IAS Mains Economics Paper 2014

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Section –A

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

  1. Examine the relationship between own and cross price elasticities for a compensated demand function.

  2. Explain H-theory of money supply.

  3. Differentiate between the complete, partial and zero crowding out effect of a given increase in government expenditure in an economy.

  4. What do you mean by existence and uniqueness of equilibrium in a market ? Examine these concepts in a market where both demand and supply curve are downward sloping.

  5. Explain the paradox of thrift.


  1. Discuss the cobweb model of dynamic equilibrium with lagged adjustment. Explain how the existence of a stable equilibrium depends on the nature of the demand and supply curves.

  2. “Monetarists are of the view that only money matters and Keynesians believe that money does not matters at all.” What is the reasoning behind these extreme views held by their protagonists ?

  3. What do you understand by shifting of a tax ? How does a monopolist succeed in shifting the burden of a tax under increasing marginal cost ?


  1. Explain with appropriate assumptions, the determination of equilibrium income and interest rate in a Keynesian model of goods money markets, through diagrams.

  2. Examine the process of reaching the Ricardian steady state. How can the tendency towards steady state be countered ?

  3. “The conventional analysis of profit maximization breaks down if the entrepreneur sells his output and possesses a production function which is homogenous of degree one. ” Explain.


  1. Compare the deposit multiplier with money multiplier. Is there any impact on money multiplier arising out of massive use of credit and debit cards ?

  2. Compare the various instruments of monetary policy with respect to influencing the cost and availability of credit.

  3. Discuss the classical dichotomy that money neutral.

Section –B

Q.5 Answer the following in about 150 words each:

  1. What is meant by ‘factor abundance’? How does it affect the shape of the production frontier of a nation ?

  2. Can Kuznets’ hypothesis of inverted-U curve be extended to environmental degradation ? Explain.

  3. What do you understands by a small open economy in the context of both goods and money markets ?

  4. Point out the critical elements in typical Public –Private –Partnership (PPP) agreements in the infrastructure projects to safeguard the interests of the public.

  5. Analyse the partial equilibrium effects of a tariff imposed by a large country on its imports in terms of consumers’ surplus.


  1. “With the Doha Round of multilateral trade talks stalled, regional trade agreements (RTAs) have emerged as an alternative approach to increase trade, spur stronger economic growth and lower unemployment rates in the participating countries.” Explain.

  2. “Balanced growth strategy of development in terms pattern of investment has to be in conformity not only with derived demands but final demands as well.” Argue whether this statement is about avoiding bottlenecks for certain sectors and excess capacities in others or promoting import substitution.

  3. Explain the conditions under which complete specialisation will be possible for two nations in case of comparative advantage. Suppose productivity per unit of labour for two nations, India and UK, is given as under :

    India UK

    Wheat(kg)/manhour 06 03

    Cloth (yard)/manhour 04 02

    Will mutually beneficial trade be possible for the two nations ? If yes , explain whether specialisation shall be complete or not.


  1. Why is it that in a pure flexible exchange rate system, foreign exchange market has no direct effects on the monetary base and money supply ? Does this mean that the foreign exchange market has no effects on the monetary policy ?

  2. Distinguish between single and double factor terms of trade. Explain how far terms of trade of a developing economy would change with technological advancement and economic growth.

  3. Our development strategy has been proposed in terms of ‘faster’ , ‘more inclusive’ and ‘sustainable’ growth. Do the three components sit together well ? Argue for your answer.


  1. Describe the different indicators that used by UNDP to construct the Human Development Index(HDI). Why is a logarithmic transformation applied only to per capita income in the calculation of HDI ?

  2. “Apart from bringing capital into a country, multinational corporations provide many other advantages that cannot be obtained by borrowing from international capital market.” Discuss.

  3. Explain the Trade Related Investment Measures (TRIMs) of World Trade Organisation (WTO). What are the major debates relating to it ?

IAS Mains Economics Paper 2014 ~ IAS Mains Economics Paper 2014


Section –A

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

  1. Land system during the British period was responsible for sustained poverty in India and stagnant growth of Indian economy. Discuss.

  2. Write about the policy of discriminating protection during the British rule and its impact on industrial development in India.

  3. Why socialist model of development could not bring about equitable distribution of income in India and the country remained on a slow growth trajectory of 3 to 3.5 percent for a long time? Discuss.

  4. Specify the main factors which hindered tricks-down in Indian economy and agenda of ‘inclusive growth’ is being pressed into for economic justice.

  5. What are the consequences of deviation from socialistic pattern of society and mixed economy particularly for the persons below the poverty line? Explain.


  1. Elaborate growth-mediated security and support-led security strategies of poverty alleviation given by Jean Dreze and Amartya Sen.

  2. Do you think Gandhian vision of development is still relevant in India? Explain with reasons.

  3. Why are land reforms still not complete in India? What are the obstacles in its way? Elaborate.


  1. Why Green Revolution lost its steam and India needs yet another Green Revolution or Evergreen Revolution? Discuss.

  2. Highlight the structural changes in Indian economy before 1991.

  3. Examine the Labour Policy of India and its impact on employment (labour) market in Indian economy.


  1. National Rural Employment Guarantee Scheme should be reoriented to create productive permanent assets to promote employment and generate income in the rural sector. Critically evaluate.

  2. What are the factors responsible for large number of farmers’ suicides in relatively richer Indian States? Examine.

  3. In Indian economy, dichotomy of development emerged during the pre-reform period despite efforts of holistic development. Delineate the factors responsible for it.

Section –B

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

  1. Highlight the issues of Bhagwati-Sen controversy over tackling poverty and Highlight the issues of Bhagwati-Sen controversy over tackling poverty and slow growth rate.

  2. While Indian economic growth in recent years is services –led growth and Chinese model is manufacturing –led growth, show the implications of the two models for long –term sustainable development.

  3. Employment pattern in India in post-reform period has moved in favour of contractual, casual and self-employment. How public sector employment deceleration would impact the future of labour (employment) market in India? Elaborate.

  4. Skill development and thereby raising labour productivity like that in China would be the only panacea for lonf-term growth in Indian economy. Discuss.

  5. Second generation economic reforms are crucial for raising the growth rate of economy. Throw light on these dimensions.


  1. What are the salient feature of FRBM Act? Examine the criticisms labelled against it.

  2. Discuss the issues involved in Capital Account Convertibility. In the light of this, explain India’s important Capital Account Liberalization measures.

  3. How global financial crisis and sovereign dept crisis of European nations exposed the disturbing role of speculative motive and fiscal imprudence? What lesson could India derive from it?


  1. ‘Elitist bias’ and ‘crony capitalism’ have eclipsed the issues of efficiency and distributive justice in India. Elaborate.

  2. Vitalization of rural economy is key to ‘inclusive growth’ which is possible through ‘strategic management ’ and technological upgradation. Explain.

  3. How could e-governance tackle the issues of corruption and inefficiency in the government sector to lead to higher growth rate in the economy? Discuss.


  1. Subsidy is a contentious issue and roadblock in the WTO. Examine India’s stand of protecting its farmers’ interests.

  2. Write on the Look East Policy of India.

  3. Write for land against FDI in retail trade of India.

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