UGC NET Paper 2: Economics 8 Oct 2022 Shift 2 (Previous Year Paper)

The correct answer is Both Statements I and Statement II are true.

Key Points India's Agriculture sector in post COVID-19 era

• India's agricultural exports have continued to grow, driven by strong demand both domestically and internationally.
• There was an increased demand for staple foods, and as a result, India's agricultural exports have continued to do well in the post-COVID era.
• Rice, pulses, spices and fruits & vegetables are major goods which export increased significantly.
• India has been an agricultural surplus-producing country so India also helped various countries with its agricultural goods like Bangladesh, UAE, Iran, South Africa and some other African countries.
• Some segments of India's agricultural sector have seen growth in exports in the post-COVID era, while others have continued to perform poorly. This includes marine products, buffalo meat, tea, coffee, and dairy products.

Additional Information Wheat Donor in post COVID era

• India has also been a major donor of wheat to other countries in the post-COVID era, particularly to countries in need of food assistance like Afghanistan, Bangladesh, Shri Lanka, Nepal and African countries.
• India has a large surplus of wheat and has used this surplus to support countries that have been impacted by food shortages.

The correct answer is Marginal willingness to pay (MTP) function.

key Points 

• The change in welfare due to change in environmental quality is measured by the marginal willingness to pay (MTP) function.
• The MTP function shows how much people are willing to pay for a marginal increase in environmental quality. It is calculated by taking the partial derivative of the utility function with respect to environmental quality.
• The MTP function can be used to measure the benefits of environmental policies, such as reducing air pollution or protecting endangered species. It can also be used to measure the costs of environmental damage, such as oil spills or deforestation.

Important Points

• Hedonic pricing
• This method is used for the valuation of non-marketed goods and services.
• In this method, we decompose the price of a commodity into the prices of its components or attributes.
• pricing in housing It is observed that the price of a house in an urban setting is ascribed to the availability of various amenities, hence its price function can be determined as

                  => P_n = f(S, N, Z)

                   =>P_n stands for the price of the House

                   =>f stands for a functional relationship

                   => S stands for space and other                                            characteristics of the house

                    =>N stands for neighbourhood characteristics like school,                                                hospital, transport etc.

                    =>Z stands for environmental factors like Air quality and nature.​

The correct answer is '(B), (D) and (E) only'

Key Points

• Pradhan Mantri Jan Dhan Yojana (PMJDY):
• Launched in 2014, PMJDY aims at ensuring access to financial services, such as banking/savings and deposit accounts, remittance, credit, insurance, and pension, in an affordable manner.
• The scheme has been instrumental in promoting financial inclusion and enabling inclusive development by bringing millions of unbanked people into the banking system.
• PMJDY has a strong focus on ensuring access to banking facilities with at least one basic banking account per household.

Additional Information

• Key Benefits and Impact:
• Inclusive Development: PMJDY has facilitated the inclusion of marginalised sections into the mainstream financial system, thus promoting inclusive growth and development.
• Women Empowerment: The scheme has significantly impacted women empowerment by providing them with financial independence and access to various financial services.
• Large-scale Beneficiaries: Over 45 crore people have benefitted from the scheme, reflecting its vast reach and impact on financial inclusion in India.
• Overview of Other Statements:
• Accident Insurance Cover: While PMJDY initially provided an accident insurance cover of Rs. 1 lakh, this amount has since been increased to Rs. 2 lakh for accounts opened after August 28, 2018, making statement (A) outdated and partially incorrect.
• MUDRA Scheme Benefits: While integrating PMJDY beneficiaries with other schemes like MUDRA could be beneficial, this is not an inherent feature of PMJDY itself, making statement (C) less relevant in the context of PMJDY’s core objectives.

The correct answer is The spread of the 1994-95 Mexican crisis to other countries in Latin Ameria

Key Points

• The Tequila effect refers to the negative impact on the Mexican economy, particularly the devaluation of the Mexican peso, as a result of the 1997 financial crisis in Asia that originated in Thailand and spread to other countries in the region.
• The crisis was named after the Mexican drink because of the close timing of the event with Mexico's decision to devalue the currency.
• The devaluation of the peso caused an increase in inflation and interest rate which led to a decline in economic activities and international investment.
• The Tequila Effect had far-reaching impacts on Mexico and other Latin American countries, as well as on the global economy

Additional Information

• Thailand crisis: financial crisis hit Thailand in mid-1997 and after it spread throughout the Asian region.
• The subprime crisis:- It was the collapse of the US Housing Market in 2007-08 due to the default of subprime mortgages.

The correct answer is  (E), (D), (C), (A), (B)

Key PointsGNP in 2015-16-

• In the financial year 2015-2016, India's real Gross National Product (GNP) growth rate was 7.99%
• This was a faster growth rate as compared to 7.46% the previous year.
• India ranked as one of the fastest growing major economies in the world

GNP in 2016-17-

• The real Gross National Product (GNP) growth rate in India for the financial year 2016-2017 was 8.27%
• It was also an improved growth rate as compared to 7.99% the previous year.
• The Indian economy faced a number of challenges during this period, including the withdrawal of large denomination currency notes and the implementation of the Goods and Services Tax (GST)
• Despite these challenges, the Indian economy remained robust, driven by a growing consumer market, expanding manufacturing sector, and increasing foreign investment.

GNP in 2017-18-

• The real Gross National Product (GNP) growth rate in India for the financial year 2017-2018 was 6.87%
• This was a slight decline from the previous year, but still higher than the growth rates of many other major economies.
• The Indian economy faced some challenges during this period, including rising oil prices, a banking sector crisis, and persistent inflationary pressures.

GNP in 2018-19-

• The real Gross National Product (GNP) growth rate in India for the financial year 2018-2019 was 6.56%
• It was a serious decline in the growth rate due the governmental reform during some recent time.

GNP in 2019-20-

• In the financial year 2019-2020, India's real Gross Domestic Product (GDP) growth rate was estimated to be around 4.16%
• This represented a decline from the previous year and was largely due to the impact of the COVID-19 pandemic, which resulted in a widespread slowdown in economic activity globally.
• In India, the pandemic led to lockdowns and other measures that disrupted businesses, reduced consumer spending, and caused a decline in investment.

The correct answer is (A), (C), (E) only

Key Points

• IS-LM Model is a macroeconomic model that explains how the interest rate and output of an economy are determined by the intersection of IS and LM curves.
• IS curve is a graphical representation of the relationship between the interest rate and aggregate demand for goods and services in an economy.
• IS curve represents the points at which the goods market and the money market are in equilibrium.
• The IS curve slopes downward that shows as interest rates decrease, aggregate demand for goods and services increases.
• IS curve shifts rightward due to an increase in government expenditure, as it increases demand for goods and services in the economy, which will result in the lower interest rate that will shift Is curve rightward.
• IS curve shifts rightward due to the reduction in taxes, as it decreases demand for goods and services in the economy, which will result in lower interest rates that will shift IS curve rightward
• LM curve represents the relationship between the interest rate and the demand for money in an economy. 
• LM curve represents the points at which the money market is in equilibrium, where the supply of money equals the demand for money.
• The slope of the LM curve is upward left to right sloping which means there is a positive relation between interest rate and demand for money.
• As the money supply increases in the economy, LM shifts rightward, an increase in the money supply will cause an increase in aggregate demand, which will result in a lower interest rate.
• **Short run Equilibrium:-**The intersection of the IS and LM curves determines the short-run equilibrium interest rate and output in the economy.

The correct answer is -1

Key Points Producer's equilibrium-

• Producer achieves the condition of equilibrium when the Iso-quant curve is tangent to the Iso-cost curve.
• At the equilibrium point, the slope of the iso-quant and the iso-cost curve is equal to each other.
• The slope of the iso-quant curve always decreases.
• The slope of the isocost curve always is constant and it is always negative.
• At the equilibrium point, the slop of iso quant and iso cost is equal to each other so it is negative as the slope of iso cost is also negative.

Additional Information Iso quant curve-

• It is a graphical representation of the relationship between the number of inputs used in the production of a good or service and the resulting output.
• It shows the maximum amount of output that can be produced for a given combination of inputs, such as labour and capital, at a constant level of technology.
• The ISO-quant curve is downward-sloping. curve, which means that as more inputs are used in production, the marginal product of each input decreases.
• The shape of the ISO-quant curve is determined by the law of diminishing marginal returns.
• The law of diminishing marginal utility states that as more units of a variable input are added to a fixed input, eventually the marginal product of the variable input will decline.

 Iso cost curve-

• The iso-cost curve is a graphical representation of the relationship between the costs of producing a good or service and the quantity of output produced.
• It shows the various combinations of inputs that can be used to produce a given level of output at the same total cost.
• An iso-cost curve is a straight line that slopes downwards from left to the right.
• The slope of the iso-cost curve represents the cost of producing one more unit of output.
• The position of the iso-cost curve depends on the firm's budget constraint and the prices of the inputs it uses.

The correct answer is (A)- (II), (B)-(III), (C)-(I), (D)-(IV)

Key Points Bentham's Criterion-

• Bentham's criterion argued that welfare is improved when the greatest good is secured for the greater number.
• It was propounded by English economists Jeremy Bentham.

Tatonnement-

• The tatonnement process is part of deciding Wallrasian equilibrium.
• In the Tatonnement process, A fictitious auctioneer is put in charge of calling

out a price vector and agents respond by providing information about their

demands and supplies.

• Only when the auctioneer calls that price vector for which the quantity demanded is identical to that which is supplied, trading is permitted to take place.
• It leads further to the provisional contract and central planning and further to a general equilibrium.

Lerner's Index-

• The Lerner Index is a measure of market power, of monopoly.
• The Lerner Index has defined as the difference between the price a firm charges and the price it would charge if it faced perfect competition.
• The Lerner Index is calculated as:

             $\text{Lerner Index} = {(P-MC)\over P}$

• A value of 0 for the Lerner Index would indicate that a firm is operating in a perfectly competitive market and is charging a price equal to its marginal cost.
• A positive value for the Lerner Index indicates that the firm has some market power and is able to charge a price above its marginal cost.

