Economics — Unit 1 — Test 1

Slutsky decomposition of the effect of a price fall on ordinary demand equals

For a strictly concave Bernoulli utility u(w), the Arrow–Pratt absolute risk aversion is

Under revealed preference (WARP), if bundle x is directly revealed preferred to y, then

In a CES production function with parameter ρ (standard form), the elasticity of substitution σ equals

Hicks-neutral technical change implies at a given K/L ratio it

A necessary condition for least-cost input choice at interior points is

If average cost is falling at Q₀, then at Q₀ the marginal cost must be

In Chamberlinian monopolistic competition long-run equilibrium has

Bertrand duopoly with homogeneous goods and identical constant MC (no capacity limits) yields

A strictly dominant strategy equilibrium (if it exists) is

In national income accounting, GNP at market prices equals

In the Keynesian cross, if marginal propensity to consume is c and tax rate is t (lump-sum zero), government spending multiplier equals

IS curve shifts right when

Liquidity trap in the LM framework corresponds to

Acceleration principle links

In the Solow model with Cobb–Douglas Y=K^α(AL)^{1−α}, steady-state capital per effective worker k* is determined by

Golden-rule capital stock k^GR in Solow maximizes

Phillips curve in its expectations-augmented form implies that in the long run

According to Friedman’s money demand, the relevant opportunity cost is

Real business cycle (RBC) models attribute fluctuations mainly to

According to Keynes, speculative demand for money is primarily a function of

In India, broad money M3 typically equals

The money multiplier (m) in a simple model with required reserve ratio rr and currency-deposit ratio c equals

Open market purchase by the central bank, ceteris paribus,

Friedman’s restatement of the quantity theory treats money demand as

High-powered money (reserve money) comprises

According to the credit creation process, the maximum deposit multiple under rr=10% and zero leakages is

The Phillips curve trade-off can be weakened by rational expectations because

Capital market regulation in India is primarily overseen by

Keynes’s liquidity preference explains interest rate by equilibrium between

According to quantity theory MV=PY, if V is constant and Y fixed in short run, a 5% increase in M implies

In public goods, the efficient provision rule (Samuelson condition) requires

Excess burden (deadweight loss) of a small ad valorem tax is approximately proportional to

A lump-sum tax compared with an equal-revenue distortionary tax is

Under Musgrave’s triple role of public finance, stabilization function deals primarily with

In optimal commodity taxation (Ramsey rule), for weak separability and no equity concerns, tax rates should be

Vertical equity implies that taxation should be based on

In India, the largest source of tax revenue for the Union government has recently been

Grant-in-aid that must be matched by recipient’s own spending is a

Fiscal deficit is defined as

Crowding out in a closed economy IS–LM setup occurs when higher G

Cost–benefit analysis at a positive social discount rate generally

Ricardian model predicts gains from trade arise due to

Heckscher–Ohlin model implies a capital-abundant country exports

Stolper–Samuelson theorem states that a rise in the relative price of a capital-intensive good

Effective rate of protection (ERP) exceeds nominal tariff when

Marshall–Lerner condition for a devaluation to improve trade balance requires

Under Mundell–Fleming with perfect capital mobility and flexible exchange rate, expansionary fiscal policy

Balance of payments identity requires

Under small-country assumption, an import tariff

WTO’s most-favored-nation (MFN) principle implies

Purchasing Power Parity (PPP) in absolute form states

J-curve effect refers to

Harrod–Domar model’s warranted growth rate equals

In Solow model without technological progress, if population grows at n and depreciation is δ, steady state satisfies

Lewis two-sector model predicts industrial wages are

Kuznets hypothesis suggests that during early development the income distribution

Foster–Greer–Thorbecke (FGT) poverty measure with parameter α=0 equals

Human Development Index (HDI) currently uses which three dimensions?

Endogenous growth (AK) model implies long-run growth can persist without

Sen’s capability approach evaluates development by

Dependency theory argues underdevelopment persists mainly due to

Incremental capital-output ratio (ICOR) of 4 with a saving rate of 24% implies Harrod–Domar growth of

Rostow’s stages identify the take-off when

A persistent feature of India’s sectoral composition since 1991 reforms is

NITI Aayog replaced the Planning Commission in

The term ‘demographic dividend’ refers to

The Green Revolution in India primarily increased

Poverty estimation in India after the Tendulkar Committee shifted to a basket anchored in

The primary agency releasing periodic labor force statistics in India is

MSP (Minimum Support Price) in India is recommended by

The GST Council decisions require approval of

Financial inclusion is best proxied by a rise in

The term ‘twin balance sheet problem’ in India typically refers to stress in

Aadhaar-enabled Direct Benefit Transfer primarily aims to

Make in India seeks primarily to

FDI differs from FPI mainly in that FDI

India’s industrial classification defines MSMEs primarily by

The IBC (Insolvency and Bankruptcy Code) 2016 primarily aims to

Infrastructure bottlenecks often create supply-side inflation by

India’s foreign trade policy emphasizes export promotion via

The term ‘stagflation’ refers to

Skill India and PMKVY primarily address

RBI’s inflation targeting framework (since 2016) sets CPI inflation target at

A high current account deficit financed by short-term debt increases

The services sector’s major export from India is

Pigouvian tax for a negative externality should equal

Coase theorem requires that for efficiency with externalities

Tragedy of the commons arises because

Contingent valuation (CVM) estimates non-market values using

Discounting in cost–benefit analysis with lower social discount rate tends to

Demographic transition theory typically predicts that during Stage II

Net reproduction rate (NRR)=1 implies

Age–sex pyramid that is top-heavy indicates

Migration selectivity suggests migrants are more likely to be

The dependency ratio is typically defined as

Environmental Kuznets Curve (EKC) hypothesizes that pollution

In OLS, the Gauss–Markov theorem states that under classical assumptions the OLS estimator is

Heteroskedasticity leads to OLS

In the presence of perfect multicollinearity, OLS

Durbin–Watson statistic near 0 indicates

If two time series are I(1) but a linear combination is I(0), the series are

For a 2×2 input–output Leontief model with technology matrix A, viability requires

In linear programming, by strong duality at optimum

The t-statistic for β̂_j under classical OLS uses

A Laspeyres price index uses

In hypothesis testing, Type I error is

For unconstrained maximization with twice-differentiable f(x), a sufficient condition at critical point x* is

A persistent feature of India’s sectoral composition since 1991 reforms is