Paper 3 June 2006

7/23/2019 Paper 3 June 2006

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ECONOMICS

PAPER III

11i"'f-' t f i f-

III

NOTE:

This

paper is

of

two hundred

200) marks containing four 4) sections.

J 0106

Candidates

are

required to attempt the questions

contained in

these

sections

according to the detailed instructions given therein.

~ - . ; r v ; l wWm 200) ~ w t v ; ; t Ff;m 4) mt1 Wl f

it

~ q 1 ~ 1 1

.;rv;it

w

"- "i'R 3Wf>l

f. i f., t l

7/23/2019 Paper 3 June 2006


Note:

SECTION-

I

~ '

Answer

the

five

questions from

the para

given

below_

Each

answer

should not exceed

30 words_ Each question

carries

five marks_

(5x5=25 marks)

~ %-> -,-p:j fnlm'Fili ;;w•n:'nft l-,-p:) 'l'Frwi\

ili m

ftlW1 ~ (30)

'lli iil (lili -&R; I W1

'1'Ff

<=fiB iB '&I

(5x5=25 ~ )

The rise and fall in

the

profits of

the

stock

depend

upon

the same

causes

with

the

rise

and fall in the wages oflabour, the increasing

or

declirungstste of

wealth

of the

society; but those

causes

affect the Onf<

and

the other differently_

The

iru:rease

in

stock,

which

raises wages,

tends

to

lower

profit_

When

the

stocks

of many rich merchants are

tuiT f<d

into the same trade, their mutual competition

naturally

tends

to lower

its

profits; and when

there is

a like iru:rease of stock in all

different trades carried on

in

the same

society,

the same

competition

must

produce

the

same

effect in them all"_

' '

•j.,O m-'1'<:''11'1 iB Tcl'l1

'11

f\--;B1 W

iB<'Jli

'nfq>h:<Rm

'&f:>R

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R i P ~

iB

Tcl'l1

>n

fl--:B;,

ill<:%'&

<:T'fJf<P <P :mw.r il q;j)-,fi- >n

fl-m<R:

~ 'Zf iB<_ Il ~ l\m vr

i\

'J'1l9-il

<8#

' I

m ~

i\

J f Z l i ~ i q;jjuf'(il#'&,

''11'1

i

;;w

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#;- ~ i l i

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zi

< 'PWP:I

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"PP

ft l Jfl#

' ,

(f<'if

~

iJ<l'W

j

'.fowr>Jl

i\

·

''11'1 j

fl--:B

iP

']<'J%

'&ill<: JPif -niT m <::niT f¥\;-,; &Nf1Pi1 il -,_;v;'i 'f'-'1 m - i l ~ <P

J r ~ #

' , (f<'if -niT

'.fowr>Jl j;_l1j ~ 'J'F1 U>iT &pj{11'jj j 'Bi &;T;t

1. Identify the factor that affects the wages

and profits

in the light of above statement_

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'.FB'll

j "R\ <# Jh

<l'.ll

' 'Pi\ iB

J U ~

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2 Why

do same

causes ffect the

profits

and wages

clifferently

'f'_l <Jl R iliV<li". "il'.l1 Pi\ iB iJ' <'fl">iJF.'P NH

i

if'i"i J U ~ iR3

'&

3 Name the

factor

th t

lowers profits

and how

Rl

iliHili

iB Jh Pif iB

81

iR31

' iJfu if'i"i

0106

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7/23/2019 Paper 3 June 2006


4

Does

persistent decline

in profits

necessarily

lead

a

capitalist

economy towards a

stationary state

?

<f f f'if l T .w:iT <FfT iJ<f qq; l m T<l •i., 1 1 ~ iJ< .P>:vw.ll

<B.

~ ~ :mw.11 <P <n

B

Ji Fn

'

r

5

Is

on set

of stationary state avoidsble

?

i f f

iJ<iW.ll

1 i Jfl ' r

0106 P T O

7/23/2019 Paper 3 June 2006


Note:

SECTION

UI 'rn'-

The part

has

fifteen 15) definitional questions of 5) marks each to be

answered

in upto 30) words_

5x15=75

marks)

B1 - z y i ; g i j ~ ; ; . , T

15)

'.R' %1

~ ' . R ' l %-TJi;;r 5) ~ ' 1

~ i l i l

B<:

(30)

'lli iil i j I

5x15=75 ~

6.

