IAS Mains Economics Paper 2016

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Paper 1

Section –A

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

(a) State Marshallian and Walrasian stability condition of market equilibrium. Do you think that existence of Marshallian stability necessarily ensures Walrasian stability and vice versa? Explain.

(b) State Bain’s limit price theory.

(c) Explain kinked demand curve theory with the help of diagram.

(d) What are the fiscal and monetary implications of vertical IS and vertical LM curves?

(e) Examine Kaldor and Kalecki theory distribution.


(a) “The advent of New Classical Macro-economics has tended to upset the applecart of Keynesian and to a great extent, that of the Monetarists.” Discuss.

(b) Write on Prisoners’ dilemma and Nash equilibrium.

(c) Discuss in brief Friedman’s restatement of the quantity theory of money and find its similarity/difference with the classical quantity theory.


(a) Distinguish between Monetarist and Neo-Keynesian approaches to expectation-augmented Phillips curve.

(b) Should inflation targeting be main plank of monetary policy of a central bank in emerging market economics like India? Show its implications on investment and growth.

(c) What is a Lemon Market? What is the role of signalling and screening in it ? Explain.


(a) What is asymmetric information? How could it lead to adverse selection and market failure? Discuss.

(b) Illustrate the notion of perverse subsidy in the context of natural resource sector.

(c) Examine the effects of public expenditure on the development process of an economy.

Section –B

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

(a) Differentiate between Inter-industry and intra-industry trade. Can standard H-O model explain intra-industry trade? Discuss.

(b) Explain dunning’s eclectic theory of FDI.

(c) Explain Brander-Krugman model of intra-industry trade in an oligopolistic market.

(d) Explain Kuznets’ inverted ‘U’ hypothesis. Is growth good for the poor? Explain.

(e) Under what condition economic growth reduces employment growth? Discuss.


(a) Describe the growth path, Which once the economy attains it, will give a higher level of per capita consumption than any other growth path for all time.

(b) “Technical progress in capital-intensive sector almost invariably reduces the real wage rate and increases the real return to capital. Technical progress in labour-intensive sector will lead to increase in wage rate and decrease in the real return to capital.” Explain.

(c) What is the stalemate in the WTO about subsidies in less-developed economics? Discuss.


(a) “The argument that export-biased growth may turn the terms of trade unfavourable to the country and hence may not be beneficial, is applicable in the case of a large country and not a small country.” Explain.

(b) With the help of Salter-Swan diagram, define the zones of disequilibrium and assign policy prescriptions for the situations pertaining to unemployment and inflation vis-à-vis BOP deficit.

(c) To counteract under-development stagnation, discuss Leibenstein’s critical minimum effort theory.


(a) What are the elasticity and absorption approaches to BOP adjustment? Disucss.

(b) “Pollution-income progression of agrarian communities (clean) to industrial economies (pollution intensive) to service economies (cleaner) would appear to be false if pollution increases again at the end due to higher levels of income and consumption of the people at large.” Discuss.

(c) Indicate the Ricardo legacy which is inherent in the Lewis model of economic development.

IAS Mains Economics Paper 2016 ~ IAS Mains Economics Paper 2016

Paper 2

Section –A

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

(a) Explain the salient features of 73rd and 74th Constitutional Amendments in India and elaborate the impact of its implementation.

(b) Do you agree with the view that in increase in the productivity of agriculture as a result of Green Revolution was only short-term ? Give reasons.

(c) What ware the economic and non-economic rationale for adopting mixed-economy model in India?

(d) Discuss the basic feature of the 2nd five year plan in India.

(e) What were the economic consequence of discriminating protection in the trade policy during British Regime ?


(a) Discuss the manufacturing condition prevailed during pre-independence period. Do you feel that private sector did not come forward for investment due to fear of Nationalisation ? Give reasons.

(b) Critically examine condition of Agriculture and rural economy during the pre-independence era.

(c) Discuss the Wage-Goods model of development as given by C.N. Vakil and P.R. Bramhanand.


(a) Critically examine the difference between absolute poverty and relative poverty. Between the two which the two which is more appropriate ? Give reasons.

(b) Explain the major tools for measuring inequality. Highlight the more appropriate method of measuring inequality.

(c) Examine the implications of Trade Related Intellectual Property Rights (TRIPS) on Indian Economy.


(a) What is ‘Crony Capitalism’? Is it true that almost all Developing Countries are facing the threat of ‘Crony Capitalism’ in their developments efforts ?

(b) Examine the process of introducing and passing GST Bill in Parliament. How it helps in Fiscal Consolidation in the country ?

(c) What were the major hurdle to development as experienced in India during first decade after independence? Discuss them and what steps were taken to remove them?

Section –B

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

(a) “Partial Capital Account Convertibility cannot serve the purpose of integrating Indian economy with World Economy”. Critically examine.

(b) Critically examine the salient feature of Fiscal Responsibility Act.

(c) Examine the basic features of the National Food Security Act 2013.

(d) Bring out the salient features of New EXIM policy of Government of India.

(e) Write short note on “Skill India” and “Make in India”.


(a) Monetary Policy in India is often criticised as ineffective because large part of the country is not yet monetised. Do you agree with the view? Give reasons.

(b) Trace the development of Non Banking Financial Companies in India since the liberalisation era and comment on their impact on the effectiveness of the interest rate policies of the RBI.

(c) Explain how Railways played an important role in unifying in people of India during pre-independence period.


(a) During post-independence era India assigned the role of ‘Commanding Height’ to the public undertakings. Should this policy be continued ? Give reasons for your answer.

(b) Explain the contribution of V.K.R.V. Rao in the estimation of National Income.

(c) Critically examine the major changes in FDI policies of the Government of India since 1991.


(a) What are the basic features of new national rural employment guarantee scheme? What are the impediments in their implementation?

(b) “Agriculture Subsidy is both an Economic as well as Social issue, hence the Government finds it difficult to take a decisive decision”. Comment on the above statement.

(c) Discuss the changes in the sectoral composition of GDP in recent years.

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