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UGC NET DEC 2009 : ECONOMICS PAPER II

24 pages, 100 questions, 16 questions with responses, 17 total responses,

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Signature and Name of Invigilator OMR Sheet No. : ......................................... (To be filled by the Candidate) 1. (Signature) __________________________ Roll No. (Name) ____________________________ 2. (Signature) __________________________ (In figures as per admission card) Roll N o.____________________________ (In words) (Name) ____________________________ D-0109 Time : 1 1/4 hours] Test Booklet No. PAPER-II [Maximum Marks : 100 ECONOMICS Number of Pages in this Booklet : 24 Instructions for the Candidates 1. Write your roll number in the space provided on the top of this page. 2. This paper consists of fifty multiple-choice type of questions. 3. At the commencement of examination, the question booklet will be given to you. In the first 5 minutes, you are requested to open the booklet and compulsorily examine it as below : (i) To have access to the Question Booklet, tear off the paper seal on the edge of this cover page. Do not accept a booklet without sticker-seal and do not accept an open booklet. (ii) Tally the number of pages and number of questions in the booklet with the information printed on the cover page. Faulty booklets due to pages/questions missing or duplicate or not in serial order or any other discrepancy should be got replaced immediately by a correct booklet from the invigilator within the period of 5 minutes. Afterwards, neither the Question Booklet will be replaced nor any extra time will be given. (iii) After this verification is over, the Test Booklet Number should be entered in the OMR Sheet and the OMR Sheet Number should be entered on this Test Booklet. 4. Each item has four alternative responses marked (A), (B), (C) and (D). You have to darken the oval as indicated below on the correct response against each item. Example : B C A D where (C) is the correct response. 5. Your responses to the items are to be indicated in the Answer Sheet given inside the Paper I Booklet only. If you mark at any place other than in the ovals in the Answer Sheet, it will not be evaluated. 6. Read instructions given inside carefully. 7. Rough Work is to be done in the end of this booklet. 8. If you write your name or put any mark on any part of the test booklet, except for the space allotted for the relevant entries, which may disclose your identity, you will render yourself liable to disqualification. 9. You have to return the test question booklet and OMR Answer sheet to the invigilators at the end of the examination compulsorily and must not carry it with you outside the Examination Hall. 10. Use only Blue/Black Ball point pen. 11. Use of any calculator or log table etc., is prohibited. 12. Negative Marking :- For each incorrect answer, 0.5 marks shall be deducted. D-0109 D-0109 Number of Questions in this Booklet : 50 1. 2. - 3. , - - : (i) - - (ii) - / - - (iii) - OMR OMR - 4. (A), (B), (C) (D) B C A D : (C) 5. I - , 6. 7. (Rough Work) 8. - , 9. - OMR - 10. / 11. ( ) 12. : 0.5 P.T.O. 1 P.T.O. ECONOMICS Paper II Note : This paper contains fifty (50) objectives type questions, each question carrying two (2) marks. Attempt all the questions. 