Third-degree price decrimination-

• Third-degree price discrimination is a pricing strategy used by firms in which they charge different prices to different groups of consumers based on their willingness to pay for a good or service.

• This concept is known as multi-market price discrimination or market segmentation given by British economist Arthur Cecil Pigou.

The correct answer is Cr/rr

Money multiplier-

• It is a rational measurement that describes the relationship between the reserve requirements set by a central bank and the amount of money that commercial banks can lend out.
• It can be calculated as follows

             K=Cr/rr OR K= 1/rr

• It shows how an amount commercial bank can create credit in the economy with their available currency deposits.

The correct answer is Fiscal deficit - Interest payment.

Key PointsPrimary deficit-

• The primary deficit is a measure of a government's fiscal balance
• The primary deficit is the difference between fiscal deficit and Interest payment.
• The primary deficit is considered a better indicator of a government's underlying fiscal position than the overall budget deficit
• It includes interest payments on government debt.

The correct answer is (D), (A), (E), (B), (C)

Key Points

• Vector autoregression (VAR) is a statistical model used to analyze the relationship between multiple time series variables.
• The VAR model is represented by the following equation: Yt = A1Yt-1 + A2Yt-2 + ... + ApYt-p + εt
• The steps to estimate a VAR model as follows:
• The Autocorrelation Function (ACF) and Partial Autocorrelation Function (PACF) tests are used in time series analysis to determine the order of the Vector Autoregression (VAR) model, which specifies the number of lags to include in the model.
• Unit root tests are used in Vector Autoregression (VAR) models to determine whether the variables of interest are stationary or non-stationary.
• Inputting data in a Vector Autoregression (VAR) model involves organizing and preparing the data to be used in the model.
• The cointegration test is a statistical technique used to test whether two or more non-stationary time series are integrated of the same order and have a long-term relationship.
• Estimation of ECM or VAR Model.

The correct answer is: (A), (C), and (E)

Matrices possess several algebraic and structural properties that are essential for operations such as transposition, inversion, and multiplication. Recognizing valid identities helps in simplifying expressions and solving matrix-related problems efficiently. The question tests foundational matrix properties involving transpose, inverse, rank, and powers.

Key Points

• (A) (A′)′ = A:
• This is a correct identity. Taking the transpose of a transpose returns the original matrix.
• Mathematically: If A is any matrix, then (Aᵗ)ᵗ = A.
• (B) The rank of an n × n nonsingular matrix A must be less than n:
• Incorrect. A nonsingular (i.e., invertible) square matrix has full rank.
• For an n × n nonsingular matrix, the rank is exactly n.
• (C) (AB)′ = B′A′:
• This is a valid matrix identity.
• The transpose of a product of two matrices reverses the order of multiplication and transposes each matrix: (AB)ᵗ = BᵗAᵗ.
• (D) (A + B)ⁿ = Aⁿ + Bⁿ:
• Incorrect. This equality generally does not hold for matrices.
• Matrix addition and exponentiation do not distribute in this way unless under very specific conditions, such as when A and B commute and are both diagonalizable in the same basis.
• (E) (A′)^-1 = (A^-1)′:
• This is a valid identity for invertible matrices.
• The transpose of the inverse equals the inverse of the transpose: (Aᵗ)^-1 = (A^-1)ᵗ.

Additional Information

1. Transpose (A′ or Aᵗ):

• Flips a matrix over its diagonal.
• Properties: (Aᵗ)ᵗ = A, (A + B)ᵗ = Aᵗ + Bᵗ, (AB)ᵗ = BᵗAᵗ.

2. Matrix Inverse:

• If A is invertible, then A^-1 exists such that AA^-1 = I.
• (Aᵗ)^-1 = (A^-1)ᵗ holds for any invertible matrix A.

3. Rank of a Matrix:

• Represents the number of linearly independent rows (or columns).
• For a nonsingular n × n matrix, rank = n.

Important Points

• Matrix properties like transposition and inversion are essential for solving linear equations and simplifying expressions.
• Always verify matrix dimension compatibility when applying properties.
• Not all algebraic identities for real numbers hold for matrices due to non-commutativity.
• Understanding the behavior of matrix operations helps in higher algebra, linear algebra, and applications in data science, engineering, and physics.

The correct answer is U.S. exports were less capital-intensive than U.S. imports

Key Points

• Wassily Leontief conducted the first empirical test of the Heckscher-Ohlin model, which is known as the Leontief Paradox. The results of this test revealed that the data did not confirm the predictions made by the Heckscher-Ohlin model.
• According to the Heckscher-Ohlin model, nations with a comparative advantage in capital-intensive manufacturing ought to export capital-intensive commodities, while nations with a comparative advantage in labor-intensive production ought to export things that need a lot of labour.
• The result of the first empirical test of the Heckscher-Ohlin model by Wassily Leontief found that U.S. exports were less capital-intensive than U.S. imports.
• However, Leontief's results showed that the United States, a country with a large capital endowment, was exporting more labor-intensive goods and importing more capital-intensive goods, contradicting the predictions of the Heckscher-Ohlin model. This became known as the Leontief Paradox.

Hence, the result of the first empirical test of the Heckscher-Ohlin model by Wassily Leontief find that U.S. exports were less capital-intensive than U.S. imports.

The correct answer is (A) and (C) only. 

Key Points

• Statement (A): The gross barter terms of trade are a measure that compares the quantity of a country's exports to the quantity of its imports. It calculates the ratio of the number of exports to the number of imports. This ratio provides insights into the relative volume or physical amount of goods a country is able to export in exchange for the goods it imports. Therefore, statement (A) is correct.
• Statement (D): This statement is incorrect. As mentioned earlier, the gross barter terms of trade use the quantity index for imports and exports. However, the net barter terms of trade use the price index, not the quantity index, for imports and exports. The price index allows for the consideration of price changes and their impact on the value of imports and exports.

Hence,  the gross barter terms of trade use the quantity index for imports and exports, while the net barter terms of trade use the price index for imports and exports.

The correct answer is 22,647.

Key Points

• NDP (FC) = GDP (MP) - Depreciation - Indirect Taxes + Subsidies
• Given:
• GDP (MP) = 27,654 Crores
• Depreciation = 2847 Crores
• Indirect taxes less subsidies = 2160 Crores
• Substituting the values in the formula:
• NDP (FC) = 27,654 Crores - 2847 Crores - 2160 Crores
• NDP (FC) = 22,647 Crores
• Therefore, the aggregate Domestic Income NDP (FC) for the economy for 2022-23 is 22,647 Crores.

Confusion Points 

This being a question from the official question paper published by the NTA, the options and the correct answer would be the same as that released by the NTA itself. 

Hence, the correct answer is 22,647 crores.

The correct answer is allocation function.

Key Points

• Resource allocation refers to the process of distributing the total resource use between private and social goods and selecting the mix of social goods. It also refers to the provision of social goods.
• During this process, society must decide how to divide resources between private and public goods as well as between different products and services. Private goods are excludable and competitive in consumption goods and services that are created and consumed by individuals. Social goods are non-excludable and non-rival in consumption commodities and services that are often provided by the government.
• A number of variables, such as consumer and producer preferences, resource availability, and the incentives and disincentives imposed by the market and the government, affect how resources are distributed between private and societal goods. Resource distribution is, in the end, a complicated and ongoing process that is influenced by several economic, political, and social variables.

Hence, The provision for social goods, or the process by which total resource use is divided between private and social goods and by which the mix of social goods is chosen is known as allocation function.

The correct answer is Gunnar Myrdal

Key Points

• The hypothesis of cumulative causation as an explanation of the backwardness of developing nations is indeed associated with the work of Gunnar Myrdal. Gunnar Myrdal was a Swedish economist and sociologist who contributed significantly to the field of development economics.
• Myrdal's hypothesis of cumulative causation, also known as the "vicious circle of poverty," suggests that underdeveloped or developing nations can become trapped in a cycle of poverty and underdevelopment. According to this hypothesis, various factors such as low income, limited access to education and healthcare, inadequate infrastructure, and institutional deficiencies interact and reinforce each other, leading to a self-perpetuating state of poverty and underdevelopment.
• Myrdal argued that in these situations, the initial disadvantages and constraints faced by developing nations create a negative feedback loop that hampers their ability to break out of the cycle. The lack of resources and opportunities can prevent the necessary investments in human capital, infrastructure, and technological advancements, thereby perpetuating underdevelopment.
• Myrdal's work emphasized the need for deliberate interventions and policies to disrupt this vicious circle of poverty and promote sustainable development. He advocated for targeted investments in education, healthcare, infrastructure, and institutional reforms to stimulate positive cumulative causation, leading to economic growth and development.
• Overall, Gunnar Myrdal's hypothesis of cumulative causation provides an explanation for the persistent backwardness observed in many developing nations and highlights the importance of addressing multiple interrelated factors to achieve sustainable development.

Hence, The hypothesis of cumulative causation as an explanation of the backwardness of developing nations is associated with Gunnar Myrdal.

the correct answer is  (B), (C) and (D) only.

Key PointsFDI Reforms during the Covid-19  period-

• Increase in FDI limits: 
• The Indian government has increased the FDI limit in the telecom sector from 49% to 100%, under the automatic route.
• The FDI limit was increased in the defence sector from 49% to 74%.
• FDI  allowed up to 100% FDI in insurance intermediaries.
• Simplification of FDI rules: 
• ​ The government has simplified FDI rules to make it easier for foreign investors to do business in India.
• it has allowed for the digital submission of FDI applications and relaxed various other regulatory requirements.
• Production Linked Incentive (PLI) scheme:
• ​It aims to provide incentives to promote domestic manufacturing and attract foreign investment in certain sectors, including electronics, pharmaceuticals, and textiles.
• National Infrastructure Pipeline:
• ​The government has launched the National Infrastructure Pipeline
• It aims to create world-class infrastructure in India and attract foreign investment in various sectors.
• Atmanirbhar Bharat Abhiyan:
• ​It aims to promote self-reliance and make India a manufacturing hub.
• The program includes various measures, such as increasing domestic manufacturing, promoting local products, and improving the ease of doing business.

