NTA UGC NET/JRF Exam, June 2020 Economics

Total Questions: 100

31. If the disturbance term is heteroscedastic, which one of the responses based on given statements, is true?

A. OLS estimates are biased
B. OLS estimates do not have the minimum variance property
C. Tests of significance based on OLS estimates will be inaccurate
D. OLS estimates are inconsistent
Choose the correct answer from the options given below:

Correct Answer: (c) B and C are true only
Solution:

As there is disturbance term is hteroscedastic so the OLS estimate do not have the minimum variance property and tests of significane based on OLS estimates will be inaccurate.

32. Based on the order condition, state whether the first equation is identified?

Given the following structural modelwhere y's are the endogenous variables, x's are predetermined variables and u's are random terms:

Correct Answer: (c) Exactly Identified
Solution:


This order condition for identification is based on the counting role of variables included and excluded from the particular solution. It is necessary but insufficient. K is total number of variables in the whole equation.
M is the number of variables in a particular equation. G is no of equation.
Cases: 1. When K - M = G - 1, then it is case of just or exactly identified.
2. K-M>G - 1, then over identified.
3. K-M<G-1, then under identified. equation; Y₁ = 3у₂ - 2x₁ + X₂ + V₁.
then, k = У₁, У₂, У₃, Х₁, Х₂, Х₃, hence, k = 6
М = У₁, У₂, Х₁, Х₂ then, M = 4
as, K = 6, M = 4
So, K - M = 6 - 4 = 2
G-1 = 3-1 = 2
K - M = G - 1, therefore, the status of the equation is just/exactly identified.

33. Which one of the following response is true as a solution for simultaneous equation bias?

A. OLS Method
B. Principle Component Method
C. Two-Stage Least Square Method (2 SLS Method)
D. Full Information Maximum Likelihood Method (FIML)
Choose the correct answer from the options given below:

Correct Answer: (c) C and D are true only
Solution:

To mitigate simultancity bias, econometric techniques such as instrumental variable regression, two-stage least squares, or panel data methods can be employed. For eg. in studying the relationship between investment and economic growth, both variables may be endogenous.

Two-stage least square method (2SLS Method)
Full Information Maximum Likelihood Method (FIML)

34. A time series, under the condition E (Xₜ) = μ and Cov (Xₜ Xₜ₊ₖ) = 'Y'(k) is said to be:

Correct Answer: (c) Weakly Stationary
Solution:

Weakly statinoary time series requires that mean and variance of the process remains unchanged as time elapses but covariance depends on its time difference i.e. lag.
E (Xₜ) = u, which is constant, and cov (Xₜ, Xₜ - K) = Y(K), which only depends on K.

35. Match List-I with List-II

Correct Answer: (a) A-IV, B-I, C-III, D-II
Solution:

The correct match is:-

36. Given the Total Revenue function, TR = 1400Q - 6Q² and Total Cost Function, TC = 1500 + 80Q, at Q = 100 units (where Q is the amount of output), which one of the following responses is correct?

A. MR > MC
B. MC = 80
C. MR < MC
D.MR = MC
Choose the most appropriate answer from the options given below:

Correct Answer: (a) A and B are true only
Solution:

TR = 1400Q – 6Q²
TC = 1500+ 80Q
Q = 100 units
MR = 1400 – 12Q = 1400 - 12 x 100
= 1400 - 1200 = 200
MC = 80
Hence, MR = 200
MC = 80
So, MR > MC

37. Solve the following equation?

Correct Answer: (b) A and C are true only
Solution:

38. Given below are two statements, one is labelled as Assertion A and the other is labelled as Reason R.

Correct Answer: (a) Both A and R are correct and R is the correct explanation of A
Solution:

Matrix is a set number arranged in the form of rectangular array of m row x and n column.

In this given question there is 3 rows and 3 columns hence it is 3 x 3 matrix. Determinant is associated with a square matrix which can be extended with any row or column.

Laplace expansion will help to solve the determinant with the expansion method and helps to solve determinants with cofactors and minors.

Minors, let us have a matrix of order 3, then minor of an element all now the minor is the determinant of submatrix obtained from the given matrix by deleting 1st and 1st column containing a 11.

Cofators; C₁₁ = (-1)¹⁺¹ M₁, M is minor.
Laplace expansion permits evaluation of a determinant along any row or column both A and R is correct and R is the correct explanation of A.

39. Given the Total Cost, TC = Q³ - 10Q³ + 60Q, what will be the Minimum average cost? At what level of output will the minimum cost occur? (Q is the level of output)

Correct Answer: (a) Minimum average cost is ACₘᵢₙ = 35 at Q = 5
Solution:

40. Which one of the following is a valid objective function as a liner programming problem?

Correct Answer: (d) Min Z = 5x + 2y
Solution:

The linear programming is a problem that is concerned with finding the optimal value of the given linear function. Here LPP is Min Z = 5x + 2y.