ICSI Previous Question papers Economics and Statistics Dec 2010

ICSI Previous Question papers

Economics and Statistics

Dec 2010

Time allowed : 3 hours

Maximum marks : 100

Total number of questions : 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) In a capitalist economy, all means of production are exclusively owned by the
government.
(ii) A straight line demand curve has the same elasticity at each point on the
curve.
(iii) Transfer incomes are excluded from the calculation of national income.
(iv) In the short-run, a firm that is operating at its shutdown point is earning no
profit or no loss.
(v) Depreciation of a currency makes the exports costlier and hence proves inflationary.
(2 marks each)
(b) Choose the most appropriate answer from the given options in respect of the
following :
(i) A consumer will continue to purchase a good until its ––
(a) Marginal utility falls to zero
(b) Total utility falls to the level of price
(c) Marginal utility falls to the level of its price
(d) Total utility falls to zero.
(ii) Quantity theory of money explains the relationship between quantity of money
and —
(a) Level of employment
(b) National income
(c) General price level
(d) Quantity of investment.
(iii) Which one of the following curves is not ‘U’ shaped ––
(a) Average variable cost curve
(b) Average cost curve
(c) Average fixed cost curve
(d) Marginal cost curve.
ECONOMICS AND STATISTICS
(iv) Which one of the following was not the immediate cause of the 1991 economic
crisis ––
(a) Rapid growth of population
(b) Severe inflation
(c) Expanding fiscal deficits
(d) Rising current account deficit.
(v) Which one of the following is not a function of the central bank ––
(a) Monopoly of note issue
(b) Custodian of foreign exchange reserves
(c) Lender of the last resort
(d) Conduct of fiscal policy.
(1 mark each)
(c) What is meant by ‘credit creation’ by the commercial banks ? Illustrate its process.
(5 marks)
2. (a) Distinguish between any three of the following :
(i) ‘Value in use’ and ‘value in exchange’.
(ii) ‘Revenue budget’ and ‘capital budget’.
(iii) ‘A firm’ and ‘an industry’.
(iv) ‘Quantitative credit control measures’ and ‘qualitative credit control measures’.
(3 marks each)
(b) Re-write the following sentences after filling-in the blank spaces with appropriate
word(s)/figure(s) :
(i) The _________ is defined as that time period over which a firm can vary all
factors of production.
(ii) In the modern economy, most of the production does not take place for
____________.
(iii) An important reason for migration of population from rural to urban areas
has been the comparative lack of _________ in the rural areas.
(iv) _________ came into existence to overcome the difficulties of the barter system.
(v) The ___________ is essentially a place where member governments try to sort
out trade problems they face with each other.
(vi) National income estimates do not cover _________ even though they may be
adding to national product.
(1 mark each)

3. (a) Define ‘market mechanism’. How does it help us to deal with the problem of
allocation of resources ?
(5 marks)
(b) What do you mean by the term ‘revenue’ ? Examine the relationship between
average revenue and marginal revenue when a firm is faced with a linear downward
sloping demand curve.
(5 marks)
(c) Discuss the structure of the Indian economy as a mixed economy.
(5 marks)
4. Attempt any three of the following :
(i) Explain the income effect and substitution effect of a change in the price of a good.
(ii) “Product differentiation and selling expenses form the foundation of monopolistic
competition.” Explain.
(iii) Discuss the major objectives of Five Year Plans in India.
(iv) Define ‘liquidity’. Discuss the factors which influence liquidity of an asset.
(v) Discuss briefly the measures taken by the government to bring in structural
reforms in 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) Statistical laws are not exact.
(ii) Arithmetic mean is very much affected by extreme observations.
(iii) A distribution having higher value of dispersion is said to be more uniform
or consistent.
(iv) The coefficient of correlation is not independent of origin and scale of
measurement.
(v) Index numbers are the specialised averages.
(2 marks each)
(b) Choose the most appropriate answer from the given options in respect of the
following :
(i) In ancient times, statistics was known as —
(a) The science of kings
(b) The science of Statecraft
(c) Political arithmetic
(d) All of the above.

(ii) Statistical data are of two types. These are —
(a) Primary data and technical data
(b) Primary data and secondary data
(c) Primary data and personal data
(d) None of the above.
(iii) If the population is shown for each of the States in India, then we have data
which are classified —
(a) Chronologically
(b) Geographically
(c) Quantitatively
(d) Qualitatively.
(iv) The difference between the maximum and minimum values in a given set of
data is called —
(a) Class interval
(b) Frequency
(c) Cumulative frequency
(d) Range.
(v) In any pie-chart, the sum of central angle is —
(a) 90º
(b) 180º
(c) 270º
(d) 360º.
(vi) The value of the variable which occurs most frequently is called —
(a) Mode
(b) Mean
(c) Median
(d) Weighted mean.
(vii) Equation Yt = a.bt represents —
(a) Linear trend
(b) Exponential trend
(c) Parabolic trend
(d) None of the above.
2/2010/E&S P. T. O.
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(viii) Which one of the following measures of central tendency can be used for
further mathematical treatment —
(a) Median
(b) Arithmetic mean
(c) Mode
(d) None of the above.
(ix) Seasonal variations are absent if the time interval between successive
observations is —
(a) Less than or equal to one year
(b) Equal to one year
(c) More than one year
(d) None of the above.
(x) The index number that uses base year quantities as weights is known as —
(a) Laspeyre’s index
(b) Paasche’s index
(c) Marshall-Edgeworth index
(d) Walsch’s index.
(1 mark each)
6. (a) Distinguish between any three of the following :
(i) ‘More than cumulative frequency table’ and ‘less than cumulative frequency
table’.
(ii) ‘Simple bar diagram’ and ‘multiple bar diagram’.
(iii) ‘Linear correlation’ and ‘non-linear correlation’.
(iv) ‘Time reversal test’ and ‘factor reversal test’.
(3 marks each)
(b) Re-write the following sentences after filling-in the blank spaces with appropriate
word(s)/figure(s) :
(i) _______________ is indispensable for functioning of the State.
(ii) _________ the size of sample, more accurate results are likely to be.
(iii) Graphical representation of a time series is known as ___________.
(iv) The difference between upper and lower limits of a class gives _________ of
the class.
(v) The sum of deviations of the variables from their median, ignoring ‘+’ and ‘–’
sign, is always _________.
(vi) ___________ is always computed from arithmetic mean.
(1 mark each)

(iv) Calculate the trend values by the method of moving averages, assuming 4-yearly
cycle from the following data :
Year                      Production                         Year                     Production
(In Lakh Tons)                                                  (In Lakh Tons)
2000                      242                                      2006                         251
2001                       250                                     2007                         257
2002                      252                                      2008                         260
2003                      249                                      2009                         265
2004                     253                                       2010                         262
2005                      255
(5 marks)

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