paper 3 december 2005

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omECONOMICS

PAPER-III

11i"'f-'tfif- III

NOTE: This paper is of two hundred (200) marks containing four (4) sections.

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Candidates are required to attempt the questions contained in these sections according to the detailed instructions given therein.

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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 ~m (30) 'lli"iil (lili" -&R; ~ I ~ W1 '1'Ff <=fiB iB '&I

(5x5=25 ~)

"The whole of a man's income is expended in the purchase of services and of commodities_ It is indeed commonly said that a man spends some portion of his iru:ome and saves another_ But it is a familiar economic axiom that a man purchases labour and commodities with that portion of his income which he saves just as much as he does with what he is said to spend_ He is said to spend when he seeks to obtain present enjoyment from the services and commodities he purchases_ He is said to save when he causes the labour and the commodities which he purchases to be devoted to the production of wealth from which he expects to derive the means of enjoyment in the future_" -Alfred J\.farshall

" ---h-.- . "1-" ~- -.;; '" '"- E~ -~-'T<!i"<-~;·q~ <P <Jl'l«l ;;w" <t<'lliJl ""' · _,,., <P ~ ., ~ w JRlT ~ 1rF~M~, "'Zf ''"'"'~" n <fZf Ji'Fll '&% 'T<!i" ~ WT=fT iW'I iB 'f'.' 'Fl ~ ili13 '& ill<: 'f'_l 'Fl ~ '& I "1'F1 "!Zf iJl'.mw. iP'T<!'Ji'RT ~ m ttr.;; <'A' z gr<n:P1'1) '&% 'T<I'~ ~ w wr=r- iW'I %-'R! 'F -n- 'R

i)lv f:iB! <B ~ '& f:iril % ~ '&, ~ % ;m 'Fl -n- f:iril % ~ '& 1 JPif % m ill<: f:iB! <P m -n-~ i! iJlFR: •tTAl '& "i'l % 'RliB ~ ili'Bl <fZf Jffil1 '& 1 -m- i':A(l ili13 ~i)?

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1. To which school of thought does the author belong ?

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2. How is a man said to spend that part of his iru:ome which he saves ?

~ <8 illPI %" "R! 'Fl"l <8 ~ ~ i1R1 lim '.FliV ft&p:n '&. f:im wr; <8 % ~Fn '& (

3. Can there be defideny of demand in the light of the above principle ?

~ ftr.;;l~ %" ill1'H 'n. iP11 "liT; iP iFfT "&R; f:i>rq '&!

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4. Name the law underlyllig this passage.

5. Do you agree with the economic axion referred to here? Give Onf< reason in support of your answer.

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omNote:

SECTION- II

"UI"'rn'- II

The part has fifteen (15) definitional questions of (5) marks each to be answered in upto (30) words_

(5x15=75 marks)

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(5x15=75 ~)

6. What are discretionary profits?

«Jf'-"'!ih ''11'1 <Pf '&!

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7. What is meant by capital- output ratio ?

•j.,iL<o,-'11<:=! ~ i\ <Pf iJlf.lF'I '&!

8. Definf. Pareto Optimality.

'1'<i; WiHMI <8 *rl!r,l ~I

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9. Defi"" capital-embodied technical progress:

10. Distinguish between progressive and regressive methods of taxation.

. ,~, ·-' I.,. , . ~ <81<.\'l!ll 1<: "'""'"'I

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11. What is linear prograrrunillg?

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12. Definf. the coru:ept of multiplier?

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13. Defi"" l<f<ynesian notion of aggregate demand.

~ it" <Jl1l1 "liT; it"~<: f¢1 iB ~ if'l1 '&!

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15. Definf. the long-tenn Phillips curve.

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16. What is meant by 'Coumot Point' ?

'qA ftq' i1 iP11 illm'l '&!

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17. Distinguish between capital deepening and capital-widening processes.

18. Identify different compoTif<nts of money supply.

~> 'f\\ i"l;" f¥\m <::i"T2<Ji"i iB <Al"?l I

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19. Definf. Total Factor Productivity (TFP).