The correct answer is All of (A), (B), (C), (D) and (E)

Key Points

• These are some of the primary goals of sustainability. These goals are aimed at creating a better and equitable world for present and future generations by addressing social, economic and environmental issues. Sustainability also focuses on reducing poverty, promoting gender equality, providing access to quality education and healthcare and ensuring a sustainable future for all.
• (A) The end of poverty and hunger
• (B) Better standard of education and healthcare
• (C) To achieve gender equality
• (D) Sustainable economic growth
• (E) To achieve both inter and intra-generational equity

Hence, all (A), (B), (C), (D) and (E) only is correct.

The correct answer is (A) - (III), (B) - (I), (C) - (IV), (D) - (II).

Key Points

• A researcher will employ the F-test to conduct the test for the equality of the two population variances. The F-test is typically used by researchers to determine whether or not two independent samples were taken from a normal population with the same variability.
• A statistical test called a t test is employed to compare the means of two groups. It is frequently employed in hypothesis testing to establish whether a procedure or treatment actually affects the population of interest or whether two groups differ from one another.
• The Jarque-Bera test determines whether the sample skewness and kurtosis, as determined by a chi-square statistic, are unusually different from their expected values. Because it is an asymptotic test, the Jarque-Bera test shouldn't be applied to small samples.
• A statistical technique called the chi-square test is used to compare actual outcomes with predictions. The goal of this test is to establish whether a discrepancy between observed and expected data is the result of chance or a correlation between the variables you are researching.

Hence, (A) - (III), (B) - (I), (C) - (IV), (D) - (II) is correct.

The correct answer is 7.0 Percent

Key Points

• Total consumption estimates:
• The estimation of growth of total consumption every year is done in the Economic survey of India.
• Economic survey of India highlights the growth of consumption last year and predicts the consumption growth for the next year.
• For year 2021-22, it is estimated that total consumption of India will grow by 7.0 percent.
• After Covid-19 pandemic and its impact on the country, it is observed that the private consumption will see a strong recovery which will lead to normalization in economic activity as before.
• Hence, it can be concluded that Growth in total consumption in India in 2021 - 22 is likely to be 7.0 percent.

The Correct answer is: A, B, and D only

Key Points

• Future financing becomes more troublesome due to public debt (A):
• This statement is correct.
• Public debt increases the burden on future governments to raise funds for debt servicing, often leading to higher taxes or reduced public spending.
• It restricts fiscal flexibility and may result in crowding out of private investment due to increased borrowing by the government.
• Public debt leads to a reduction of resources for productive private employment (B):
• This statement is correct.
• High levels of public debt can lead to higher interest rates, which discourage private investment in productive sectors.
• It can also lead to higher taxation in the future, reducing disposable income and consumption.
• Debt financing requires funds for interest payment and amortization, hence a double burden for the exchequer (D):
• This statement is correct.
• Paying interest on public debt and amortizing the principal amount requires significant financial resources, reducing funds available for other government programs.
• It essentially doubles the financial burden on the government’s budget, affecting fiscal health.

Additional Information

• The classical view on public debt is generally negative, seeing it as a burden that distorts economic decisions and imposes heavy costs on future generations.
• Economists such as Adam Smith and David Ricardo argued that government borrowing should be avoided as it competes with the private sector for scarce financial resources and could lead to higher interest rates.
• These views have shaped the fiscal policies of many governments, focusing on maintaining low levels of debt to promote economic stability and growth.
• However, modern economic theories provide a more nuanced view, suggesting that public debt can also be used strategically for growth-enhancing investments.

The correct answer is - Inferior

Key Points

• Inferior Good
• An inferior good is a type of good for which demand decreases as consumer income increases, and vice versa.
• For inferior goods, the income effect works in the opposite direction of the price change, meaning as income increases, the demand for these goods decreases.
• The substitution effect, however, is in the same direction as the price change, and it typically leads to a decrease in demand when the price rises.
• Despite the income effect working against the good, if the substitution effect is stronger, the demand for the good may still decrease when prices increase.
• Examples of inferior goods include cheaper staples like instant noodles or lower-quality brands of food products that people turn to when their income is low.

Additional Information

• Normal Good
• A normal good is one where demand increases when consumer income increases and decreases when income falls.
• The income effect and substitution effect for normal goods both work in the same direction: when the price decreases, both effects lead to increased demand.
• Giffen Good
• A Giffen good is a special case of an inferior good where the substitution effect is outweighed by the income effect, leading to a paradoxical increase in demand when the price rises.
• In Giffen goods, the income effect dominates, and the consumer ends up demanding more of the good when its price increases, which goes against the usual law of demand.
• Substitution Effect
• The substitution effect occurs when a price change causes a shift in demand between goods due to a change in their relative prices.
• In typical cases, when a good becomes more expensive, consumers switch to alternatives, increasing demand for substitute goods.

The correct answer is – MRPT^K_xy = MRPT^L_xy = w/r

Key Points

• Marginal Rate of Product Transformation (MRPT) reflects the trade-off between the production of two goods using the same set of resources.
• In marginal conditions of Pareto optimality, the correct condition involves the equality of the MRPT between goods (say x and y) across firms or production processes, but not with input price ratios.
• w/r is the ratio of the wage rate (w) to the rental rate of capital (r). This ratio is used in the context of the Marginal Rate of Technical Substitution (MRTS), not MRPT.
• Thus, equating MRPT^K_xy and MRPT^L_xy to w/r is incorrect and not a part of marginal conditions of Pareto optimality.

Additional Information

• MRS^A_xy = MRS^B_xy = P_x/P_y
• This is the condition for consumption efficiency in Pareto optimality.
• It ensures that all consumers have the same marginal rate of substitution and that it equals the price ratio.
• MRTS^x_L,K = MRTS^y_L,K = w/r
• This is the condition for production efficiency in the use of inputs (labour and capital).
• It requires that the marginal rate of technical substitution is the same across goods and equal to the factor price ratio.
• MRPT^K_xy = MRPT^L_xy = r/w
• This format is closer to correct as it compares opportunity costs of output transformation across production techniques but the ratio must not be expressed in terms of input prices like w/r or r/w directly.
• The correct form in Pareto optimality would be equality of MRPT across firms, without necessarily equating it to input price ratios.

The correct answer is "More than one numerical values can be obtained for some of the parameters of the structural equations"

Key Points

• In econometrics, a simultaneous equation model refers to a system of equations where multiple endogenous variables are determined simultaneously.
• These models are commonly used to analyze interdependent relationships among economic variables.
• An over-identified simultaneous equation model occurs when the number of identifying equations is greater than the number of unknown parameters to be estimated.
• When a simultaneous equation model is over-identified, it means that there are more equations than necessary to estimate the parameters of the model.
• This situation arises when there is an excess of instruments or exogenous variables available in the system.
• An instrument is a variable that is correlated with the endogenous variable but is not affected by it directly. Instruments are used to address endogeneity issues in econometric analysis.

Additional Information

• In an over-identified model, the surplus of equations provides redundant information about the parameters.
• As a result, it becomes possible to obtain multiple numerical values for some of the parameters of the structural equations. This situation is known as identification failure or parameter indeterminacy.
• Identification failure occurs because the surplus instruments or equations create conflicting information about the parameters.
• The estimation methods commonly used in econometrics, such as two-stage least squares (2SLS) or generalized method of moments (GMM), struggle to provide unique solutions for the parameters in such cases.
• To address the over-identification problem, researchers often employ additional techniques like instrumental variable estimation or specify additional restrictions on the model's parameters.
• These restrictions, known as identifying assumptions or over-identification restrictions, help to obtain consistent and efficient estimates of the parameters.

Important Points

• Over-identification tests, such as the Sargan test or the Hansen test, can be used to test whether an equation is over-identified and whether the additional instruments improve the model's fit.
• Over-identification is an important concept in econometrics, as it affects the validity of the estimation results and the conclusions that can be drawn from them.

The correct answer is (A) (C) & (D)

Key Points

• Ordinal utility analysis is a type of utility analysis that is based on the ranking of goods and services rather than on their absolute values.
• The analysis assumes that consumers are rational, which means that they have a well-defined preference ordering of the goods and services they consume.
• Consistency in preferences means that a consumer's preferences do not change over time, and that they do not violate the transitivity condition.
• Transitivity implies that if a consumer prefers bundle A to bundle B, and bundle B to bundle C, then the consumer must prefer bundle A to bundle C.

Additional Information

• The assumption of non-satiation means that consumers always prefer more of a good to less of it, given that all other goods are held constant.
• The assumption of measurability of total utility is not necessary in ordinal utility analysis because the analysis focuses on the ranking of bundles of goods rather than on their absolute values.
• The assumption of irrationality is not part of the assumptions of ordinal utility analysis, as the analysis is based on the assumption of rational behavior by consumers.
• Ordinal utility analysis is widely used in microeconomic analysis and is a fundamental concept in consumer theory.
• Hence, it can be concluded that option 3 is correct.

The correct answer is "Sterilization."

Key Points

• Sterilization is a monetary policy tool used by central banks to offset the impact of foreign exchange operations on domestic money supply.
• When a central bank buys foreign currency to increase foreign exchange reserves, it injects domestic currency into the economy, which can lead to inflationary pressures.
• Sterilization involves the central bank conducting an equal and opposite transaction in the domestic money market to offset the injection of domestic currency resulting from the purchase of foreign currency.
• For example, if the central bank buys $1 billion of foreign currency, it will sell an equivalent amount of government bonds to domestic banks or the public, thereby removing an equivalent amount of domestic currency from the economy.

