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MOCK TEST-I JNU ENTRANCE M.A. (Economics) Time : 3 Hrs Marks : 100 Instruction: (i) This question paper has three Sections (ii) Section A has 30 multiple choice question of 1 mark each (iii) Section B has 10 multiple Choice questions of 3 marks each. (iv) Section C contains 6 problems of which any 4 must be answered. Each problem carries 10 marks. 1. If x, y are real number sand it is known that x.y < 2 (the product of x and y is less than 2), then it MUST be the case that (a) x, y are both less then 2 (b) x, y are both positive (c) At least one of x and y is positive (d) At least one of x and y is less than 2. 2. Let x, y and z be arbitrary real numbers. Then we must have (a) if x > y, then x.z > y.z (b) if x > y, then x – z > y – z (c) if x > y, then x/z > y/z (d) if x > y, then 1/x > 1/y 3. Suppose n observations of a variable yield n different values with median m. Suppose the observations with the maximum value and the minimum value are omitted. The median of the remaining n-2 observation is (a) >m (b) m (c) <m (d) None of the above 4. Consider the function y x defined in the interval I 1 1, x 0 is 3 (a) A point of local maximum in I (b) A point of local minimum in I (c) A point of inflexion in I (d) A point of global extremum in I 5. The coefficient of variation of income of people in a country is 5. Due to changes in units of currency, everybody’s income in doubled. The coefficient of variation will now become (e) (a) 10 (f) (b) 5 (g) (c) 12 (d) (d) 12/5 6. Suppose a consumer’s preference are given by the utility function U 4 x1 x 2 . Suppose the consumer’s original equilibrium was x1 9, x 2 10 . If the consumption of x 1 reduces to 4, how many units of x 2 must he consume to remain on the same indifference curve? (a) 10 (b) 8 (c) 14 (d) 5 Bliss Point Studies 9811343411 1 9891555578 MOCK TEST-I 7. Commodities x 1 and x 2 are perfect complements, and the utility function is given by U min x1 , 3x 2 . Price of x 1 is 2, price of x 2 is 1, and income is 140 at equilibrium, the consumer consumes. (a) Zero units of x 1 (b) Zero units of x 2 (c) 90 units of x 1 , and 30 units of x 2 (d) 60 units of x 1 , and 20 units of x 2 9. If a public sector monopoly is concerned about maximizing social welfare, then (a) It must set marginal revenue (MR) equal to marginal cost (MC) (b) It must adopt the ‘full cost’ pricing principal (c) It must set price equal to average variable cost (d) It must set price equal to average marginal cost 10. A cake is to be distributed between two persons. In situation A, individual 1 gets the whole cake and individual 2 gets nothing. In situation B, the cake is divided equally between the two individuals. Then (a) Situation A is Pareto superior to situation B (b) Situation B is Pareto superior to situation A (c) The two situations are Pareto wise noncomparable (d) The two situations are Pareto wise equivalent 11. Let x > 0, then (a) log x > x always (b) log x < x always (c) log x is a fixed proportion of x (d) None of the above 12. If A and B are mutually exclusive events then (a) A and B are independent events (b) P(A) + P(B) = 1 (c) P(A) = P(B) (d) A B = the null set 13. There are two villages A and B. An equal number of households, say 200, live in each village. Total agricultural land in each village is 200 hectares. The median land holding is 0.5 hectares in village A and 1 hectare in village B. What can we say about the inequality of land distribution in A and B? (a) Inequality is more in A than in B (b) Inequality is less in A than in B (c) Level of inequality is same in A and in B (d) Any of the above could be true 14. Two events A and B are equally likely and are independent. The probability of the events occurring simultaneously is 0.36. The probability of event A (a) is 0.9 (b) is 0.6 (c) is 0.4 (d) cannot be computed on the basis of the information given Bliss Point Studies 9811343411 2 9891555578 MOCK TEST-I 15. Z is a random variable with mean equal to 2 and variance equal to 2. The variance of the random variable 2Z equals (a) 4 (b) 0 (c) 8 (d) 16 16. Suppose the utility possibility frontier for two individuals (A and B) is given by U A 2U B 99 . Then the Rawlsian social welfare function will be maximized on the above utility possibility frontier when (a) U A 33, U B 36 (b) U A 33, U B 32 (c) U A 33, U B 33 (d) U A 33, U B 36 17. By a “managed floating exchange rate system” we mean that: (a) Countries which allow their exchange rate to move freely will lose borrowing privileges with IMP (b) The value of any IMF member’s currency can only vary 2 percent form its par value (c) IMF officials determine exchange rates on a day-to-day basis (d) The Central Bank of various countries buy and sell foreign exchange to smooth out short-term fluctuations or undesirable trends in exchange rates 18. Which of the following would make the LM curve flatter? (a) A decrease in the marginal tax rate (b) An increase in the income sensitivity of some demand (c) An increase in the interest sensitivity of some demand (d) A increase in the multiplier 19. With a horizontal LM curve and