The Institute of Company Secretaries of India 2006 Basic Economic and Business Environment - Question Paper

The Institute of Company Secretary of India exam Dec. 2006

SUB: Basic Economic and Business Environment

Roll No..........................
Time allowed: three hours
Maximum marks: 100
Total number of questions: eight


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) A pure capitalistic economy is characterised by absence of State intervention in economic activity.

(ii) As a consumer moves along an indifference curve from left to right, the marginal rate of substitution of Commodity-X for Commodity-Y increases.

(iii) 2 isoquants may intersect every other.

(iv) Monopolistic competition is characterised by the homogeneity of product.

(v) Commercial banks have unlimited capacity to create credit.


(b) Distinguish ranging from any 2 of the following: (5 marks each)

(i) ‘Inferior goods’ and ‘status related goods’.

(ii) ‘Cardinal approach’ and ‘ordinal approach’ in utility analysis.

(iii) ‘National income at current prices’ and ‘national income at constant prices’.


2.
(a) When the price of Commodity-X is Rs.20 per unit, its volume demanded is 50 units; and when the price goes up to Rs.40 per unit, its volume demanded falls to 25 units. obtain the price elasticity coefficient and provide its interpretation. (4 marks)

(b) Fill in the blanks in the subsequent table: (3 marks)

Agricultural Output with Fixed Land and Variable Units of Labour
Labour Total Average Marginal
(Units) Output (Tonnes) Output (Tonnes) Output (Tonnes)
1 .... .... 8
2 .... 10 ....
3 .... .... 16
4 48 .... ....
5 .... 11 ....
6 .... 10 ....
7 60 .... ....

(c) What is ‘inflationary gap’? (4 marks)

(d) Briefly discuss the concept of ‘marginal propensity to save’. (4 marks)

3.
(a) What is meant by ‘selling expenses’ in the situation of monopolistic competition? (3 marks)

(b) elaborate ‘ridge lines’? discuss giving a suitable diagram. (5 marks)

(c) What is meant by ‘monopoly’? discuss the equilibrium of a monopolist firm in the long run. (7 marks)

4.
(a) Write notes on any 2 of the following: (5 marks each)

(i) Investment multiplier

(ii) Demand pulls inflation

(iii) Net barter terms of trade.

(b) What is ‘bank rate’ ? How is it used by the central bank of a country to control credit creation by banks? (5 marks)

5.
(a) Critically analyse the comparative cost advantage theory of international trade. (8 marks)

(b)What is meant by ‘national income’? Can it be taken as a measure of welfare? provide reasons for your ans. (7 marks)



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


6.
(a) What is meant by ‘government failure’ ? elaborate the reasons for government failure ? (8 marks)

(b) How does rapid growth of population create hurdles in economic development ? (7 marks)


7.
(a) Write short notes on the subsequent : (4 marks each)


(i) Dualistic nature of Indian economy

(ii) Drawbacks of road transport system in India.

(b) What is meant by ‘economic environment of business’ ? Mention the factors which influence it. (7 marks)


8.
(a) Define ‘subsidy’. (2 marks)
(b) Briefly explain the financial sector reforms initiated in India in latest years. (8 marks)

(c) “Changing composition of India’s external trade reflects the changing nature of the economy.” what are. (5 marks)

Earning:   Approval pending.