Additional Information

• The aim of sterilization is to keep the monetary base (the sum of reserves and currency in circulation) constant so that changes in foreign exchange reserves do not have an impact on domestic money supply and inflation.
• Sterilization can be done through open market operations, which involve buying or selling government securities, or through other monetary policy tools such as reserve requirements or changes in interest rates.
• Sterilization is used by central banks in countries with floating exchange rate regimes to avoid the exchange rate fluctuations that can result from changes in foreign exchange reserves.
• Hence, it can be concluded that option 4 is correct$

The correct answer is Deen Dayal Upadhyaya

Key Points

• Mahatma Gandhi was a leading figure in the Indian independence movement and a prominent political and social activist.
• Gandhi is known for his philosophy of nonviolent resistance, which he used to challenge British colonial rule in India.
• While Gandhi was a prominent figure in Indian politics and economic thought, he went to London for his study or work abroad.
• Ram Manohar Lohia went to Vidya Sagar college , Berlin university for his further studies.
• B.R. Ambedkar went to London school of Economics.
• Deen Dayal Upadhaya was the one who did not went to abroad for study and work. He completed his studies in Santa Dharam College.

Additional Information

• Gandhi believed in a decentralized, community-based economic system that emphasized self-sufficiency, cooperation, and sustainability.
• Pandit Deen Dayal Upadhyaya was an Indian politician, proponent of integral humanism ideology and leader of the political party Bharatiya Jana Sangh.
• Hence, it can be concluded that Deen Dayal Upadhyaya did not went to abroad for studies or work.

The correct answer is (A) - (IV), (B) - (I), (C) - (II), (D) - (III)  

Key Points

• Rural-Urban migration - Harris Todaro Model
• Rural-urban migration can occur as workers seek better-paying jobs and improved living conditions in cities.
• The model suggests that this process can lead to industrialization and economic growth, but it can also lead to urban poverty and social issues.
• Economic development with unlimited supply of labor - Lewis.
• This model suggests the existence of two sectors- agriculture and industry, where agriculture is the primary sector which has disguised unemployment and unlimited supplies of labor. Industry on the other hand uses modern techniques and have more demand for labor, so Lewis suggests the migration of people from rural to urban areas.
• The model suggests that policies to improve rural conditions, such as investments in agriculture and infrastructure, may be more effective in promoting economic development.
• Process of cumulative causation - Gunnar Myrdal
• The concept of cumulative causation, developed by Gunnar Myrdal, suggests that economic development can be self-reinforcing and lead to a virtuous circle of growth, or a vicious circle of poverty.
• Positive feedback mechanisms, such as increasing returns to scale and network effects, can amplify initial differences in income and development, leading to concentration of wealth and power in certain regions or groups.
• The concept suggests that policies to promote more equitable distribution of income and resources may be necessary to break out of a vicious circle of poverty and stimulate economic development.
• Decline in terms of trade of primary commodities - Raul Prebisch
• The Prebisch-Singer hypothesis suggests that primary commodities, such as agricultural and mineral products, have experienced a long-term decline in their relative prices compared to manufactured goods.
• Raul Prebisch argued that this decline was due to structural factors, such as differences in productivity growth between primary and manufacturing sectors, and unequal distribution of bargaining power in international trade.
• The hypothesis suggests that primary commodity-exporting countries may face difficulties in achieving sustained economic development and may need to diversify their economies to reduce dependence on primary commodities.
• Hence, it can be concluded that option 2 is correct.

The correct answer is:Overall level of population change resulting from total migrants and emigrants.

Key Points

• Net migration is an important factor in determining population growth or decline in a region or country.
• It can be influenced by a range of factors, including economic opportunities, political stability, environmental conditions, social and cultural factors, and government policies.
• Net migration can be measured at different levels of geographic aggregation, such as global, national, regional, or local, and can be affected by different types of migration, such as skilled or unskilled, legal or illegal, temporary or permanent.

Additional Information

• Net migration data is often used in demographic analysis, policy-making, and research on topics such as labor market, social integration, and health outcomes.
• Positive net migration can contribute to economic growth and cultural diversity, but it can also put pressure on infrastructure and resources in the receiving region or country.
• Negative net migration can lead to population decline and aging, which can have implications for economic development, labor force, and social welfare.
• Hence, option 1 is correct.

Key PointsStatement I: If you bought a product which now becomes subject to tax. you will be in a better position to avoid the tax and the seller bears with a larger part if your demand is elastic while seller's supply is inelastic.

• This statement suggests that when your demand for a product is elastic (sensitive to price changes), and the seller's supply is inelastic (not sensitive to price changes), you can avoid more of the tax burden.
• This is because with elastic demand, consumers are likely to reduce their quantity demanded significantly if the price increases, whereas an inelastic supply means sellers cannot easily reduce the quantity supplied.
• Consequently, sellers would bear a larger share of the tax to avoid losing substantial sales.

This statement is generally true. When demand is more elastic than supply, consumers can avoid the tax by reducing their purchases, pushing more of the tax burden onto the seller.

Statement II: A tax on salt is likely to be borne by the consumer.

• A tax on salt is likely to be borne by the consumer.
• This is because the demand for essential goods like salt is relatively inelastic; consumers still need to buy almost the same amount even if the price increases.
• Therefore, most of the tax burden falls on consumers, as they cannot easily reduce their consumption.

This statement is generally true. The inelastic nature of the demand for essential goods implies that consumers will bear most of the tax burden.​

Thus, the most appropriate answer is Statement I and Statement II are both correct.

The correct answer is – (A), (C) and (D)

Key Points

• Finite and independent number of trials

• The binomial distribution applies only when the number of trials is fixed and finite.

• Each trial must be independent, meaning the outcome of one trial does not influence the outcome of another.

• This assumption allows probabilities to be applied uniformly across all trials.

• Two mutually exclusive and exhaustive outcomes

• Each trial must result in exactly two possible outcomes.

• These outcomes are commonly labelled as success and failure.

• No third outcome is possible, and both outcomes cannot occur simultaneously.

• Constant probability of success

• The probability of success must remain the same for every trial.

• This constancy is essential for applying the binomial probability formula.

• Since success probability is constant, the probability of failure is also constant.

  Additional Information

• Infinite number of trials

• An infinite number of trials does not satisfy the requirements of the binomial distribution.

• Situations involving a very large or infinite number of trials are usually analyzed using other distributions.

• Probability of failure

• The probability of failure is derived from the probability of success.

• If the probability of success is constant, the probability of failure must also remain constant.

• Use of binomial distribution

• The binomial distribution measures the likelihood of a given number of successes in a fixed number of trials.

• All core conditions must be satisfied simultaneously for valid application.

The correct answer is Maxi max.

Key Points

• The strategy of choosing the policy that has the best possible outcome is known as the maximization approach, in short, the maxi-max approach.
• The maxi-max approach is a specific decision-making criterion used in decision theory and game theory, which focuses on maximizing the best possible outcome or payoff under the assumption of perfect information and optimistic decision-making.
• The maxi-max approach is based on the idea that decision-makers should select the alternative that has the highest potential payoff among all possible outcomes.
• It essentially involves maximizing the maximum possible gain or payoff in a decision-making situation, without considering the likelihood or probability of achieving that outcome.

Additional Information

• In other words, the maxi-max approach assumes that decision-makers are risk-seeking and solely interested in attaining the best possible outcome, regardless of the associated risks or uncertainties. It is a strategy that disregards the potential for negative outcomes or losses and focuses solely on maximizing the potential for gain.
• While the maxi-max approach can be useful in certain scenarios where the potential gains are particularly significant or when there is a high degree of certainty in the outcomes, it may not be suitable in situations where there is a considerable level of uncertainty or when the potential losses are substantial.
• In such cases, decision-makers might consider other decision-making criteria that take into account the probabilities of different outcomes, such as expected value, expected utility, or minimax regret.
• Therefore, while the maxi-max approach represents a specific decision-making strategy that aims to maximize the best possible outcome, it is important to consider other decision criteria and take into account factors such as risk, uncertainty, and the potential for negative outcomes in real-world decision-making processes.

The correct answer is 27.

Key Points

• Numerical solution
• The demand function is given as P =  35 - 2x - x2, and the value of x = 3.
• Calculating the value of P, we get,
• P = 35 - 2 (3) - (3)²
• P = 35 - 6 - 9 = 20
• P = 20
• Consumer surplus can be calculated using integration
• The formula for consumer surplus is given as: 
• C.S. = $\int_0^3$ P dx - P₀ x₀
• ​​C.S. = $\int_0^3$ 35x - 2x - x² - 20(3)
• C.S. = [35x - 2x² / 2 - x³ / 3]$]_0^3$ - 60
• C.S. = [35 (3) - (3)² - (3)³ / 3] - [ 0 ] - 60
• C.S. = 87 - 60
• Consumer surplus = 27

Important Points

• The difference between what the consumers are willing to pay and what they would actually pay is called consumer's surplus.

Thus, If the demand function is given as P = 35 - 2x - x2 and the demand x0 is 3, the consumer's surplus will be 27.

The correct answer is (D), (E), (C), (B), and (A).

