NTA UGC NET/JRF Exam, Dec. 2019 Economics (Shift-I)

Total Questions: 95

21. Which one of the following is an example of a positive externality ?

Correct Answer: (a) Public immunizations
Solution:

Examples of positive externalities ⇒ Education, Electric cars, a nice garden, public immunization installation of street lights and construction of parks, subsidies, vaccines etc. Positive externality means did good to others but does not receive any compensation for themself for doing so.

22. Which amongst the following market form leads to most efficient allocation of resources?

Correct Answer: (d) Perfect Competition
Solution:

Perfect competition is one method for allocating resources in an economy. It is widely thought to be better and more efficiency than other approaches for allocating scarce resources.

Note: Perfect competition describes an imaginary market condition where all consumers have access to the same products and information.
In this type of economy, all firms must offer the lowest price possible or risk being undercut by their competitors.

23. Incidence of tax refers to:

Correct Answer: (c) The person or group who ultimately pays the tax
Solution:

Tax incidence (or incidence of tax) is an economic term for understanding the division of a tax burden between stakeholders, such as buyers and sellers or producers and consumer tax incidence can also be related to the price elasticity of supply and demand.  Incidence of tax refers to the person or group who ultimately pays the tax.

24. 'Displacement effect' in the Peacock-Wiseman Hypothesis implies:

Correct Answer: (b) The movement from older level of public expenditure and taxation to a newer and higher level
Solution:

The displacement effect in the PeacockWiseman hypothesis is a mechanism that describes how, governments can manage the financial implications of war by increasing tax during times of conflict.

This effect occurs when a social disturbance, like war, causes the government to raise taxes to increase revenue and public expenditure to meet the social disturbances. This creates a displacement effect in which low taxes and expenditure are replaced by higher tax and expenditure levels.

25. Which one of the following is correct for the money supply measure - Mi?

Correct Answer: (a) Currency with the public + demand deposits of Commercial Banks + other deposits at a point of time
Solution:

Currency with the public + demand deposits of commercial bank + other deposits at a point of time; is correct for the money supply measure M₁.

26. Which amongst the following is not the source of the income of RBI?

Correct Answer: (d) Dividend on the shares of private equity held with the bank
Solution:

Dividend on the shares of private equity held with the bank is the part of the return for investors in private equity is through receiving dividends, much like shareholders of a public company.

This process is known as dividend recapitalization and involves the process of raising debt to pay private equity shareholders a dividend.

27. Insolvency and bankruptcy code is primarily entrusted with which of the following?

Correct Answer: (c) Facilitating banks recover higher amount of bad loans then they recovered earlier
Solution:

The insolvency and bankruptcy code, 2016 aims to: consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms, and individuals in a timebound manner for maximization of the value of assets of such persons promote entrepreneurship.

28. When the market rate of interest falls, which one of the following will happen?

Correct Answer: (c) Bond price will rise and bond yield will fall
Solution:

When the market rate of interest falls bond prices tend to increase and bond yields tend to decrease. This is because interest rates and bond prices have an inverse relationship.

29. The elasticity of substitution (σ) of the production function which admits of both Hicks and Harrod neutral technical progress would be:

Correct Answer: (b) σ = 1
Solution:

The elasticity of substitution (σ) of a production function that admits both Hicks and Harrodneutral technical progress is 1, or constant unit elasticity of substitution.
σ = 1
Elasticity of substitution is the ratio of the percentage change in the capital-labor ratio to the percentage change in the marginal rate of technical substitution.
It measures how easy it is to substitute one input for another, and gives a measure of the curvature of an isoquant.

30. In which of the following models 'knife-edge' problem occur ?

Correct Answer: (c) Harrod
Solution: