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

1. For the demand function P = 10 – 3x – x2, what is consumer’s surplus at x = 3?

2. 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?

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

4. At the point of tangency between short- run average total cost and long run average cost, the short-run marginal cost

5. If 1 = Involuntary unemployment;
2 = Disguised unemployment;
3 = Frictional unemployment; and
4 = Structural unemployment, then full employment is consistent with

6. The rate of net investment spending per time period depends on the steepness of the downward slope of

7. 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.

8. Which of the following statements is true concerning standard regression model?

9. As long as the substitution effect dominates the income effect, the labour supply curve is

10. The equilibrium in a market is incomplete with increasing returns to scale only in the case of

11. 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

12. Verdoon’s law is about the

13. 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.

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

15. If MPL/MPK does not change with any proportionate change in labour and capital then the production function is

16. Which of the following statements is false?

17. Under Cournot Model of Duopoly, each duopolist will produce

18. 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

19. Which of the following is not specifically mentioned as a determinant of the demand for money?

20. 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.