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# The Institute of Company Secretaries of India 2004 CS Foundation: Basic economics & business environment: - Question Paper

Wednesday, 06 February 2013 08:10Web

CS Foundation: Basic economics & business environment: June 2004
Roll No…………………
Time allowed : three hours
Maximum marks : 100
Total number of ques. : eight
Total number of printed pages : 3

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

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

(i) Micro-economics and macro-economics analyse the identical economic aggregates.
(ii) A firm under perfect competition is a price-taker.
(iii) GNP is always less than GDP.
(iv) Commercial banks have more liquidity when the CRR is raised by the central bank.
(v) There exists an inverse relationship ranging from the multiplier and the MPS.

(b) Distinguish ranging from any 2 of the following: (5 marks each)
(i) 'Positive science' and 'normative science',
(ii) 'External economies' and 'internal economies'.
(iii) 'Income effect' and 'substitution effect' with the help of indifference curves.

2.
(a) Define 'consumer equilibrium'. Determine this concept using the equi-marginal principle. (5 marks)
(b) Calculate the marginal rate of tech. substitution of Y for X from the subsequent table: (2 marks each)

Combination Factor-X Factor-Y
A 1 12
B 2 8
C 3 5
D 4 3
E 5 2

(c) Distinguish ranging from 'expansion in demand' and 'contraction in demand' with the help of suitable diagrams. (4 marks)

(d) Explain the concept of 'stagflation'. (4 marks)

3.
(a) Explain the relationship ranging from 'short-run avg. cost curves' and 'long-run avg. cost curves'.
(3 marks)
(b) Describe in brief the various components of the domestic factor income. (5 marks)

(c) What are the 3 kinds of price discrimination followed by monopoly firms ? explain. (7 marks)

4.
(a) "Inflation in small doses is desirable. But, if it is left uncontrolled, it will eat in to the very fabric of an economic system." Do you agree ? Substantiate your ans. (7 marks)

(b) Critically examine the 'quantity theory of money'. (8 marks)

5.
(a) Distinguish ranging from 'autonomous investment' and induced investment'. discuss the determinants of investment in an economy. (7 marks)

(b) Explain and evaluate in brief the Ricardian theory of comparative cost advantage. (8 marks)

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

6. (a) Analyse the importance of the market structure in the business environment of a firm. (7 marks)

(b) What do you mean by 'business environment'? elaborate its various components? (8 marks)

7.
(a)"India is a poor, but developing economy." Substantiate this claim by considering the features of Indian economy. (7 marks)

(b) Analyse the modifications in the composition and direction of India's foreign trade since independence.(8 marks)

8.
(a) "An efficient system of transport forms the core of the infrastructure of an economy." Comment on this statement in the Indian situation. (7 marks )

(b) Write short notes on the following: (4 marks each)
(i) Indian financial system
(ii) Current industrial policy.