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Objective Questions

Latest HP SET Economics Exam Question (Objective Questions), MCQ in English

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Question Bank HP SET Economics Exam Paper 2 - English

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Economics

Question 1Single Answer

Which is called Gossen’s second Law ?

A
Law of equi-marginal utility
B
Law of Diminishing marginal utility
C
Revealed Preference Theory
D
Indifference Curav approach

Question 2Single Answer

Which of the condition support long run equilibrium in monopolistic competition ?

A
MR = MC, AR = AC
B
P = MC, AR = AC
C
MR = MC = AR = AC
D
AR = MC = AC

Question 3Single Answer

Who explained importance of time element in price determination, for the first time ?

A
Chamberlin
B
Stigler
C
Mrs. Joan Robinson
D
Marshall

Question 4Single Answer

Law of diminishing returns begins to operate when :

A
Total product begins to rise
B
Total product begins to fall
C
Marginal Product begins to rise
D
Marginal product begins to fall

Question 5Single Answer

Consider the following statements regarding Edgeworth Duopoly model :
I.      It takes as given output decision of rival.
II.    It takes as given price decision of rival
III.   It is an explanation of price rigidity of thease , the correct answer is :

A
Only Statement I is true
B
Both I & II are true
C
Both II & III are true
D
Only III is true

Question 6Single Answer

Public goods are charactertised by :
1. Collective consumption
2. Divisibility
3. Non – exclusion
4. Rival consumption
Select the correct answer from the code given below :

A
1 & 2 are correct
B
1 & 3 are correct
C
1 & 4 are correct
D
2 & 4 are correct

Question 7Single Answer

Among the following what causes market failure ?
1. Externality
2. Asymmetry of information
3. Perfact competition
Choose the correct answer from the code given below :

A
Codes :
1,2 & 3 are correct
B
Only 1 is correct
C
1 & 2 are correct
D
2 & 3 are correct

Question 8Single Answer

Assuming wages – price flexibility , the classical economists asserted that a decline in money wages And price would lead to :

A
Unemployment
B
Deflation
C
High level of employment and output
D
Unemployment and decline in output

Question 9Single Answer

Who distinguished between value in use and value in exchange and gave the famous example of diamonds and water ?

A
Adam smith
B
David Ricardo
C
Alfred Marshall
D
Karl Marx

Question 10Single Answer

When income effect becomes stronger than substitution effect, the labour supply curve will :

A
Slope positively
B
Negatively sloped
C
Bend backward
D
Slope upwards

Question 11Single Answer

Assertion (A) : The concept of supply curve is meaningless for the monopolist.
Reason (R) : Monopolists are price setters ; it does not make reuse to ask what output they will produce at various prices.

A
Codes :
Both (A) and (R) are correct and (R) is the correct explanation of (A)
B
(A) is correct , but (R) is not correct
C
Both (A) and (R) are correct , but (R) is not correct explanation of (A)
D
(R) is correct, but (A) is incorrect

Question 12Single Answer

Predatory pricing policy is designed to :

A
drive competitors out of business
B
maximum profits
C
encourage entrants into the market
D
atain least cost output

Question 13Single Answer

Match items in List-I with items in List-II and select the correct answer from the code given below :
List-I List-II
a. The screening Hypothesis 1. George A. Akerlof
b. Job Market signaling 2. K. J Arrow
c. The problem of moral 3. M. Spencer
hazard in the case
of medical insura
d. The market for lemons 4. Paul W. Miller and Paul A.
Vplcker

A
Codes :
(a) (b) (c) (d)
3 2 4 1
B
2 3 4 1
C
4 3 2 1
D
2 4 3 1

Question 14Single Answer

An industry whose long run supply curve is horizontal is called :

A
Constant cost industry
B
Increasing cost industry
C
Decreasing Cost Industry
D
Effisient Industry

Question 15Single Answer

The practice of charging each consumer the reservation price is called :

