ECONOMICS PAPER III UGC NET MCQS FOR UNIT VII

Unit-VII

Industrial structure and economic growth

Pattern of industrialization – Public and Private; large and small industries

Theories of Industrial location – Indian experience

Industrial productivity – measurement, partial and total trends Industrial Finance in India

Industrial Labour – Problems, policies and reforms in India Economic Reforms and industrial growth

1. In which of the following y was the highest growth of general index of industrial production in India registered?

(a) 2001-02

(b) 2002-03

(c) 2003-04

(d) 2004-05

Ans. (d)

2. Consider the following statements about industrial relations on the basis of Economic Survey:
1. There was a constant decline in the number of strikes and lockouts during 2000 - 05 in India.
2. The maximum number of strikes and lockouts in the year 2006 were experienced by Kerala, followed by Tamil Nadu and West Bengal.

Which of the statements given above is/are correct?
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2

Ans. c

3. Which is not the characteristic of socialist or planned economy ?
(A) Government is the owner of resources
(B) Production decisions are determined by the government
(C) Profit motive
(D) None of the above
Ans : (C)

4. The main feature of mixed economy is—
(A) Combination of free market economy and centrally planned economy
(B) Production is carried out by private individuals and government
(C) Both of the above
(D) None of the above
Ans : (C)

5. What per cent of GDP at 2004-05 prices was contributed by agriculture and related sectors in 2009-10 ?
(A) 14•6%
(B) 17•6%
(C) 19•0%
(D) 19•8%
Ans : (A)

6. According to World Development Report 2010, Low income economies are those whose per-capita gross national income is—
(A) $ 975 or less than this
(B) Less than $ 11905
(C) Less than $ 4526
(D) None of the above
Ans : (A)

7. Which of the following country's economy is known as high income economy ?
(A) America
(B) U.K.
(C) Singapore
(D) All of the above
Ans : (D)

8 “An Enquiry into the Nature and Causes of Wealth of Nations” is the book of economist—
(A) Adam Smith
(B) Marshall
(C) Robbins
(D) None of above
Ans : (A)

9. “Economics is the Science of Wealth” who gave this definition ?
(A) J. K. Mehta
(B) Marshall
(C) Adam Smith
(D) Robbins
Ans : (C)

10. “Economics is what economists do.” It has been supported by—
(A) Richard Jones
(B) Comte
(C) Gunnar Myrdal
(D) All of the above
Ans : (D)

11. How many countries of Latin America and Africa have been notified by the Ministry of Commerce under the newly introduced ‘Focus Market Scheme’ for export promotion ?
(A) 37
(B) 57
(C) 81
(D) 115
Ans : (B)

12. According to the latest statistics released by International Tea Committee, the largest tea producer country in the world is—
(A) India
(B) Kenya
(C) China
(D) Indonesia
Ans : (C)

13. Which company among the following started GPS service on mobile phone in April 2009 ?
(A) Reliance Communications
(B) Tata Tele Services
(C) Bharati Airtel
(D) BSNL
Ans : (B)

14. The operational period for the recommendations of 13th Finance Commission will be—
(A) 2008–13
(B) 2009–14
(C) 2010–15
(D) 2011–16
Ans : (C)

15. According to the Global Competitiveness Report 2008-09, India gets competitiveness ranking
at—
(A) 46th
(B) 50th
(C) 52nd
(D) 55th

Ans c

16. The Ex-officio Secretary of NDC is—
(A) Secretary of Finance Ministry
(B) General Secretary of Lok Sabha
(C) Secretary of Planning Commission
(D) Vice Chairman of Planning Commission

Ans. a

17. For charters and cargo services, what is the new FDI ceiling announced by the government ?
(A) 100%
(B) 75%
(C) 61%
(D) 51%

Ans. c

18. In National Mineral Policy (1993) which mineral was allowed for having investment from private sector—
(A) Coal
(B) Iron
(C) Gold
(D) Platinum

