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Topics: Supply and demand, Central bank, Economics Pages: 29 (10522 words) Published: July 10, 2013
FOUNDATON EXAMINATION
(REVISED SYLLABUS - 2008)

Paper - 3 : ECONOMICS AND BUSINESS FUNDAMENTALS

Section - I
[ Economics ]
Q. 1. (a) Answers the following : (i) Effective demand is (A) Demand exceeds supply (B) Aggregate demand is equal to aggregate supply (c) Elasticity of demand for a product is high (D) Difference between actual and forecast demand. (ii) Progressive taxation means (A) Tax burden decreases with income (B) Tax burden increases with income (C) Large quantity of tax evasion (D) Large quantity of tax avoidance. (iii) Cross elasticity of demand relates (A) Price of one commodity and demand for another commodity (B) Substitutes and complementary goods (C) Market and supply (D) Production and cost (iv) Central Problem of all Economics are (A) What to produce? (B) How to Produce? (C) For whom to produce? (D) All the above (v) Exceptions to the law of demand are (A) Conspicuous goods (B) Giffen goods (C) Shares’ speculative market (D) All the above

2 [ December  2012 ]

Revisionary Test Paper (Revised Syllabus-2008)

(vi) Economics is — (A) Normative science (B) Positive science (C) Human science (D) Political science (vii) Inductive Method proceeds from (A) Praticular to General (B) General to particular (C) Imagination to reality (D) None of the above (viii) Constituents of money supply are (A) Rupee notes and coins with the public (B) Credit cards (C) Traveller’s cheques etc. (D) All the above (ix) The author of ‘General Theory of Employment, Interest and Money’ was (A) Adam Smith (B) Paul Samuelsen (C) J. M. Keynes (D) Robbins (x) The law ‘supply crates its own demand’ was put forth by (A) Marshall (B) Pigou (C) Robbins (D) J. B. Say (xi) Deductive method is also known as (A) Hypothetical Method (B) Abstract Method (C) Periori Method (D) All of the above. (xii) An individual demand curve sloped downward to the right because (A) Income effect of fall in price (B) Substitution effect of decrease in price (C) Diminishing marginal utility (D) All of the above (xiii) Normative secience deals with (A) What ought to be (B) What is (C) Individual Consumption (D) All of the above

Foundation : Paper-3 : Economics and Business Fundamentals

[ December  2012 ] 3

(xiv) The concept of consumer’s surplus was propounded by (A) Malthus (B) Alfred Marshall (C) Robbins (D) Pigou (xv) Law of Demand Explains (A) Qualitative relationship (B) Quantitative relationship (C) Functional relationship (D) None of the above (xvi) Utility is (A) Cardinal (B) Ordinal (C) Neutral (D) Both (A) and (B) (xvii) Average cost is calculated as (A) “TC/” output (B) TC output (C) AC/output (D) None of the above. (xviii) Exception to the law of supply is : (A) Agricultural product (B) Scarce goods (C) Labour market (D) All of the above (xix) Homogeneous product is the characteristics of : (A) Perfect competition (B) Monopoly market (C) Monopolistic competition (D) Oligopoly Q. 1. (b) Fill up the blanks : (i) According to Malthus production of food grains increases at an arithmetical . (ii) Per capital income figure woruld be inflated because of . (iii) Theory of comparative cost was developed by . (iv) Fisher’s equation is MV = . (v) The two primary functions of a commercial bank are the and . (vi) GNP is the of all final goods and services produced by domestic sectors in the country in a year.

4 [ December  2012 ]

Revisionary Test Paper (Revised Syllabus-2008)

(vii) (viii) (ix) (x) (xi) (xii)

A central bank has monopoly over . . Law of variable proportions applies in the Net National Product = Gross National Product Minus Per Capita Income = National Income / . Balance of payment is than Balance of Trade. of money. Cash Balance Approach is based on the

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Q. 1. (c) State which of the following statements is true and which is false. (i) Balance of Payments is wider than Balance of Trade. (ii) Giffen goods are otherwise known as superior goods. (iii) Average Fixed cost can never be zero. (iv) Theory of...
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