A
Peak load pricing
B
Inter –tem poral price discrimination
C
Third degree price discrimination
D
None if these

Question 16Single Answer

Frictional unemployment is also known as :

A
Disguised unemployed
B
Turnover unemployed
C
Cyclical unemployed
D
Structural unemployment

Question 17Single Answer

The cost incurred by the firm in hiring labour is called as :

A
Explicit cost
B
Implicit Cost
C
Marginal Cost
D
Total Cost

Question 18Single Answer

The locus of Pareto optimality in production and consumption is given by :

A
The social Welfare Function
B
The Utility Possibility Curve
C
The Transformation Curve
D
The Grand Utility possibility Curve

Question 19Single Answer

Match items given in List-1 with those in List-II :
List-I                                      List_II
a. Tea and coffee         1. Veblen goods
b. Car and petrol            2. Substitutes
c. Gold and               3. Giffen goods
Diamonds
d. Ragi and Bajra       4. Complementary

A
Codes :
a b c d
2 1 3 4
B
2 4 1 3
C
4 1 2 3
D
4 3 1 2

Question 20Single Answer

Assertion (A) : In the short run under perfect competition, given the market demand and market supply the industry is in equilibrium at that price which clears the market.
Reason (R) : In the long run all the firms in the industry earn profit .

A
Codes :
Both (A) and (R) are true and (R) is the correct explanations of (A)
B
Both (A) and (R) are true , but (R) is not correct explanation of (A)
C
(A) is true , but (R) is false
D
(A) is false , but (R) is true

Question 21Single Answer

Put the following in chronological order on the basis of development :
I. Law of demand
II.Revealed Preference Analysis
III. IIndifference Curve Analysis
IV. Law of Diminishing Marginal Utility

A
I, II, III, IV
B
I, IV, III, II
C
I, II, IV,III
D
I, III, IV, II

Question 22Single Answer

If the monopolist incurs loss in the short run , then in the long run :
a. he will go out of business.
b. he will stay in business
c. he will break even
d. any of the above is possible

A
(A) and (B)
B
(A) and (C)
C
(A) only
D
(D) only

Question 23Single Answer

The condition of Pareto Optimality holds correct under.

A
Perfect Competition
B
Monopolistic Competition
C
Oligopoly
D
Monopoly

Question 24Single Answer

Assertion (A) : Compared to the individual supply curve is more elastic .
Reason (R) : There is the possibility of moving between being out of the labour force and being in the labour force.
Choose amongst the following the correct answer .

A
Codes :
(A) is correct , but (R) I not the correct explanation of (A)
B
(A) is correct and (R) is the correct explanation of (A)
C
(A) is correct , but (R) is incorrect
D
(A) is incorrect , but (R) Is correct

Question 25Single Answer

Fiscal deficit less interest payments is called

A
Net fiscal deficit
B
Monetised deficit
C
Primary deficit
D
Budgetary deficit

Question 26Single Answer

How many countries are the members of European Union ?

A
25
B
28
C
26
D
15

Question 27Single Answer

If the mean and variance of a given distribution is 8 and 0.25, then the coefficient of variation will be

A
4 percent
B
8 percent
C
12 percent
D
16 percent

Question 28Single Answer

The doctrine of unbalanced growth was propounded by
I. Hirschman
II. Robert Solow
III. Singer
IV. Ragnar Nurkse
Codes :

A
I and II are correct
B
II and III are correct
C
III and IV are correct
D
I and III are correct

Question 29Single Answer

Match List-I with List-II and show the relation between trade cycle and profit by selecting correct codes given below
List-I                      List-II
a. Recession                   I. Low
b. Boom                           II. Positive
c. Recovery                     III. Highest level
d. Depression                IV. Negative

A
Codes :
a b c d
III IV I II
B
I III II IV
C
IV III II I
D
I II III IV

Question 30Single Answer

The sequencing process of Schumpeter model of development is

A
Swarm like Clusters, Innovation, Bank credit, Breaking circular flow
B
Breaking circular flow, Innovation, Bank credit, Swarm like Clusters
C
Innovation, Bank credit, Breaking circular flow, Swarm like Clusters
D
Bank credit, Innovation, Swarm like Clusters, Breaking circular flow

