NTA UGC NET/JRF Exam, December-2022 Economics (Shift-II)

Total Questions: 100

1. The negative network externality in which a consumer wishes to own an exclusive or unique good such as specially designed sports car is.

Correct Answer: (c) Snob effect
Solution:

The snob effect is the decreasing in the demand for a product due to the consumption of that product by others or the increasing consumption of that product by others.
Important Points -
The Snob effect is driven by the desire to own unique or exclusive products that are perceived as status symbols. People who consume less popular goods believe they are standing out and signaling to others that they are wealthy and sophisticated.

2. When each player has chosen his or her optimal strategy given the strategy chosen by other player, the situation is referred to as.

Correct Answer: (a) Nash Equilibrium
Solution:

Nash equilibrium is a game theory concept that describes a situation where no player has an incentive to change their strategy, even if they know what their opponents are doing.
Important points -
A Nash equilibrium is a strategy profile where no player has a dominant strategy. A dominant strategy is one that's superior to other strategies and guarantees the best payoff, regardless of what other palyers do.

3. Solve the following equation.

Correct Answer: (c) 11 and 111(1/3)
Solution:





So, profit maximum level of output (Q*) is 11and max 1112 profit of the firm is 111(1/3)

4. The condition of preferring a certain income to a risky income with same expected value is referred to as.

Correct Answer: (c) Risk averse
Solution:

Preferring a certain income to a risky income with the same expected value leads to a risk-averse behaviour.

Risk aversion is the tendency to avoid risk.
It is concave in shape.
Note -
Risk aversion is the to avoid risk and choose options with low uncertainty over those with high uncertainty. In finance, risk-averse investors prefer low-risk investments with steady returns over time, even if they may have lower returns than riskier investments.

5. Which one of the following is not a component of M₁?

Correct Answer: (c) Commercial paper
Solution:

M1 is the money supply that is composed of currency, traveler's cheque, demand deposits, other liquid deposits.

6. The Keynes's animal spirits are closely associated with.

Correct Answer: (b) Current investment
Solution:

The Keynes's animal spirits are closely associated with current investment. The term 'animal spirits' refers to the psychological and emotional factors that influence investors and consumers behavior in a market economy.

7. In the Mundell-Fleming model, the monetary policy will be more effective when there is.

Correct Answer: (a) Perfect capital mobility and flexible exchange rate
Solution:

In the Mundell-
 Fleming model, monetary policy is more effective in influencing a country's aggregate income under a floating exchange rate regime.

This is because the central bank can use instruments like money supply and interest rates to control domestic output without worrying about a balance of payments problem.

Important points-
 In the Mundell-Fleming model, the monetary policy will be more effective when there is perfect capital mobility and flexible exchange rate.

8. If the two events A and B are not independent then which of the following is correct?

Correct Answer: (b) P(A∩B) = P(A).P(B/A)
Solution:

In the two events A & B are not independent in P(A∩B) = P(A). P(B/A)
In this case P(A) is already done & P(B/A) when A is already done.

9. The chain-weighted index is.

Correct Answer: (c) A method for calcultating changes in prices that used an average of base year from neighbouring years.
Solution:

The Chain Weighted Index -
The Index measures the average change in prices that consumers pay for a basket of goods and services over time. This basket represents aggregate consumer spending. It is the most commonly used measure of inflation in the United States.
Important Points -
The Chain - Weighted index is a method for calculating changes inprinces that used an average of base yea from neighbouring years.

10. If the consumption function passes through the origin and APC = MPC then it must be.

Correct Answer: (a) Linear without any intercept
Solution:

If the consumption function passes through the origin and the average propensity to consume (APC) is equal to the marginal propensity to consume (MPC), then the consumption function is linear :

Explanation - The slope of the consumption function is the MPC. If the MPC is constant, then the consumption function is linear and will be represented as a straight line.

Definition - The APC is the percentage of income spent on goods and services. The MPC is the ratio of the change in income.