State

Keynerian Psychological

fundamental

law of consumption_

%- iW'R'l il

'N>i\Tf

iB ~

0106

'

7/23/2019 Paper 3 June 2006


7 hat

are

giffen goods

~ ~ i f ' l 1 ' &

8. Defi

a

merit

goods.

iV

iP foW l

~

0106 P T O

7/23/2019 Paper 3 June 2006


9

hat is invesbnent functions

?

10. Defi

Bemruli's

hypothesis

about

the

behaviour

of a

risk

averter.

'T<Ji

ilflw:l Z fli (risk averter)

ili

~ <

ili

i i :R'i\W fi<h HI <B

1 ~

1

J

0106

7/23/2019 Paper 3 June 2006


11. What is

ISO-revenue

curve ?

12. How

do

you test for

significance of E1

n

simple regression

equation

E0

+

E1 x, u,?

'T<I' n g O '1'i'H +1 1°<h{ l Y, ~ E

0

+E

1

x, u, :ij E

1

<#

iJl•.l'I' i"ill

<#

Ji R

%"{1 .T<fl{ <Ri f I

J 0106

9

P.T.O.

7/23/2019 Paper 3 June 2006


13. Identify

labour augmenting and labour

displacing

element

n

Green

Revolution

\ I ~

j Sl1

~ ' F l i

(l .l1 %lf\w.ll'T<Ji"

il f il iB ~ ~

14.

hat s

Baromatric

Price

l eadership

?

i : R J ~ ~ if'l1 '&

0106

7/23/2019 Paper 3 June 2006


15.

hat

is cliffereru e

between narrow

money and broad

money

'T< R ~ ' ' i j

i f f iJ PR: '&

16.

hat

are

Optimums

Currency

Areas

iJi WT i i f f '&

0106 P T O

7/23/2019 Paper 3 June 2006


17.

Define

demographic transition.

18.

What s input output analysis

iJ'lll R f , o p , _ O j ~ O if l1 '&

J

0106

7/23/2019 Paper 3 June 2006


19. Define Accelerator

20. hat s Endogenous

growth?

t ~ ~

if l1 '&

0106 P T O

7/23/2019 Paper 3 June 2006


SECTION - III

~ I I I

Note: The

part

has

five

short-essay

type

questions

of

(12) marks each

to

be

answered in upto

(200) words_

The

candidste

may

select one elective

and answer all

five

(5)

questions_

(Ux5=60

marks)

1nm -q

~

zs J '-'11 f q q p j ~ .R l '&1 .R l -

(12)

<tili '%1

.R l i

;ou-;: -,_;v;w; i l

-nl 'lli iil l 1

TJiiw•.iT

fin:iT 'T<l'

g_,_'Jf<121

l -n- 'li;;r

'.R'if i

B<: it

I

Elective - I

f.:J'lftf<l

I

21 In

a

simple regression

of Y

a f3X+l

(Ux5=60 ~

A

sample

of 20 observations

gave

the

following

dsta

:

- -

LY=20

LX= 1SO

L(Y-Y/=90

L(X-X)=20

L X

-X)(Y- Y)= 100

Estimate

and

f3

and

calculate estimates of variance of these estimates_

Y a

f3X + - 'T<l'

<:18

gMO

1 i H i , 20 iJ wlij

- 'T<l'

U fq-;:;q

Jffi

1'1:

·

LY=20

LX= 1SO

L(Y-Y/=90

L(X-X)=20

L X

-"X)(Y- Y)= 100

22.

Given the

Cobb-Douglas

Production

furu:tion Y

=

L ~ , K ~ s

(1)

Where

Y o u t p u t L ~ l a b o u r

input and K ~ c a p i t a l

input

Dividing (1) through

by K,

we

get (Y/K)=I3

1

(L K/'Kr',

s - 1 ______ (2)

Taking

the

natural log of (2). We obtain Jn(Y /K) = 13o + 13

2

Jn

(L/K) + (13

2

+13s-1J

Jn

K

where 3D

=

Jnl3

1

______

(3)

(a)

How would you test

the

hypothesis

that

there

are

constant returns

to scale,

i.e_,

(132 + 13s =

1) from equation

(3) ?

