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Micro Economics

1 votes, 4 avg

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Utility Test #1

1. Please Read the Questions and all the options Carefully, Before Selecting Your Choice.
2. You are not Allowed to edit your answers after submission.
3. The Paper has ten Questions
4. Time Allowed is 10 Minutes.
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1 / 10

Which of the following is not a monotonic transformation

f(u) = u^2, for u > 0

f(u) = e^u

f(u) = ln(u)

f(u) = 1/u

2 / 10

An Indirect Utility function

assumes profit maximization

is homogeneous of degree one

is defined over income and prices

satisfies all of the above

3 / 10

Suppose a consumers preferences over commodities 1 and 2 can be represented by utility function U(x1, x2) = min{x1, x2} where x1, x2 ≥ 0. The utility function of the consumer is

Continuous at all points in the domain but but not differentiable at all points in the domain.

Not continuous at all points in the domain

Differentiable at all points in the domain

None of the above

4 / 10

Which of the following represents the same preferences as U(x1, x2) = min{x1, x2} + max{x1, x2}

x1 + x2

x1 * x2

Min{x1, x2}

Max{x1, x2}

5 / 10

Which of the following represents the same preferences as U(x1, x2) = min{x1, x2} + max{x1, x2}

x1 + x2

x1 * x2

Min{x1, x2}

Max{x1, x2}

6 / 10

For a utility function representing strictly convex preferences, the marginal rate of substitution between two commodities must be

Diminishing

Constant

Increasing

Zero

7 / 10

Suppose a consumer’s preference are given by the utility function u =4(x^0.5) + y . Suppose the consumer’s original equilibrium was x = 9, y = 10. If the consumption of x reduces to 4, how many units of y must he consume to remain on the same indifference curve?

8 / 10

Rohit consumes soft drink which is available in ½ litre and 1 litre bottles. He allows himself only half litre of soft drink at a time, so if he has a bottle of 1 litre he will throw ½ litre in the sink. Considering 1/2 litre bottle as good 1, what is his utility function

U = min{x, y}

U = x + y

U = 2x + y

U = x + 2y

9 / 10

A consumer is indifferent between two hamburgers (good 1) and 3 Puri's (good 2) so his indifference curves are

Downward sloping straight lines with slope -1

Downward sloping straight lines with slope -3/2

Downward sloping straight lines with slope -2/3

L-Shaped

10 / 10

A consumer is indifferent between two hamburgers (good 1) and 3 Puri's (good 2) so his utility function is

U = X + Y

U = Min{3x, 2y}

U = 3x + 2y

U = 2x + 3y

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Demand Test #1

1. Please Read the Questions and all the options Carefully, Before Selecting Your Choice.
2. You are not Allowed to edit your answers after submission.
3. The Paper has Twenty Questions
4. Time Allowed is 20 Minutes.
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1 / 20

If the price of automobiles were to decrease substantially, the demand curve for automobiles would most likely

shift rightward.

shift leftward.

remain unchanged.

become steeper.

2 / 20

If the price of automobiles were to increase substantially, the demand curve for gasoline would most likely

shift leftward.

shift rightward.

become flatter.

become steeper.

3 / 20

As the price of a good increases, the change in the quantity demanded can be shown by

shifting the demand curve leftward.

shifting the demand curve rightward.

moving down along the same demand curve.

moving up along the same demand curve.

4 / 20

Holding all other factors constant, consumers demand more of a good the

higher its price.

lower its price.

steeper the downward slope of the demand curve.

steeper the upward slope of the demand curve.

5 / 20

According to the Law of Demand, the demand curve for a good will

shift leftward when the price of the good increases.

shift rightward when the price of the good increases.

slope downward.

slope upward.

6 / 20

The demand curve for a good connects points describing how much consumers

Actually bought at different prices during a particular period.

Actually bought at different prices in different periods.

Would have been willing and able to buy at different prices during a particular period.

Would have been willing and able to buy at different prices in different periods.

7 / 20

When two goods are substitutes, a shock that raises the price of one good causes the price of the other good to

remain unchanged.

decrease.

increase.

change in an unpredictable manner.

8 / 20

If pizza and tacos are substitutes, a decrease in the price of tacos would lead to a

decrease in the demand curve for pizza.

decrease in the quantity demanded of pizza.

decrease in the price of pizza.

All of the above.

9 / 20

An increase in the demand curve for orange juice would be illustrated as a

leftward shift of the demand curve.

rightward shift of the demand curve.

movement up along the demand curve.

movement down along the demand curve.

10 / 20

If the price of automobiles were to decrease substantially, the demand curve for public transportation would most likely

shift rightward.

shift leftward.

remain unchanged.

remain unchanged while quantity demanded would change.

11 / 20

The market demand for a product is found by

Horizontally summing the individual demand curves.

Vertically summing the individual demand curves.

Both horizontally and vertically summing the individual demand curves.

None of the above

12 / 20

Bo Dacious buys 10 classical albums and 15 tubes of suntan lotion along with quantities of other goods. Suppose that the price of records rises by 90 cents per album and the price of suntan lotion falls by 60 cents per tube. Other prices and Bo’s income remain unchanged. What will Bo do?

Buy more albums and less suntan lotion.

Buy fewer albums and more suntan lotion.

Buy the same number of albums and more suntan lotion.

Remain where she is since her present position is the best attainable one after prices change.

13 / 20

If price rises, what happens to quantity demanded for a product?

It increases.

It decreases.

It does not change.

Uncertain-economic theory has no answer to this question.

14 / 20

If price rises, what happens to demand curve for a product?

It increases.

It decreases.

It does not change.

Uncertain-economic theory has no answer to this question.

15 / 20

The demand curve for a typical good has

A negative slope because some consumers switch to other goods as the price of the good rises.

A negative slope because the supply of the good rises as demand rises.

A negative slope because the good has less "snob appeal" as its price falls.

An inverse slope because as the price goes up, the good has more profitability.

16 / 20

all Giffen goods are essentially inferior but it is not necessary that all inferior goods are Giffen goods.

True

False

17 / 20

When Income of a consumer increases, the demand for Giffen goods will

Increase

decrease

remain unchanged

May increase or decrease

18 / 20

When price of a good increases, the demand curve of its complimentary good

shifts rightwards

shifts leftwards

remains unchanged

becomes horizontal

19 / 20

The Demand Curve for Inferior Goods (Not Giffen) is

Positively Sloped

Negatively Sloped

Not Defined

None of the above

20 / 20

If two commodities are complementary, then a rise in the price of one commodity will induce

A rise in the price of the other commodity

An upward shift of demand curve

No shift in demand for the other commodity

A backward shift in demand for the other commodity

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Macro Economics

2 votes, 4.5 avg

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Quantity Theory of Money Test #1

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1 / 10

If the money supply is $3 trillion and nominal GDP is $12 trillion, the income velocity of money is :

1/4

1/3

2 / 10

If aggregate output is constant while the money supply and its velocity both double, the equation of exchange predicts that the price level will :

double

remain constant

fall by half

quadruple (rise by a factor of 4)

3 / 10

The Classical Quantity Theory of Money was based on assumptions that :

prices and real GDP were fixed.

real GDP and velocity were constant.

prices and real GDP grew as the money supply rose.

doubling the money supply would double real GDP.

4 / 10

Velocity of money is :

The speed of circulation of income in year

Nominal GDP/(Money supply)

Real GDP/ (Money supply)

Both (A) and (B)

Nominal GDP/(Money supply), because Velocity is the speed by which money (M1 or M2 definitions) changes hands in transaction of final goods and services (Nominal GDP) in a year in an economy. It is defined as NGDP/(Money supply)

5 / 10

Quantity theory of money implies that :

The rate of growth in the quantity of money determines the inflation rate

Money supply is controlled by the Central Bank

Money functions as a store of value

M * V = P * Y

6 / 10

Given the following information :

Quantity of Money (M) = Rs. 4,800

Nominal GDP = Rs. 96,000

Real GDP = Rs. 48,000

What is the Velocity of money in this country

V = 10

V = 20

V = 100

V = 40

7 / 10

Given the following information :

Quantity of Money (M) = Rs. 4,800

Nominal GDP = Rs. 96,000

Real GDP = Rs. 48,000

What is the Price Level

P = Rs. 4

P = Rs. 2

P = Rs. 1/2

Insufficient Information

8 / 10

Consider the following statements

A : Fisher’s view that velocity is fairly constant in the short run transforms the equation of exchange into the quantity theory money, which states that nominal income is determined solely by movements in the quantity of money.

B : For the classical economists, the quantity theory of money provided an explanation of movements in the price level.

Both A and B are True

Both A and B are False

A is True and B is False

A is False and B is True

9 / 10

The equation of exchange states that

when M increases, Y must increase in same proportion

when M increases, V must increase in same proportion

when M increases, Nominal GDP (P*Y) must increase in same proportion

None of the above

10 / 10

You are given the following data on an economy in 2001 and 2007:
2001 2007

Money Supply 200 300

Real GDP 100 150

Price Level 10 ?

The velocity of circulation is the same in both years.

According to the quantity theory of money what would be the value of the price level in 2007?

None of the above

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LM Curve Test #1

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1 / 10

In the standard IS LM framework if you introduce endogenous money supply such that money supply depends positively on the nominal rate of interest, the corresponding rate of interest

becomes steeper

becomes flatter

becomes horizontal

remains unchanged

2 / 10

Which of the following would make the LM curve flatter in the (Y, r) space?

an increase in the income sensitivity of money demand

an increase in the interest sensitivity of planned investment

an increase in marginal propensity to consume

an increase in the interest sensitivity of money demand

3 / 10

Which of the following would make the LM curve flatter?

A decrease in marginal tax rate

An increase in the income sensitivity of money demand

An increase in the interest sensitivity of money demand

An increase in the multiplier

4 / 10

The LM curve slopes upward to the right because

as the interest rate rises, household increases savings, lowering expenditure on goods and services, increasing firms inventory levels and lowering production and income

as the income level rises, the transaction demand for money rises, increasing the interest rate

as the level of income falls, household will reduce their consumption levels, lowering demand for credit and thus lowering interest rates

none of the above

5 / 10

The LM curve will shift to the

Left if the price level falls and the quantity of money is held constant

Left if the price level is held constant and the quantity of money rises

Right if the price level falls and/or the quantity of money rises

Right if the price level rises and the quantity of money is held constant

6 / 10

When LM curve is almost horizontal, a ________ change in the interest rate must be accompanied by a _________ change in the level of income in order to maintain money market equilibrium.

