IIT Delhi - MSC Economics 2023
IIT Delhi - MSC Economics 2023
Economics
Indian Institute of Technology Delhi
Entrance Examination 2023
Set A
Eminenco
TECHRO
tit OF
Ition OF
Instructions: Read Carefully
There are two scctions. Section Ihas 20 one-mark qucstions. For cach, a correct
answer fetches one mark, an
incorrect answer penalizes negative , and no answer
gives mo marks. Section I1 has 40
marks, an incorrect answer getting negative
Zero.
,
questions, with a correct answer getting two
and no answer to a question getting
• Maximum possible
marks is 100.
• You are allowed to use a n01-programmable
calculator. Cheat sheets, mobile phones,
programable calculators, and any other clectronic deviccs are
strictly not allowcd.
• You will need to submit the entire
question paper (including the rough sheets)
with the OMR shcct. along
Page 2
Multiple Choice Questions (One mark each)
1. In the standard IS-LM nodel, in which governnent spending is exogenous, investment.
is a function of interest rate, and consunption is a function of incone and interest
rate, an increase in Government spending () witlhout changing taxes
A. necessarily has a positive cflect on cquilibrium consunption.
B. necessarily has a
negative effect on cquilibrium consumption.
C. has an ambiguous effect on equilibrium consumption.
D. necessarily has a neutral effect on equilibrium consumption.
2. According to the standard Solow gowth model, which of the following statements is
FALSE?
A. A country that experiences higher population growth than another will have
a lower output per worker in a steady-state.
B. Stcady-state consumption in a country that saves morc will always be higher
a
than the steady-st ate consumption of a country vith lower savings rate.
C. Capital accumulation alone can not sustain long-run growth in capital per
worker.
com
D. Consumption per capita in the golden rule steady state cannot be less
pared to other steady states.
B. Pl > 2.
P2
D.
P2
C. zero.
D. ambiguous.
Page 3
A. the income eflect on X is always zero0.
B.
the income elleet on Y is always zero.
C. the substitution effect on X is always zoro.
none of the above is correet.
6. A
cake of size onc is to be divided betwecn two individuals, 1 and 2. Lct
share of the cake for individual i, i = 1,2, where 0 < <
: bo H
8. The supply curve of apples is given by: c+ dP, wherc c > 0, Q is the quantity
apple supply (in million tons), and isQ= of
then the supply of apples is P the price per unit of apple. If d equals zero,
A. inelastic, but not perfectly
inelastic.
B. elastic, but not infinitely
elastic.
C. infinitely elastic.
D. perfectly inclastic.
Page 4
A. work against each other.
B. work together.
C. can work togethcr or in opposition to cach other depending on preferences.
D. always exactly canccl cach other.
0.25 if z = 0
J(a) =
z
0.5 if =1
0.25 if = 2
12. The mean and variance of a random variable are given by 7 and 49, respectively. The
coefficient of variation for the random variable is
A.
B. -1.
Ç. 7.
D. 1.
,
are independently and identically distributed as Bernoulli random
X10
13. X1,X2,
variables with a probability of success p. The random variable Y is defined as,
10
=
Y )x,
2=1
will follow
the same Bernoulli distribution with a probability of success
p.
A.
B. a Bernoulli distribution but with a diferent parameter.
C. a Binomial distribution.
D. a Uniform distribution.
Page 5
the Null llypothesis.
B. the largest level of significance for rejecting
Null Hypothesis
C. the smallest level of significance for accepting the
D. the smallest level of significance for acccpting the Null Hypothesis
Frequency
20
P= P', p² = P.
Then eigenvalues of this matrix can
take only values
A. {1,0}.
Page 6
B. {0,-1}.
C.{1,0, -1}.
D. none of the above.
18. Let N be a N x K (N> K) matrix wlich has full rank. Then the matrix X
X is
A. invertible.
B. not invertible.
C. only invertible if N = K.
D. of indeterminate rank.
20. Suppose vj, U2,. are n linearly independent vectors in some vector space. Let the
Un
vectors W1, UW2,: .,w, be defincd by w = U), = Uj+ U2, = V1 + UytU3 .,Wn =
W2 W3
Ui t U2
t+ Un. Then, ,
A. strict nonempty subsets of {w1, W2,... Wn} are linearly independent, but
{W1, W2,
... ,W,} arc not lincarly indcpcendent.