Key Points

• Jevon's Coal Question (1865)
• In his 1865 book, “The Coal Question; An Inquiry Concerning the Progress of the Nation, and the Probable Exhaustion of Our Coal Mines,” British economist William Stanley Jevons warned that Britain would exhaust the coal supplies that were fueling its growth and prosperity.
• Jevons argued that increased efficiency in consumption would not reduce the demand for energy, but rather would spur increased use and further deplete supplies.
• His insight, popularly called Jevons’ Paradox, is used to explain why increased energy efficiency does not necessarily reduce present-day demand for electricity or gasoline.
• Raechel Canson's Silent Spring (1962)
• Rachel Carson’s Silent Spring, published in 1962, was a landmark in the development of the modern environmental movement.
• Carson’s scientific perspective about the effect of pesticides on the natural world led to new policies that protect our air, water, and, ultimately, our health and safety.
• Carson’s book promoted a paradigm shift in how chemists practice their discipline and help to establish a new role for chemists in investigating the impact of human activity on the natural environment.
• The legacy of Silent Spring continues today in the chemistry community’s increased focus on green chemistry practices and the public’s heightened support for sustainability in all spheres of human lives.
• The Economics of Coming Spaceship Earth (1966)
• The article ‘Economics of the Coming Spaceship Earth’ [1], authored by economist Kenneth E. Boulding (1966), provides a philosophical view of Boulding’s conceptualization of the spaceman economy, which has influenced the work of Pearce and Turner (1989) and their introduction to the concept of Circular Economy (CE) [2].
• In ‘Economics of the Coming Spaceship Earth’, Boulding (1966) discusses the classes of inputs and outputs of open and closed systems, specifically in the context of the matter, energy resources, and information systems of the past and within the timeframe of publication of the article in 1966.
• Boulding (1966) also shares his views on the suitability of the Gross National Product (GNP) as an economic indicator and foresight on the future generational impact on the environment from failing to address the environmental pollution occurring at the time due to constraints imposed by conservative political policies.
• Limits to growth theorem (1972)
• The limits to growth model is designed to predict the future development of five global interrelated variables namely population, food production, industrial production, non-renewable resources, and environmental pollution.
• The model is based on the thesis that “the continued growth leads to infinite quantities that just do not fit into a finite world.”
• This basic idea has been elaborated in a highly complicated model which cannot be easily described in equation form because the existence of multiple inter-relationships between the five variables is not rectilinear.
• Environmental Kuznets Curve Hypothesis (1995)
• Grossman and Krueger (1995) put forward the environmental Kuznets curve (EKC) hypothesis, which refers to an inverted U-shaped relationship between environmental degradation and per capita income, i.e., the environmental quality initially deteriorates but then improves as per capita income increases.

Thus, the correct chronological order is Jevon's coal question, Raechel Canson's silent spring, The economics of coming spaceship Earth, Limits to growth theorem, and Environmental Kuznet's curve hypothesis.

The correct answer is ${\frac{x^{2}}{2}}-2x+4\log(x+2)+{c}$

Key Points

• Using integration by division
• When the degree of the numerator is equal to or greater than the degree of the denominator, divide the numerator by the denominator till the degree of the remainder is less than that of the divisor.

Important Points

• Numerical solution
• Given $\frac{x^2}{x+2}$
• Dividing the numerator by the denominator, we get:
• $\frac{x^2}{x+2}$ = x - 2 + 4 / (x+2)
• Integrating, ∫ x dx - ∫ 2 dx + ∫ 4 / (x + 2) dx, we get:
• ∫ x dx - ∫ 2 dx + ∫ 4 / (x + 2) dx = (x² / 2) - 2x + 4 [ log (x + 2) ]

Thus, on integrating  $\frac{x^2}{x+2}$, we get (x2 / 2) - 2x + 4 [ log (x + 2) ] + C

The correct answer is (C), (D), and (E) only.

Key Points

• Monetary policy instruments
• Quantitative instruments of monetary policy
• Cash Reserve Ratio (CRR)
• It refers to the minimum amount of funds that a commercial bank has to maintain with the Reserve Bank of India, in the form of deposits.
• An increase in the cash reserve ratio reduces the money supply in the economy.
• A decrease in the cash reserve ratio increases the money supply in the economy.
• ​Statutory Liquidity Ratio (SLR)
• The Statutory Liquidity Ratio is defined as the minimum percentage of assets to be maintained in the form of either fixed or liquid assets with RBI.
• The flow of credit is reduced by increasing this liquidity ratio and vice-versa.
• Open Market Operations
• Open Market operations refer to the buying and selling of government securities in an open market, in order to affect the money supply in the economy.
• The selling of securities by RBI will wipe out the extra cash balance from the economy, thereby limiting the money supply,
• The buying of securities by RBI will pump additional money into the economy, thus, stimulating the money supply.
• Interest rate policy
• Interest rate policy is also a component of the monetary policy of the RBI.
• Interest rate policy includes repo rate, reverse repo rate, bank rate, marginal standing facility, etc.

Thus, open market operations, reserve requirements, and interest rate policies are the instruments of monetary policy.

Additional Information

• Changes in public expenditure and changes in tax rates are the instruments of the fiscal policy of the government of India.

The correct answer is (D), (B), (E), (A), and (C).

Key Points

• 15^th Finance Commission
• The Finance Commission is a constitutional body formed by the President of India to give suggestions on center-state financial relations.
• The 15^th Finance Commission chaired by Mr. N. K. Singh was required to submit two reports.
• The first report, consisting of recommendations for the financial year 2020-21, was tabled in Parliament in February 2020.
• The final report with recommendations for the period 2021-26 was tabled in Parliament on 1^st February 2021.
• Horizontal devolution 
• Horizontal devolution implies the criteria for the distribution of net proceeds of central taxes among the different states of India.
• Criteria for horizontal devolution and weights assigned (in ascending order)

Important Points

• Income distance
• Income distance is the distance of a state’s income from the state with the highest income.
• The income of a state has been computed as the average per capita GSDP during the three-year period between 2016-17 and 2018-19.
• A state with lower per capita income will have a higher share to maintain equity among states.
• Demographic performance
• The demographic performance criterion has been used to reward efforts made by states in controlling their population.
• States with a lower fertility ratio score higher on this criterion.
• Forest and ecology
• This criterion has been arrived at by calculating the share of the dense forest area of each state in the total dense forest of all the states.
• Tax and fiscal efforts
• This criterion has been used to reward states with higher tax collection efficiency.
• It is measured as the ratio of the average per capita own tax revenue and the average per capita state GDP during the three years between 2016-17 and 2018-19.

Thus, the criteria and weights assigned by the Fifteenth Finance Commission of India for Horizontal Devolution in ascending order are tax and fiscal efforts, forest and ecology, demographic performance, area, and income distance.

The correct answer is 32 %.

Key Points

• The Harrod-Domar Model
• The Harrod-Domar model focuses on the dual role of investment.
• On the one hand, new investment generates income (via the multiplier effect) and effective demand.
• On the other hand, new investment increases the productive capacity of the economy by expanding the stock of capital assets.

Important Points 

• Numerical solution
• According to the Harrod-Domar model, the growth equation is given as
• δ Y = S / r, where, δ Y is the growth rate of income, S is the saving rate, and r is the capital-output ratio.
• Substituting the given values in the growth equation, we get-
• 8 % = S / 4 %
• S = 32 %

Thus, In the Harrod-Domar model, if the growth rate of income is 8% and the capital-output ratio is 4% then the saving rate must be 32 %.

The correct answer is (A), (C), and (E) only.

Key Points

• The current account includes merchandise export
• In the current account, merchandise exports are shown as a positive item and are calculated free on board, i.e. the costs of transportation, insurance, etc. are excluded.
• The difference between merchandise exports and imports is the balance of visible trade or merchandise trade.
• The current account includes invisible export
• In the current account, invisible exports imply the export of services and are included as a positive or credit item.
• The balance of exports and imports of services and transfer payments is called the balance of invisible trade.
• The current account includes both merchandise exports and imports and invisible exports and imports
• Merchandise exports and imports imply the export and import of visible goods, and, invisible exports and imports imply the export and import of services.
• In the current account, merchandise and invisible exports are entered as credits as they represent receipts from foreigners.
• Merchandise and invisible imports are entered as debits because they represent payments to foreigners.

Important Points

• Components of the current account of B.O.P.
• The current account of a country consists of all the transactions concerning trade in goods and services and unilateral transfers.
• Service transactions include costs of travel and transportation, incomes and payments of foreign investments, etc.
• Transfer payments relate to gifts, pensions, foreign aid, private remittances, charitable donations, etc. received from foreign individuals and governments to foreigners.

Thus, out of the given statements, (A), (C), and (E) are correct regarding the current account of B.O.P.

The correct answer is 'Cheaper inputs from different countries are required to remain competitive'.

Key PointsThe fifth statement of the passage says, 'The New International Economies of Scale (NIES) states that - more and more products manufactured by international corporations have parts and components made in many different nations. The reason is to minimize production costs. Foreign "sourcing" of inputs is often not a matter of choice to earn higher profit, but simply a requirement to remain competitive.

In accordance with the above statement, it can be concluded that 'cheaper inputs from different countries are required to remain competitive' reflects the most correct sense of the New International Economies of Scale (NIES).

The correct answer is 'Without globalization world poverty would probably be even more widespread'.

Key Points

The first statement of the passage says, 'Although globalization is often accused of increasing world poverty, the fact is that poverty would probably be even more widespread without globalization'.

On the basis of the above statement, it is true that without globalization world poverty would probably be even more widespread.

The correct answer is 'Uneven and inequitable distribution of efficiency and openness'.

Key PointsThe third statement of the passage says, "What globalization can be blamed for is not spreading the benefits of increased efficiency and openness that come with globalization more evenly and equitably to all nations".

In accordance with the above statement, it can be concluded that globalization has been blamed for the uneven and inequitable distribution of efficiency and openness.

The correct answer is 'the investor will lose money'.

 Key Points

The last statement of the passage states, 'The risk is that if during the investment period, the higher-yielding currency depreciates against the lower-yielding currency by a higher percentage than the positive interest differentials, the investor will lose money'.

Hence, on the basis of the above statement, it is clear that during the investment period, if the higher-yielding currency depreciates against the lower-yielding currency by a higher percentage than the positive interest differentials then the investor will lose money.

