ICSI Question paper Foundation Economics and Statistics Dec 2012


ICSI Question paper

Foundation Economics and Statistics

Dec 2012

Time allowed : 3 hours Maximum marks : 100
Total number of questions : 8 Total number of printed pages : 8
PART — A
(Answer Question No.1 which is compulsory
and any two of the rest from this part.)
1. (a) State, with reasons in brief, whether the following statements are true or false :
(i) National income is studied in micro economics.
(ii) A perfect competitive firm has downward sloping demand curve.
(iii) Balance of payments and balance of trade are synonymous.
(iv) No individual bank can create credit without the help of other banks.
(v) Since April, 1977, RBI has been publishing four alternative measures of money
supply.
(2 marks each)
(b) Write the most appropriate answer from the given options in respect of the following :
(i) “Economics is on the one side a study of wealth, and on the other, and more
important side, a part of the study of mankind.” This statement is given by —
(a) Adam Smith
(b) Marshall
(c) Robbins
(d) Ricardo.
(ii) According to law of equi-marginal utility, a consumer will be in equilibrium
if —

(iii) If a shopkeeper increases the price of a commodity and as a result of it his
total revenue also increases, it means the price elasticity of demand of the
commodity is —
(a) Less than one
(b) Greater than one
(c) Equal to one
(d) None of the above.
(iv) Marginal cost and average cost are equal to each other at —
(a) Minimum point of marginal cost curve
(b) Minimum point of average cost curve
(c) Diminishing part of marginal cost curve
(d) Diminishing part of average cost curve.
(v) Discriminating monopoly is possible, if two markets have —
(a) Different elasticities of demand
(b) Equal elasticities of demand
(c) Zero elasticities of demand
(d) Infinite elasticities of demand.
(vi) In which sector, the maximum percentage of working population of India is
employed —
(a) Tertiary sector
(b) Secondary sector
(c) Primary sector
(d) None of the above.
(vii) Which of the following policy is controlled by the Central Bank of a country —
(a) Fiscal policy
(b) Monetary policy
(c) Wage policy
(d) Export policy.
(viii) Which one of the following items generally accounts for the highest share in
total imports of India —
(a) Capital goods
(b) Petroleum and oil
(c) Fertilizers
(d) Iron and steel.
(ix) Commercial banks create credit —
(a) On the basis of their capital
(b) On the basis of their cash deposits
(c) On the basis of their total assets
(d) On the basis of their net profits.
(x) When was the World Trade Organisation established —
(a) 1956
(b) 1991
(c) 1995
(d) 2005.
(1 mark each)
2. (a) Distinguish between any three of the following :
(i) ‘Inductive reasoning’ and ‘deductive reasoning’.
(ii) ‘Short-run equilibrium of a firm’ and ‘long-run equilibrium of a firm’.
(iii) ‘Private income’ and ‘personal income’.
(iv) ‘Cost of production in monopolistic competition’ and ‘selling costs in monopolistic
competition’.
(3 marks each)
(b) Re-write the following sentences after filling-in the blank spaces with appropriate
word(s)/figure(s) :
(i) An economy always has ______________ of resources as compared to the
wants to be satisfied.
(ii) In case of inferior goods, the income effect is ______________ .
(iii) ______________ is one of the factors of production which is provided free of
cost by nature.
(iv) Per capita ______________ of manufactured and consumer goods is considered
as most widely accepted measure of standard of living and quality of life.
(v) ______________ refers to the practice of sale and purchase of commercial
papers and government securities by the RBI in the market.
(vi) Fiscal policy is an important and effective instrument to influence business
environment of a ______________ in a country.
(1 mark each)
3. Attempt any three of the following :
(i) What do you mean by ‘distributive justice’ ? What are the difficulties in achieving this
objective ?
(ii) What does the law of variable proportions state ? Explain the assumption(s) on which
the law of variable proportions is based ?
(iii) “An increase in national income leads to a corresponding increase in economic welfare
of the society.” Comment.
(iv) What are the new challenges faced in the conduct of monetary policy in India ?
(5 marks each)
4. Attempt any three of the following :
(i) How is the concept of elasticity of demand useful to the government as well as the
business sector ?
(ii) How would a monopoly firm determine the price and output, if it decides to charge
different prices in different markets ?
(iii) How does foreign trade contribute to economic growth of a country ? Explain.
(iv) How ‘globalisation’ has helped Indian economy ?
(5 marks each)