B. {W1, W2,..., Wn} may or may not be linearly dependent.
C. {wi, w2,...,uw,-1} are linearly dependent.
D. {Wi, W2,...,wn} are linearly independent.
Page 7
II Multiple Choice Questions (Two marks each)
23. A worker
has utility over consunption
c and leisure
l given by
U(c. l) = a
where 0< 8
<l. She has T hours
hour she works, she carns a wagc to allocate between
1. She leisure
also rcceives an
additional
of w to
spend on consumption and work. For cach
works. She maximizCs non-labor incone' m c. The price
utility subjcct to regardless of how of c is
the following constraints: much she
c< w(T
-) + m
c>0
0<l<T
.
Assume interior solution,
c
c
then
is normal and 7 is
B. is inferior
inferior good.
and is inferior good.
C. c is inferior
and is normal good.
D. c is normal
and l is normal good.
Page &
production fmction y f(r,T2) homogencous of degree one in
a = T
24. lor and r2,
A. if the average poduet for I is inerensing in rh, it implies that the marginal
product of the ot her input 2 is uegative.
B. if the marginal produet for z; is inereasing in z,, it implies that the average
product of the other input a; is negative.
C._ if the average product for a is decrcasing in T, it implics that the marginal
prodnet of the ot her iput ; is 1ncgative.
D. if the marginal produet for z is inercasing in z1, it implics that the marginal
product of the ot her input ) is negative.
25. Consider an cxchange cconomy with two agents, 1 and 2, and two goods, X and Y.
B. 2
C. 3
D. 4
26. Consider an exchange economy with two agents, 1 and 2, and two goods, X and Y.
Agent 1's endowment is (, 0), where k is some positive real number, and Agent 2's
endowment is (0, 1). Agent l's utility function u(z1,y)= 1/3,2/3 and Agent 2's
°y°
utility function uz(22,y2) = cy. The price of good X is normalized to equal
1. Let p be the price of good Y in competitive equilibrium. Then, the derivative dp
equals
A. 2
B. 1
C. 1.5
D. 3
(The following two questions are based on the problen and the graph
outlined below.]
Coal production creates air pollution as a byproduct which is bad for health. Assume
that the coal production industry is perfectly competitive and the minimum Average
Cost (min AC) of firms is Rs. 10. The market demand is lincar, and without auy
government intervention, the market output will be 50 million nits at a price of Rs.
10. The marginal social cost (given by the MSC curve) of producing coal is Rs. 15 at
this level of output. The socially optimal output is 30 million units at a price of Rs.
13. This output can be attained by levying an exCise tax of Rs. 3 on the production
of cach unit of coal.
Page 9
MSC
15
13
A
10 min A=S
30 50 Q (in millions)
29. Consider a
functionf: R2 R. Suppose, for every pe R?, there
such that f(z(p)) > 1 and p.z(p)< p.y exists z(p)E R?
g:R² for every yE R² such that f(y) > 1. Define
R by g(p) = p.z(p). Then, g is
A. linear.
B, convex.
C. quasi-convex.
D. concave.
Page 10
A. may have 5 distinet. real roots.
C. 0.
D. 2.
34. The matrix Q = PAPT, where PT is the transpose of the matrix P, and
V3/2 1/2
P= l -1/2 V3/2
A-(0)
Then, P"Q2P equals
Page 11
(P)
B
(7")
C.
(u )
D.
2+ V3
-1 2 - V3
35. Let
I 0 0
A = 2 1 0
and B1, B>, B3 3 2 1
be three 3 x 1 column
vectors, such that..
AB = ,AB, = 2
-3 ,
AB3 = 3
Let B be the 3 x
3
determinant det(B)matrix whose 3 columns are
is equal to B, B, and B3 respectively.
A. -3. Then the
B. 3.
C. -.
D
Page 12
37. A fnetion f :W W
is called quasi-coneave if for all ,y and 0 < A<
J(Ar +
(1 - A)r) >min {f(r), f(u)}.
Then the following holds for quasi-concave functioIs.
A. If f is non-decreasing, it is quasi-concave.
Closcd.
B. Opcn.
C. neither Closcd nor Open.
D. n0ne of the abovc.
39. Suppose A
is a matrix such that there exist nonzero vectors v and w with
Au = 3w, Aw = 3u.
