Time:2Hrs

CoolOffTime:15min.

HSEII
Economics
February2011ModelQuestionPapper

(MaximumScore:80)

1.Acountrytradesinternationallyonlythreeitems,asillustratedinthetablebelow.
Items
Exports($m)
Imports($m)
Motorcars

15

50

Food

35

12

Tourism

Calculate:
a)thebalanceofvisibletrade(Score1)

b)thebalanceofinvisibletrade(Score1)
c)thebalanceoncurrentaccount(Score1)
2.AconsumersincomeisRs.50.HewantstoconsumetwogoodsXandY.The
pricesoftwogoodsareRs.10andRs.5respectively.
a)Givetheequationofbudgetline(1Score)
b)HowmuchofgoodYcantheconsumerconsumeifhespendsentire
50rupeesonthegood.(1Score)
3.Thediagramshowsthecircularflowofincomeforaneconomy

H
F

a)NamethetwoflowslabelledAandBandthetwosectors
labelledHandF(3Score)
4.
a)Coffeepricesroseby10percentduringtheyearandthedemandcontract
by15percent.Calculatepriceelasticityofdemandandcommenton
youranswer(2Score)
b)WhatistherelationshipbetweengoodXandYifwithaincreaseinthepriceof
X,demandforgoodYfalls.Givereasons.(1Score)
OR
Themarketdemandforagoodatapriceof20perunitis100units.Whenits
priceschangesitsmarketdemandfallsto25units.Findoutthenewpriceifthe
priceelasticityofdemand()2.
Dr.P.KAjithkumar

GHSSMuzhappilangad

KannurCluster

5. The diagrambelowillustrates thesupplyanddemandfortelevision sets.Theoriginal

supplycurveisS1andtheoriginaldemandcurveisD1
PriceS1
D3
D1
D2
Quantity
Usingthediagram,statethenewdemandcurve(D2orD3)whichwillapplyaftereachof
thefollowingchangestakenplace.(Thesameanswermaybeusedmorethanonce)
a) Asuccessfuladvertisingcampaignfortelevisionsetsoccurs
b) Incomedecreases
c) Anincreaseinthepopulation(3Score)
6.Withthehelpofdiagramsshowthechangesinthebudgetlineofaconsumerwhen
a)theincomeoftheconsumerincreases
b)priceofgoodxaloneincrease
c)priceofgoodyalonedecreases.(3Score)
7.Drawastraightlinedemandcurveandmarkapointwheretheelasticityofdemandis
unitaryandapointwhereelasticityisinelastic.(2Score)
8.Explainhoweachofthefollowingmightaffectacountry'sbalanceofpayment?(3Score)
a)Devaluation
b)Incometaxcut
9.Thediagrambelowshowstheproductionpossibilitycurveforaneconomywhichcan
producecapitalgoodorconsumergood.
Consumer
goods

M1
.Y
M2

OF1F2Capitalgoods
a)WhatistheopportunitycostofincreasingcapitalgoodsfromOF1toOF2?(1Score)
b)IftheeconomyproducedoutputX,whymightitbeconsideredinefficient?(2Score)
OR
Dr.P.KAjithkumar

GHSSMuzhappilangad

KannurCluster

Classifythefollowingintotwobranchesofeconomics
i)Analysisofdemandii)UnemploymentlevelinIndia

iii)Inflation iv)Wageratedeterminationofafirmforitslabourers

10.Thetablebelowshowshowtheoutputofafruitfarmvariesasitemploysmorelabour.
Numberofpeople Totaloutput(Kg)
employed
1
15
2
40
3
80
4
85
5
60
a)Calcultetheaverageoutputperworkerforeachlevelofoutput(2Score))
b)Explainhowthetableillustratetheprincipleoflawofdiminishing
returns.(3Score)
11.Dataofproductionandcoststructureofafirmisgivenbelow.
Output TC
0

1000

1350

1560

1740

2000

2400

3000

3850

4960

TFC

TVC

AFC

AVC

AC

MC

a)Completethefollowingtable
b)OnthesamesetofaxisplotTFC,TVCandTC(Score8)
12.Usingsupplyanddemanddiagramshowpricesandoutputwithintheagricultural
industryinaneconomyarelikelytoaffectedbyanimprovementsin
productivity(2Score)
13.Withthehelpofadiagramexplaintheprofitmaximizationofaperfectlycompetitive
industry.(3Score)
14.Supposethatthemarketdemandinaperfectlycompetitiveindustryisgivenby
Qd=800500PandthemarketsupplyfunctionisQs=300+250P
a)Findthemarketequilibriumprice(1score)
b)Findthemarketdemandandsupplyscheduleatpricesof
Dr.P.KAjithkumar

GHSSMuzhappilangad

KannurCluster

Rupees.1,2,3,4,5,6,7(2Score)
15.PrepareaseminarreportontheMonopolyandmonopolisticcompetitionwithreference
tonumberofsellers,natureofproductandnatureofdemandcurve.(4Score)

16.Identifythesupplycurvewithunitaryelasticsupplyandjustifyyouranswer.(Score1)
Price
BA
C

Quantity
17.HigherlevelofGDPofacountryisnotanindexofgreaterwellbeing"Justify.(3Score)
18.Describethefourmajorsectorsinaneconomyaccordingtothemacroeconomicpointof
view.(3Score)
19.Providetheappropriateterms(3Score)
a)NominalGDP
RealGDP
b)GNPDepreciation
c)Indirecttaxessubsidies
20.Identifyandexplainanythreefunctionsofmoney(3Score)

OR
PrepareachartshowingNationalIncomeCalculationbyexpendituremethod.
21.IndianRupeeislegaltenderExplain(2Score)
22.Ifc=0.6andm=0.2,calculateopenandclosedeconomymultiplier(3Score)
23.Distinguishbetweenexanteandexpostconsumption.(1Score)

24.Measuretheexanteaggregatedemandwhenautonomousinvestmentandconsumption
expenditure(A)isRs.200crores andMPSis0.5andlevelofincome(Y)isRs.4000
crores.Statewhethertheeconomyisinequilibriumornot(givereasons).(4Score)
25.Categorisethefollowinggovernmentreceiptsintorevenueandcapitalreceipts.Give
reasonsforyouranswer.(3Score)
a)Receiptsfromsaleofsharesofapublicsectorundertaking
b)Borrowingfrompublic
c)Profitsofpublicsectorundertakings
Dr.P.KAjithkumar

GHSSMuzhappilangad

KannurCluster

OR
Explainwhytaxmultiplierissmallerinabsolutevaluethanthegovernmentexpenditure
multiplier.

26.Completethefollowingtable(2Score)
RevenueDeficit

(+)

Primarydeficit

()

OR
Cantherebeafiscaldeficitingovernmentbudgetwithoutrevenuedeficit?Explain
7.ClassifythefollowingintoforeignexchangedemandandsupplyinIndia(2Score)
a)MoneyspendbyanIndianTouristinUK
b)MoneyspendbyanAmericanTouristinIndia
c)ImportofgoodstoIndiafromJapan
d)SpendingofIndianstudentsinAustralia.
28.Distinguishbetweenfixedandflexibleexchangerate.(2Score)

Dr.P.KAjithkumar

GHSSMuzhappilangad

KannurCluster