1. The Law of Diminishing Returns to Scale holds true in the (A) Market - Period (B) Short - Period (C) Long - Period (D) Secular - Period 2. The demand for labour by a firm is a derived demand because it depends upon (A) The demand for goods and services that labour helps to produce. (B) The degree of substitution between labour and other factors of production. (C) The elasticity of demand for labour. (D) The demand for other factors of production. 3. Social Welfare Function is assumed (A) Theoretically (C) Hypothetically (B) Axiomatically (D) Empirically 4. In the classical theory, an increase in money supply leads to (A) Decrease in price level. (B) Increase in savings. (C) Decrease in investment. (D) Increase in price level. 5. Shift in LM curve takes place due to (A) Increase in autonomous investment. (B) Increase in money supply. (C) Increase in consumption. (D) Increase in saving rate. 6. The Phillips Curve shows the relation between (A) Income and consumption. (B) Income and price level. (C) Income and investment. (D) Inflation and unemployment. 7. Rolling Plan Concept was propounded by (A) Gunnar Myrdal (B) J.K. Galbraith (C) Paul A. Samuelson (D) A.K. Sen 8. The Incremental Capital-Output Ratio is symbolically written as (A) K / L (B) K / L (C) K / Y (D) K / Y Paper-II 2 D-0109 II : (50) - (2) 1. ? (A) - (B) - (C) - (D) 2. : (A) , , (B) (C) (D) 3. (A) (C) (B) (D) 4. , ? (A) (B) (C) (D) 5. LM ? (A) (B) (C) (D) 6. ? (A) (C) (B) (D) 7. ? (A) (B) . . (C) . (D) . . 8. - ? (A) K / L (C) K / Y D-0109 (B) K / L (D) K / Y 3 Paper-II 9. The doctrine of unbalanced growth has not been advocated by (A) H.W. Singer (C) 10. (B) (D) C.P. Kindleberger A.O. Hirschman W.A. Lewis Which group represents the interests of the developing countries ? (A) G 7 (C) 11. (B) (D) G 80 G 77 G 10 Funds not belonging to the Government are called (A) Contingency Fund (C) 12. (B) (D) Public Accounts Private Accounts Consolidated Fund The Deficit Budget in which the deficits are covered through taxes is called (A) Balanced Budget (C) 13. (B) (D) Zero-base Budget Surplus Budget Unbalanced Budget Raul Prebisch s argument is concerned with the effects of business cycles on (A) Terms of Trade (C) 14. (B) (D) Consumption Output Balance of Payments The difference between the export and import of services is called (A) Balance of Trade. (B) Balance of Invisibles. (C) Balance of Current account. (D) Balance of Capital account. 15. Public Enterprises in India have developed only in (A) Consumer goods industries (B) (C) Key and basic industries Service industries (D) All types of industries 16. According to Economic Survey 2007-08, India s Current Account balance as percent of GDP in 2006-07 stood at (A) 3.3 (B) (C) (D) 0.4 Paper-II 1.1 4 2.1 D-0109 9. ? (A) . . (B) . . (C) . . (D) . . 10. ? (A) G - 7 (B) G - 10 (C) G - 77 (D) G - 80 11. , ? (A) ( ) (B) (C) (D) 12. ? (A) (B) (C) (D) - ( - ) 13. , , ? (A) (B) (C) (D) 14. ? (A) (B) (C) (D) 15. ______ (A) (B) (C) (D) 16. 