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

Total Questions: 100

91. According to the laureates, what leads to imminent collapse of banks?

Correct Answer: (c) When a large number of savers simultaneously withdraw their money
Solution:

When a large number of savers simultaneously withdraw their money.

92. What do the laureates suggest to prevent rumours-led bank collapses?

Correct Answer: (d) Government should provide deposit insurance and act as lender of last resort.
Solution:

Government should provide insurance and act as lender of last resort.

93. According to Diamond, how do banks ensure that loans are used for good investments?

Correct Answer: (a) Since banks act as intermediaries between savers and borrowers, they have better idea about the creditworthiness of the borrowers and hence can ensure loans are used for good investments.
Solution:

Since banks act as intermediaries between savers and borrowers, they have better idea about the credit worthiness of the borrowers and hence can ensure loans are used for good investments.

94. India's Presidency of the Group Twenty (G-20) is a matter of great pride for all Indians. The G-20 is an intergovernmental forum consisting of 19 countries such as Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, United Kingdom and United States and the European Union.

The G-20 was founded in 1999 after the Asian financial crises as a forum for international economic cooperation. The size of G-20 indicates its relevance in the global economy. The G-20 members represents around 85% of the global GDP, over 75% of the global trade and 67% of world population.

The G-20 summit is held annually under the leadership of a rotating presidency. India assumed the G-20 presidency from Indonesia on December 1, 2022 and will convene the G-20 leaders' summit for the first time in the country in 2023.

The theme of India's G-20 presidency is "Vasudhaiva Kutumbakam", that is, "One Earth, One family and One future" closely ties with LIFE (Lifestyle is Environment). The G-20 presidency steers the G-20 agenda for one year and hosts the summit.

The G-20 consists of two parallel tracks : the Finance track and the Sherpa track. Finance ministers and Central Bank Governors lead the finance track, while Sherpas lead the Sherpa track.

India's G-20 priorities are Green Development, Climate finance and life; Accelerated inclusive and resilient growth; Accelerating progress on SDG;

Technological transformation and Digital public infrastructure; Multilateral institutions for the 21st century; and Women Led development. India kickstarted its presidency term agenda with a series of initiatives and meetings.

As a part of this, India will host over 200 meetings in over 50 cities across 32 different work streams before conducting the annual G-20 summit in Delhi in September, 2023.

The 43 Heads of Delegations. the largest ever in G-20 will be participating in the final summit. Conducting of this summit definitely increases India's standing in the global order.

It is a great opportunity to showcase India's cultural heritage, culture and achievements to global leaders and India's commitment for global sustainable development.

For which purpose G-20 was originally founded? 

Correct Answer: (b) To discuss global economic and financial issues.
Solution:

To discuss global economic and financial issues.

95. Which one of the followings is not India's G-20 priorities?

Correct Answer: (c) Development and sustained border
Solution:

Development and sustained border.

96. The size of G-20 in terms of world population, global GDP and global trade respectively is.

Correct Answer: (d) 67%, 85% and 75%
Solution:

67%, 85% and 75%.

97. The theme of India's G-20 presidency is tied closely with-

Correct Answer: (d) Life style for environment
Solution:

Life style for environment.

98. The tracks in G-20 are.

Correct Answer: (a) Finance track and Sherpa track
Solution:

Finance track and Sherpa track.

99. In case of two goods for which the MRS is zero or infinite, then the nature of goods is :

Correct Answer: (c) Perfect compliments
Solution:

When two goods are perfect complements, the Marginal Rate of Substitution (MRS) is either zero or infinite:

Explanation: The MRS is the slope of an indifference curve, which is a graph that shows different combinations of goods that yield the same level of satisfaction to a consumers.

For perfect subs complements, the indifference curve is L-shaped or right angled. This is because the MRS for both products must be zero or infinite.

100. Which of the following is not true?

1. Total effect of price change on consumption of a good is a combination of income effect and substitution effect.
2. For inferior goods, income effect is always larger than substitution effect, in absolute terms.

4. For a normal good both the income and substitution effect hold.

Correct Answer: (b) 2
Solution:

(1) Yes, the total effect of a price change on the consumption of a good is the combination of the income effect and the substitution effect.

Income effect - The change in consumption patterns due to a change in purchasing power. This can occur when income increases, prices change, or currently fluctuates.

Substitution effect - The effect of the relative price change. This occurs when the price of one good decreases while the price of the other good remains the same.

(2) The statement "for inferior goods income effect is always larger than substitution effect is absolute terms" is not true.

Explanation -The income and substitution effect for inferior goods work in opposite directions :

Income effect : When the price of an inferior good increases, the income effect causes demand to increase because its the cheapest good available.

Substitution effect : When the price of an inferior good increases, the substitution effect causes consumers to look for alternative goods.

In practice, the substitution effect is usually larger than the income effect. This is because consumers typically allocate a small portion of their gross income to any given goods.


(4) For a normal goods both the income and substitution effect hold as both work in the same direction, a decrease in the relative price of the good will increase quantity demanded both because the good is now
cheaper than substitute goods, and because the lower price means that consumers have a greater total purchasing power.