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|£.5/.5.5. BGSP-B-GNM
Examination - 2025
GENERAL ECONOMICS
PAPER—II
Time Allowed : Three Hours | Maximum Marks : 200
QUESTION PAPER SPECIFIC INSTRUCTIONS
Please read each of the following instructions carefully
before attempting questions
There are SIXTEEN questions divided under THREE Sections.
The ONLY question in Section—A is compulsory.
In Section—B, SIX out of NINE questions are to be attempted.
In Section—C, FOUR out of SIX questions are to be attempted.
Candidates should attempt questions/parts as per the instructions given in the Sections.
The number of marks carried by a question/part is indicated against it.
Candidates are required to write clear, legible and concise answers and to adhere to word
limits, wherever indicated. Failure to adhere to word limits may be penalized.
Attempts of questions shall be counted in sequential order. Unless struck off, attempt of
a question shall be counted even if attempted partly.
Any page or portion of the page left blank in the Question-cum-Answer (QCA) Booklet
must be clearly struck off.
Answers must be written in ENGLISH only.
BGSP-B-GNM/67 1 (क
SECTION—A
( Compulsory Section )
1. Answer the following questions in about 100 words each : 56530
(a) Trace the role of Quesnay in the formulation of intersectoral flows in an
economy as it stands today.
(b) “Inflation is always and everywhere a monetary phenomenon.” Explain briefly
the arguments of Friedman.
(c) Briefly explain Rosenstein-Rodan’s Big Push theory.
(0) Specify the sources of gains from trade when production is characterised by
increasing cost conditions.
(e) Differentiate among fixed, freely floating and managed floating exchange rates.
() Trace the major developments in the various rounds of negotiations from GATT
to WTO.
SECTION—B
Answer any six out of the following nine questions in about 200 words each: 15:6-90
2. Bring out the equivalence between national income measured by value-added
method and final expenditure method.
3. Analyse how the supply and demand for loanable funds and equilibrium in the
financial market is related to equilibrium in the goods market in a closed economy.
4. Briefly explain the US subprime crisis (2007-2010). Explain whether the subprime
crisis was a ‘plain vanilla’ financial crisis.
5. Explain the basic endogenous growth model which emphasises the role of
knowledge in economic growth.
6. Discuss the evolution of the concept of human development since 1990 to its
present state.
7. Critically analyse the role of Regional Trade Agreements in the creation and
diversion of trade.
BGSP-B-GNM/67 2
8. Examine the effect of an import tariff on equilibrium output and balance of trade
under a fixed exchange rate using a short-run macroeconomic framework.
9. Discuss the role of the United Nations and its agencies in addressing global
environmental concerns.
10. Discuss the concepts of moral hazard and adverse selection in the context of
insurance sector.
SECTION—C
Answer any four out of the following six questions in about 300 words each : 20x4=80
11. Consider a closed economy with the following specifications :
C = 700+0-7Yp
Yp= Y-T
T = 150
I = 600-207, G=500
L = 0-2Y-50r
2-7
7
where
C = Consumption
Yp = Disposable income
Y = National income or output
T = Lump sum tax
7 = Investment
G = Government expenditure
L = Demand for liquidity
r = Real rate of interest in %
7 = Real money supply
(a)
(b)
(c)
(0)
(૭
Derive the IS equation.
Derive the LM equation.
Find the equilibrium output and interest rate.
Present your results in a diagram.
Identify the crowding out effect of an increase in G to 1000.
BGSP-B-GNM/67 3
4+3+5+3+5=20
(2.7.౦.
12. Analyse the trade-off between unemployment and inflation with reference to the
Phillips curve under adaptive expectations. Derive the aggregate supply curve from
the Phillips curve. 10+10=20
13. Compare and contrast the utilitarian-welfarist approach with Sen’s approach to
socioeconomic and gender issues. 20
14. Define ‘options’. Differentiate between the American and European options.
Suppose an investor buys a European call on a share for र 4. The strike price (Kt) is
₹ 96 and the stock price (St) is ₹ 115. The expiration date is 4 months. Find whether
the investor is making a profit or a loss. Draw a diagram. 5:3: 12-20
15. Analyse the efficacy of monetary and fiscal policy with high but not perfect capital
mobility in the ‘IS-LM-BP’ model under—
(a) fixed exchange rate;
(b) flexible exchange rate. 10+10=20
16. Discuss the role of the World Bank and its affiliates in facilitating economic
development of developing countries. 20
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BGSP-B-GNM/67 4 25SS—7008