small, small

large, large

small, large

large, small

7 / 10

If demand for money is highly sensitive to the interest rate, then

IS Curve is almost Vertical

LM Curve is almost Vertical

IS Curve is almost horizontal

LM curve is almost horizontal

8 / 10

If demand for money is relatively insensitive to the interest rate, then

IS Curve is Vertical

LM Curve is Vertical

IS Curve is horizontal

LM curve is horizontal

9 / 10

The LM curve would be steeper

smaller the responsiveness of the demand for money to the interest rate

greater the responsiveness of Investment to interest rate

smaller the responsiveness of Investment to interest rate

smaller the responsiveness of the demand for money to income

10 / 10

The LM curve would be steeper

greater the responsiveness of the demand for money to the interest rate

greater the responsiveness of Investment to interest rate

smaller the responsiveness of Investment to interest rate

greater the responsiveness of the demand for money to income

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Solow Model Test #1

1. Please Read the Questions and all the options Carefully, Before Selecting Your Choice.
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3. The Paper has twenty Questions
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1 / 20

Investment increases proportionately with the increase in capital stock implies that, for a given rate of saving _______

those economies which have lower level of capital will have higher level of investment

those economies which have higher level of capital will have higher level of investment

those economies which have lower level of capital will have Constant level of investment

those economies which have higher level of capital will have lower level of investment

2 / 20

In the Solow Model, The production function becomes __________ as k increases indicating that it gives _____________ marginal product of capital

Flatter ; Increasing

Steeper ; Increasing

Flatter ; Diminishing

Steeper ; Diminishing

3 / 20

The aggregate production function for the Solow growth model assumes (A) ___________ returns to scale and (B) _____________marginal productivity of labour and capital.

A : Increasing, B : Diminishing

A : Constant, B : Diminishing

A : Decreasing, B : Diminishing

A : Increasing, B : Constant

4 / 20

In the Solow Model, the point where investment is equal to depreciation is known as the ______________.

Equilibrium Point

Steady State

Break Even Point

None of the above

5 / 20

According to the Solow Model, _____________________ is a function of capital.

Labour

Output

Technology

Population

6 / 20

Consider an economy described by the following production function :

F(K, L) = K^0.5L^0.5

Assume that the rate of depreciation is 10% per year and rate of saving is 30%. Find the steady state level of Investment of Solow’s model.

i* = 0.9

i* = 0.10

i* = 3

i* = 0.16

7 / 20

Consider an economy described by the following production function :

F(K, L) = K^0.5L^0.5

Assume that the rate of depreciation is 10% per year and rate of saving is 30%. Find the steady state capital stock per worker of Solow’s model.

k* = 16

k* = 10

k* = 9

k* = 3

8 / 20

In the Solow Model, the change in saving rate produces

Level Effect

Growth Effect

No Effect on steady state

None of these

9 / 20

In the Solow Model, the economy which is not at steady state

will remain where it is initially

will automatically reach at Golden rule Level of Capital

will approach towards its steady state

will never reach its steady state

10 / 20

In the Solow Model, at the steady state we have

Change in Capital = Investment

Change in Capital = Depreciation

Change in Capital = Investment plus Depreciation

Change in Capital = Investment minus Depreciation

11 / 20

In the Solow model, the steady-state level of capital per worker is determined by:

The saving rate and the population growth rate.

The level of technology and the depreciation rate.

The saving rate, the population growth rate, the level of technology, and the depreciation rate.

Government policies and external shocks.

12 / 20

What is the "golden rule" level of capital in the Solow model?

The level of capital that maximizes the output per worker.

The level of capital that maximizes the consumption per worker.

The level of capital that maximizes the saving rate.

The level of capital that minimizes the population growth rate.

13 / 20

In the Solow model, what role does the depreciation rate play in the economy?

It determines the long-term growth rate of the economy.

It influences the steady-state level of capital per worker.

It is irrelevant to the level of output.

It only affects short-term economic fluctuations.

14 / 20

The Solow model predicts that countries with lower initial levels of capital per worker will:

Grow at the same rate as richer countries.

Grow faster than richer countries, due to diminishing returns to capital.

Grow slower than richer countries, due to higher depreciation rates.

Never catch up to richer countries.

15 / 20

In the Solow model, technological progress is often considered to be:

Endogenous.

Exogenous.

Determined by the level of capital.

Irrelevant to economic growth.

16 / 20

According to the Solow model, if a country increases its saving rate, what will happen in the long run?

The country will achieve a higher level of steady-state consumption per worker.

The country will achieve a higher level of steady-state capital per worker.

The country will experience higher population growth.

The country will see a permanent increase in the growth rate of output per worker.

17 / 20

In the context of the Solow model, what is meant by "steady state"?

A situation where the economy is growing at a constant rate forever.

A situation where the capital per worker and output per worker remain constant over time.

A situation where the saving rate is equal to the depreciation rate.

A situation where technological progress ceases.

18 / 20

According to the Solow model, an increase in the population growth rate will:

Increase the steady-state level of capital per worker.

Decrease the steady-state level of capital per worker.

Have no effect on the steady-state level of capital per worker.

Increase the steady-state level of output per worker.

19 / 20

Which of the following assumptions is NOT part of the Solow model?

Constant returns to scale in production.

Diminishing returns to individual factors of production.

Endogenous technological change.

A constant saving rate.

20 / 20

In the Solow model, convergence occurs when:

All countries grow at the same rate regardless of their initial conditions.

Poorer countries grow faster than richer ones, leading to equal levels of income per worker over time.

Richer countries grow faster than poorer ones, maintaining the income gap.

Population growth rates adjust to equalize income per worker.