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20. Countries of the world are given ranKs according to (a) per capita income, x, and (b) population density per square kilometer, y,. How do you correlate x, andy, ?

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<8l ft>:r Ji"Fll '&1x, (l".l1 y, <8 illl'T %n '.T<IiV<JZI~Fl <Ri":!

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SECTION - III

~-III

Note: The part has five short-essay type questions of (12) marks each to be answered in upto (200) words_ The candidstesmay select OTif< elective and answer all five (5) questions_

(Ux5=60 marks)

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Elective- I

f.:J'lftf<l I

21. Given the following least-squares estimates :

c,_1 ~constant + 0.78 Y, + e3t

Y,~constant + 0.55 c,_1 + e4t

Calculate the least-squares estimates of 132 and 133 in

Y, ~ ~ + 0.55 C:,_1 + e4t

f'q-;:;q {1'1 °<li{"l ij 132 if<: l33 i'!;-~ qi; iW~ <# T(!!Fil ~ ·

C,= 131 +132Y,+I33C:,_1 +U,

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(Ux5=60 ~)

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22. Consider the Cobb-Douglas production furu:tion:

m " Y,= /31 X,, X~ e"' (1)

Where Y,= output, Xz= labour input and X:J =capital input. Written in log fonn, the

equation becomes :

fuYi=A+AfuX,,+AfuX,,+U, .. (2)

Where flo = lnf\ 1

How does one find out if there are constant returns to scale ?

m " Y,= /31 X,, X~ e"' (1)

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fuYi=A+AfuX,,+AfuX,,+U, .. (2)

~[l0 =1nf'J

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23. The empirical results based on the data for 1946-1975 were as follows (standard errors in the parenthesis) :

Ct = 26 19 +0 6248GNPt -0 43'JBDt (2 73) (0 OCBJ) (0 0736)

(a) What assumption is mad£ by the authors about the nature of heteroscedasticity?

(b) Compare the results of the two regressions. Has the transfonnation of the original model improved the results, that is reduced, the estimated standard errors ?

(c) Can you compare the two R2 values ?

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1946-1975 #;- «f~ #;- ill1'H 'n f'q-;:;q illFJ:'U~ (p>f1f«Ji<_1) ~ ;:w:(l ~ '& (~ W ~ij %"! '&)

Ct = 26 19 +0 6248 GNPt -0 43SSD 1 (2 73) (0 OCBJ) (0 073S)

R 2 =0999

/'., Ct/GNP =25.92 (lfGNPJ+0.6246-0A315 (DtfGNPt)

(2..22) ~.cJ068) (0.0591) 2 R -0.875

(a) ~ fq,lfi.1MI #;-~ ij ~ -0) if'!l '1F'Fll '11-ofT'&!

(b) il gMO '1'1'1~\ #;-~ iP 1'-1+ iJi't I if'!l 'FI '1f9'1 #;- ¥'1iM"I i\ ~ ij <:}'H ¥11 '&, ill'.:l"?,

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(c) if'!l illl'T 'R i1 R2 'f?i! <P 1'-1+ <R: ~ '&!

24. Given the two equation system :

13nY1t+I312Y2t+All x1,+A12 x2t=u1t··---(1)

13n Y 1t + 1322 Y2t + A21 x1t + A22 x2t = u2t -----(2)

Following restrictions are imposed

(a) A12 =0, A21 =0,

(b) A12 =0, A22 =0,

Discuss the identification problem of equations (1) and (2) with respect to restrictions in (a) and (b).

~ il n'1'<li''* ilil t'i""<fPI %"'I'& .

13nY1t+I312Y2t+All x1,+A12 x2t=u1,-----(1)

13n Y 1t + 1322 Y2t + A21 x1t + A2 2 x2t = u 2, -----(2)

f~"ifi.1f@M ;i(p:j•J WliCJ: -,-p:j '& .