Ans. d

19. The share of road transport in total transport of the country is—
(A) 20%
(B) 40%
(C) 60%
(D) 80%

Ans. c

20. At the end of September 2008, India’s foreign debt stood at $ 222·61 billion in which share
of long term debt and short term debt stands at—
(A) 80 : 20
(B) 20 : 80
(C) 77·5 : 22·5
(D) 22·5 : 77·5
Ans. c

21. Which statement is correct for Indian Planning Commission ?
(A) It is not defined in Indian Constitution
(B) Members and Vice-Chairman of it do not have fixed working duration
(C) Members do not require any minimum education
(D) All of these

Ans. b

22. Foreign Trade Policy 2008-09 document forecasts the share of India’s trade in world trade at—
(A) 1·2%
(B) 1·3%
(C) 1·4%
(D) 1·5%
Ans. c

23. Which of the following concepts represents the extra revenue a firm receives from the services of an additional unit of a factor of production?
a. total revenue
b. marginal physical product
c. marginal revenus product
d. marginal revenue 

Ans. c

24. The demand for labor is the same as the
a. marginal revenue product
b. marginal physical product
c. marginal cost
d. wage

Ans. a

25. The demand for labor slopes down and to the right because of
a. the law of demand
b. the iron law of wages
c. the law of diminishing marginal returns
d. economies of scale
ans. c
26. The demand for labor will be more elastic if:
a. there are few substitutes for labor
b. there is a short time under consideration
c. labor is a large percent of the total cost of production
d. the demand for the product is relatively inelastic
e. all of the above
Ans.c
27. Skills that can be transferred to other employers are called:
a. general skills
b. specific skills
c. non-pecuniary skills
d. all of the above
Ans. a
28. Which skills are most likely to be paid for by the employer?
a. General skills
b. Specific skills
c. Educational skills
Ans.b
29. If worker A earns more in wages than worker B, it could be because:
a. The product made by worker A sells for a higher price than that made by worker B
b. Worker A uses more capital per worker than worker B
c. Worker A has more natural ability than worker B
d. All of the above
Ans. d
30. Skills that embodied in a person are called
a. Human capital
b. Embodied skills
c. Physical capital
d. Experience skills

Ans. a

31. “Treating an individual as typical of a group” is the definition of
a. pure discrimination
b. statistical discrimination
c. human capital
d. specific skills

Ans. b

32. The rate of growth of Indian
economy during last three years
has been 8 per cent. At this rate
the G.N.P. will be double in-
(A) 12 years (B) 9years
(C) 15 years (D) 10 years

Answer.B

33. For equitable development it is
necessary that-
(A) Proportionate benefit to all
classes
(B) Main benefit goes to rich
persons
(C) Main benefit goes to poor
persons
(D) Main benefit goes to middle
classes

Answer.A

34. Bank rate in India is determined
by-
(A) Government
(B) Commercial Banks
(C) Reserve Bank of India
(D) Cooperative Banks

Answer.C

35. Entrepreneurial activity is per-
formed-
(A) By rich persons
(B) Who works under conditions of certainty
(C) Who works only on the basis
of past experiences
(D) Who works under conditions of uncertainty

Answer.D

36. Trade off means—
(A) Simultaneous increase in
two variables
(B) Increase in one variable,
keeping the other constant
(C) Decrease in other variable
with increase of one
(D) None of the above

Answer.C

37. A firm will suffer l0ss—
(A) If the price is less than
average fixed cost + average •
variable cost
(B) If the price is less than
variable cost
(C) lf the price is less than
average fixed cost
(D) lf the price is more than
average fixed cost + average
variable cost

Answer.A

38. lf the amount of 100 crore is
invested in an economy and if
marginal propensity to consume
is 0•8, then increase in national
income will be—
(A) 80 crore
(B) 300 crore
(C) 500 crore
(D) None of these

Answer.C

39. If the total cost of production of
400 units is Rs. 8,000 and of 399
units is Rs. 7,990, then the
production is under—
(A) Law of increasing Returns
to the Scale
(B) Law of Decreasing Returns
to Scale
(C) Law of Constant Returns to
Scale
(D) None of the above

