The Institute of Company Secretaries of India 2005 CS Foundation: Basic economics & business environment: - Question Paper

CS Foundation: Basic economics & business environment: June 2005
Roll No…………………
Time allowed : three hours
Maximum marks : 100
Total number of ques. : eight
Total number of printed pages :


PART – A
(Answer ques. No.1 which is compulsory and any 3 of the rest from this part.)


1.
(a) State, with reasons in brief, whether the subsequent statements are actual or false : (3 marks each)

(i) The cross elasticity of demand is negative in case of substitute goods.

(ii) Under monopoly, marginal revenue is equal to avg. revenue.

(iii) Average fixed cost curve is a horizontal straight line indicating that the avg. fixed cost remains the identical at all levels of output.

(iv) Fixed wage earners suffer both in inflation and deflation.

(v) Robbins definition of economics makes it a science of option making.


(b)
(i) Given beneath is the demand schedule for a commodity. What is the nature of elasticity of demand for the commodity ? provide reasons for your ans : (3 marks each)

Price (Rs.) volume Demanded(units)
5 12.6
6 10.0
8 7.5
10 6.0

(ii) Given beneath is the long-run production function. Which kind of returns to scale are being shown in the table ? provide reasons for your ans : (3 marks each)

Units of Inputs (Labour+Capital) volume Demanded (Units)
1 + 1 10
2 + 2 30
4 + 4 60
8 + 8 100
16 + 16 180

2.
(a) Distinguish ranging from M1 and M3 measures of money supply as used in India. (3 marks )

(b) “Saving is necessarily equal to investment.” Comment. (4 marks )

(c) Explain the properties of an isoquant curve. (4 marks )

(d) An investment of Rs.100 crore outcomes in generation of additional Rs.400 crore of income in an economy. Estimate the value of marginal propensity to consume. (4 marks )


3.
(a) State and discuss the ‘law of variable proportions’. Out of the 3 stages in its operation, which do you think is the most relevant for the producer ? (7 marks )

(b) Define ‘income elasticity of demand’. How will the income elasticity of demand for an inferior good be various from that of a normal good ? (5 marks )

(c) What do you mean by ‘open market operations’ (OMO) ? (3 marks )


4.
(a) Distinguish ranging from any 2 of the subsequent : (5 marks every )

(i) ‘Perfect competition’ and ‘monopolistic competition’.

(ii) ‘Inflationary gap’ and ‘deflationary gap’.

(iii) ‘Fisher’s version’ and ‘Cambridge version’ of volume theory of money.

(b)
describe —
(i) Gross Domestic Product (GDP). (2 marks every )

(ii) Stagflation. (3 marks)


5.
(a) Define ‘national income’. discuss the significance of national income estimates. (7 marks )

(b) What do you mean by ‘rate of exchange’ ? How is the rate of exchange of a currency determined ?(8 marks )



PART – B
(Answer ANY 2 ques. from this part.)


6.
(a) What do you mean by ‘business environment’ ? State the factors that affect the economic environment of a business firm.(8 marks )

(b) Discuss in brief the basic features of the Indian economy. (7 marks )


7.
(a) Discuss in brief the subsequent : (3 marks every )

(i) Salient features of Indian tax system.

(ii) Composition of India’s national income.

(iii) Principal objectives of economic planning in India.

(b) Explain the concept of ‘balance of payments’. (6 marks )


8.
(a) What do you mean by ‘disinvestment’ ? Account for the declining role of public sector in the Indian economy. (7 marks )

(b) Write notes on any 2 of the subsequent : (4 marks each)

(i) Financial instruments

(ii) Financial institutions

(iii) Financial markets.

Earning:   Approval pending.