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Mathematical Methods

1 votes, 5 avg

236

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Combinations Test #1

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1 / 10

In how many ways can 11 players be chosen out of 15 if a particular player is never chosen :

1365

1001

364

None of these

2 / 10

In how many ways can 11 players be chosen out of 15 if a particular player is always chosen :

1365

1001

364

None of these

3 / 10

A committee of 5 is to selected from among 6 boys and 5 girls. Determine the number of ways of selection if the committee is to consist of at least one boy and one girl?

455

450

545

None of these

4 / 10

A cricket team of 11 players is to be selected from 16 players including 5 bowlers and 2 wicket keepers. In how many ways can a team be selected so as to consist of exactly 3 bowlers and one wicket keeper?

950

900

720

None of these

5 / 10

A box contains two white balls, three black balls, and four red balls. In how many ways can three balls be drawn from the box if at least one black ball is to be included in the draw?

None of these

6 / 10

A candidate is required to answer 7 questions out of 12 questions which are divided into two groups of 6 questions each. He is not permitted to attempt more than 5 questions from either group. In how many ways can he choose 7 questions?

780

760

700

None of these

7 / 10

From a class of 25 students, 10 are to be chosen for an excursion. There are 3 students who decide that either all of them will join or none of them will join. In how many ways can they be chosen ?

C(22, 10)

C(22, 7)

C(22, 10) + C(22, 7)

None of these

8 / 10

A certain club consists of 5 men and 5 women. A 5-member committee consisting of 2 men and 3 women has to be constituted. Also, suppose that Mrs. F refuses to work with Mr. M.

How many ways are there of constituting a 5-member committee that ensures that both of them do not work together?

108

None of the above

9 / 10

A certain club consists of 5 men and 5 women. A 5 member committee consisting of 2 men and 3 women has to be constituted. How many ways are there of constituting this committee?

100

150

None of the above

10 / 10

A committee consisting of 3 men and 2 women is to be formed out of 6 men and 4 women. In how many ways this can be done if Mr. X and Mrs. Y are not to be included together?

120

140

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Lagrange Multipliers Test #1

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1 / 19

The Lagrange multiplier method is only applicable to problems with linear constraints.

True

False

2 / 19

For a function subject to two constraints and , how many Lagrange multipliers are required?

None

3 / 19

For the solution obtained from the Lagrange multiplier method to be valid, the solution must:

Satisfy the constraint exactly

Maximize the constraint function

Minimize the constraint function

Be independent of the constraint

4 / 19

If there are multiple constraints, the Lagrange multiplier method can be extended by introducing:

Additional objective functions

Additional constraint functions

Additional Lagrange multipliers

Additional variables

5 / 19

In the Lagrange multiplier method, if the gradients of the objective function and the constraint are not parallel at a point, that point cannot be an optimum.

True

False

6 / 19

In the context of the Lagrange multiplier method, a constraint is typically represented as:

g(x, y, z) > 0

g(x, y, z) = 0

g(x, y, z) ≤ 0

7 / 19

The Lagrange multiplier method is primarily used for handling:

Inequality constraints

Equality constraints

No constraints

Both equality and inequality constraints without modifications

8 / 19

In the context of Lagrange multipliers, the value of the multiplier represents:

The gradient of the constraint function

The rate of change of the objective function with respect to the constraint

The distance from the origin

The solution to the constraint equation

9 / 19

In the method of Lagrange multipliers, the critical points are found by:

Solving the original objective function

Finding the zeros of the gradient of the Lagrange function

Substituting values into the constraint

Evaluating the function at boundary points

10 / 19

When using the Lagrange multiplier method, the method can find:

Only maximum points

Only minimum points

Both maximum and minimum points

Neither maximum nor minimum points

11 / 19

After setting up the Lagrange function , the next step involves:

Solving ∇ 𝑓 = 0

Solving ∇L = 0

Integrating the function 𝑓 ( 𝑥 , 𝑦 )

None of the above

12 / 19

The Lagrange multiplier method can be extended to handle multiple constraints by introducing a Lagrange multiplier for each constraint.

True

False

13 / 19

In the method of Lagrange multipliers, if is the function to be optimized and is the constraint, the system of equations to be solved is given by:

∇f = λ∇g

∇f = -λ∇g

f(x,y) = λg(x,y)

f(x,y) = -λg(x,y)

14 / 19

In the Lagrange multiplier method, the multiplier indicates the sensitivity of the optimal value to changes in the constraint.

True

False

15 / 19

Consider the problem of maximizing subject to the constraint . The Lagrange function is:

x^2 + y^2 + λ(x + y − 1)

x^2 + y^2 - λ(x + y − 1)

x^2 + y^2 + λ(x*y − 1)

x^2 + y^2 + λ(x + y + 1)

16 / 19

In economics, the Lagrange multiplier is often interpreted as:

the marginal cost

the shadow price

the total revenue

the profit

17 / 19

If in the solution of a Lagrange multiplier problem, the constraint has no impact on the optimal solution.

True

False

18 / 19

The Lagrange multiplier method is used to:

Solve linear equations

Maximize or minimize a function subject to constraints

Integrate differential equations

Solve second-order differential equations

19 / 19

If you have an objective function and one constraint , how many equations will you solve when using the Lagrange multiplier method?

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Statistical Methods

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Probability Test #1

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1 / 20

What is the probability of 53 Sundays in a leap year

1/7

1/365

2/365

2/7

2 / 20

Tickets numbered 1 to 200 are mixed and a ticket is drawn at random from them. What is the probability that the ticket drawn is a multiple of 3

3/200

33/100

13/100

None of the above

3 / 20

Two dice are thrown simultaneously. What is the probability of getting two numbers whose product is even?

