IAS Mains Economics Paper 2011

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Section –A

Q. 1. Answer the following in not more than 200 words each:


(a) Elucidate how does Kalecki's theory of distribution share the value of output between labour and capital.

(b) The marginal efficiency of capital together with the current rate of interest determine the profitability of an investment project. How does it help in the selection of an investment project ?

(c) Is Friedman's quantity theory of money close to Classical or Keynesian approach to the aggregate demand for money? Give justifications for your arguments.

Q. 2.

(a) The 'non-rival nature' of social goods consumption has important bearing on efficient resource allocation. Explore the problem with the examples and diagrams.

(b) How does the burden of tax distribution between buyers and sellers in the ratio of elasticity of demand and that of supply take place?

(c) 'Monetarists are of the view that only money does and Keynesians believe that money does not matter.' What is your reasoning of the extreme views held by the monetarists and the Keynesians?

Q. 3.

(a) What is the difference between horizontal equity and vertical equity while considering ability to pay? How should the problem be resolved? Illustrate graphically.

(b) What is ‘liquidity trap’? How does it occur? Illustrate.

(c) Would the introduction of automatic teller machines, which allows people to withdraw cash from banks as needed, make deposits more inconvenient and affect the money supply? Elucidate.

Q. 4.

(a) How do the small trading nations share the gains from trade which occur, as a consequence of gain from exchange and gains from specialisation?

(b) If all assumptions hold true, how does trade between nations tend to bring about equalisation of factor prices?

(c) How does portfolio balance approach differ from monetary approach in determining the exchange rate?

Section –B

Q. 1. Answer the following in not more than 200 words each:


(a) What do the following terms signify in structural transformation and growth ?

(i) Kuznets' U-shaped curve

(ii) Environmental Kuznets curve

(iii) N-shaped Kuznets curve in the long-run

(b) How can the structural independence between A-sector and K-sector in the dualistic economy foster growth in the absence of external stimuli?

(c) Compare Human Development Index (HDI) with Human Poverty Index (HPI) as a measure of development. How is the Human Poverty Index different from the Happy Planet Index ?

Q. 6.

(a) Why do energy elasticities tend to unity in industrially advanced countries?

(b) What are the negative externalities of high energy coefficients?

(c) How is subsidy better than tariff· to achieve domestic objectives?

Q. 7.

(a) How does the policy mix of fiscal and monetary policies maintain equilibrium in balance of payments and full employment?

(b) How is warranted growth different from natural rate of growth ? Explain why Harrod's growth model is called ‘knife-edge’.

(c) In the contemporary world of perfect capital mobility and fixed exchange rates, why is the monetary policy ineffective to maintain equilibrium?

Q. 8.

(a) How does Solow incorporate investment m education in the growth model to achieve long-run growth?

(b) What are the objectives of National Environment Policy, 2006 ?

(c) What are India's gains under WTO regime with respect to

(i) Service sector,

(ii) Globe-Hex model ?


Section –A

Q.1 Answer the following question in about 150 words each:

(a) Discuss Amartya Sen’s poverty measure and recent advances in poverty measurement.

(b) Throw light on wage-goods model of C.N. Vakil and P.R. Brahmanand.

(c) Discuss policy of Discriminating Protection and its impact on Indian industrial development during the British period.

(d) “By restricting social benefits to BPL households, the poverty line (in India) will be fully converted from a statistical benchmark to a real-life social division” (Dreze). Discuss.


(a) Poverty alleviation strategy of the day is moving ahead of Redistribution with Growth(RWG) of Chenery and the World Bank and Dreze and Sen’s Growth-mediated security and Support-led security strategies to Empowerment, Opportunities and Security lines. Elaborate.

(b) Elaborate upon Gandhian versus Nehruvian visions of India’s development. Do you think Gandhian approach is again attracting scholars and the people? Give reasons.


(a) “India urgently needs yet another Green Revolution by infusing modern technologies like ICT and Spece technologies and Strategic Management techniques to come up with demand side pressures resulting in persistent food inflation in the economy.” Do you agree?

(b) Critically examine the point of view that RBI’s recent measures at containing inflation have compromised growth.


(a) “The declining share of commodity producing sectors—agriculture and industry—and rising share of Services sector is creating imbalances of far-reaching consequences in the economy.” Critically analyse.

(b) Analyse the recent trend of gross capital formation in agriculture. Has it, do you think, been responsible for the sluggish growth rate in agriculture?

Section –B

Q.5 Answer the following questions in around 150 words each:

(a) Throw light on the PURA model of rural development.

(b) Write on second-generation economic reforms in India.

(c) Write on the unfinished agenda of Doha Round of negotiations of the WTO.

(d) Write on Indo-ASEAN trade relations.


(a) Is India ready for full capital account convertibility? Assess.

(b) Compare the role of Foreign Direct Investment (FDI) and Foreign Institutional Investment (FII’s) in India’s economic development. Are FDI’s preferable to Portfolio Investments? Evaluate.


(a) Analyse the impact of MNREGA on rural and urban wages and rural migration.

(b) Discuss salient economic feature of 73rd and 74th Constitutional amendments.

(c) Examine the challenges to export diversification and increase in export competitiveness of India.


(a) In view of fresh fears of global financial crisis arising out of decelerating credit rating of the U.S. economy and sovereign debt crisis in peripheral Euro-Zone economies analyse its likely impact on India’s trade and growth performance. Suggest measures to contain it.

(b) Write in brief on Special Economic Zones (SEZ) and their socio-economic repercussions.

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