UGC NTA NET/JRF Exam, June-2023 Economics (Shift-I)

Total Questions: 100

1. The Uruguary Round of trade negotiations called for

A. the reduction of average tariffs on industrial goods
B. quotas to be replaced by tariffs
C. the reduction in agriculture export subsidies
D. the reduction in industrial subsidies.
E. antidumping and safeguards to be relaxed
Choose the correct answer from the option given below:

Correct Answer: (a) A, B, C, D only
Solution:

The Uruguay Round of trade negotiations called for.
(A) The reduction of average tariffs on industrial goods.
(B) Quotes to be replaced by tariffs.
(C) The reduction in agriculture export subsidies.
(D) The reduction in industrial subsidies.
Notes- The Uruguay Round was the largest ever international trade negotiation. It took place within the frame work of the general agreement an tariffs and trade (GATT) and was launched at Puntadel Exit.
Uruguay or 20 September 1986s formally concluded at Marrakesh, morocco, on 15 April 1994.

2. Based on the NITI Aayog of poverty for the year 2011-12, the states with above 30 percent rural poverty are

A. Manipur
B. Bihar
C. Sikkim
D. Uttar Pradesh
E. Nagaland
Choose the correct answer from the option given below:

Correct Answer: (d) A, B and D only
Solution:

Based on the NITI Aayog estimate of poverty for the year 2011-12, the states with above 30 percent rural poverty are-
(1) Manipur → 38.40%
(2) Bihar  → 34.06%
(3) Uttar Pradesh → 30.40%
Notes:-
• Sikkim → 9.85%
• Nagaland • 19%.

3. Match List I with List II

List-IList-II
A. Tax EvasionI. Bond Financing
B. Effective incidence of taxII. Illegal free riding
C. Legal incidence of taxIII. Obliged to deliver tax revenue to Government
D. Fiscal IllusionIV. Not necessarily correspond to on whom tax is imposed

Choose the correct answer from the options given below:

ABCD
(a)IIIIIIVI
(b)IIIIIIIV
(c)IIIVIIII
(d)IVIIIIII
Correct Answer: (c)
Solution:
List-IList-II
A. Tax EvasionIllegal free riding
B. Effective incidence of taxNot necessarily correspond to on whom tax is imposed
C. Legal incidence of taxObliged to deliver tax revenue to Government
D. Fiscal IllusionBond Financing

4. If S is a sample space and E is an event then the probability axioms can be written as

Choose the correct answer from the option given below:

Correct Answer: (d) A, B and C only
Solution:

Axiom 1: The probability of an
A. P (A) ≥ 0 event is always at least zero.
Axioms 2: The probability of all possible
B. P (S) = 1 out come is one.

Axiom 3:- The total probability of a number of non overlapping events is the sum of the individual probabilities:
A mathematical axiom is a statement that is presumed to be true even if it cannot be proven.

5. Give below are two statements:

Statement I: Division of labour is the starting point of Smith's theory of economic growth.
Statement II: It is division of labour that results in the greatest improvement in the production power of labour.

In light of the above statements, choose the correct answer from the options given below:

Correct Answer: (a) Both Statement I and Statement II are true.
Solution:

(1) Yes, the Division of labour is the starting point of smith's theory of economic growth. (2) Yes, it is division of labour that results in the greatest improvement in the productive power of labour.

Notes:- According to Adam Smith (1776), the main factors affecting the engine of economic growth are population growth capital growth, the division of labour (technological progress) and institutional frame work of the economy (Competitive-free trade market economy).

6. The BOP crisis of early 1990s made India borrow from the IMF which came on following conditions

A. Devaluation of rupee by 22%
B. Drastic custom cut to a peak duty of 30% from the erstwhile level of 130% for all goods
C. Consolidation of all indirect taxes into one tax
D. Excise duty to be increases by 20% to neutralize the loss of revenue due to custom cut E. Government expenditure to be cut by 10% per annum.
Choose the correct answer from the option given below:

Correct Answer: (d) A, B, D, E only
Solution:

In 1991, the International Monetary fund (IMF) provided a loan to India to help it overcome its economic crisis. The conditions imposed by the IMF for this loan included.

(1) Economic liberalization measure, including reducing government regulation and opening up the economy to foreign investment.
(2) Reducing government spending and increasing revenue through taxation.
(3) Devaluing the rupee to make exports more competitive.
(4) Eliminating subsidies and reducing trade barriers.
(5) Improving the efficiency of state owned enterprises.
(6) Strengthening the banking sector through reforms and increased transparency.
(7) Improving governance and reducing corruption.
(8) These conditions were intended to help India stabilize its economy and promote long-term.

7. The merchant's file of 20 accounts contains 6 delinquent and 14 non-delinquent. An auditor randomly selects 5 of these accounts for examination. What is the probability that the auditor finds exactly 2 delinquent cases?

Correct Answer: (c) 0.3087
Solution:

Exactly 2 deliquescent or non-deliquescent.
Let success is getting a deliquescent account.
Case 1→2 deliquescent
Binomial distribution -> n = 5, r = 2, P = 3/10, q = 7/10
(1) Probability of of deliquescent account = 6/20 = 3/10
(2) Probability of Non deliquescent account = 14/20 = 7/10
Case 2: 2non deliquescent.
n=5, r= 3 (as success is deliquescent account)
P = 3/10
q =7/10

8. The components of services sector in Gross Value Added (GVA) are

A. Construction
B. Trade, Hotels, Transport and Communication related to Broadcasting
C. Electricity, Gas, Water supply and other utility services
D. Public Administration, Defense and other services
E. Financial, Real Estate and Professional services
Choose the correct answer from the option given below:

Correct Answer: (e) (*)
Solution:

The components of service sector in gross value added (GVA) are
→ Financial, Real Estate and Processional Service. Public Administration, Defense and other services. construction.

Trade, Hotels, Transport, Communication and services related to Broad costing. Answer- (B, D, E).

9. Which one of the following is not a characteristic of market structure?

Correct Answer: (d) Vertical integration
Solution:

Vertical integration is not characteristics of market structure.
# Vertical integration is a business strategy where a company takes control of multiple stages of its production and distribution process.
This can include acquiring or merging with companies at different stages of the supply chain, or developing new production lines internally.

Notes:-Some characteristic of market structure.
(1) Number of buyers and sellers.
(2) Ease of entry and exit.
(3) Product differentiation.
(4) Market share.
(5) Negotiation power.
(6) Concentration
(7) Type of goods and service.
(8) Information flow.

10. Which of the following are true in case of Ramsey Rule for efficient taxation -

A. Tax rate should be higher on the good that has lower price elasticity of demand.
B. If the demand elasticity in a market is zero, taxes should be imposed only in that market.
C. Ramsey rule applies to taxation of goods, but not to taxation of income.
D. Ramsey rule minimises the excess burden of taxation across markets.
E. Ramsey rule does not necessarily result in social justice.
Choose the most appropriate answer from the option given below:

Correct Answer: (b) A, B, D and E only
Solution:

Case of Ramsey Rule for efficient taxation-
(1) Tax rate should be higher on the good that has lower prices elasticity of demand.
(2) It the demand elasticity in a market is Zero, taxes should be imposed only in that markets.
(3) Ramsey rule minimises the excess burden of taxationacross markets.
(4) Ramsey rule does not necessarily result in social justice.