Question 31Single Answer

Harrod-Domar model of economic growth is based upon
I. Warranted growth rate
II. Investment growth rate
III. Productivity growth rate
IV. Natural growth rate
Codes :

A
I and II are correct
B
II and III are correct
C
III and IV are correct
D
I and IV are correct

Question 32Single Answer

Endogenous technological change is not caused by

A
FDI
B
Population size
C
Population density
D
Educational level

Question 33Single Answer

Under Cournot Model of Duopoly, each duopolist will produce :

A
half the output
B
one-fourth of the output
C
one-six of the output
D
one-third of the total output

Question 34Single Answer

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

A
negatively sloped
B
positively sloped
C
bend backward
D
shifting towards left

Question 35Single Answer

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 of the reduction in price

A
Codes:
Both (A) and (R) are correct and (R) is the correct explanation of (A)
B
(A) is correct, but (R) is not correct
C
Both (A) and (R) are correct, but (R) is incorrect explanation of (A)
D
(R) is correct, but (A) is incorrect

Question 36Single Answer

If MP_k/MP_k does not change with any proportionate change in labour and capital then the production function is :

A
Linear
B
Non-Linear
C
Homogeneous
D
Homothetic

Question 37Single Answer

Match the items in the List-I with items in List-II select the correct answer from the code given below :
List-I                                      List-II
I. Agency Theory of      1. O.E. Williamson
Firm
II. X-inefficiency            2. M.C. Jenson and W. J. Meckling
III. The Utility 3. Wilfredo Pareto
Maximisation
Model
IV. Edgeworth box       4. Harvey Leibenstein
Diagram first
Used by

A
Codes:
I II III IV
3 2 1 4
B
2 4 1 3
C
2 3 4 1
D
3 4 1 2

Question 38Single Answer

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

A
greater than long-run cost
B
less than long-run marginal cost
C
is far above long-run marginal cost
D
equals long-run marginal cost

Question 39Single Answer

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

A
imperfectly competitive market
B
monopolistic market
C
perfectly competitive market
D
none of the above

Question 40Single Answer

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

A
1 & 2
B
2 & 3
C
3 & 4
D
1 & 4

Question 41Single Answer

The revealed preference theory of consumer’s behavior is based on :

A
Consistency
B
Strong ordering
C
Positive income elasticity of demand
D
All of the above

Question 42Single Answer

An individual’s supply curve for labour will bend backwards when :

A
The substitution effect of wage rate increases is higher than income effect
B
The income effect of wage rate increases is negative and higher than the substitution effect
C
Leisure is Giffen good
D
The substitution and income effect of wage rate increases reinforce each other

Question 43Single Answer

The short run supply curve of a firm under perfect competition is the same as the :

A
Marginal cost curve
B
marginal cost curve above the average variable cost curve
C
average variable cost curve
D
Average total cost curve

Question 44Single Answer

Match List-I with List-II and select the correct answer from the codes given below :
List-I List-II
a. Quasi rent 1. Hicks
b. Elasticity of substitution 2. Chamberlin
c. Monopolistic 3. Neumann and Morgenstern
d. Theory of Games 4. Marshall
Codes :

A
A b c d
4 1 3 2
B
2 1 4 3
C
2 1 3 4
D
4 1 2 3

Question 45Single Answer

The difference between the value of marginal product and the marginal revenue product arises only if :

A
Average revenue is not equal to marginal revenue
B
Average cost is not equal to marginal revenue
C
Total revenue is not equal to total cost
D
Average cost is not equal to average revenu.

