per person at which

a.Savings per person and investment per person are maximum.

b.Marginal productivity of capital is equal to the rate of growth of population.

c.Elasticity of output with respect to capital is equal to saving ratio.

d.Marginal productivity of capital is equal to saving ratio.

10. Kaldor’s growth model is based on the following assumptions: I. Output consists of wages and profits only. II. Investment output ratio is an independent variable. III. MPS and MPC are constant. IV. There is less than full employment.

a.III and IV

b.I and II

c.I and IV

d.II and III

11. Assertion (A): According to Keynes, individuals hold either cash or all bonds. Reasoning (R): Because, according to him, the speculative demand for money is associated with uncertainty.

a.Both (A) and (R) are incorrect.

b.Both (A) and (R) are correct and (R) is the correct explanation of (A).

c.Both (A) and (R) are correct, but (R) is not the correct explanation of (A).

d.(A) is correct, but (R) is incorrect.

12. Which of the following is relevant for Wagner’s Law of Increasing State Activities?

a.Public expenditure increases in step like fashion.

b.Public expenditure does not increase in a smooth and continuous manner.

c.Economy grows faster than the governmental sector.

d.There are inherent tendencies for the activities of the Government to increase both intensively and extensively.

13. For particular high values of marginal propensity to consume and the accelerator coefficient, explosive non-oscillatory cycles will occur in the model of the business cycles propounded by

a.Nicholas Kaldor

b.J.R. Hicks

c.Paul A. Samuelson

d.All of the above

14. The share of the tax borne by the seller will be larger

a.if the elasticity of supply of the product is larger.

b.if the demand for the product is inelastic.

c.if the demand for the product has greater elasticity.

d.if the demand for the product is less elastic.

15. Embodied technical change model is based on which production function?

a.Translog

b.Cobb-Douglas

c.CES

d.VES

16. Assertion (A): Dependence of Less Developed Countries (LDCs) on Developed Countries (DCs) is the main cause for the underdevelopment of the former. Reason (R): “This is because of historical evolution of a highly unequal international capitalist system of rich-poor country relationships.”

a.(A) is incorrect, but (R) is correct.

b.Both (A) and (R) are correct.

c.Both (A) and (R) are incorrect.

d.(A) is correct and (R) is the correct reason for (A).

17. Endogenous growth models have been developed by I. Kenneth J. Arrow II. Paul M. Romer III. Robert E. Lucas IV. R.M. Solow

a.III and IV

b.I, II and III

c.I and II

d.II, III and IV

18. The Constitution of India provides for transfer of resources from Centre to States in the form of I. Tax sharing II. Loans III. Grants-in-aid IV. Grants for implementation of Five Year Plans

a.I, II and III are correct.

b.All are correct.

c.I, III and IV are correct.

d.I and III are correct.

19. The non-plan revenue expenditure of Central Government on Revenue Account include: I. Interest payments II. Subsidies III. Grants-in-aid IV. Loans to Public Enterprises

a.I and II are correct.

b.I, II and IV are correct.

c.I, II, III and IV are correct.

d.I, II and III are correct.

20. According to the cost based definition of dumping, dumping occurs when a firm sells a product abroad at a price that is less than

a.Average Fixed Cost

b.Average Variable Cost

c.Marginal Cost

d.Average Total Cost

UGC NET Mock Test 25 on Economics – 20 Questions for Practice

UGC NET Mock Test 25 on Economics – 20 Questions for Practice

Take Test 25 20 questions for Practice – Economics Test 25

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