1/2

3/4

3/8

5/16

4 / 20

What is the Probability of getting a sum 9 from two throws of a dice

1/6

1/8

1/9

1/12

5 / 20

Two dice are rolled simultaneously. The probability that total score is prime number is

1/6

5/12

1/2

7/9

6 / 20

Let A and B be two mutually exclusive events with positive probability each, defined on the same sample space. Find the correct answer:

A and B are necessarily independent

A and B are necessarily dependent

A and B are necessarily equally likely

None of the above

7 / 20

An unbiased coin is tossed until a head appears. The expected number of tosses required is

Infinite

8 / 20

A card is drawn at random from an ordinary deck of cards. If an ace is drawn you win Rs. 100; if a king is drawn you win Rs. 75; if a queen is drawn you win Rs. 50; and if a jack is drawn you win Rs. 25. What is the probability of winning at least Rs. 25? What would you expect to win on average?

1/4 ; Rs. 62.50

4/13 ; Rs. 62.50

1/13 ; Rs. 19.23

4/13 ; Rs. 19.23

9 / 20

Among 25 articles, 9 are defective, 6 have only minor defects and 3 have major defects. The probability that, if a selected article is defective, then the defect is major is

1/3

0.25

0.24

0.08

10 / 20

A student must choose one of the subjects - Physics, Chemistry or Mathematics for study. She is equally likely to choose Physics or Chemistry and twice as likely to choose Mathematics. The probability that student chooses Mathematics is

1/3

1/4

1/2

None of the above

11 / 20

If A and B are independent events, P(A) = 0.5, P(A U B) = 0.7, then P(B) is

0.5

0.2

0.4

0.35

12 / 20

A car with six spark plugs is known to have two defective spark plugs. If two plugs are pulled at random, then the probability that both are defective is :

1/3

1/8

1/15

None of the above

13 / 20

If E(XY) = 36, E(X) = 9, E(Y) = 4 then

X and Y are independent

X and Y are uncorrelated

X and Y are mutually exclusive

None of the above

14 / 20

Events A and B are equally likely and are independent. The probability of the event A and B is 0.36. The probability of A is :

0.9

0.4

0.6

None of the above

15 / 20

If P(A) = P(B) = p, then P[A ∩ B]

is greater than or equal to p^2

is less than equal to p^2

is equal to 2p

cannot be determined

16 / 20

Given P(A) = 0.5, P(B) = 0.4 if A and B are independent then P(A U B) is

0.2

0.7

0.9

none of the above

17 / 20

If a fair coin is tossed twice, the probability of getting 'head' at least once is

1/2 + 1/2

(1/2)*(1/2)

3/4

2/4

18 / 20

If two fair dice are tossed, the probability that the sum of the points on the dice equals 7 is

1/12

3/6

2/6

1/6

19 / 20

If A and B are independent events then

P(A U B) = P(A) / P(B)

P(A ∩ B) = P(A)*P(B)

P(A / B) = P(A) / P(B)

All of the above

20 / 20

Given P(A) = 0.4, P(A U B) = 0.7, and A and B are independent, P(B) is equal to

0.5

0.2

0.4

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Probability Test #5

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1 / 10

Two patients share a hospital room for two days. Suppose that, on any given day, a person independently picks up an airborne infection with probability 1/4. An individual who is infected on the first day will certainly pass it to the other patient on the second day. Once contracted, the infection stays for at least two days. What is the probability that fewer than two patients have the infection by the end of the second day?

135/256

121/256

131/256

125/256

2 / 10

Suppose 1/10 of the population has a disease. If a person has the disease, then a test detects it with probability 8/10. If a person does not have the disease, then the test incorrectly shows the presence of the disease with probability 2/10. What is the probability that the person tested has the disease if the test indicates the presence of the disease?

9/13

4/13

7/13

3 / 10

There are 3 red and 5 black balls in an urn. You draw two balls in succession without replacing the first ball.
The probability that the second ball is red equals

2/7

3/8

5/7

1/4

4 / 10

An insurance policy-holder can submit up to 5 claims. The probability that the policyholder submits exactly n claims is p_n, for n = 0, 1, 2, 3, 4, 5. It is known that
(a) The difference between p_n and p_{n + 1} is constant for n = 0, 1, 2, 3, 4, and

(b) 40% of the policyholders submit 0 or 1 claim.
What is the probability that a policy-holder submits 4 or 5 claims?

0.06

0.19

0.26

0.34

5 / 10

A tour operator has a bus that can accommodate 20 tourists. The operator knows that tourists may not show up, so he sells 21 tickets. The probability that an individual tourist will not show up is 0.02, independent of all other tourists. Each ticket costs 50, and is non-refundable if a tourist fails to show up. If a tourist shows up and a seat is not available, the tour operator has to pay 100 to that tourist. The expected revenue of the tour operator is

950

967

976

985

6 / 10

In a roll of two fair dice, X is the number on first die and Y is the number on second die. Which of the following statements is True

X - Y and X + Y are dependent random variables

X^2 and Y are independent random variables

X^2 and Y^2 are independent random variables

All of the above

7 / 10

A family has two children, what is the probability that both are girls given that at least one child is girl?

