ECONOMICS (MAIN) - 2004 PAPER - I Time Allowed: Three Hours Maximum Marks: 300
Candidates should attempt Questions 1 and 5 which are compulsory and any three of the remaining questions selecting at least one question from each Section. SECTION A
1. Answer any three of the following questions. Each answer should not exceed 200 words: 20 x 3 = 60
(a) Show that the exponents of the Cobb-Douglas production function are a measure of the factor share in output as well as the elasticity of output with respect to the factor.
(b) Do you agree with the view that in competitive banking environment, the Bank Rate has lost its effectiveness to control credit? Give reasons for your answer.
(c) Lately, too much concern has been shown regarding the size of the fiscal deficit; what matters more is the reason for the deficit rather than the size. Comment.
(d) Trace out the relationship between increasingforeign exchange reserves and money supply.
2. Critically examine Mundell’s approach for the effective use of monetary and fiscal policy to attain macro balances. 60
3. Explain Patinkin's approach to integrate the Value theory and Monetary theory. 60
4. Distinguish between the effect and incidence of direct taxation. How do direct taxes affect the production and savings in the economy. 60
SECTION B
5. Answer any three of the following questions. Each answer should not exceed 200 words: 20 X 3 =60
(a) What is Kuznet's hypothesis? What are itsimplications for a developing economy?
(b) Explain Leontief paradox.
(c) Is Wagner hypothesis an adequate explanation of increase in public expenditure in recent times? Explain.
(d) What do you understand by tax buoyancy and elasticity of tax revenue?
6. What is a Customs' Union? Discuss the effects ofa Customs' Union formation under partial equilibrium conditions. 60
7. Major theories of growth namely, Classical, Marxian, Keynesian and Schumpeterian, all predict crisis in the later stages of capitalist development. Comment and give reasons for your answer 60
8. What are the main features of Neoclassical growth theory? Explain them with the help of Solow's growth model. 60