(b)

If

there are constant returns

to scale,

how

would

you

interpret

regression (3) ?

(c) Does

it

make

any

differeru:e

whether we divide

(1)

by

L rather

than by

K

?

0106 14

7/23/2019 Paper 3 June 2006


~ iF<'il "¥11<:=1

'F'f 'l ft>:r Tf'l1 '

Y = I 3 L ~ , K ~ s (1)

Y

~ L ~

Sl1

iJ<VR,

K ~

•j.,O iJ<VR {1'1-,<li( JI

(1)

<8 K

i\

fiT.;f:>R

<li1. r

'n

f'q-;:;q n ' 1 ' < l i ' ~ 'JI9 \il ill

'

(Y/K) =

13,

GL KY''K

1

''

~ » - '

------

(2)

{1'1O<li{"l

(2) iB J I ~ "fl1

<.¥\ 'n f'q-;:;q {1'1O<li( JI 'JI9 \Wn

'

ln Y K) = f3o + 13, In

(L/K)

+ (13, + f3s -1) nK

~ ~ = lnl3

1

------

(3)

' ' ,____..., '

- -

• <'.-o

f.

'

(a) iJ<I'TB'\ B<li,_"HI

<P .,.,,.

m

~

' ' ' ' ' ' "'Zf

' < ' 1 1 ~ <'li'

·«-R g ~ l i d ~ i.e_,

(132 +13s=1) n'1°<li{ l (3)

-..<'. '.

•

"'""

f.

'

. -

,____...,

~

b) · ; · ~ " Zf '<'11"1

<'li' ·; . {

g ~ l i d ~

(1\ iJ<I'T

f1'1'<li{ l (3) iB '" '" '

'J<lil{ 'f1.'lf

"''''

(c)

" %- \1'1 (1)

<8

K

- qJ;7

L

i\fil>uf'JR <it,

-,h

iP11 1f1i\ 'f'_l <i'iR:

m

23 In the

following

macro-model

c , ~ a + f 3 Y , + u ,

Y,=C:,+Z,

Where C

aggregate

consumption

expenditure

Y

national income

Z

~ non-consumption

expenditure

~

a stockastic disturbaru:e

tenn

The following assumptions are made :

(1) u-N

(0,

j

(2) Z

and

are

independent

Why

do we need two stage least squares

(2 SLS)

method to

estimate

f3 ? Describe

the

method of 2

SLS_

f'q-;:;q 'f1l'ft

"lW''

c , ~ a + f 3 Y , + u ,

Y,=C:,+Z,

i j c ~ f:T'W 'O'T't'r; "'f ' '

Y ~ iJ<P

z

fr:

=-t-r; "'f ' '

~ 'T<l' :w:Rl"''lil'liR m

f'q-;:;q

'1P1Mrf/

<# ~ '

(1) u-N

(0,

j

(2) Z i J < l < : u ~ ' &

(Iii

<i>

qi;j

(2 SIS) 'T.l;%

<# f3

<#

Tf'IR1

'<liB

-

ftTI if'il

JiT«l "\il# '& 2 SLS

'T.l;%

< 8 ~ 1 " 1

0106 P T O

7/23/2019 Paper 3 June 2006


24. The following models were estimated usillg

the annual data for 1949

-1%4:

Model

A:

Y, =0 4529-0

00411

(3%C8)

p 2

=05284,d=OB252

ModelE: Y,=04/B6-001271+00005t

2

(32724) (2 7777)

R

2

=0E629,d= 1

B2

Where the

figures

in the parenthesis are t

ratios.

(a)

Is there

auto-correlation

in Model

A ?

In Model

B ?

~ )

(c)

What

accounts for

the auto-correlation ?

How would you distinguished between

Pure

auto-correlation

and specification

bias?

1949-1%4

# ; ~ ~

iB

N i ~ T f

<R:

~

"lW'il

<P

Tf'JR1

<P

~ .

"'lW''

A .

"'lW'' B .

Y,

= 0 4529- 0 00411

(3%C8)

p

2

=05284,d=OB252

Y,

=o

4JB6-o o121t+o ooost

2

(32724) (2 7777)

R

2

=0E629,d= 1

B2

<B '3<B

j iT ~ Uw:rif t i ) l ~ '

(a)

if'l1

'119.'1

il 1 '&

"'lW''

B

j 1 '&

(b) ~ · J i B if'l1 <Bf'Jl '&

(c)

~ ; ; ; ~ 1

il'.ll f q f ~ ~ ¥ 1

i J < ~

j iJ<l'T fim 'NH i1<:

<8# '&

25.

What

is

integrated

series

?

Explain OTif< test to check

the

integration series.

fHI<lif..1M if'l1 '& fRI<FT'l ~ T

#; #;

ftrll

%fiT

'T<Ji Rz <#

'li Wll ~

OR roW

Elective-

II

f.:J'lftf\1 II

21.

Does

KinKed demand function provide a theory

of

price determination under

oligopoly? Explain

f . · ~

.

-+- •

-

• - ,__

f' 11<£ ' 'd "Wl'F<'F ,

iJ<•."W"liBl:: «< ~ ' f . " ' ' · ~ ' l l < . " i

iB

•

'.P?'(l

<R(li ~ ~ " ' ' ' " " ' I

22.

Explain the major assumptions underlying Tlf<o-classical

growth

model.

Comment

on

their validity.

'1?1.. 'W 'HJ1£

1

~ ' { "'lW'' <# 'J'1W '11 'Fll<i'i <#

"'li"W 1

~ ~

'fi•Fn n

iJ< RR '1il

' J l ' 2 ~ 1

J

-0106

7/23/2019 Paper 3 June 2006


23.

In the IS-LM framework,

show

the

crowding-out

of

private expenditure as government

expenditure

is

increased.

24 Given U

x , y ) ~ x . y ,

P x ~ 1 ,

P y ~ 4 and income

m ~ 4 for a consumer,

derive indirect

utility

function

for this

consumer.

'T<Ji"

'N>fi@

#;" ftP:l

ft>:n ¥11

'

· U

(x, y)

~ X . y, px 1, Py ~ 4

il'.l1

illP m ~ 4 0 B' 'N>fi@ iB

ill'.PI'li

oo•pj;fl;< 'F<'R <P '1 R1 1

25. What

is expenditure

multiplier?

How does it

change as

tax rate is increased ?

OR

I roW

Elective -

Ill

21

Discuss

the major factors

responssible for

the

final collapse of

the Brelton

woods

system,

in

1973. ExamiTif< the efforts made

by

the world

community

to evolve a

workable

monetary system

from the point

of view of developing countries, thereafter.

1973

i , i)R 'fW Vf<W.H #;" 1'VT

i

'?fe "\i)'i #;"

iJiW ij iB fqihH1

~ ~ 'W i l il

~ ] ~ <1 $ # i ~ i 8 m i\, 'T<Ji"iBlF"i"<' Bi Vf<W.H

fq<Jif@ <liB

j

f:Tlf PI

j;71

fiFll

l f'l

'.PWi\

<fT

I

22 What are the

major commibnents made

between the developed

and developing

countries

under

VIITO with

respect to

agriculture

and

textile

sectors ? Are their

commibnents being

fulfilled

by the advaru:ed

countries ?

0106

P T O

7/23/2019 Paper 3 June 2006


23

E:xplam fully the coru:ept of globalization. Discuss its benefits

and 'discontents'

from

the point

of view of developing countries.

24

Examine

the

detennination of exchange rates

under

fixed

and

fluctuating exchange

rate systems. Which

system

do

you

prefer in the context of a developing country. Give

reasons in support

of

your answer.

25. Distinguish between Euro-dollar

and

Euro-currency

market Explain whether Euro

and

Euro-currency are different. Discuss the major factors responsible for

the

emergeru:e

and

growth of the Euro-currency

market.

OR 3roW

Elective-

V

21 Highlight the

main

trends in

the

production

and

productivity of

major

food crops in

Indian agriculture during the

last decade.

'11«1

rj R1,Y.1

j

Fp9

&rn 'RE'i( i l; ill'R:

; p : n ~

j 'Pffl '.JY%if

n .FB'll

~

22

Comn t

on

the objectives

and

perfonnaru:e of

public distribution

system

in

India.

23

What are

the

main

marketing

problems of surplus geTif<rating farmers in India? What

steps

should be taken

to

improve

the

system

of

agricultural marketing

?

W<fl rj ~ ? r i f

i f@<li

< J i T ~

fHl lilf if'l1 '& Vf<W.H

j <:}'Wi li ftP:l

if'l1 i8 l1

Rl

JfR

0106

7/23/2019 Paper 3 June 2006


24.

Analyse the impact of

VI/TO on

the diversification of

Indian

agriculture.

25. Do you agree with the view that tedmological changes in agriculture have aggravated

regional ~ u l i t i e s ? Substantiate your answer.

i f f iJPT

B1 '1il U '&% -,p T i j

'.ilti1fl:<Jih1

'1f«lH

0) j j ~ ?ifHHM iJ?:

iB

q p

% 'I

'&

? ~ " ' ' i ~ < # ~ ~ l

OR

I

roW

Elective V

21. What

is the role of plarming in the context of

liberalisation?

22. What

is the

methodology

followed

by

the commission

on agriculture

costs and prices

for

detenninllig

minimum support prices ?

fl"l'.R "lf?i

iB

ft>1\ftl ili1"f

i ,

-,p T

" TA"

f<1 F I

iJF'fTf

j;RI fin:l

ftF:n 'T;;;f\l

iB

? 1 ' : \ ' 1 1 < . 1 ~

fiF:r Jfl l l '&

23. What

are

the

important

recommendations

of Finaru:ial Sector Refonns

committee?

24. What is the relationship between infrastructure and

economic

development

in

India

?

? ' ~

il'.ll

iWfl<.Ri" ~ i t " ~ i f f ~ · J '&

25. What

are the

major

changes in Fiscal Policy of

India

in recent times ?

J

-0106

P.T.O.

7/23/2019 Paper 3 June 2006


Note:

SECTION-

IV

UI 'rn'-

I V

This

part

has

OTif<

question

of (40)

marks

to

be answered

in

upto

1000

words_

(40x1=40 marks)

B1 m

il

'T<l'

W1 ;;r-,_;f-n-

z

0) 00 <B ' 1 f:iruiB

~

-,_;v;w;

'T<l'

\fJR

1 0 0 0 ) ~ - i j ~ l

(40x1=40 ~

26. In time-series

analysis, what

is

the

meanllig

of

'stationarity'? In

this context,

discuss

'unit root test'_ Explain

the

coru:ept of causality_

<:T'f'l

f , p , _ O ) ~ w il ''ft>.ren (stationarity) i1 if'l1 .W.1::w:1

'&

B1 -n <:>\ i · ~ R'2R' iB

1 <:;Wl (causality)

<# 'F<.'Jll <B

~ W \ 1

0Rj3JW:IT

Use

NeumannMorgenstem

utility index to dis tinguish

between the behaviour of a

risk

averter and risk

lover_

' il%:R

<'Rili ' <1'-ll

' il%:R

' ;-

j

.m <: ~ #;-

f;_;pj -,:f-fR:i9

i Pilflt<

f i i <lii<li

< B . P i P ~ I

0Rj3JW:IT

Defi the spot

exchange rate and

forward

exchange

rate_

Discuss Interest Rate Parity

Theorem ORPI)-

What factors might

lead to persistent

deviations

from parity

between

countries curreru:ies ?

0Rj3JW:IT

Discuss the impact of

economic

refonns on the Indian agriculture_

>m_<f\'1 if% 'n, iJH11<.Ri- <:}'Fl:i #;- 'J'F<1

<#

fqihHi ~

0Rj3JW:IT

Discuss the importance of social sector

and

examine the impact of changes in social

sector on poverty alleviation in

India_

m l 1 1 ~ ffi

ili-'1ZR1

iB <1'-ll '11«1

j

<81 ili1 f

j

: 1 1 ~ ,jj;<

j

1 f « F i ~ 1

il;-

'1'1?1

iB

~ ' I I ~

J

-0106

7/23/2019 Paper 3 June 2006


FOR

OFFICE

USE ONLY

Marks

Obtained

.

~

.

~

.

~

.

~

i ]i ]i ]i

z

:E§

z

:E§

z

:E§

z

:E§

'

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n

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' ''

0

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00

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•

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'

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M

w i

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n

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'

@

M 00

G

w

i

i

•

w w %

n TI %

'

%

%

i

;m

Total l\1arks Obtamed (in

words)

_

(in figures) _

Signature & Name of the Coordinator _

Evaluation)

Date_

J -0106

Documents

Paper 3 June 2006