PART — B

(Answer Question No.5 which is compulsory
and any two of the rest from this part.)
5. (a) State, with reasons in brief, whether the following statements are true or false :
(i) The larger the size of the sample, the less accurate the results are likely to be.
(ii) Secondary data need utmost care in their use.
(iii) The sum of deviations of values is maximum when these deviations are taken
from their arithmetic mean.
(iv) The value of correlation coefficient cannot be negative.
(v) Index numbers are often known as the barometer of economic activity.
(2 marks each)
(b) Write the most appropriate answer from the given options in respect of the following :
(i) Statistics is concerned with —
(a) Only numerical statements of facts
(b) Only statistical methods
(c) Both (a) and (b) above
(d) None of the above.
(ii) The entire structure of statistical analysis for any enquiry is based on systematic —
(a) Presentation of data
(b) Collection of data
(c) Tabulation of data
(d) Analysis of data.
(iii) In chronological classification, data are classified on the basis of —
(a) Attributes
(b) Place
(c) Time
(d) Class intervals.
(iv) If the arithmetic mean of 7 observations is 100 and that of 3 observations is 50,
the combined arithmetic mean would be —
(a) 75
(b) 85
(c) 100
(d) 65.
2/2012/E&S Contd ……..
(v) In a frequency distribution, if variance is 25 and arithmetic mean is 10, then the
coefficient of variation would be —
(a) 250%
(b) 50%
(c) 2.5%
(d) None of the above.
(vi) Spearman’s rank correlation coefficient ‘R’ is equal to
(vii) Seasonal variations are caused by —
(a) Growth of population
(b) Business cycles
(c) Technological improvements
(d) Climate, custom and traditions.
(viii) Time reversal test is satisfied when —
(a) P01 × P10 = 1
(b) P01 × Q01 = 1
(c) P01 × Q10 = 1
(d) P10 × Q01 = 1.
(ix) Which of the following is a cause of distrust of statistics —
(a) Ignorance of the common man
(b) Lack of special skill and ability in the statistics
(c) No stamp of accuracy in the data
(d) All of the above.
(x) Multiple bar diagrams are —
(a) One dimensional diagrams
(b) Two dimensional diagrams
(c) Three dimensional diagrams
(d) None of the above.
(1 mark each)

6. (a) Distinguish between any three of the following :
(i) ‘Histogram’ and ‘histograph’.
(ii) ‘Mathematical averages’ and ‘positional averages’.
(iii) ‘Lorenz curve’ and ‘Gini coefficient’.
(iv) ‘Simple correlation’ and ‘partial correlation’.
(3 marks each)
(b) Re-write the following sentences after filling-in the blank spaces with appropriate word(s)/
figure(s) :
(i) Statistics relates to ______________ of facts.
(ii) Median is a ______________ average.
(iii) Square of the standard deviation is known as the ______________ of the
distribution.
(iv) ______________ is the tendency of data to increase or decrease over a long
period of time.
(v) In a class, the end values i.e., highest and lowest values are known as
______________ of that class.
(vi) ______________ is the step preceding tabulation.
(1 mark each)
7. Attempt any three of the following :
(i) What is tabulation ? Discuss the essential components of a table.
(ii) Discuss various functions performed by statistics.
(iii) What is ‘forecasting’ ? Discuss different survey methods available for forecasting.
(iv) Compare the dispersion in the following two series through quartile deviation measures :
Height 58 56 62 61 63 64 65 59 62 65 55
(in inches)
Weight 117 112 127 123 125 130 106 119 121 132 108
(in pounds)
(5 marks each)
2/2012/E&S Contd ……..
152
: 8 :
8. Attempt any three of the following :
(i) Represent by using the multiple bar diagrams the changes in the students enrolment in
four faculties of a college during the last three years :
Faculty No. of Students
2009-10 2010-11 2011-12
Arts 600 550 500
Science 400 500 600
Commerce 200 250 250
Law 150 200 250
(5 marks)
(ii) An investor buys `1,500 worth of shares in a company each month. During the first
four months he bought the shares at a price of `10, `15, `20 and `30 per share
respectively. What is the average price paid for the shares bought during these four
months ?
(5 marks)
(iii) From the following data, calculate the rank correlation coefficient :
X 115 109 112 87 98 98 120 100 96 118
Y 75 73 85 70 76 65 82 73 68 80
(5 marks)
(iv) From the following data, obtain the Fisher’s ideal index number :
Year Rice Wheat Barley
Price Qty. Price Qty. Price Qty.
2001 4 50 3 10 2 5
2010 10 40 8 8 4 4
(5 marks)

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