The correct answer is 'Both the inward stock of FDI to developing countries and outward stock of FDI from developing countries remained higher in developing countries than developed countries'.

Key Points

The fourth statement of the passage states, "The stock of foreign direct investments around the world states that in 2010, the inward stock of FDI of developing countries was 48 percent that of developed countries, while their stock of outward FDI was about 17 percent that of developed countries".

Thus, on the basis of the above statement, it can be concluded that "Both the inward stock of FDI to developing countries and outward stock of FDI from developing countries remained higher in developing countries than developed countries" is incorrect.

The correct answer is 'The startups increased by 8972 % during 2016 - 17 and 2021 - 22'.

Key Points

The sixth statement of the passage states that "The recognized startups has been increased from 726 in FY 2016-17 to 65,861 in FY2021-22".

Thus, on the basis of the above statement, it can be concluded that the startups increased by about 8972 % during 2016 - 17 and 2021 - 22.

The correct answer is none of the above.

 Key PointsThe eighth statement of the passage states, "These startups have been recently developed in new domains and sectors of strategic importance including the development of IT services, hardware technology, and software enterprises. artificial intelligence, robotics and technology of banking & finance across 56 sectors". 

On the basis of the above statement, it can be concluded that all the given sectors have developed recently in startups.

The correct answer is 'creation of domestic demand for startups'.

Key PointsThe last statement of the passage states, "Innovation in new sectors and creation of domestic demand for these products are important for long-term development and attracting new startups".

Thus, on the basis of this statement, the creation of domestic demand for startups is required for sustaining startups.

The correct answer is employment opportunities.

Key Points

The first-four statements of the passage state that "Since the second five-year plan, the Government of India has been emphasizing on development of industry on promoting self-reliance in India. But at that time the priority was for import substitution and export promotion. Though the same phenomenon is still relevant the priority of Industrialisation has changed. Industry helps not only for the self-reliance and reducing dependence on foreign countries but it creates massive employment for a populated country like India".

Also, the seventh statement states that "The startups spread across 640 districts have created more than 7 lakh jobs".

In accordance with the above statements, it can be concluded that employment opportunities are the prioritized objective of industrialization in terms of startup initiatives.

The correct answer is 945 crore.

Key PointsThe ninth statement of the passage states that "As on Feb. 2022, the Ministry of Commerce and Industry has allocated Rs. 2,791.29 crore to SIDBI which in turn committed Rs. 6.795 crores to 82 alternative investment funds (AIFs) while Rs. 8.785 crore has been invested by supported AIFs in 574 startups and Rs. 945 crores has been allocated under the scheme for a period of four years starting from 2021-22 to fund the startups for proof of concept, prototypes, trials of products, entry of market and commercialization".

Thus, on the basis of this statement, it is clear that Rs. 945 crores has been allocated under the scheme of startups to fund new startups for proof of concepts, prototypes, and trials of products, entry of market, and commercialization.

The correct answer is Shortage of semi-conductor chips

Key Points

• Recently vehicle registration has decreased by 30% in India due to a semiconductor chip shortage.
• It was the lowest in the last 8 years according to the Federation of automobiles dealer association.
• It is the impact of the supply chain breaking due to Covid 19's second wave.

Additional Information Global semiconductor chip shortage-

• The global chip shortage started in late 2020 in the impact of covid 19 pandemic.
• This chip shortage disrupted the global supply chain, factory shutdowns, and changes in consumer behaviour.
• It increased the demand for electronics.
• The Pandemic has resulted in a surge in demand for semiconductors used in products such as laptops and gaming consoles,
• It has further created a shortage of semiconductors.

The correct answer is Monetary neutrality.

 Key Points

Monetary neutrality

• According to the proponents of classical economics, money is neutral in the sense that it affects monetary variables such as prices, wage rate and an exchange rate that is called monetary neutrality.
• It does not affect real variables such as output and employment in long run.
• Changes in the money supply only have a temporary impact on nominal variables, such as the price level, but do not affect the underlying real variables in the economy.

Additional Information

• Fiscal neutrality means that the change is a fiscal policy by the government and does not impact the allocation of resources in the economy.
• Exchange rate neutrality means that changes in the exchange rate, or the relative value of a currency in relation to other currencies, do not affect the real economy in the long run.
• According to the principle of technological neutrality, technological advancements only affect the production process, but do not affect the allocation of resources in the economy.

The correct answer is 13

Key PointsThe equilibrium of a firm-

• A firm gets an equilibrium point where MR equals MC.
• According to question, the given firm will achieve the equilibrium situation as follows

          $TC= 20+4Q$

          $\text{hence,} \text{ MC}=0+4 = 4$ [Derrivate TC with respect of Q]

         And $TR=30Q-Q^2$

         $hence,\text{MR}=30-2Q$ {Derrivate TC with respect of Q]

      The equilibrium will be maximised when 

                         $MR=MC$       

                   $30-2Q=4$   

                            $26=2Q$  

                             $13=Q$

     The firm will maximise its profit where Q = 13

The correct answer is 0.6.

Key Points

• By counting the number of tickets that are multiples of 2 or 5 and dividing by the total number of tickets in the bag, one can determine the likelihood of drawing a multiple of 2 or 5.
• 10 tickets with two-digit multiples are available (2, 4, 6, 8, 10, 12, 14, 16, 18, 20).
• There are 4 tickets that total five (5, 10, 15, 20).
• There are two tickets that both add up to 2 and to 5. (10, 20).
• There are therefore 12 tickets that are multiples of 2 or 5 (10 + 4 - 2 = 12).
• The likelihood of drawing a multiple of 2 or 5 is therefore 12/20 = 3/5.

Hence, A bag contains 20 tickets marked with numbers 1 to 20. One ticket is drawn at random. The probability that will be multiple of 2 or 5 is 0.6.

The correct answer is - (B), (D), and (E)

Key Points

• Multicollinearity in CLRM
• Multicollinearity arises when two or more independent variables in a regression model are highly correlated with each other.
• This leads to issues in estimating the relationship between dependent and independent variables.
• Option (B): OLS estimators are not BLUE
• BLUE stands for Best Linear Unbiased Estimator, and it is one of the Gauss-Markov assumptions.
• When multicollinearity exists, the OLS estimators are still unbiased, but they no longer have the smallest variance among all unbiased estimators.
• Option (D): t ratio of one or more coefficients is statistically insignificant
• Multicollinearity inflates the standard errors of OLS estimators, leading to statistically insignificant t-ratios for some coefficients, even though they might be important.
• Option (E): The OLS estimators and their standard errors can be sensitive to small changes in the data
• Multicollinearity causes the OLS estimates and their standard errors to become highly sensitive to small changes in the dataset, making the model unstable.

Additional Information

• Practical Consequences of Multicollinearity
• R-squared (R²) can be very high, giving a false impression of a good fit, but this is not always meaningful in the presence of multicollinearity.
• When multicollinearity is present, the variance of OLS estimators increases, and their precision is reduced, making it harder to determine the individual impact of each variable.
• Even though multicollinearity doesn't affect the unbiased nature of OLS estimates, it does reduce their efficiency (they no longer have the minimum variance), making them less reliable for hypothesis testing.
• Dealing with Multicollinearity
• Solutions to multicollinearity include removing highly correlated predictors, using principal component analysis (PCA), or applying regularization techniques like Ridge or Lasso regression.
• It is also possible to combine highly correlated variables into a composite variable to reduce multicollinearity.

The correct answer is Option 1) (B), (D), and (E) only.

Key Points

• Q1 + Q2 = 2Md This statement is incorrect.
• In a normal distribution, the sum of the quartiles does not equal twice the median (Md).
• Q1 = -Q3 This statement is correct.
• In a symmetric distribution like the normal distribution, Q1 and Q3 are equidistant from the median but on opposite sides.
• All moments of odd order about mean are zero This statement is correct.
• In a normal distribution, moments of odd order (such as the third, fifth, etc.) about the mean are zero because the distribution is symmetric.
• Q1 + Q2 = Md This statement is correct.
• In a normal distribution, the sum of the first and second quartiles equals the median.

Additional Information

• A normal distribution is symmetric about its mean, and its skewness is zero.
• This means the left and right sides of the distribution are mirror images.

The correct answer is Employed + Unemployed.

Key Points

• The total population of persons who are either working or actively looking for work within an economy is referred to as the labour force. It is used to determine the unemployment rate and is a crucial measure of a nation's economic activity.
• People of working age who are employed or looking for work make up the labour force. No matter if they work full- or part-time, persons who have a job are considered to be employed.
• Unemployed people are those who are actively looking for work but are unable to secure a position. The size of the labour force is a crucial indicator of a country's economic health since it can be used to gauge the degree of demand for goods and services.

Hence, Labour force is employed + unemployed.

The correct answer is (B), (C) and (D) only.

Key Points

• The correct answer is:
• Gujarat ∶ 919
• Madhya Pradesh ∶ 931
• Odisha ∶ 979
• Tamil Nadu ∶ 996
• Haryana ∶ 879
• Sex ratios are among the most fundamental demographic variables and give an indicator of a population's future reproductive capacity as well as the relative survival of females and males. The observed sex ratio results from both natural selection on the sexes and any harvest-related anthropogenic influences.

Hence, (B- Madhya pradesh ∶ 931), (C-Odisha ∶ 979) and (D-Tamil Nadu ∶ 996) only is correct.

The correct answer is 20

Key Points Profit maximization-

• Profit maximization is the situation where the producer achieves the highest level of profit.
• It occurs when MR= MC
• For the given situation profit maximization can be calculated as follows:-

          Total production of firm =800 [Given]                                                                          Price of the commodity = 40 per unit [Given]                                                              Elasticity of Demand = (-2) [Given]                                  $Price ={AR} ={MR}{ {e} \over e-1}$                                                                                     Because MR=MC at the equilibrium point.                       Hence, ${P} ={MC}{ {e} \over e-1}$                                                                     ${40} ={MC}{ {2} \over 2-1}$                                                                      ${40} =2{MC}\Rightarrow{20}=MC$

The correct answer is  (A), (C), and (D) only.