Question 46Single Answer

Assertion (A) : In the short run, a producer operates in only stage II of the law of diminishingreturns where average product of the variable factor is decline
Reason (R) In stage I and Stage III the marginal products of the fixed and the variable factors respectively are negative
codes :

A
(A) is true and (R) is false
B
Both (A) and (R) are true and (R) is the correct explanation of (A)
C
Both (A) and (R) are true and (R) is not the correct explanation of (A)
D
(A) is false and (R) is true

Question 47Single Answer

Assertion (A) : In monopolistic competition a firm earns only normal profit in the long run
Reason (R) A firm in monopolistic competition produces a commodity which has no closesubstitutes
Codes :

A
Both (A) and (R) are true and (R) is the correct explanation of (A)
B
Both (A) and (R) are true and (R) is not the correct explanation of (A)
C
(A) is true and (R) is false
D
(A) is false and (R) is true

Question 48Single Answer

Assertion (A) : Devaluation in general is resorted to increase the exports
Reason (R) It makes exports cheaper
Codes:

A
Both (A) and (R) are correct
B
(A) is correct, but (R) is not correct
C
Both (A) and (R) are incorrect
D
(A) is incorrect, but (R) is correct

Question 49Single Answer

The Opportunity Cost Curve assumes that

A
Labour is the only factor of production
B
The price or a cost of a commodity can be inferred from its labour content
C
Labour is homogeneous
D
None of the above

Question 50Single Answer

Hedging refers to ;

A
the acceptance of a foreign exchange risk
B
covering of a foreign exchange risk
C
foreign exchange speculation
D
foreign exchange arbitrage

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Economics

Question 51Single Answer

An increase in the marginal propensity to import :

A
has the same effect upon the multiplier as an increase in the MPC
B
has no effect upon the multiplier
C
will increase the value of the multiplier
D
will decrease the value of the multiplier

Question 52Single Answer

The price elasticity of demand is equal to one for a demand curve, which is:

A
horizontal line
B
vertical line
C
rectangular hyperbola
D
downward moving line

Question 53Single Answer

The third moment around the mean is useful to measure

A
central tendency
B
Hirschman
C
peakedness
D
symmetry

Question 54Single Answer

Which of the following plans aimed at improving the standard of living ?

A
Third Plan
B
Fourth Plan
C
Fifth Plan
D
Sixth Plan

Question 55Single Answer

Golden Age hypothesis is concerned with :

A
natural rate of growth > warranted rate of growth
B
actual rate of growth > warranted rate of growth
C
warranted rate of growth > natural rate of growth
D
warranted rate of growth = natural rate of growth

Question 56Single Answer

Which of the following can be evaluated with the help of Lorenz Curve ?

A
The Allocation and technical efficiency of markets
B
The comparative advantage of trading partners and terms of trade
C
The degree of equity in income distribution
D
the equilibrium of market prices and quantities throughout the world

Question 57Single Answer

Green Box subsidies under WTO are allowed because they are considered to be :

A
Minimally trade distorting
B
higher among developed and relatively lower for developing counties
C
They are confined to agriculture sector
D
They are related to GATS provision

Question 58Single Answer

Which one of the following is not reserved for public sector ?

A
Atomic energy
B
Railways
C
Insurance
D
Port Trust of India

Question 59Single Answer

The rate at which the Central Bank discounts the bills of commercial banks is called :

A
Discount Rate
B
Bill Rate
C
Interest Rate
D
Lending Rate

Question 60Single Answer

If the economy is the liquidity trap then

A
Fiscal policy will be more effective
B
Monetary policy will be more effective
C
Crowding our effect will make fiscal and monetary policy effective
D
None of the above

Question 61Single Answer

If the price consumption curve of a commodity is bending backwards , then the commodity must be :

A
An inferior commodity
B
A perfectly elastic commodity
C
Normal commodity
D
Giffen goods

Question 62Single Answer

IS curve represents :

A
Goods market equilibrium
B
Money market equilibrium
C
Bond market equilibrium
D
Labour Market equilibrium

Question 63Single Answer

''Freedom as Development “ Book is written by :

