## UGC NET Mock Test 7 on Economics – 20 Questions for Practice

#### Take Test 7 20 questions for Practice – Economics Test 7

1. Given a production function Q = ALα Kβ; α, β > 0, increasing returns to scale requires that
a.
b.
c.
d.

2. For the demand function P = 10 – 3x – x2, what is consumer’s surplus at x = 3?
a.
b.
c.
d.

3. Verdoon’s law is about the
a.
b.
c.
d.

4. Under Cournot Model of Duopoly, each duopolist will produce
a.
b.
c.
d.

5. Which of the following statements are true concerning a triangular or recursive system?
(i) The parameters can be validly estimated using separate applications of OLS to each equation.
(ii) The independent variables may be correlated with the error terms in other equations
(iii) An application of 2 SLS would lead to unbiased but inefficient parameter estimates
(iv) The independent variables may be correlated with error terms in the equations in which they appear as independent variables.
a.
b.
c.
d.

6. Which of the following statements is false?
a.
b.
c.
d.

7. Which of the following is not specifically mentioned as a determinant of the demand for money?
a.
b.
c.
d.

8. Consider the following system of equations, using standard notations :
Y1 = α0 + α1Y2 + α3Y3 + α4X1 + α5X2 + u1
Y2 = β0 + β1Y3 + β2Y1 + β3X2 + u2
Y3 = γ0 + γ1X1 + γ2X2 + γ3X3 + u3
According to the order condition, the first equation is
a.
b.
c.
d.

9. The equilibrium in a market is incomplete with increasing returns to scale only in the case of
a.
b.
c.
d.

10. Which of the following statements is true concerning standard regression model?
a.
b.
c.
d.

11. Assertion (A) : Monopoly is Pareto inefficient.
Reason (R) : It would be possible to change the allocation of resources to make the amount of income he would be prepared to pay in exchange for the reduction in price.
a.
b.
c.
d.

12. What would be the consequences for the OLS estimator if heteroscedasticity is present in a regression model but ignored?
a.
b.
c.
d.

13. As long as the substitution effect dominates the income effect, the labour supply curve is
a.
b.
c.
d.

14. If 1 = Involuntary unemployment;
2 = Disguised unemployment;
3 = Frictional unemployment; and
4 = Structural unemployment, then full employment is consistent with
a.
b.
c.
d.

15. The distinguishing characteristics of monopolistic competition are
I. Product differentiation
II. Non-price competition
III. Large number of firms and freedom to entry and exit
IV. Firms are interdependent
a.
b.
c.
d.

16. If MPL/MPK does not change with any proportionate change in labour and capital then the production function is
a.
b.
c.
d.

17. The rate of net investment spending per time period depends on the steepness of the downward slope of
a.
b.
c.
d.

18. In Keynes’ equation of absolute income hypothesis, C = α0 + by, where C = Consumption expenditure; α0 = Consumption expenditure when income (y) is zero; and b = Marginal Propensity to Consume (MPC), then which of the following statements is false?
a.
b.
c.
d.

19. At the point of tangency between short- run average total cost and long run average cost, the short-run marginal cost
a.
b.
c.
d.

20. Assertion (A) : In liquidity trap, the demand for money is perfectly interest elastic.
Reason (R) : Because in this situation, all the investors expect the market rate of interest to rise towards the natural rate of interest.
a.
b.
c.
d.

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