Key Points

• Revised definition of the MSMEs was brought in July 2020. This statement is correct.
• The Government of India revised the definition of MSMEs in July 2020 to broaden the coverage and include more enterprises under the MSME category.
• In this definition, turnover limit varied between service and manufacturing enterprises. This statement is incorrect.
• The revised definition does not differentiate between service and manufacturing enterprises regarding turnover limits. The criteria are the same for both types of enterprises.
• In the revised definition, the turnover limit for small enterprises was Rs.50 crore. This statement is correct.
• According to the revised definition, the turnover limit for small enterprises is Rs.50 crore, facilitating the growth and expansion of small businesses.
• In this revised definition, the investment limit in plant and machinery or equipment for medium enterprises was Rs.50 crore. This statement is correct.
• The revised definition set the investment limit for medium enterprises at Rs.50 crore for plant and machinery or equipment, providing a broader scope for medium enterprises to invest and grow.
• In the revised definition, the investment limit for plant and machinery or equipment for medium enterprises was Rs.5 crore. This statement is incorrect.
• The correct investment limit for medium enterprises is Rs.50 crore, not Rs.5 crore, which applies to micro enterprises under the revised definition.

Additional Information

• The investment limit for micro enterprises in plant and machinery or equipment is Rs.1 crore, and the turnover limit is Rs.5 crore.
• The revised definition aims to support the smallest enterprises in their growth and expansion by providing them with a clear investment and turnover criteria.
• The revised definition helps in reducing the compliance burden and enhancing the ease of doing business for MSMEs.
• The updated criteria make it easier for enterprises to maintain their MSME status and benefit from various government schemes and support systems.

The correct answer is:" Both (A) and (B) "                                             

Key Points

• Demographic dividend refers to the potential economic benefits that can arise from a country's changing age structure, as a larger working-age population can support a smaller dependent population.
• Demographic dualism refers to a situation where there is a large divergence in demographic and economic characteristics between different regions or segments of a population within a country.
• In India, some states have experienced rapid demographic transition, with declining fertility rates and increasing education levels, while others continue to have high fertility rates and low levels of human development.

Additional Information

• The states that have experienced demographic transition tend to be more urbanized and have higher per capita incomes, while those with high fertility rates tend to be more rural and poorer.
• Sex ratio can also be an important factor in demographic dualism, as some states have much higher levels of gender discrimination and female infanticide than others.

Important Points

• Demographic dualism can pose challenges for policy makers, as they may need to adopt different strategies for addressing the needs and opportunities of different segments of the population.
• While the potential benefits of demographic dividend are significant, they are not automatic and depend on a range of factors, including investments in education, health, and infrastructure, as well as a favorable business environment and supportive policies for job creation.
• In India, some analysts have also raised concerns about the potential risks of demographic transition, such as a growing elderly population and declining support ratios, which could pose challenges for the country's social security and healthcare systems.

The correct answer is option 4.

Important Points

Hence, it can be concluded that FEMA matches with 1999, MRTP Act matches with 1969, Competition act matches with 2002 and FERA with 1973.

The correct answer is 1.5

Key Points

• Z-score indicates the how much a given value differs from the standard deviation.
• It is the number of standard deviations a given data point lies above or below the mean.
• The Z-score is measured in terms of standard deviations from the mean.
• The formula to calculate Z-score is $\frac{mean-\mu}{\sigma}$
• where $\mu$ is the sample mean
• $\sigma$ is the standard deviation.

Important Points

• In this question, the value of the mean is 76,
• $\mu$ is 68
• The standard deviation is 5
• Putting these values in the formula,
• Z-score=$\frac{76-68}{5}=1.6$
• Hence, it can be concluded that Hari's Z-score is 1.6

The correct answer is (A) - (II), (B) - (III), (C) - (I), (D) - (IV).

Key Points

• Absolute Income Hypothesis:
• This hypothesis states that an individual's consumption level is based on their current level of income. The theory was proposed by John Maynard Keynes.
• Relative Income Hypothesis:
• This hypothesis states that an individual's consumption level is based on their relative income compared to others in society. The theory was proposed by James Duesenberry.
• Permanent Income Hypothesis:
• This hypothesis states that an individual's consumption level is based on their average income over a long period of time, rather than their current income level. The theory was proposed by Milton Friedman.
• Life Cycle Hypothesis: This hypothesis states that individuals base their consumption decisions on their expected income over their lifetime, rather than their current income level. The theory was proposed by Franco Modigliani.

Additional Information

• The Absolute Income Hypothesis (AIH)
• It is an economic theory that suggests that an individual's level of consumption is directly proportional to their current level of income, regardless of changes in their future income prospects.
• This theory was introduced by economist John Maynard Keynes in the 1930s.
• The Relative Income Hypothesis (RIH)
• It is an economic theory that suggests that people's consumption patterns are determined not just by their absolute level of income, but also by their income relative to others in their society.
• The theory was introduced by economist James Duesenberry in the 1940s.
• The Permanent Income Hypothesis (PIH)
• It is an economic theory that suggests that people's consumption patterns are determined by their long-term, or permanent, income, rather than their current income level.
• The theory was introduced by economist Milton Friedman in the 1950s.
• The Life Cycle Hypothesis (LCH)
• It is an economic theory that suggests that people's consumption patterns are determined by their life-cycle stage and their income expectations over their lifetime.
• The theory was introduced by economist Franco Modigliani in the 1950s.
• ​Hence, the correct answer is option 2.

The correct answer is New Keynesian economics.

Key Points

• Menu cost is a concept in economics that refers to the cost that firms incur when changing the prices of their products or services.
• This cost can include the time and effort spent updating price lists, re-labeling products, and communicating new prices to customers.
• Menu cost is considered a barrier to price adjustment and can lead to a phenomenon known as "sticky prices," where prices do not adjust immediately to changes in market conditions.
• The concept of menu cost is often associated with neo Keynesian economics, which emphasizes the importance of price flexibility and market efficiency.

 Additional Information

• Menu cost is a real-world example of what economists call "friction," which refers to anything that slows down or impedes the efficient operation of markets.
• The term "menu cost" comes from the analogy of a restaurant changing the prices on its menu. Just as a restaurant must print new menus or update its digital menu, firms must incur costs to change the prices of their goods and services.
• Menu cost is often cited as a reason why inflation can be persistent and difficult to control. If firms face high menu costs, they may be reluctant to change their prices even in the face of changing market conditions or rising costs, leading to a lag in the adjustment of prices.
• The concept of menu cost has also been applied in other fields outside of economics, such as marketing, where firms must consider the cost of changing product names or packaging designs.

 Important Points

• The concept of menu cost is important because it highlights the role that transaction costs can play in shaping market outcomes.
• Even small costs associated with price adjustments can have significant effects on market efficiency and the ability of firms to respond to changes in demand or supply.
• The idea of sticky prices, which arises from menu costs, challenges the traditional assumption of perfect price flexibility in classical economics.
• This has important implications for monetary policy, which may be less effective in stimulating the economy if prices do not adjust quickly to changes in interest rates or money supply.
• The concept of menu cost has also been used to explain why some industries or firms may have a greater tendency towards price rigidity than others.
• For example, industries with a high degree of product differentiation or branding may face higher menu costs than those with more standardized products.
• Hence, it can be concluded that option 3 is correct.

The correct answer is: (A) - (IV), (B) - (I), (C) - (III), (D) - (II)

Key Points

• Size matters in international trade is associated with The gravity model.
• Economies of scale and monopolistic competition in international trade is associated with Paul Krugman.
• The technological gap theory of trade is associated with M.V. Posner.
• The zero-sum game of trade is associated with Mercantilists.

Additional Information

• Size matters in international trade - The gravity model.
• The gravity model is an economic model used to estimate the trade flow between two countries.
• According to the gravity model, the trade between two countries is proportional to their size (measured by GDP) and inversely proportional to the distance between them.
• Economies of scale and monopolistic competition in international trade - Paul Krugman.
• Paul Krugman is an economist known for his research on international trade.
• He developed the theory of economies of scale and monopolistic competition, which explains how firms' market power and product differentiation can lead to trade patterns and specialization.
• Krugman's work highlighted the role of economies of scale in trade and how firms can gain a competitive advantage through product differentiation in global markets.
• Technological gap theory of trade - M.V. Posner  
• M.V. Posner is associated with the technological gap theory of trade, which suggests that trade patterns are influenced by differences in technology levels between countries.
• ​According to this theory, countries with superior technology or higher levels of innovation tend to specialize in producing and exporting technologically advanced goods, while countries with lower technology levels focus on producing and exporting goods that require less advanced technology.
• The zero-sum game of trade - Mercantilists.
• Mercantilism is an economic theory that dominated European economic thought in the 16^th to 18^th centuries.
• Mercantilists believed that a nation's wealth and power were based on its accumulation of precious metals, especially gold and silver.
• According to mercantilist theory, trade is a zero-sum game in which one country's gain is another country's loss. As a result, mercantilists advocated for policies such as tariffs and export subsidies to promote domestic production and exports and limit imports.
• Hence, it can be concluded that option 2 is correct.

The correct answer is 2007 - 08.

Key Points

• Gross Domestic Saving
• Gross domestic saving is gross domestic product minus final consumption expenditure.
• Gross domestic saving is expressed as a percentage of gross domestic product.
• Gross domestic saving consists of savings from the household sector, private corporate sector, and public sector.
• According to the RBI data, from a low of 21.6 percent in the year 1991-92, India's domestic saving rate jumped to a record high of 37.7 percent during the year 2007-08.