1/2

2/3

1/3

3/4

8 / 10

A student is answering a multiple‐choice examination. Suppose a question has m possible answers. The student knows the correct answer with probability p. If the student knows the correct answer, then she picks that answer; otherwise, she picks randomly from the choices with probability 1/m each. Given that the student picked the correct answer, the probability that she knew the correct answer is

mp/[1 + (m − 1)p]

mp/[1 + (1 − p)m]

(1 − p)/[1 + (m − 1)p]

(1 − p)/[1 + (1 − p)m]

9 / 10

Suppose two fair dice are tossed simultaneously. What is the probability that the total number of spots on the upper faces of the two dice is not divisible by 2, 3, or 5?

1/3

2/9

4/9

7/16

10 / 10

A coin toss has possible outcomes H and T with probabilities 3/4 and 1/4 respectively. A gambler observes a sequence of tosses of this coin until H occurs. Let the first H occur on the n^th toss. If n is odd, then the gambler’s prize is −2ⁿ , and if n is even, then the gambler’s prize is 2ⁿ . What is the expected value of the gambler’s prize?

-1

-3

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Econometrics

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Simple Linear Regression Test #1

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1 / 20

If errors are not normally distributed but sample size is large, OLS inference is still valid due to:

Law of Large Numbers

Central Limit Theorem

Gauss-Markov Theorem

Heteroscedasticity correction

2 / 20

Which assumption is not necessary for OLS to be unbiased?

Homoscedasticity

Linearity in parameters

Random sampling

Zero conditional mean

3 / 20

Which of the following is an implication of the assumption that the error term has zero mean?

Regression line passes through the sample mean of X

Regression line passes through the sample mean of Y

Regression line passes through the point (Xbar, Ybar)

Regression line passes through the origin

4 / 20

The linearity assumption in regression refers to linearity in:

Variables

Parameters

Both variables and parameters

None of the above

5 / 20

If the data is not randomly sampled, the estimates may suffer from:

Heteroscedasticity

Multicollinearity

Sample selection bias

Autocorrelation

6 / 20

If autocorrelation is present in time-series regression, which method is commonly applied?

Weighted Least Squares

Generalized Least Squares

Instrumental Variables

Ridge Regression

7 / 20

The assumption of normality of errors is mainly required for:

Unbiasedness of OLS

Consistency of OLS

Hypothesis testing and confidence intervals

Linearity of regression

8 / 20

The assumption implies:

Errors are uncorrelated with X

Errors have constant variance

Errors are normally distributed

Errors have zero mean unconditionally

9 / 20

Violation of homoscedasticity leads to:

Biased OLS estimators

Inefficient OLS estimators

Unbiased and efficient OLS estimators

No effect on estimators

10 / 20

In simple linear regression, the error term captures:

Effect of omitted variables

Random shocks

Measurement errors

All of the above

11 / 20

If the zero conditional mean assumption is violated, OLS estimators become:

Unbiased

Biased and inconsistent

Efficient

Consistent but inefficient

12 / 20

Homoscedasticity means:

Variance of error term depends on X

Variance of error term is constant across observations

Errors are normally distributed

Errors have mean zero

13 / 20

Which assumption ensures that the observations used in regression analysis are representative of the population?

Homoscedasticity

Linearity

Random sampling

Normality of errors

14 / 20

Which assumption ensures that OLS is BLUE (Best Linear Unbiased Estimator)?

Zero conditional mean + Homoscedasticity + No autocorrelation

Linearity + Normality

Random sampling + Multicollinearity

Normality + Homoscedasticity

15 / 20

In regression analysis, the assumption that is non-stochastic (fixed in repeated samples) or independent of the error term is important because:

It guarantees consistent variance estimates

It ensures that regressors are uncorrelated with the error term

It allows testing hypotheses with t- and F-statistics

It improves efficiency of OLS estimators

16 / 20

The assumption that the model is correctly specified means:

No relevant variable is omitted

No irrelevant variable is included

Functional form is correct

All of the above

17 / 20

The Gauss–Markov theorem guarantees efficiency of OLS estimators under:

Only homoscedasticity

Only normality

Classical linear regression assumptions (without normality)

Large sample size

18 / 20

In simple linear regression, perfect multicollinearity:

Can occur between X and Y

Cannot occur because only one regressor exists

Always occurs

Depends on sample size

19 / 20

If heteroscedasticity is present, which of the following remedies can be used?

Weighted Least Squares

Adding more variables

Dropping observations

Using higher-order polynomials

20 / 20

Which type of data often violates the no autocorrelation assumption?

Cross-sectional

Time-series

Panel data

Experimental data

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International Economics

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Ricardian Theory Test #1

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1 / 10

Malaysia has 200 units of labor, while there are 400 units of labor in Indonesia. When they produce, the countries have the following unit labor requirements.

Malaysia Indonesia

Cameras 10 20

Rugs 10 40

For which product does Malaysia have comparative advantage?

Cameras

Rugs

None

Both

2 / 10

Malaysia has 200 units of labor, while there are 400 units of labor in Indonesia. When they produce, the countries have the following unit labor requirements.

Malaysia Indonesia

Cameras 10 20

Rugs 10 40

What is the relative price of rugs to cameras in Indonesia if there is no trade?

1/4

1/2

3 / 10

Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year, and a worker in Sylvania can produce either 2 units of com or 6 units of wheat per year. Each nation has 10 workers. Without trade, Freedonia produces and consumes 30 units of corn and 10 units of wheat per year. Sylvania produces and consumes 10 units of corn and 30 units of wheat. Suppose that trade is then initiated between the two countries, and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat. Sylvania will now be able to consume a maximum of

30 units of corn and 30 units of wheat.

