MCQs on Economics -3

1. In Linear Programming problem involving two variables, multiple optimal solutions are obtained when one of the constraints is
(A) the objective function should be parallel to a constraint that forms boundary of the feasible region.
(B) the objective function should be perpendicular to a constraint that forms the boundary of the feasible region.
(C) neither (A) nor (B).
(D) two constraints should be parallel to each other.


2. For the Cobb-Douglas Production function
Q = A Lα K1 – α.
The elasticity of substitution is
(A) Zero
(B) Infinity
(C) One
(D) A


3. Coefficient of determination of a regression model:
1. Explains the proportion of total variation in the values of the dependent variable.
2. It can be used to derive the estimate of the extent of variation in the value of Y that is explained by the random factors.
3. Direction of inter-relation between the dependent and independent variables.
4. It explains the influence of the intercept on the dependent variable.

Select the correct code from the list given below:
(A) 1 2 3 4
(B) 1 2
(C) 2 4 3
(D) 4 1


4. The input coefficients/elements of which of the following matrices are interpreted as inputs required directly and indirectly per unit of final demand.
(A) A
(B) (I – A)
(C) (I – A)–1
(D) All of the above


5. Total food grains production target for the year 2010-11 has been placed at
(A) 250 million tonnes
(B) 240 million tonnes
(C) 244 million tonnes
(D) 234 million tonnes


6. Indicate the year in which National Food Security Mission (NFSM) was launched:
(A) 2001 –02
(B) 2004 – 05
(C) 2010 – 11
(D) 2007 – 08


7. Identify sources of agricultural credit in India from the code given below:
1. Commercial Banks
2. Money Lender
3. Regional Rural Bank
4. Small Industries Development Bank of India
Codes :
(A) 1, 2 and 3
(B) 2, 3 and 4
(C) 3, 4 and 1
(D) 1, 2, 3 and 4


8. Low productivity for agriculture in India is attributed to
(A) Poor irrigation facilities
(B) Heavy dependence on monsoon
(C) Absence of new technology
(D) All the above


9. Quantum of food subsidy was highest in the year
(A) 2009 – 10
(B) 2008 – 09
(C) 2004 – 05
(D) 2001 – 02


10. Productivity of Indian agriculture can be enhanced by
1. Increased public investment
2. Increased irrigation facilities
3. Higher support price to the farmers
4. Shifting workers from industry to agriculture

Select the correct answer from the given codes:
(A) 1, 2 and 4
(B) 1, 2 and 3
(C) 2, 3 and 4
(D) 3, 4 and 1


11. High powered money comprises
(A) Currency held by the public + Cash reserves of banks
(B) Currency held by the public + Demand and time deposits + Cash reserves of banks
(C) Currency held by the public + Cash reserves of banks + Other deposits of RBI
(D) Currency held by the public + other deposits of RBI


12. Capital to risk-weighted asset ratio of all scheduled commercial banks in India under the Basel – I framework is stipulated at the minimum of
(A) 7%
(B) 9%
(C) 12%
(D) 14%


13. Which of the following financial institutions are operating in the money market?
1. Non-banking financial institutions
2. Acceptance Houses
3. Central Bank
4. Stock Exchanges

Select the correct answer from the given codes:
(A) 2 and 3
(B) 1 and 3
(C) 1, 2 and 4
(D) 1, 2 and 3


14. Assertion (A): The capital base of regional rural banks (RRBs) is found to be weak. Reason (R): Deposit mobilization of RRBs has been inadequate.
From the above two statements, select the correct answer from the given codes.
Code :
(A) Both (A) and (R) are correct and (R) is the correct explanation of (A).
(B) Both (A) and (R) are correct but (R) is not the correct explanation of (A).
(C) (A) is false but (R) is true.
(D) (A) is true but (R) is false.


15. Which of the following is broad money (M3) in India?
(A) Currency with public + demand deposits in the banks
(B) Currency + demand deposits + other deposits with RBI
(C) Currency + demand deposits + time deposits
(D) Currency + demand deposits + time deposits + other deposits with RBI

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