Important Points

• Domestic saving in India
• Domestic saving in India is divided into two parts -
• Public saving: The amount of revenue earned from taxes that is leftover after accounting for all government expenditures is called public saving.
• Private saving: Private saving is the total amount of savings made by private (financial and non-financial) corporations and the household sector.
• ​Private saving is further divided into two parts, i.e., household saving and corporate saving.
• Household saving: Household saving is defined as the difference between a household's disposable income and its consumption expenditure on goods and services.
• Corporate saving: Corporate saving equals corporate profits less dividend payments to shareholders.

Thus, the gross domestic saving rate was the highest during the year 2007-08.

The correct answer is Rs. 60 crores.

Key Points

• Tax multiplier
• The tax multiplier is defined as the factor by which a change in taxes will change the value of the gross domestic product.
• Using tax multiplier, the government is able to decrease (increase) taxes by the exact amount that they need the gross domestic product to rise (decline).
• The formula of the tax multiplier
• K_T = - b / (1 - b) = δ Y / δ T
• Here,  K_T denotes tax multiplier, b denotes marginal propensity to consume, δ Y denotes a change in GDP or income, and δ T denotes a change in taxes.
• Marginal Propensity to Consume (MPC)
• Marginal propensity to consume is the ratio of change in consumption to change in income.
• The formula to calculate the marginal propensity to consume is MPC =  δ C / δ Y.

Important Points

• Numerical solution
• Using the formula of tax multiplier, 
• δ Y / δ T =  - b / (1 - b), we get,
• δ Y / (-20) = - 0.75 / 1 - 0.75
• δ Y = 15 / 0.25 = 60
• δ Y = 60

Thus, When MPC = 0.75, a decrease in taxes by Rs. 20 crores will increase GDP by 60 crores.

The correct answer is (A), (C), (D), and (E) only.

Key Points

• Characteristics of an under-developed economy
• Over-dependence on the primary sector
• Agriculture plays a predominant role in most of the underdeveloped economies.
• This is because of the less progressive secondary and tertiary sectors, and the lack of capital formation.
• Deficiency of capital
• Underdeveloped economies are characterized by a chronic deficiency of capital.
• This shortage of capital is one of the factors responsible for a low per capita income.
• Low rate of capital formation
• The underdeveloped economies can be termed capital-poor, low-saving, and low-investment economies.
• This low level of capital formation is because of a lack of inducement to invest, and a low propensity to save.
• High rate of poverty
• One of the important characteristics of underdeveloped economies is the prevalence of poverty and malnutrition.
• The issues of poverty and malnutrition are prevalent in rural areas, where more than 70 % of the population resides.
• Technological backwardness
• Technological backwardness in underdeveloped economies leads to economic backwardness.
• This low level of technological capabilities limits the rate of technological change and economic growth and keeps underdeveloped countries dependent on imports of technology.
• High expenditure on food
• As household incomes increase, the percentage of income spent on food decreases and a larger proportion of income is spent on consumer and capital goods.
• A higher proportion of expenditure on food is a feature of an underdeveloped economy.

Thus, a low level of technology and poor human capital, a high proportion of the labour force engaged in agriculture and low agriculture productivity, a high proportion of domestic expenditure on food, and a higher incidence of poverty are the basic characteristics of an underdeveloped economy.

Additional Information

• A high level of GDP and high per-capita income are the characteristics of a developed economy.

The correct answer is (A), (D) and (E) only.

Key PointsProfit maximization in the short run

• Profit maximization refers to the situation fulfils the given conditions
• TR-TC= π

                     p(q)-TC=π

• To maximise
• We differentiate the profit maximisation function (p(q)-TC=π) with respect to q so that MR = MC.
• The second-order condition requires that $\frac{\partial ^2p(q)-TC}{\partial q}>0$
• Marginal profit must be decreasing at the optimal level of q.

Important PointsProfit maximization and Input demand-

• The profit maximisation exercise is the firm's decision problem of selecting appropriate levels of capital and labour inputs L​
• Assuming that the producer is a price taker so the output and input prices are parameters in

the maxirnisation problem.

• The first-order conditions (FOCs) of the maximisation problem are:

​           $\frac{\partial π}{\partial k}$=$\frac{\partial f}{\partial k}-r=0$

           $\frac{\partial π}{\partial l}$=$\frac{\partial f}{\partial l}-w=0$

Solving these equations, we get

           $\frac{MP_{L}}{MP_{K}}=\frac{\frac{\partial Q}{\partial L}} {\frac{\partial Q}{\partial k}}=\frac{w}{r}$

• The second. order conditions of the maximisation need to satisfy such that:
• π_KK < 0=$\frac{\partial ^2Q}{\partial K^2}<0$, π_LL < 0=$\frac{\partial ^2Q}{\partial L^2}<0$
• π_KKπ_LL - π²_KL > 0=$\left( \frac{\partial ^2Q}{\partial L^2} \right) \left( \frac{\partial ^2Q}{\partial K^2} \right)> \left( \frac{\partial ^2Q}{\partial L \partial K} \right) ^2$

Additional Information Marginal Revenue at Equilibrium-

• Marginal revenue of labour  for the given function will be​​:

• MP_L =∂Q∂L∂Q∂L∂Q∂L

• ​Marginal revenue capital  for the  given function:

• ​MPk = ∂Q∂k∂Q∂k∂Q∂k

  ​

The correct answer is (A), (C), (B), (E), and (D).

Key Points

• Physiocrats (18^th century)
• ​Physiocracy includes those economic principles and policies which developed in France during the mid-18^th century.
• Economic thinkers who contributed to the growth and development of physiocracy have been called physiocrats.
• The Physiocrats are regarded as the founders of economic science because they were the first to analyze the general principles underlying economic phenomena and to evolve a theoretical system.
• Physiocracy which means 'rule of nature' is also considered the first school of economic thought.
• Classical economics (late 18^th - early 19^th century)
• Classical economics refers to the school of thought of economics that originated in the late 18^th and early 19^th centuries, especially in Britain.
• It focused on economic growth and economic freedom, advocating laissez-faire economy ideas and free competition.
• Keynesian economics (20^th century)
• Keynesian economics named after British economist John Maynard Keynes is based on the various macroeconomic theories and models of how aggregate demand strongly influences economic output and inflation.
• In the Keynesian view, aggregate demand does not necessarily equal the productive capacity of the economy.
• Instead, it is influenced by a number of factors, sometimes behaving erratically and affecting production, employment, and inflation.
• Monetarist counter-revolution (the 1970s)
• Monetarism or monetarist counter-revolution is a school of thought in monetary economics that emphasizes the role of government intervention in controlling the amount of money in circulation.
• The monetarist theory asserts that variations in the money supply have major influences on national output in the short run and on price levels in the long run.
• The “monetarist revolution” is a sort of revolution against the views of Keynesians who held the view that “money does not matter.”
• New-Keynesian economics (the 1990s)
• New Keynesian Economics was developed from classical Keynesian economics.
• New Keynesian economics is a contemporary macroeconomics school of thought that studies the rate at which prices and wages fluctuate.
• New Keynesian Economics, as a modern version of the classical theory, seeks to provide a response to how fast wages and prices adjust.
• The two key assumptions of New Keynesian economics are the stickiness of wages and the stickiness of prices.

Thus, the correct chronology is physiocrats, classical economics, Keynesian economics, monetarist counter-revolution, and new-Keynesian economics.

Additional Information

• Proponents of different schools of economic thought
• Founder of Physiocracy - Francois Quesney
• Founder of classical economics - Adam Smith
• Founder of Keynesian economics - John Maynard Keynes
• Founder of monetarism - Milton Friedman
• Major proponents of new-Keynesian economics - George Mankiw, Joseph Stiglitz

The correct answer is (A), (B) and (D) only 

Key PointsMoney supply-

• The money supply is the measurement of money held by the people of a country at a point of time.
• It is a measure of the liquidity and availability of money in an economy and can impact the overall level of economic activity
• It is measured by the various following measurements
• M1 = C + DD + OD
• M2 = M1 + saving deposits with post office saving banks
• M3 = M1 + net time deposits of banks
• M₄ = M₃ + Total deposits of post offices (discluding NSCs)

The correct answer is (C), (E), (D), (A), (B)

Key Points

In the process of evolving WTO, there were multilateral meetings held, those were called rounds, these are-

• **The Annecy Round:-**The Annecy Round was the third round of multilateral trade negotiations under the General Agreement on Tariffs and Trade (GATT) that took place in 1949.
• **The Torquay Round:-**The Torquay Round was the second round of multilateral trade negotiations under the General Agreement on Tariffs and Trade (GATT) that took place in 1950.
• **The Dillon Round:-**The Dillon Round was the fifth round of multilateral trade negotiations under the General Agreement on Tariffs and Trade (GATT) that took place from 1960 to 1962.
• **The Tokyo Round:-**The Tokyo Round was a set of negotiations under the General Agreement on Tariffs and Trade (GATT) that took place from 1973 to 1979.
• **The Uruguay Round:-**The Uruguay Round was the eighth round of multilateral trade negotiations under the General Agreement on Tariffs and Trade (GATT) that took place from 1986 to 1994.

Additional Information

• **GATT-**The General Agreement on Tariffs and Trade was a multilateral agreement that aimed to reduce trade barriers and promote free trade among participating countries.
• GATT was established in 1947 and served as the foundation for the global trading system until it was replaced by the World Trade Organization (WTO) in 1995.
• WTO- World trade organization is an intergovernmental organization which was established in 1995 after the successful eight-round multilateral negotiation meeting under GATT.

The correct answer is (A) - (IV), (B) - (I), (C) - (II), (D) - (III)

Key Points Per capita income-

• Per capita income is the average income of a region, state, or country.
• It is calculated by dividing total income (national income\GDP) by the total population, by the given formula

           $\text{Per Capita Income} = {GDP \over Population}$

• According to the Economic Survey 2021-22, there are PCI for some states.