NTA UGC NET/JRF Exam, June 2019 Economics (Shift-II)

Total Questions: 100

31. The provision under the membership clause of the IMF is that any country can become a member, if

Correct Answer: (c) The country is willing to be a member of the WTO and willing to pay all subscriptions in gold
Solution:

The provision under the membership clause of the IMF is that any country can become a member, if:- The country is willing to be a member of the World Bank and willing to pay subscription.

Any country can join IMF. 

1. Soverign Country:-The country must be a soverign country will complete control of its foreign affairs.
• Willing and able to meet obligations: the country must be willing and able to meet the obligations outlined in the IMF's artificial of agreement.
• Provide Information: The country must provided information about its economy.
• Pay a quota subscription: The country must may a sum of money called a quota subscription.

32. According to Marshall-Lerner condition for the foreign exchange market to be stable, the sum of the elastic ties of demand for imports and the demand for exports should be

Correct Answer: (d) more than
Solution:

The Marshall-Lerner condition (after Alfred Marshall and Abba P. Lerner) is satisfied if the absolute sum of a country's export and import demand elasticities (demand responsiveness to price) is greater than one.

33. The commodity or Net Barter Terms of trade are represented by the formula

Correct Answer: (d)
Solution:

The commodity or Net Barter terms of trade are represented by the formula:

34. 'Immiserizing growth' is the term given by

Correct Answer: (d) Jagdish Bhagwati
Solution:

Immiserizing growth is a theoretical economic phenomenon that can occur when a country economic growth results in a decline in social results in a decline in social welfare.

This happens when the gains from growth are outweighed by a negative shift in the country's terms of trade. Jagdish Bhagwati first proposed the theory of immiserizing growth in 1958.

35. Which of the following factors is NOT the cause for 'Market failure'?

Correct Answer: (d) Lack of demand
Solution:

Causes of market failure:-
1. Externalities
2. Public goods
3. Monopolies
4. Asymmetric information
5. Merit goods
6. Demerit goods
7. Environmental issues
8. Government failure
9. Perfect information
10. Public bads
11. Common property resources
12. Factor immobility
13. Imperfect markets
14. Market power
15. Indivisibilities
16. Inequality
17. Market control

36. Which of the following is an example of а public good?

Correct Answer: (b) National defence
Solution:

Example of a public good-National Defense. Public goods are goods and services that are available to everyone in a society without reducing their availability to others.

The government typically provides public goods, which are funded through taxes. Some examples of public goods include:

  • Clean air and water
  • National defense
  • Street lights
  • Police and fire protection
  • Emergency call service
  • Disaster relief
  • Legal system
  • Food and drug safety
  • Research and development to mitigation climate change
  • Children's playgrounds
  • Bank deposit insurance
  • Public education
  • Radio Public televsion
  • Free and open-source software

37. A tax is said to be direct, when

Correct Answer: (a) impact and incidence fall upon the same person
Solution:

A direct tax is a tax that a person or organization pays directly to the entity that imposed it. A tax is said to be direct, when impact and incidence fall upon the same person.

38. A toll tax is a tax based on which of the following?

Correct Answer: (a) The benefit principle
Solution:

Toll tax is a type of indirect tax (levied on services).
A toll tax is a tax based on the benefit principle.

39. Vertical equity in taxation means that

Correct Answer: (b) people in different income groups should be taxed differently
Solution:

Vertical equity in taxation is the principle that people with different incomes or wealth should pay different amounts of taxes. It is based on the idea that people with higher incomes and more assets should pay more in taxes than those with lower incomes and fewer assets.

40. Which of the following is NOT part of Wiseman and Peacock hypothesis?

Correct Answer: (d) Taxation effect
Solution:

The Peacock-Wiseman hypothesis, also known as the displacement effect, explains increase in government spending over time.
The hypothesis has three effects:-

1. Displacement Effect- When a social disturbance, like war, occurs, the government raises taxes and increases public expenditure to meet the disturbance this replaces low taxes and expenditures with higher ones.

2. Inspection Effect- When revenune lags required spending, the government and people must assess the revenue positions and find solutions.

3. Concentration Effect-When an economy is experiencing growth, central governemnt economic activities tend to grow faster than state and local government economic activity.