ARTHA SUTRA- THE ECONOMICS CONNECTION

1. What will happen to price, if a lump-sum tax is imposed in a constant cost competitive
industry?

(a) increases in the Long Run (LR),decreases in the Short Run (SR)

(b) Decreases in the LR increases in the SR

(c) Unchanged in the SR and increases in the LR

(d)None of the above

2. If injections are less than withdrawals at the full employment level of National Income,
there is

(a) Deflationary gap

(b) Hyperinflation

(c) Inflationary gap

3. Using the clue given below coin the term often used by
underwriters?

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4. The following utility function is given

U= X^1/2 + Y^1/2

Suppose price of X is $1, price of Y is $3 and income is $100. Find the demand for X and Y.

5. List two forms of market where total surplus is maximized?

6. Connect the following to get an economics term?

7. Consider a group of people A, B, C and the relation “atleast as tall as”, as in “ A is atleast
as tall as B”. Is this relation transitive? Is it complete?

a) no, yes

b) yes, no

c) yes, yes

d) no, no

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8. Suppose your neighbour plays loud music at night which disturbs your sleep. There are no
bargaining costs. There are two circumstances: one in which you have the right which
prohibits anyone playing loud music at night in your locality and the other in which the
neighbour can play music whenever he likes. In both circumstances the efficient outcome is
the same. Identify the economic theorem.

9. Mary plans the entire week’s meals for her family, while Fred shops each day. Which is
likely to produce more varied meals? What is this effect called?

10. Connect to get an economics term?

11. Under what circumstances does sacrifice ratio become zero?

12. Sometimes some short run phenomenon may also have long lasting effects. For example,
recession can have permanent effects if it changes the people who become unemployed-
people may lose valuable skills or it may change the attitude of workers towards work.
Identify the economic phenomenon.

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13. A monopolist is operating at an output level where elasticity is equal to three. The
government imposes a quantity tax of $6 per unit of output. If the demand curve facing the
monopolist is linear, how much does the price rise?

14. He is an economist who became very critical of World Bank policy. Under pressure to keep quiet
he resigned in protest. Who is he is?

15. Ramesh earns Rs. 10,000 per month. But he does not consume his entire income. He
saves a part of his income for retirement to maintain some minimum level of consumption.
Identify the hypothesis?

16. Suppose that you have two commodities: gold and silver .You would always prefer a
consumption bundle that has more gold no matter how much silver it has. But given the
amount of gold, you would always prefer a bundle with more amount of silver. Identify the
preference pattern and how does the indifference curves look like?

17. Part of the “ile” family that gives identity on a scale of numbers?

18. The cyclical fluctuations in economic activity named after an economist who identified
the cycle lasting for more than half a century?

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19. Under what circumstances does the government use the following approach?

20. Suppose that the demand function facing a monopoly is P= 4 – 2Q. If the government imposes a
restriction that the maximum price that can be charged is Rs. 1 per unit. Would the monopolist
continue its operations in the market?

i)Yes

ii) No

iii) Can’t say

21. Suppose that there are two periods- period 1 and 2 and there is an individual XYZ whose income
and consumption levels are given in the table below.

Income Consumption

Period 1 10,000 11000

Period 2 11,000 9900

Suppose that other things remaining same, the interest rate changes to 15%. XYZ continues to
consume more than his income in the first period. Would he be better off due to change in interest
rates?

i) Always

ii) May be

iii)Never

iv) Can’t say

Ecolibria Cell, NMIMS

22. Connect to get an economics term?

+
23. Which option(s) is a fiscal policy measure?

a. Prime Rate Change

b. Federal Income Tax Rate Change

c. Discount Rate Change

d. all

24. Connect to get an economics term?

+
Ecolibria Cell, NMIMS
25. A system in which business deals are dominated by personal connections and insider links to the
government?

Ecolibria Cell, NMIMS