IEcoS General Economics Paper 2 Papers 1994

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IEcoS General Economics Paper 2 1994


  1. Answer any two of the following

    1. Bring out the key elements of the Marxian analysis of capitalist economic development, pointing out its weaknesses, if any. 30

    2. What is built-in flexibility? Suggest a few measures that may increase the degree of built-in flexibility of the budget. 30

    3. Answer the following questions

      1. Explain how, according to the monetary approach, the imposition of an import tariff or quota can speed up the process of correcting a nation's balance of payments deficit under a fixed exchange rate system. 30

      2. What is the effect of an exogenous increase in domestic prices on a nation's balance of payments? 30

    4. In what ways do open-market operations affect the portfolio of commercial banks? 30


Answer any two of the following

  1. Examine the relative merits of debt versus taxation as a means of finance by the state authorities. Does debt finance impose a burden on future generations? State your reasons. 25

  2. There is a considerable area of disagreement over the proper role of the price system in economic development. Briefly state the main arguments of the opposing points of view. 25

  3. Answer the following questions

    1. Who did Adam Smith explain his contention that all nations engaged in trade can benefit from trade?

    2. To what extent, do you think, a policy of free trade is being approached through GATT? 25

  4. Answer the following questions

    1. What are the properties of a good measure of central tendency of a frequency distribution? Examine those properties with reference to the arithmetic mean. 25

    2. In which case both mean and mode measures would give identical result? 25


Answer any two of the following

  1. How does the introduction of stochastic elements affect the choice of monetary policy instruments? When should one choose interest rate policy as an effective instrument? 45

  2. Assume that a country is at full employment level with out inflation but has a balance-of-payments deficit.

    1. Explain why a devaluation will not correct the deficit unless real output rises or domestic expenditures or absorption fall.

    2. How can the countries's output rise as a result of the devaluation?

    3. How can domestic absorption fall automatically as a result of the devaluation?

    4. How can the Government help reduce domestic adsorption and make the devaluation effective? 45

  3. It has been maintained that too high a degree of price flexibility is incompatible with the maintenance of a money economy. Explain why you agree or disagree. 45

  4. Discuss the view that the voluntary exchange model fails to provide an adequate analysis of the tux allocation problem where social goods are involved. 45

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