Then the eigenvalues of the matrix A are
A. {1, -1}.
B. {V3, -V3}.
C. {3, -3}.
D. none of the above.
41. Let f :R R
such that 0 < f'(a) <1 for all a > 1. Suppose f(1) =
2. It follows
that for all z > 10, J() <
A. 1+ ;
B. ;+a
C, 1+ I
Page 13
D. 3- I
. :
42. Consider thc following rcal-valued function, wherc a,b are rcal umbers and
positive integer:
Jlr) = if a < a
B. n = 3.
C. n = 2.
D. n = 1.
44. Consider a
labour market charact erized bv the following
functions: production and labour supply
F(N) = 20N- N2
N,
2 p
Herc, N, is the labour
supply, w is the nominal wage
prices p as given. Consider and N is thc labour input.
nominal wage D = 50. the case in which the government Take
The cquilibrium real wage introduces a minimum
given by under the case whcn
<p<5 is
A. 30
B. 25
C 3
2p
D.
Page 14
model with prices fixed at P run
45. Consider the followimg 1S-LNM
=1 (consider short
analysis). Notations are all standard.
P
= Y -'
C = 1+ 0.5)'
|- 0.5r'
G= G
= C+ |+
G
M
P P
Md Ms Witl, Md MS
IA if r >0
P
D
PP
Suppose that the economy described above is going through a recession and the gov
ernment is trying to stimulate the economy. The condition under which the monetary
policy will be effective in stimulating the economy is given by
+
A. M<4 2.
+
B. =4 2G.
C. M > 4 + 2G.
+
D. <4 2.
46. Nicholas Kaldor in his famous 1961 paper, describcd a list of six "stylized" facts about
economic growth. Which of the following facts do not belong to his original list.
Fact 1. Per capita output grows over time, and its growth rate does not tend to
diminish.
Fact 2. Physical capital per worker grows over time.
Fact 3. The rate of return to capital is nearly constant.
Fact 4. The ratio of physical capital to output is nearly constant.
Fact 5. The share of labour earnings in national income is decreasing and share of
physical capital earnings in national income is increasing.
Fact 6. The growth rate of output per worker differs across countries.
A. Fact 3.
B. Fact 5.
9. Fact 6.
D. Fact 2.
= ln c
the period-t utility function, uy, is given by u, b> 0.
+
e)
47. Suppose
1-7
y0. The functional form of this utility function when y=1, is givcn by
= ln q
A. uy
t
B. uy = ln c + ln b.
C. uy = ln q + b ln(1 - ,).
Page 15
D. u, = In
,+ h.
B. VO.49.
C, 0.492.
D. (1 - v0.49).
B. 2.
Page 16
C. ()':
D.
A. 5
B. 25
C. 5
D. 5
54. In a survey of 1055 voters were asked if they prefer candidate A over B. Let p and
denote the fraction of voters in the population and the sample that prefers voter A,
Page 17
the lhvpothesis, /, p 0.5, against the allermativ.
: =
Ç. 0.20.
D. 0.25.
55. A survey rocorded the weights (a,) and leights () of 300 students. The resulting
summary statistics are below
y; = Bo + B, + €j.
Given the summary st atistics, the estimates of
the parameters of the model are
A. Bo = 100; 6;
= 110; B,
=.
B. Bo 1.
C. Bo = 120; B1
=.
D. Bo = 130; 81
56. Consider the following two population regression lines where the dependent and
independent variables are flipped the
(1)
(2)
The cstimatcd slopc cocfficicnts from cquations (1) and (2) are -108 and 0.006, re
spectively. Which of the following statements is/are correct?
Ap R² from equation (1) is 0.648.
Page 18
A. V Y]+ E|X A Y].
E|X
A Y].
B. E|X
V
Y]-E|N
unless (; is homoscedastic.
S. The parameters cannot be cstimated
D. All of the above statements are correct.
59. Assume that each of n farmers can costlessly produce any amount of rice (in kg).
Suppose that the kth farmer produces Wk kg;
so that the total amount of rice produced
is W = W, + W2 + + W,. The price P at which rice sells is determined by the
rice that strongly dominates all other
demandP=e-". The strategy of producing by
quantities by the kth profit-maximizing farmer is given
= 10
A. Wk
W;
B. =1
C. W; = 0.1
D. Wk = 00
are Pure
and H. The payoff matrix below summarizes their payoffs. There
Strategy Nash Equilibria of the game.