A
Keynes
B
Amartya Kumar Sen
C
Mrs. Joan Robinson
D
Gunnar Myrdal

Question 64Single Answer

The Chairman of 13^th Finance Commission is :

A
Dr. Vijay Kelkar
B
Dr. M. Govind Rao
C
Dr. C. Rangarajan
D
Dr. Atul Sharma

Question 65Single Answer

Marginal Revenue of a Monopoly firm is less than the price, Because :

A
Demand curve has a positive slope
B
Demand curve has a negative slope
C
Monopolist is in equilibrium
D
Monopolist incurs losses

Question 66Single Answer

For an inferior goods , income consumption curve and Engles curves are :

A
Positively sloped
B
Negative sloped
C
Are the same
D
Income consumption curve positively sloped and the Engles curve is negative sloped

Question 67Single Answer

The classical economists focused on the role of money as :

A
Medium of exchange
B
medium of distribution
C
wealth
D
link between present and future

Question 68Single Answer

If the demand for money is perfectly interest inelastic , the LM schedule will be :

A
Upward sloping
B
Downward sloping
C
Horizontal line
D
vertical line

Question 69Single Answer

Harrod –Domer model of economic growth is based on the equilibrium between

A
Income generation and productive capacity creation
B
Equilibrium between income and consumption
C
Equilibrium between income and consumption
D
None of the above

Question 70Single Answer

In calculating the buoyancy of a tax, we consider :

A
Only discretionary changes
B
Only automatic changes
C
Both (A) and (B)
D
Neither (A) nor (B)

Question 71Single Answer

Which of the following measure of the central tendency suits the data best if the objective is to assess the distribution of values ?

A
Arithmetic mean
B
Mode
C
Median
D
Kurtosis

Question 72Single Answer

Comparative cost advantage in Ricardo;s international trade theory arises due to

A
Labour cost differences
B
Differences in factor endowment
C
Factor abundance defined in terms of factor prices
D
All of the above

Question 73Single Answer

In case of indifference curve of two goods X and Y, as consumption of X increases :

A
MRS_XY increases
B
MRS_XY decreases
C
MRS_XY remains the same
D
MRS_XY increases but later on MRS_XY decreases

Question 74Single Answer

General Economic equilibrium is NOT related to which one of the following problems ?

A
Uniqueness problem
B
Existence problem
C
Stability problem
D
Moral hazard problem

Question 75Single Answer

In the shoft-run production function, which on eof the following is CORRECT ?

A
Technology is assumed to change as labour input changes
B
Technology is assumed to change as capital stock changes
C
Technology is assumed to change positively until diminishing returns set in
D
Technology is assumedto be constant for a given production function relationship

Question 76Single Answer

As output expands, LAC curve falls. This is due to :

A
Law of variable proportions
B
Law of diminishing returns
C
Economies of scale
D
Diseconomies of scale

Question 77Single Answer

In a situtation of decision under uncertainty, if a consumer faces equal expected income from two alternatives, then she will take decision on the basis of :

A
Expected utility of both the alternatives
B
Probability of risk attached with each alternatives
C
Variation of risk attached with each alternatives
D
Mean of risk of each alternatives

Question 78Single Answer

What type of relationship the Phillips curve postulates between the rae of unemployment and the rate of increase of money wages ?

A
Inverse
B
Direct
C
Direct and proportional
D
Inverse and proportional

Question 79Single Answer

The concept of 'money illusion' was first given by whom ?

A
Milton Friedman
B
Irving Fisher
C
Robertson
D
J. M. Keynes

Question 80Single Answer

Which one of the following correctly describes the concept of 'Super Multiplier' ?