a downward sloping IS curve, if government expenditure increases by Rs. 1000 and is financed by an increase in lumpsum taxes, with a marginal propensity to consume of 0.8, income increase by (a) Rs. 5000 (b) Rs. 1000 (c) Rs. 4000 (d) Rs. 1200 20. The ratio of females per 1000 males in India on 1st March 2001 closest to (a) 990 (b) 970 (c) 950 (d) 930 21. The demand curve facing a firm is as follows: qp Aρ the demand curve is elastic if and only if (a) A > 1 (b) A < 1 and >0 (c) >1 (d) <1 22. Derivative of log 10 x (a) 1/x (b) 1/xlog10 (c) log 10/x (d) 1/xlog 10 e 23. The function x 2 1 x attains its maximum at 2 (a) x = ½ (b) x = 1 (c) x = 2 (d) None of the above Bliss Point Studies 9811343411 3 9891555578 MOCK TEST-I 24. The function f(x) is defined as f(x) = 1 if x is rational f(x) = 0 if x is rational Then f(x) is (a) Continuous everywhere (b) Continuous only at x rational (c) Continuous only at x rational (d) Nowhere continuous 25. Define x x if > 0 = –x if 1 < 0 Then x a implies (a) a x a (b) a x a (c) x a (d) None of the above 26. If Rs. 100 is distributed between A and B with A getting Rs. 99 and B getting Re. 1 and money is desirable for both then (a) This distribution is less Pareto efficient than equal distribution (b) This distribution is Pareto efficient (c) This distribution is Pareto efficient (d) None of the above 27. For a quansilinear utility function, the income effect of one of the commodities is (a) one (b) zero (c) infinity (d) indeterminate 28. If the investment demand curve is vertical (a) Both monetary and fiscal policy are ineffective. (b) Both monetary and fiscal policy are effective. (c) Monetary policy is effective, but fiscal policy is ineffective. (d) Monetary policy is effective, but fiscal policy is effective. 29. Suppose a consumer consumes only two commodities X and Y measured on X and Y axes respectively. Marginal utility of Y is zero at every level, While that of X is positive. Indifference curve for this consumer will be (a) Downward sloping (b) Upward sloping (c) Straight line parallel to X axis (d) Straight lines parallel to Y axis 30. Hari’s total spending on grapes rises when the price falls from Rs. 2/kg to Re. 1/kg. What can we say about the price elasticity of his demand for grapes? (a) It is greater than 1 (b) It is less than 1 (c) It is equal to one (d) All of the above (e) None of the above Bliss Point Studies 9811343411 4 9891555578 MOCK TEST-I SECTION – B 1. A monopolist faces a demand curve q(p) = 1/p. He incurs a cost of Rs. 3 per unit of output produced. There is no fixed cost. His optimal output choice is (a) 2 (b) 3 (c) 0 (d) No such optimal output exists 2. Suppose in an economy Y = C + I, C = 500 + 0.8Y, I = 100-, supply of money M s = 1000, transaction demand for money M DT = 0.1Y, speculative demand for money M DS 1000 75r , where r is the percentage rate of interest. What is the equilibrium value of r in the economy? (a) 0.05 (b) 0.1 (c) 5 (d) 10 3. The long –run cost function for a commodity sold a perfectly competitive market is given by Cq q 3 2q 2 2q . The equilibrium price of the commodity in the long run is : (a) 4 (b) 2 (c) 1 (d) 1/2 4. Suppose that the nominal interest rate of an economy is 10 percent, the inflation rate 5 percent, and the tax rate from interest income 40 percent. The after –tax real rate of interest will be (a) 1 percent (b) 2 percent (c) 3 percent (d) None of the above 5. In the standard IS-LM framework if you introduce endogenous money supply such that money supply depends positively one the nominal rate of interest, the corresponding LM curve. (a) Becomes steeper (b) Becomes flatter (c) Becomes horizontal (d) Remains unchanged 6. Suppose an unbiased dice is thrown repeatedly thirty time under identical conditions. What is the expected number of throws in which the outcome will be an even number greater than two or an odd number less than four? (a) Eight (b) Twelve (c) Twenty (d) Twenty-four 7. In a frequency distribution, what percent of the total number of observations lies between the first and third quartiles? (a) 50 (b) 68 (c) 75 (d) The question can’t be answered without knowledge of the specific distribution. Bliss Point Studies 9811343411 5 9891555578 MOCK TEST-I 8. The number of permutations of n distinct objects arranged in a circle is (a) n! (b) ( n – 1)! (c) (n – 2)! (d) None of the above 9. The random variable x has two properties : (i) the mean of X is 2, and (ii) the mean of x2 is 9. What is the variance of 4x. (ii) 80 (iii) 20 (iv) 144 (v) 112 10. An urn contains 3 black balls and 2 red balls. You draw two balls without replacement from the urn. What is the probability that both drawn balls are red? (a) 2/5 (b) 4/25 (c) 3/10 (d) 1/10 11. (a) Find lim a 1 x x 0 x 1 2 1 (b) Let A find A 2 6 x x 1 (c) Let f : R R be defined by f x 2 x x 1 then show whether the function f(x) (i) is continuous at x = 1 (ii) is differentiable at x = 1. (d) Let f x 2 x 2 2x . Determine the maximum value of f on the interval [0, 1] *** All the Best Ravindra N. Jha Amit Kumar Bliss Point Studies 9811343411 6 9891555578

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