40 units of corn and 30 units of wheat.

40 units of corn and 20 units of wheat.

10 units of corn and 40 units of wheat.

4 / 10

The before-trade price of fish in Denmark is $10.00 per pound. The world price of fish is $6.00 per pound. Denmark is a price-taker in the fish market. If Denmark begins to allow trade in fish, its consumers of fish will become:

better off, its producers of fish will become better off, and on balance the citizens of Denmark will become better off

worse off, its producers of fish will become better off, and on balance the citizens of Denmark will become worse off

better off, its producers of fish will become worse off, and on balance the citizens of Denmark will become better off

5 / 10

30 units of corn and 30 units of wheat

40 units of corn and 30 units of wheat

40 units of corn and 20 units of wheat

10 units of corn and 40 units of wheat

6 / 10

The Ricardian Theory of comparative advantage states that a country has a comparative advantage in widgets if

Output per worker of widgets is higher in that country.

That country's exchange rate is low.

Wage rates in that country are high.

The output per worker of widgets as compared to the output of some other product ishigher in that country.

7 / 10

The production possibilities of two countries, Homeland and Foreign, capable of producing two goods, cloth and wheat, are given as follows:

Output per labour year

Country Cloth Wheat

Homeland 250 200

Foreign 300 400

Homeland and Foreign would be willing to trade with each other if the relative price of cloth is set at

1.5

0.5

None of the above, as there is no scope for trade

8 / 10

The production possibilities of two countries, Homeland and Foreign, capable of producing two goods, cloth and wheat, are given as follows:

Output per labour year

Country Cloth Wheat

Homeland 250 200

Foreign 300 400

Then each country can benefit if

Homeland Specializes in the production and export of cloth, while importing wheat from the foreign country

Foreign Country Specializes in the production and export of cloth, while importing wheat from the Homeland

Homeland and Foreign both specializes in Wheat production in order to maximize world production of Wheat

There is no scope for specialization and trade

9 / 10

The theory of Comparative Advantage in a two country, two commodity world can only work if

labour and capital are mobile

labour is mobile capital is not

capital is mobile labour is not

labour and capital are immobile

10 / 10

The fixed labour requirements per unit of wine and clothing production before trade for England and Portugal are given below :
Wine Clothing

England 6 10

Portugal 3 5

If trade opens up between England and Portugal, what will be the pattern of trade according to comparative advantage?

England exports clothing and Portugal exports wine

England exports wine and Portugal exports clothing

Neither country will trade in any good

Cannot Say

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Development Economics

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Amartaya Sen's Capability Approach Test #1

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1 / 20

Which of the following is a limitation of focusing solely on resources according to Sen’s "Capability" approach?

A. Resources do not equate to actual freedoms and opportunities.

B. Resources are difficult to measure.

C. Resources are not related to economic growth.

D. Resources are not important for well-being.

2 / 20

Why does Sen criticize traditional economic measures like GDP per capita?

A. They do not account for environmental degradation.

B. They do not consider inequalities within a society.

C. They do not reflect individuals' actual capabilities to lead the lives they value.

D. All of the above.

3 / 20

What is the core idea of Amartya Sen’s "Capability" approach?

A. Measuring economic growth solely through GDP.

B. Assessing well-being based on individuals' income levels.

C. Evaluating well-being based on individuals' actual capabilities and freedoms.

D. Determining social progress through technological advancements.

4 / 20

According to Sen, which of the following is an example of a basic capability?

A. Owning a house

B. Being able to read and write

C. Having a high-paying job

D. Traveling internationally

5 / 20

Which of the following is NOT a key component of the "Capability" approach?

A. Functionings

B. Capabilities

C. Resources

D. Utility

6 / 20

How does Sen's "Capability" approach address issues of inequality?

A. By focusing on income redistribution.

B. By measuring the overall happiness of a population.

C. By emphasizing the distribution of capabilities and opportunities.

D. By ensuring everyone has the same level of resources.

7 / 20

Sen’s "Capability" approach is often contrasted with which traditional economic measure?

A. Gross Domestic Product (GDP)

B. Consumer Price Index (CPI)

C. Unemployment Rate

D. Interest Rates

8 / 20

What does Sen mean by "functionings" in his "Capability" approach?

A. The income and wealth of an individual.

B. The states of being and activities that a person can undertake.

C. The educational qualifications of an individual.

D. The societal status of a person.

9 / 20

Which of the following statements aligns with Sen’s "Capability" approach?

A. Economic growth is the sole indicator of a country's development.

B. Individual freedoms and opportunities are central to evaluating development.

C. The number of consumer goods owned determines well-being.

D. National security is the most important aspect of development.

10 / 20

What role does public policy play in Sen’s "Capability" approach?

A. It should primarily aim to increase national income.

B. It should focus on reducing taxes to stimulate growth.

C. It should aim to expand individuals' capabilities and opportunities.

D. It should ensure political stability through law enforcement.

11 / 20

Which of the following best describes "functionings" in Sen’s approach?

A. The services provided by the government.

B. The activities and states of being that make up a person’s life.

C. The material possessions a person has.

D. The healthcare facilities available in a country.

12 / 20

Which of the following best describes "agency" in the context of Sen’s "Capability" approach?

A. The ability to act on behalf of others.

B. The capacity to pursue goals that one values and has reason to value.

C. The ability to accumulate wealth.

D. The function of governmental institutions in policy-making.

13 / 20

In the "Capability" approach, why is access to education considered important?