A
Investment multiplier
B
Money multiplier
C
Interaction between multiplier and accelerator
D
Employment multiplier

Question 81Single Answer

Given
I = 50 + 0.2Y
S = –150 + 0.4Y
G = 50
Where, I = Investment, S = Savings
G = Government Expenditure
Y = National Income
What is the equilibrium level of national income

A
2500
B
1250
C
250
D
1500

Question 82Single Answer

The independence of real variables from changes in money supply and nominal variables is called :

A
Keynesian dichotomy
B
Classical dichotomy
C
Money illusion
D
Money multiplier

Question 83Single Answer

Assuming the probability of a male birth as 0.5, find the chances that a family of 3 children will have two boys and one girl :

Question 84Single Answer

Which one of the following measures of central tendency will be the most appropriate to use if the data relates to rates, proportions and ratios ?

A
Arithmetic mean
B
M edian
C
Harmonic Mean
D
Geometric mean

Question 85Single Answer

The sampling distribution of mean based on a sample of 13 units selected without replacement shows a variance of 5 units. If the population consists of 49 units, estimate the variance of the population

A
80.67
B
84.87
C
86.67
D
86.87

Question 86Single Answer

In the classical linear regression model, X_i and U_i are assumed to be :

A
highly correlated
B
not correlated
C
positively correlated
D
negatively correlated

Question 87Single Answer

Identify which one of the following statements is INCORRECT ?

A
Intersection of two disjoint sets is a null set
B
Complement of a Universal set is a null set
C
If X ∩ Y =ϕ, then X-Y ≠X
D

Question 88Single Answer

Given Y = X³ – 12X² + 36X + 8, identify which one of the following is CORRECT :

A
Y is maximum at X = 6, and minimum at X = 2
B
Y is minimum at X= 6, and maximum at X = 2
C
Y has two inflexion points at X = 2 and X = 6
D
Point of optimality is indeterminate

Question 89Single Answer

Identify which one of the following statements is CORRECT :

A
A^–1 is equal to Adj (A) if the value of the determinant A is unity
B
If two columns of a determinant are interchanged, the sign of the determinant does not alter
C
The value of a determinant changes if the rows and columns are interchanged
D
Law of division is allowed in matrix operations

Question 90Single Answer

Identify which of the following statements with respect to Linear Programming Problem (LPP) is CORRECT ?

A
A solution is unbounded in an LPP if all the feasible solutions of the problem fall within the boundary created by its constraints
B
If A is primal problem and B its dual, then dual of B is Not A
C
The constraints of an LPP in standard form is always expressed in less than and equal to form
D
If an LPP has two optimum solutions, then it has also infinite number of optimum solutions

Question 91Single Answer

The Net Barter terms of trade refer to :

A
The excess of import expenditures over export earnings
B
Trade agreements
C
The ratio between export prices and import prices
D
The terms and conditions on which a country is offered a loan in the event of balance of payments difficulties

Question 92Single Answer

The items on the capital account of Balance of Payments are :

A
Flow variables
B
Stock variables
C
Changes in stock magnitudes
D
Both Stock and Flow variables

Question 93Single Answer

A sudden shift from import tariffs to free trade may induce short-term unemployment in :

A
Import competing industries
B
Industries that are only exporters
C
Industries that sell domestically as well as export
D
Industries that neither import or export

Question 94Single Answer

The optimum tariff means :

A
Most occur in the elastic range of the tariff imposing home country's offer curve
B
Takes account of the probability that the partner country will retaliate with protective measures of its own
C
Maximises total export sales of the imposing country
D
Must occur in the elastic range of the partner country's offer curve

Question 95Single Answer

The movement from old level of expenditure and taxation to a new and higher level is called :

A
Concentration effect
B
Inspection effect
C
Displacement effect
D
All of the above

Question 96Single Answer

Which method can help in obtaining a welfare improvement, if externalities exist ?

A
Pigovian taxes
B
Regulation
C
Assigning property righs and permitting bargaining
D
All of the above

Question 97Single Answer

The efficiency condition in the production of pure public good requires that the production be carried out up to a point when :
{where MB_i, represents marginal Benefit of the 'i^th' individual and MB_j represents marginal Benefits that accrue to the 'j^th' individual and MC is the marginal cost}