Answer.A

40. Inflation in India is measured
by?
(A) Change in wholesale price
index
(B) Increase in currency in
circulation
(C) Change in retail price index
(D) Credit created by the banks

Answer.A

41. The movement from non-Pareto
to Pareto equilibrium is desirable
because-
(A) It increases the production
of first commodity without
adversely affecting the production of second
(B) It increases the production
of second commodity more than
it decreases the production of
first
(C) It increases the production
of first commodity more than if
decreases the production of
second one
(D) None of the above

Answer.A

42. Inflation means-
(A) When the prices of necessities increase
(B) When the general price
increases for a long period
(C) When there is a seasonal
fluctuation in prices
(D) When the prices of luxuries
increase

Answer.B

43. Speculative Demand for money
and Interest rate are related—
(A) Inverse relationship
(B) Direct relationship
(C) No relationship in these
(D) None of these

Answer.A

44, When the demand for money
increases for investment-
(A) Will decrease the multiplier
effect
(B) Adversely affect the consumption
(C) Interest rate will remain
unchanged
(D) The increase in interest rate
will depend upon the slope of
investment curve

Answer.D

45. Disinflation means—
(A) When increase in prices in
the long run
(B) When the prices increase
due to export
(C) When the increase in prices
is more than average
(D) When increased prices
decrease

Answer.D

46. If any firm uses only two factors
of production, namely labour (L)
and capital (K), which of the
following equations represent
minimum cost of production

(A) MPPL/ PL = MPPK / PK
(B) MPPL x PL = MPPK x PK
(C) MRPL = MRPK
(D) MPPL : MPPK

Answer.A

47, Devaluation of money means—
(A) Decrease in purchasing
power of money
(B) Increase in purchasing
power of money
(C) Decrease in external value
of money
(D) None of the above

Answer.C

48. Money supply could be
increased when-
(A) Central Bank purchases
government securities
(B) Central Bank sells government securities
(C) Cash-reserve ratio of banks
is increased
(D) Commercial Banks increase
the amount deposited with Central Bank

Answer.A

49. Minimum wage should be deter-
mined-
(A) Less than prevailing wage
rates
(B) Higher than equilibrium
rate in die market
(C) Minimum Physical and
Social needs may be fulfilled
(D) None of the above

Answer.C

50 Pigou’s concept of equilibrium
firm is a-
(A) Completely new concept,
having nothing to do with
Marshallian representative firm
(B) Revised version of
Marshallian representative firm
(C) Marshall’s representative
firm is a revised version of
Pigou’s equilibrium firm
(D) None of the above

Answer.B

51. Passive factor of production is—
(A) Only land
(B) Only capital
(C) Both land and capital
(D) Neither land nor capital
Ans : (C)

52. What is the percentage of rural
working population in 1991-
2001 ?
(A) Increased in case of females
but decreased in males
(B) Increased in case of males
but decreased in females
(C) Increased in both, males and
females
(D) Decreased in both, males
and females

Answer.A

53. For retrenchment, government
permission is necessary if-
(A) The unit has 100 or more
labourers
(B) The unit has more than 500
labourers V
(C) The unit has more than 50
labourers
(D) It is necessary for every
industrial unit

Answer.A

54. Which of the following would include Foreign Direct Investment in India?

 1. Subsidiaries of foreign companies in India

 2. Majority foreign equity holding in Indian companies

 3. Companies exclusively financed by foreign companies

 4. Portfolio investment

 Select the correct answer using the codes given below:

 (a) 1, 2, 3 and 4 (b) 2 and 4 only

 (c) 1 and 3 only (d) 1, 2 and 3 only

Ans. (d)

55. Despite having large reserves of coal, why does India import millions of tonnes of coal?

 1. It is the policy of India to save its own coal reserves for future, and import it from other countries for the present use.

 2. Most of the power plants in India are coal-based and they are not able to get sufficient supplies of coal from within the country.

 3. Steel companies need large quantity of coking coal which has to be imported.

 Which of the statements given above is/are correct?