A. It directly increases income levels.

B. It enhances individuals' capabilities and freedoms.

C. It is a measure of economic productivity.

D. It ensures political stability.

14 / 20

Sen's "Capability" approach emphasizes the importance of:

A. Only the availability of resources.

B. Only economic development.

C. The opportunities and freedoms people have to achieve well-being.

D. Only technological progress.

15 / 20

What is a key difference between the "Capability" approach and utilitarianism?

A. Utilitarianism focuses on maximizing wealth, while the "Capability" approach focuses on individual freedoms.

B. Utilitarianism focuses on overall happiness, while the "Capability" approach focuses on individual capabilities.

C. Utilitarianism considers income equality, while the "Capability" approach considers income inequality.

D. Utilitarianism focuses on economic outputs, while the "Capability" approach focuses on social inputs.

16 / 20

How does Sen’s "Capability" approach view poverty?

A. As a lack of monetary resources.

B. As a failure of government policies.

C. As a deprivation of basic capabilities.

D. As a natural outcome of economic processes.

17 / 20

Which of the following best represents the idea of "capability" in Sen's approach?

A. The amount of money a person has.

B. The education level a person has achieved.

C. The set of valuable doings and beings a person can achieve.

D. The employment status of a person.

18 / 20

According to Amartya Sen, which of the following is more important than income in assessing individual well-being?

A. Wealth

B. Capabilities

C. Social status

D. Political power

19 / 20

Which aspect does Sen’s "Capability" approach emphasize when assessing quality of life?

A. Availability of resources

B. Economic growth rates

C. Freedom to achieve various lifestyles

D. Technological advancement

20 / 20

According to Sen’s "Capability" approach, what is a "capability"?

A. The total wealth a person possesses.

B. The various functions a person can achieve.

C. The skills a person has acquired through education.

D. The potential to earn a high income.

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Logic & Reasoning

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Logic & Reasoning Test #1

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1 / 10

(i) Four students, named P, Q, R and S all opted for different subjects - Economics, History, Physics and Chemistry

(ii) Q opted neither for Physics nor for History.

(iii) S opted neither for Physics nor for Chemistry.

(iv) If Q did not opt for Chemistry, then R did not opt for Physics.

(v) P opted neither for Physics nor for History.

Determine, Economics was opted by which student

2 / 10

(i) Four students, named P, Q, R and S all opted for different subjects - Economics, History, Physics and Chemistry

(ii) Q opted neither for Physics nor for History.

(iii) S opted neither for Physics nor for Chemistry.

(iv) If Q did not opt for Chemistry, then R did not opt for Physics.

(v) P opted neither for Physics nor for History.

Determine, Q opted which subjected

Physics

Chemistry

Economics

History

3 / 10

Only one of the following three statements regarding the number of balls in an urn is true :

(i) There are at least 100 balls in the urn

(ii) There are less than 100 balls in the urn

(iii) There is at least one balls in the urn

How many balls are there in the urn

100

101

4 / 10

Three trucks, A, B and C are used for transporting wheat and rice. The following information is given:

(i) If A carried wheat, then B carried rice

(ii) If A carried rice, then C carried wheat

(i) If B carried wheat, then C carried rice

Which truck always carried the same thing?

None of these

5 / 10

Linda is 31 years old, single, outspoken, and very bright. She studied in philosophy. As a student, she was deeply concerned with issues of discrimination and social justice, and also participated in anti-nuclear demonstrations. Consider the following two situations :

(i) Linda is a bank teller.

(ii) Linda is a bank teller and is active in the feminist movement.

Which of the following claims must be correct?

Situation (ii) is strictly more likely than situation (i)

Situation (i) is strictly more likely than situation (ii)

Situation (i) is atleast as likely than situation (ii)

None of the above

6 / 10

Two men, starting at the same point, walk in opposite directions for 4 meters, turn left and walk another 3 meters. what is the distance between them.

2 meters

6 meters

10 meters

14 meters

7 / 10

Which number comes next in the following series of numbers?

2, 3, 5, 7, 11, 13

8 / 10

Continue the following number series with the group of numbers below which best continues the series

1, 10, 3, 9, 5, 8, 7, 7, 9, 6

11, 5

10, 5

10, 4

11, 6

9 / 10

Three sportspersons A, B and C each made two statements given below :

A's Statements :

(i) I do not belong to the Hockey team

(ii) Mr. D is on the Soccer team.

B's Statements :

(i) I do not belong to the Soccer team

(ii) Mr. D is on the Cricket team.

C's Statements :

(i) I do not belong to the Cricket team

(ii) Mr. D is on the Hockey team.

Both statements made by the person who belongs to the hockey team are true;

Both statements made by the person who belongs to the Soccer team are false; and

the person who belong to the Cricket team made one true statement and one false statement.

Determine, The person who belongs to Cricket Team

None of the above

10 / 10

Three sportspersons A, B and C each made two statements given below :

A's Statements :

(i) I do not belong to the Hockey team

(ii) Mr. D is on the Soccer team.

B's Statements :

(i) I do not belong to the Soccer team

(ii) Mr. D is on the Cricket team.

C's Statements :

(i) I do not belong to the Cricket team

(ii) Mr. D is on the Hockey team.

Both statements made by the person who belongs to the hockey team are true;

Both statements made by the person who belongs to the Soccer team are false; and

the person who belong to the Cricket team made one true statement and one false statement.

Determine, Mr. D is on the

Cricket Team

Hockey Team

Soccer Team

None of the above

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