Player 2
H
Player 1 S
(3,3)| (0,1)
H| (1,0)(1, 1) |
SA. one
B. two
C. three
D. countably infinite
Page 19
Standard Normal Distribution Table
00 .01
.02.03 .04 .05 .06 .07 .08 .09
0.0 .0000 .0040 .0080 .0120 .0160 .0199 .0239 .0279 .0319 .0359
0.1 .0398 .0438 .0478 .0517 .0557 .0596 .0636 .0675 .0714 .0753
0.2 .0793 .0832 .0871 .0910 .0948 .0987 .1026 .1064 .1103 .1141
0.3 .1179 .1217 .1255 .1293 .1331 .1368 .1406 .1443 .1480 .1517
0.4 .1554 .1591 .1628 .1664.1700 .1736 .1772.1808 .1844 .1879
0.5 .1915 .1950 .1985 .2019 .2054 .2088 .2123 .2157 .2190
0. .2224
.2257 .2291 .2324 .2357 .2389 .2422 .2454 .2486 .2517 .2549
0.7 .2580 .2611 .2642 .2673 .2704 .2734 .2764 .2794 .2823 .2852
0.8 .2881 .2910.2939 .2967 .2995 .3023 .3051 .3078
0.9 .3159 .3106 .3133
.3186 .3212 .3238 .3264 .3289
1.0
.3315 .3340 .3365 .3389
.3413 .3438 .3461 .3485 .3508 .3531 .3554 .3577 .3599 .3621
1.1 .3643 .3665 .3686 .3708
1.2 .3849
.3729 37493770 .3790 .3810 .3830
.3869 .3888 .3907 .3925 .3944 .3962
1.3 .4032 .3980 .3997 .4015
.4049 4066 .4082 .4099 .4115 .4131
1.4 .4192 .4147 .4162 .4177
.4207 .4222 .4236 4251 .4265
1.5 4332 .4345 .4357
.4279 4292 4306 .4319
.4370 .4382 .4394 .4406 .4418
1.6 4452 .4463 4474 .4484
.4429 .4441
.4495 .4505 .4515 .4525 .4535
1.7 .4554 .4564 .4573 .4545
4582 .4591 .4599 .4608 .4616 .4625
1.8 .4641 .4649 .4656 .4633
.4664 .4671 .4678 .4686 .4693
1.9 .4713 .4719 4726 4699 .4706
.4732 .4738 .4744 .4750 .4756
2.0 .4772 .4778 .4783 .4761 .4767
.4788 .4793 .4798 .4803
2.1 4821 .4826 .4830 4808 .4812 .4817
.4834 .4838 4842
2.2 .4861 .4846 .4850 .4854 .4857
.4864 .4868 .4871 .4875 .4878 .4881 .4884 .4887 .4890
2.3 .4893 .4896 .4898 .4901 .4904 .4906 4909 .491| .4913 .4916
2.4 .4918 .4920 .4922 .4925 .4927 4929 .4931 .4932 4934
2.5 .4938 .4940 .4941 4936
4943 .4945 4946 4948 .4949 .4951
2.6 4953 .4955 .4956 .4952
4957 .4959 .4960 4961 4962 .4963
2.7 .4965 .4966 .4967 .4964
4968 .4969 .4970 .4971 .4972 .4973
2.8 .4974 4975 .4976 4974
.4977 4977 .4978 .4979 4979 .4980
2.9 4981 .4982 .4982 .4981
.4983 .4984 .4984 .4985
3.0 .4987 .4987 .4987 4985 .4986 .4986
.4988 .4988 .4989 4989 .4989
3.1 .4990 .4991 .4991 .4990 .4990
.4991 .4992 .4992 .4992 4992 .4993
3.2 4993 .4993 .4994 .4994
.4993
.4994 .4994 .4994 .4995
3.3 4995 .4995 .4995 4995 .4995
.4996 .4996 .4996 .4996 4996
3.4 4997 4997 4996 .4997
4997 .4997 .4997 4997 .4997 .4997 .4997 .4998
3.5 .4998 .4998 .4998 4998 .49984998 4998 .4998 .4998 .4998