2007-08 , 2006-07 GDP ? (A) 3.3 (B) 2.1 (C) 1.1 (D) 0.4 D-0109 5 Paper-II 17. The overall production of foodgrains in India in 2006-07 was (A) 207.3 million tonnes (C) 18. (B) (D) 227.8 million tonnes 270.8 million tonnes 217.3 million tonnes On Current Daily Status (CDS) basis, the incidence of unemployment in India in 2004-05 was (A) 4.52% (C) 19. (B) (D) 10.12% 8.28% 6.43% The statistical technique used to determine the degree of relationship between two variables is called (A) Dispersion (C) 20. (B) (D) Correlation Association Index Numbers Which Index Number method has an upward bias ? (A) Laspeyre s method (B) (C) (D) Fisher s method Bowley s method Paasche s method Note : Consider the following statements and select the correct answer from the codes given below for questions 21 to 30. (Assertion and Reason type item) 21. Assertion (A) : The rate of fall of MR is more than that of AR in the event of their falling. Reason (R) : Both MR and AR curves are linear and negatively sloping. (A) Both (A) and (R) are true, but (R) is not the correct explanation of (A). (B) Both (A) and (R) are true, and (R) is the correct explanation of (A). (C) (A) is false, but (R) is true. (D) (A) is true, but (R) is false. 22. Assertion (A) : Under monopolistic competition, the long-run average revenue (LAR) of a firm is tangent to the negatively sloping portion of the long-run average cost (LAC) curve. Reason (R) : The demand curve facing the firm under monopolistic competition is relatively more elastic. (A) Both (A) and (R) are true, but (R) is the correct explanation of (A). (B) (A) is true, but (R) is false. (C) Both (A) and (R) are false. (D) Both (A) and (R) are true, but (R) is not the correct explanation of (A). Paper-II 6 D-0109 17. 2006-07 ? (A) 207.3 (B) 217.3 (C) 270.8 (D) 227.8 18. (CDS) , 2004-05 , ? (A) 4.52% (B) 6.43% (C) 8.28% (D) 10.12% 19. ? (A) ( ) (B) (C) / (D) 20. ( ) ? (A) (B) (C) (D) : 21 30 ( ) 21. (A) : MR AR AR MR (R) : MR AR (A) (A) (R) (R), (A) (B) (A) (R) (R), (A) (C) (A) , (R) (D) (A) , (R) 22. (A) : , , (R) : , (A) (A) (R) (R), (A) (B) (A) , (R) (C) (A) (R) (D) (A) (R) (R), (A) D-0109 7 Paper-II 23. Assertion (A) : According to Milton Friedman, the slope of the long-run Phillips curve is vertical. Reason (R) : The expectations about future inflation are the basic cause of the nonexistence of the trade-off between inflation and unemployment in the long-run. (A) Both (A) and (R) are true, but (R) is not the correct reason of (A). (B) Both (A) and (R) are true, and (R) is the correct reason of (A). (C) Both (A) and (R) are false. (D) (A) is true, but (R) is false. 24. Assertion (A) : Life Cycle Hypothesis attempts to reconcile the short-run nonproportional and the long-run proportional consumption functions. Reason (R) : Short-run non-proportional consumption function implies that APC declines as income increases. (A) (A) is true, but (R) is false. (B) Both (A) and (R) are false. (C) Both (A) and (R) are true, but (R) is not the correct reason of (A). (D) Both (A) and (R) are true, and (R) is the correct reason of (A). 25. Assertion (A) : According to Gunnar Myrdal, there exists a circular and cumulative causation in under-developed countries. Reason (R) : There is a mutually reinforcing interaction between low living levels and low productivity. (A) (A) is false, but (R) is true. (B) Both (A) and (R) are false. (C) Both (A) and (R) are true, but (R) is not the correct explanation of (A). (D) Both (A) and (R) are true, and (R) is the correct explanation of (A). 