IEcoS General Economics Paper 2 Papers 1995

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IEcoS General Economics Paper 2 1995


  1. Answer any two of the following:

    1. What are the basic features of Arthur Lewis model of economic development with unlimited labour supplies? Show how he uses the classical framework to solve the problems of distribution, accumulation and growth of a backward dual economy. 30

    2. State some of the assumptions of the Heckscher-Ohlin theory of trade. What does this theory predict about the pattern of trade and effect of trade on factor prices? 30

    3. if there are costs associated with the purchases and sales of short-term bonds, what determines the optimum holding of money and bonds? 30

    4. it has been argued that ‘high taxes combined with equally high government expenditures are certainly inflationary’ Do you agree with this view? State your reasons. 30


Answer any two of the following:

  1. What are the differences between a physical and a financial plan of a country? Explain the nature and role of the input-output table for the country during its planning process. 25

  2. If, for every debit or credit in the balance of payments, an offsetting credit or debit, respectively, of an equal amount is entered, how can a nation have a deficit or a surplus in the balance of payments? How can a deficit or a surplus in the balance of payments be measured? 25

  3. In what circumstances would you advise the Reserve Bank of India to conduct open-market sales? Why? 25

  4. Define moments of a frequency distribution and explain their usefulness in describing various features of a frequency distribution. 25


Answer any two of the following:

  1. State and explain the Stopper-Samuelson theorem in regard to the effects of tariff on income distribution. What are the assumptions on which the theorem is based? To what extent are some of the assumptions relax able without affecting the result? 45

  2. Comment on the view that ‘international trade still remains an important engine of growth and the argument for seeking an alternative engine of growth through domestic industrialization and internal balanced grow-th is seriously weakened’ Examine some of the major obstacles in this path of economic development through freer trade. 45

  3. What is meant by the burden of public debt? Do you think the existence of external debt involves a burden on the community? Explain your point of view. 45

  4. Examine the monetarist argument that monetary policy cannot affect any real variable: Its effect is only on the price level and the nominal rate of interest. What are the necessary assumptions on which the argument is based? 45

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