 (a) 1 only (b) 2 and 3 only

 (c) 1 and 3 only (d) 1, 2 and 3

Ans. (b)

56. If the total cost of producing 400
units is Rs. 4,000 and total
variable cost is Rs. 2,600, then
per unit fixed cost will be-
(A) Rs. l0 (B) Rs.3.50
(C) Rs. 40 (D) Rs.6.50

Answer.B

57. Marginal cost can be obtained
by-
(A) TCn — TCn-1
(B) TCn + TCn+1
(C) ACn — ACn-1
(D) ACn + ACn+1

Answer.A

58. During these years of liberalization-
(A) There has been increase in
productivity of labour but
decrease in the share in national
income ,
(B) Productivity of labour and
their share in national income,
both have decreased
(C) There has been no increase
in productivity of labour and
their share in national income
(D) The productivity of labour
and their share in national
income, both have decreased
Which of above statement is
correct ?

Answer.A

59. During these years about 1 lac
farmers have taken resort to
suicide. What is the reason ?
(A) Increase in fluctuation in
prices due to imports
(B) Increasing indebtedness
(C) Increase in cost of production
(D) There has been increase to
suicide cases in general population

Answer.B

60. In U.S.A. and other developed
countries, depression is spreading fast. The effect of the same
on Indian economy-
(A) Will be equally
(B) Will be too much since
India is a developing country
(C) Will be relatively less
(D) Will be no effect on India

Answer.C

61. Monopolistic exploitation of labour occurs when

a. wage is less than marginal revenue product

b. both wage and marginal revenue product are equal

c. wage is more than the marginal revenue product

d. Wage is equal to marginal physical product.

Ans. c

62. Under the Keynesian Liquidity trap conditions, an increase in money supply will

a. reduce the rate of interest

b. both wage and marginal revenue product are equal

c. wage is more than the marginal revenue product

d. Wage is equal to marginal physical product.

Ans. a

63. Under the Keynesian Liquidity trap conditions, an increase in money supply will

a. deposit mobilization in India

b. branch expansion in various parts of the world

c. financing India's foreign trade

d. lending to weaker sections in India

Ans. a

64. In which one of the following situations should a country pursue a cheap money policy?

a. Balance of payments is unfavorable

b. Price-are rising

c. Gold is likely to flow out of the country

d. Level of employment is low

Ans. c

65. Normally, a country exports the commodity which is intensive in the use of its relatively abundant factor and imports the commodity which is intensive in the use of its relatively scarce factor. this has reference to.

a. Harberler's theory of opportunity cost in international trade

b. J.S. Mill's theory of reciprocal demand

c. Heckscher – Ohlin's theorem

d. None of the above

Ans. c

66.  Match List 1 with List 2 and select the correct answer using the codes given below the lists.

List I

A. Absolute advantage

B. The doctrine of comparative cost

C. Investment multiplier

List II

1. J.S. Mill

2. J.M Keynes

3. David Ricardo

4. Adam Smith

Codes: A B C

a. 4 3 2

b. 3 1 2

c. 4 2 3

d. 2 3 4

Ans. d

67. Trade as an 'engine of growth" has in the past operated in the a. world as a whole

b. nineteenth century

c. developing countries

d. twentieth century

Ans. b

68. Prebisch-Singer thesis enunciates that an important factor inhibiting the growth of developing countries has been

a. the secular deterioration in terms of trade experienced by them in commodity trade

b. high population growth rate

c. lack of effective demand in the domestic economy

d. low rate of domestic saving and investment

Ans. c

69. Calculating the size of gaps as per Chenery's two gap model, what will be the " savings gap" if the target growth rate of national real income in 6 percent, the capital out put ratio is 3: 1, the marginal saving rate is 13 percent and the initial savings ratio is also 13 percent?

a. 7 %

b. 6%

c. 5%

d. 4%

Ans. b

70. In the keynesian system, all fall in money wage rate will lead to:

a. an increase in employment

b. a decrease in the price level

c. an increase in the interest rate

d. a decrease in the quantity of money

Ans. a

71. Phillips curve shows the relation between the

a. percentage of wage increase and the percentage of unemployment of economy's labour force

b. percentage of wage' increase and the percentage of increased employment of economy's labour force

c. percentage of price change and the percentage of change in income

d. percentage of price change and the percentage of change in demand.