26. Assertion (A) : Harrod-Domar model assumes fixed technological relationship between capital stock and income flows. Reason (R) : The model assumes flexible capital output ratio. (A) Both (A) and (R) are true. (B) Both (A) and (R) are true, but (R) is not the correct explanation of (A). (C) Both (A) and (R) are false. (D) (A) is true, but (R) is false. Paper-II 8 D-0109 23. (A) : , (R) : - (A) (A) (R) , (R), (A) (B) (A) (R) (R), (A) (C) (A) (R) (D) (A) , (R) 24. (A) : , (R) : APC (A) (A) (R) (B) (A) (R) (C) (A) (R) , (R), (A) (D) (A) (R) (R), (A) 25. (A) : - (R) : : (A) (A) , (R) (B) (A) (R) (C) (A) (R) , (R), (A) (D) (A) (R) , (R), (A) 26. (A) : - (R) : , - (A) (A) (R) (B) (A) (R) , (R), (A) (C) (A) (R) (D) (A) , (R) D-0109 9 Paper-II 27. Assertion (A) : Over the years, the goal of self-reliance has proved to be elusive in the Indian economy. Reason (R) : Balance Of Payments (BOP) problems have been arising due to imports of POL. (A) Both (A) and (R) are false. (B) (A) is true, but (R) is false. (C) Both (A) and (R) are true, but (R) is not the correct explanation of (A). (D) Both (A) and (R) are true and (R) is the correct explanation of (A). 28. Assertion (A) : Laspeyre s index has a upward bias. Reason (R) : Paasche s index has a downward bias. (A) Both (A) and (R) are true and (R) is the correct explanation of (A). (B) Both (A) and (R) are true, but (R) is not the correct explanation of (A). (C) (A) is true but (R) is false. (D) (A) is false but (R) is true. 29. Assertion (A) : In a bell-shaped distributive curve, the value of Mean, Median and Mode would be identical. Reason (R) : There is no skewness in the series. (A) Both (A) and (R) are true, but (R) is not the correct explanation of (A). (B) (A) is true, but (R) is false. (C) (A) is false, but (R) is true. (D) Both (A) and (R) are true and (R) is the correct explanation of (A). 30. Assertion (A) : Colin Clark hypothesised that the safe upper limit of taxation is 25 percent of national income. Reason (R) : The excess burden of taxation will be very high if it goes beyond the 25 percent limit. (A) (A) is true, but (R) is false. (B) Both (A) and (R) are true. (C) Both (A) and (R) are true and (R) is the correct explanation of (A). (D) Both (A) and (R) are false. Paper-II 10 D-0109 27. (A) : , (R) : POL ( ) (A) (A) (R) (B) (A) , (R) (C) (A) (R) , (R), (A) (D) (A) (R) , (R), (A) 28. (A) : (R) : (A) (A) (R) (R), (A) (B) (A) (R) , (R), (A) (C) (A) , (R) (D) (A) , (R) 29. (A) : , , - (R) : ( ) (A) (A) (R) (R), (A) (B) (A) , (R) (C) (A) , (R) (D) (A) (R) (R), (A) 30. (A) : 25 (R) : 25 (A) (A) , (R) (B) (A) (R) (C) (A) (R) (R), (A) (D) (A) (R) D-0109 11 Paper-II Note : For Question Nos. 31 to 38, the candidates are required to tick ( ) mark the option having the right chronological order. 31. (i) Value and Capital (ii) Principles of Political Economy and Taxation (iii) A Revision of Demand Theory (iv) The General Theory of Employment, Interest and Money Codes : (A) (ii), (iv), (i), (iii) (B) (iii), (i), (iv), (ii) (C) (iv), (iii), (i), (ii) (D) (i), (iv), (iii), (ii) 32. (i) Introduction of MODVAT (ii) Introduction of Fringe Benefit Tax (iii) Introduction of Expenditure Tax (iv) Abolition of Estate Duty Codes : (A) (ii), (iii), (i), (iv) (B) (iii), (iv), (i), (ii) (C) (iv), (i), (iii), (ii) (D) (i), (iv), (ii), (iii) 33. (i) Relative Income Hypothesis (ii) Life-cycle Hypothesis (iii) Absolute Income Hypothesis (iv) Permanent