(a) A12 =0, A21 =0,

(b) A12 =0, A22 =0,

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25. Discuss the coru:ept of stationarity and unit roottest in the context of time series analysis.

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22. What is meant by equilibrium growth in the neo-classical growth model? How is it achieved ?

23. Explain the problem of economic inefficieru:y under monopoly.

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24. What is acceleration priru:iple ? Explain the working of super-multiplier?

25. Why the equilibrium growth rate is unstable in the Harrod-Damar model ? Explain

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OR I 3roW

Elective - III

21. Discuss the lessons which could be drawn by the developing countries from the break down of the Bretton Woods System finally in 1973. ExalYlinf< the role of lli/!F in putting the international monetary system on a sound footing in the Post-Bretton Woods period.

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22. What are the major features of Singapore issues under VI/TO? How do these affect the developing countries including India ?

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23. Distinguish between equilibrium exchange rate and exchange rate overshooting. Explain the factors that influeru:e the exchange rate overshooting under the fluctuating exchange rate system.

24. Discuss the major features of the Euro-Currency market and International bond markets. Explain their rapid growth in tenns of size and the range of services during the last three decades.

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25. Examine the role of structural adjusbnent programmes initated by Ill/IF/ World Bank during 1980..85 in reducing the incideru:e of poverty in developing countries iru:luding India.

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Elective- IV

21. Account for regional differentials in the productivity of non-food crops in India. How can these differentials be narrowed ?

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22. Examine the rationale behind the introduction of public distribution system in India.

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23. "Availability of credit is the major bottleneck in the attainment of sustainable development of Indian Agriculture". In this context evaluate the role of co operative credit institutions in the country.

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25. Account for the failure of land refonns in India in improving incentive-structure in agriculture.

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22. What are the effects of economic refonns on reduction of poverty in India ?

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23. Explain the effects of liberalisation on the Indian Industrial Sector.

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24. What are the environmental issues emerging as a result of &anomie Refonns in India ?

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25. Highlight the importance of women empowerment in the context of Economic Development.

iJ<;I)<.Ri" ~nit" <:t<:•\ il ~ n¥l#<li{"l %" "lZR1 'n '.FB'll ~ 1

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omNote:

SECTION- IV

"UI"'rn'- I V

The part has one question of (40) marks to be answered in upto 1000 words_

(40x1=40 marks)

B1 m il 'T<l' W1 ;;r-,_;f-n- z 40) 00 <B '& 1 f:iruiB ~ -,_;v;w; 'T<l' \fJR

(1000)~-ij~l

(40x1=40 ~)

2 6. Why does the problem of heteroscedasticityislikely to be more common incross-sectional than time series dsta? Discuss a test for detection of heteroscedssticity_ Briefly, explain the consequeru:es of using OLS in the presence of heteroscedasticity_

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0Rj3JW:IT

How does a sales revenue mailinizer achieve an optimal combination of inputa and outputa_

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0Rj3JW:IT

Discuss the underlying factors responsible for the 1997 East Asian finaru:ial crisis_ In what way it was different than 1982 Latin American debt crisis ?

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0Rj3JW:IT

Discuss the problems and prospects of agricultural marketing in Indian Agriculture_

0Rj3JW:IT

Discuss the major recommendstions of the Narasimham Committee on Financial Sector Refonns in India_

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omFOR OFFICE USE ONLY

Marks Obtained

' . ~1

' . ~1

' . ~1

' . ~1 ]i ]i ]i ]i !z :E§ !z :E§ !z :E§ !z :E§

' " " ' ' n ' n

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' '' " ' 0 " 00 00

' " • "' ' " " "' " ~ • ~

' " • M

w " ffi "' n " " 00

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w " ffi " n " " " n ~ ffi • " " " ~

w " w %

n " TI %

" " " " ~ '" " %

" " " %

" ffi ' ;m

Total l\1arks Obtailled (in words) _

(in figures) _

Signature & Name of the Coordinator _

(Evaluation) Date_

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paper 3 december 2005

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