Ans. c

72. In the Ricardian model, a higher growth rate of accumulation will.

a. postpone the stationary state

b. hasten the stationary state

c. reduce the population growth rate

d. cause increasing returns to emerge

Ans. b

73. Mahalanobis plan model adopted in India in the fifties aimed at.

a. building a strong defence industry base

b. setting up heavy industries which

were capital intensive

c. curbing inflation in the economy

d. removing unemployment without short

Ans. c

74. The selective regional planning approach aim at

a. selecting specific regions in a country for optimum development

b. providing equal investment in selected regions

c. equal development rates for all regions in selected sectors

d. deliberate unequal development rates for the different regions of the economy

Ans. c

75. Of the following states, per capita net state domestic product in India during 1988-89

(current prices) was the highest in. Liquidity trap refers to

a. Punjab

b. Kerala

c. Haryana

d. Nagaland

Ans. c

76. Of the following states, per capita net state domestic product in India during 1988-90 works out to 5.2 percent at 1980-81 prices. Given a capital output ratio of 4.1, what is the estimated saving rate, assuming not foreign aid?

a. 9.3 percent

b. 20 percent

c. 21.3 percent

d. 24.4 percent

Ans. b

77. Which one of the following makes up the common aim of economic planning during successive Five Year plan of India?

a. Reduction of disparities in income and wealth

b. Expansion of employment

c. Prevention of concentration of economic power

d. prevention of concentration of economic power

Ans c

78. Of all the additional rural programmes, which one of the following was stressed during the Sixth plan?

a. Integrated rural development

b. Rural literacy development

c. Rural railways

d. Advanced communication link for rural people

Ans. c

79. Which one of the following is true in respect of the balance of payment at the end of the first half of the Second five Year Plan of India?

a. A surplus resulted from an excess of exports over imports

b. A deficit on trade was covered by surplus on invisible account

c. balance of payment was undisturbed and not new problem arose here

d. A foreign exchange problem appeared

Ans. d

80. Which one of the following was a feature of India's third Five year Plan?

a. Integrated Rural DEvelopment Project

b. Rural works Programme

c. Special Jute Development Project

d. Special Oilseeds Development Project

Ans. a

81. (i) Milton Friedman's Approach
(ii) Fishers Approach
(iii) Stock Balance Approach
(iv) Keynes Approach
Codes :
(A) (ii), (iii), (iv), (i)
(B) (i), (ii), (iii), (iv)
(C) (iii), (i), (ii), (iv)
(D) (iv), (iii), (i), (ii)

Ans. a

82 Assertion (A) : Backwash effects imply an unfavourable situation arising in
underdeveloped countries. Reason (R) : Undue emphasis on exports of raw-materials at the expense of the growth of domestic manufacturing.
(A) (A) is true, but (R) is false
(B) Both (A) and (R) are false
(C) Both (A) and (R) are true and (R) is the correct explanation of (A)
(D) Both (A) and (R) are true, but (R) is not the correct explanation of (A)

Ans. c

83. Assertion (A) : Low levels of labour productivity exist in underdeveloped countries.Reason (R) : It is due to the lack of physical capital.
(A) Both (A) and (R) are false
(B) (A) is true, but (R) is false
(C) Both (A) and (R) are true and (R) is the correct explanation of (A)
(D) Both (A) and (R) are true, but (R) is not the correct explanation of (A)

Ans. a

84. Production function explains

a. The relationship between Qty of inputs employed and the corresponding total  production cost.

b. The relationship between the firms total revenue and total production cost.

c. The relationship between qty of inputs used and the corresponding output  obtained.

d. The relationship between market price charged and quantity supplied.

Ans. a

85. In case of short run production function Qty of fixed input remains constant and

a. Qty of either one or two variable inputs change.

b. Qty of one or two variable inputs are kept constant as Qty of fixed inputs change.

c. The Qty of both fixed as well as variable inputs remains constant.

d. The Qty of both variable and fixed input change.