Income Hypothesis Codes : (A) (iii), (i), (iv), (ii) (B) (ii), (iv), (i), (iii) (C) (i), (iii), (ii), (iv) (D) (iv), (ii), (iii), (i) Paper-II 12 D-0109 : 31 38 , 31. (i) (ii) (iii) (iv) , : (A) (ii), (iv), (i), (iii) (B) (iii), (i), (iv), (ii) (C) (iv), (iii), (i), (ii) (D) (i), (iv), (iii), (ii) 32. (i) (MODVAT) (ii) ( ) (iii) (iv) : (A) (ii), (iii), (i), (iv) (B) (iii), (iv), (i), (ii) (C) (iv), (i), (iii), (ii) (D) (i), (iv), (ii), (iii) 33. (i) (ii) - (iii) (iv) : (A) (iii), (i), (iv), (ii) (B) (ii), (iv), (i), (iii) (C) (i), (iii), (ii), (iv) (D) (iv), (ii), (iii), (i) D-0109 13 Paper-II 34. (i) Modernisation (ii) Rapid and non-inclusive growth (iii) Removal of poverty and self-reliance (iv) Rapid and large scale industrialisation Codes : (A) (i), (ii), (iv), (iii) (B) (ii), (iv), (i), (iii) (C) (iv), (ii), (iii), (i) (D) (iv), (iii), (i), (ii) 35. (i) Formation of WTO (ii) Uruguay Round of GATT (iii) Formation of GATT (iv) Formation of UNCTAD Codes : (A) (i), (iii), (ii), (iv) (B) (iv), (iii), (ii), (i) (C) (iii), (iv), (ii), (i) (D) (ii), (iv), (i), (iii) 36. (i) Pradhan Mantri Gramodaya Yojana (PMGY) (ii) Swarnjayanti Gram Swarozgar Yojana (SGSY) (iii) Jawahar Rozgar Yojana (JRY) (iv) Integrated Rural Development Programme (IRDP) Codes : (A) (iii), (iv), (ii), (i) (B) (ii), (iii), (iv), (i) (C) (i), (ii), (iii), (iv) (D) (iv), (iii), (ii), (i) 37. (i) Creation of SDRs (ii) Formation of IMF (iii) Collapse of International Monetary System (iv) Introduction of Gold Standard Codes : (A) (ii), (iii), (i), (iv) (B) (iii), (iv), (i), (ii) (C) (ii), (iv), (iii), (i) (D) (iv), (ii), (i), (iii) Paper-II 14 D-0109 34. (i) (ii) - (iii) - (iv) : (A) (i), (ii), (iv), (iii) (B) (ii), (iv), (i), (iii) (C) (iv), (ii), (iii), (i) (D) (iv), (iii), (i), (ii) 35. (i) WTO (ii) GATT (iii) GATT (iv) UNCTAD : (A) (i), (iii), (ii), (iv) (B) (iv), (iii), (ii), (i) (C) (iii), (iv), (ii), (i) (D) (ii), (iv), (i), (iii) 36. (i) (PMGY) (ii) (SGSY) (iii) (JRY) (iv) (IRDP) : (A) (iii), (iv), (ii), (i) (B) (ii), (iii), (iv), (i) (C) (i), (ii), (iii), (iv) (D) (iv), (iii), (ii), (i) 37. (i) SDR (ii) IMF (iii) (iv) : (A) (ii), (iii), (i), (iv) (B) (iii), (iv), (i), (ii) (C) (ii), (iv), (iii), (i) (D) (iv), (ii), (i), (iii) D-0109 15 Paper-II 38. Chairman of the Finance Commission (i) K.C. Pant (ii) K. Brahamananda Reddy (iii) A.M. Khusro (iv) K. Santhanam Codes : (A) (i), (iii), (ii), (iv) (B) (ii), (i), (iii), (iv) (C) (iv), (ii), (i), (iii) (D) (iii), (ii), (i), (iv) Note : Matching item (Q. Nos. 39 to 46) : This consists of two lists of Events / Theories / Models / Statements, etc., and the other of authors/years. The candidates are required to match an item in one list with an item in the other and mark the correct matching option, given in the code. 39. (a) List-I Degree of monopoly theory (i) List-II T. Scitovsky (b) Double criterion (ii) Halland Hitch (c) Behavioural theory of firm (iii) M. Kalecki (d) Average cost pricing (iv) Herbert Simon (a) (b) (c) (d) (A) (iii) (i) (iv) (ii) (B) (ii) (iii) (iv) (i) (C) (iv) (ii) (D) (iii) (ii) 40. (i) (iii) (iv) (i) (a) List-I Compensation criterion (i) (b) (c) Impossibility theorem Managerial discretion model (ii) F.H. Knight (iii) Kaldor-Hicks (d) Uncertainty theory of profits (iv) Kenneth Arrow (a) (b) (A) (iv) (i) List-II Williamson (c) (d) (iii) (ii) (B) (iii) (iv) (i) (ii) (C) (ii) (iv) (iii) (i) (D) (iii) (ii) Paper-II (iv) (i) 16 D-0109 38. : (i) . . (ii) . (iii) . . (iv) . : (A) (i), (iii), (ii), (iv) (B) (ii), (i), (iii), (iv) (C) (iv), (ii), (i), (iii) (D) (iii), (ii), (i), (iv) : ( . . 