Ans. c

86. In case of long run production

a. The Qty of both fixed and variable inputs are changed.

b. The Qty of both fixed and variable inputs are kept constant.

c. The Qty of both fixed and variable inputs are changed in the same proportions.

d. The Qty of both fixed and variable inputs are changed in different proportions.

Ans. b

87. Williamson's model is an example for

a. Profit maximization model.

b. Non- Profit maximization model.

c. Managerial utility model.

d. Behavioral model.

Ans. c

88. Marris model is an example for

a. Profit- maximizing model.

b. Non-profit maximizing model.

c. Behavioral model.

d. Growth maximizing model.

Ans. c

.

89. If a production function is homogenous of degree one it implies that

a. There is decreasing return to scale.

b. There is increasing return to scale.

c. There is constant return to scale.

d. None of these.

Ans. b

90. Reviewing the over-all achievements of planning in all the Five Year Plan, the Government daft of the sixth Plan mentions: "It is a cause of legitimate national pride that over this period no stagnant and dependent economy has been modernized and made more self-reliant". Then which model of development are these achievements ascribed?

a. Gandhian Model

b. Mahalanobis model

c. Marxian model

Ans. c

91. Assertion (A): It is difficult to replicate the development process of the developed countries in the less developed countries.

Reason (R): Presently less developed countries are to start from much lower economic levels than was true for the presently developed countries.

a. Both A and R are true and R is the correct explanation

b. Both A and R are true but R is not a correct explanation

c. A is true but R is false

d. A is false R is true

Ans. c

92. Assertion (A): There has been a steady decline in relative poverty in India.

Reason (R): New economic reforms (1991) are anti-poverty oriented.

a. Both A and R are true and R is the correct explanation

b. Both A and R are true but R is not a correct explanation

c. A is true but R is false

d. A is false R is true

Ans b

93. Assertion (A): Indian development planning is oriented towards growth with social justice

Reason (R): India inherited a colonial economy.

a. Both A and R are true and R is the correct explanation

b. Both A and R are true but R is not a correct explanation

c. A is true but R is false

d. A is false R is true

Ans. a

94. Assertion (A): One of the impediments in the industrialisation of backward areas in the lack of adequate infrastructural facilities.

Reason (R): The growth centre approach announced in 1988 is government of India's answer to the problem of poor industrialisation in backward areas.

a. Both A and R are true and R is the correct explanation

b. Both A and R are true but R is not a correct explanation

c. A is true but R is false

d. A is false R is true

Ans. a

95. Assertion (A): Guaranteeing right to work

is a full employment policy.

Reason (R): This is a necessary condition

for solving unemployment in India.

a. Both A and R are true and R is the

correct explanation

b. Both A and R are true but R is not a

correct explanation

c. A is true but R is false

d. A is false R is true

Ans. c

96. Assertion (A): The GNP is the value of all

goods and services produced annually in

the nation.

Reason (R): The most comprehensive

measure of nation output is the GNP.

a. Both A and R are true and R is the

correct explanation

b. Both A and R are true but R is not a

correct explanation

c. A is true but R is false

d. A is false R is true

Ans. b

97. In calculating a country's NNP at factor

costs, which on of the following elements

is not included?

a. Rent, interest, wages and profits

b. Supplements to wages paid by

employers under social security

arrangements.

c. Factor payments from abroad

d. Indirect taxes.

Ans. c

98. The size of the gap between actual and

potential GNP is a measure of

a. inflationary gap

b. deflationary gap

c. savings-investment gap

d. natural rate of unemployment

Ans. c

99. In the case of a Cobb-Douglas production

function, output elasticity of an input is

a. a constant

b. unity

c. a function of all the inputs

d. indeterminate

ans. c

100. Dumping involves

a. selling at lower prices in the market'

b. price discrimination between the two

markets.

c. surplus production at lower cost

d. price discrimination between the home

market and foreign market.

Ans. c