39 46) -I / / / , -II -I -II 39. (a) (b) (c) (d) (A) (B) (C) (D) 40. (a) (b) (c) (d) (A) (B) (C) (D) D-0109 -I (a) (b) (c) (d) (iii) (i) (iv) (ii) (ii) (iii) (iv) (i) (iv) (ii) (i) (iii) (iii) (ii) (iv) (i) -II (i) . (ii) (iii) . (iv) -I (a) (b) (c) (d) (iv) (i) (iii) (ii) (iii) (iv) (i) (ii) (ii) (iii) (i) (iv) (iii) (ii) (iv) (i) -II (i) (ii) . . (iii) - (iv) 17 Paper-II 41. List-I List-II (a) Absolute income hypothesis (i) N. Gregory Mankiw (b) Rational expectation hypothesis (ii) J.M. Keynes (c) Relative income hypothesis (iii) Robert Lucas (d) The New Keynesian model (iv) James Duesenberry (a) (b) (c) (d) (A) (iv) (iii) (ii) (i) (B) (ii) (i) (iv) (iii) (C) (ii) (iii) (iv) (i) (D) (iii) (ii) 42. (i) (iv) List-I List-II (a) Stability of demand function for money (i) Bent Hansen (b) Demand inflation theory (ii) Milton Friedman (c) Interest elasticity of transactions demand for cash (d) (iii) Don Patinkin Real balance effect (iv) James Tobin (a) (c) (d) (A) (ii) (iii) (i) (iv) (B) (ii) (i) (C) (iii) (ii) (D) (ii) 43. (b) (iv) (iii) (i) (iv) (iii) (iv) (i) List-I List-II (a) Steady rate of growth (i) P.R. Brahmananda (b) Golden age (ii) Joseph Schumpeter (c) Wage goods model (iii) R.M. Solow (d) Circular flow of economic life (iv) Mrs. Joan Robinson (a) (A) (ii) (b) (c) (d) (iii) (iv) (i) (B) (iii) (i) (ii) (C) (i) (iv) (iii) (ii) (D) (iii) (iv) (i) Paper-II (iv) (ii) 18 D-0109 41. (a) (b) (c) (d) (A) (B) (C) (D) 42. (a) (b) (c) (d) (A) (B) (C) (D) 43. (a) (b) (c) (d) (A) (B) (C) (D) D-0109 -I (a) (b) (c) (d) (iv) (iii) (ii) (i) (ii) (i) (iv) (iii) (ii) (iii) (iv) (i) (iii) (ii) (i) (iv) -II (i) . (ii) . . (iii) (iv) -I (a) (b) (c) (d) (ii) (iii) (i) (iv) (ii) (i) (iv) (iii) (iii) (ii) (i) (iv) (ii) (iii) (iv) (i) -I (a) (b) (c) (d) (ii) (iii) (iv) (i) (iii) (i) (ii) (iv) (i) (ii) (iv) (iii) (iii) (iv) (i) (ii) -II (i) (ii) (iii) (iv) -II (i) . . (ii) (iii) . . (iv) 19 Paper-II 44. List-I List-II (a) Principle of absolute advantage (i) Rybczynski (b) Effects of factor endowment changes on trade (ii) Samuelson (c) Theory of reciprocal demand (iii) Adam Smith (d) Factor price equalisation theorem (iv) (a) (b) (c) J.S. Mill (d) (A) (iii) (ii) (iv) (i) (B) (iv) (ii) (i) (C) (iii) (i) (iv) (ii) (D) (iii) (iv) (ii) 45. (iii) (i) List-I List-II (a) Voluntary exchange approach (i) Peacock-Wiseman (b) Theory of local public goods (ii) A.C. Pigou (c) Time-pattern of public expenditure growth (d) (iii) Wicksell-Lindahl Principle of least aggregate sacrifice (iv) Charles Tiebout (a) (b) (c) (d) (A) (iii) (iv) (i) (ii) (B) (iii) (i) (iv) (ii) (C) (iii) (ii) (i) (D) (iv) (ii) 46. (iv) (iii) (i) List-I List-II (i) Hybrid Index Number (a) Spearman (ii) Association of Attributes (b) Yule (iii) Rank Correlation (c) Gulton (iv) Regression (d) Marshall-Edgeworth Codes : (A) (i, b), (ii, c), (iii, d), (iv, a) (B) (i, d), (ii, b), (iii, a), (iv, c) (C) (i, a), (ii, c) (iii, b), (iv, d) (D) (i, d), (ii, b), (iii, c), (iv, a) Paper-II 20 D-0109 44. (a) (b) (c) (d) (A) (B) (C) (D) 45. (a) (b) (c) (d) (A) (B) (C) (D) 46. -I (a) (b) (c) (d) (iii) (ii) (iv) (i) (iv) (ii) (i) (iii) (iii) (i) (iv) (ii) (iii) (iv) (ii) (i) -I - (a) (b) (c) (d) (iii) (iv) (i) (ii) (iii) (i) (iv) (ii) (iii) (ii) (i) (iv) (iv) (ii) (iii) (i) -II (i) (ii) . . (iii) (iv) -I (i) (ii) (iii) (iv) : (A) (i, b), (ii, c), (iii, d), (iv, a) (B) (i, d), (ii, b), (iii, a), (iv, c) (C) (i, a), (ii, c) (iii, b), (iv, d) (D) (i, d), (ii, b), (iii, c), (iv, a) D-0109 -II (i) (ii) (iii) (iv) . . (a) (b) (c) (d) 21 -II - Paper-II Read the passage below and answer questions from 47 to 50 on your understanding of the passage. The theory of economic integration refers to the commercial policy of discriminatively reducing or eliminating trade barriers only among the nations joining together. The degree of economic integration ranges from preferential trade arrangements to free trade areas, customs, unions, common markets, and economic unions. Preferential trade arrangements provide lower barriers on trade among participating nations than on trade with non-member nations. The best example of a preferential trade arrangement is the British Commonwealth Preference Scheme established in 1932. A free trade area is the form of economic integration wherein all barriers are removed on trade among members, but each nation retains its own barriers to trade with non-members. The best examples are the European Free Trade Association (EFTA) formed in 1960, the North American Free Trade Agreement (NAFTA) formed in 1993 and the Southern Common Market (MEROSUR) formed in 1991. A customs Union allows no tariff or other barrier on trade among members. The most famous example is the European Union (EU) or European Common Market, formed in 1957. A common market goes beyond a customs union by also allowing the free movement of labour and capital among member nations. An economic union goes still further by harmonizing or even unifying the monetary and fiscal policies of member state. This is the most advanced type of economic integration. 47. Which of the following is not a free trade area ? (A) The North American Free Trade Agreement. (B) Southern Common Market. (C) European Common Market. (D) European Free Trade Association. 48. Which of the following allows free movement of labour and capital among member nations ? (A) Preferential trade arrangement (B) Customs union (C) Economic union (D) Common market 49. An economic union is the most advanced type of economic integration. (A) It unifies the monetary and fiscal policies of member states. (B) It permits no tariff barriers on trade among members. (C) It allows free movement of capital and labour among member nations. (D) It allows no tariffs on trade among members and a common tariff policy towards the rest of the world is followed. 50. The most advanced type of economic integration is (A) Economic union (B) Customs union (C) Common market (D) Free Trade Area ______________ Paper-II 22 D-0109 47 50 , , , - - 1932 - - - ( ) 1960 ( ) 1993 ( ) 1991 - ( ) 1957 - - 47. ? (A) (B) (C) (D) 48. - ? (A) (B) - (C) (D) 49. (A) - (B) - (C) - (D) - 50. ? (A) (B) - (C) (D) ______________ D-0109 23 Paper-II Space for Rough Work Paper-II 24 D-0109

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Additional Info : Ugc Net December 2009 Question Paper - Economics Paper II
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