GATE 2021 question paper

All 40 questions from the GATE 2021 GATE Economics (XH-C1) paper. Open any question for the worked solution.

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1. Q1A firm finds that for the product that it produces, its (own) price elasticity of demand is 4. Currently, the firm is selling 2000 units per month…
2. Q2"Inflation increases the average level of prices". Which of the following is(are) necessarily implied by this statement: (i) The prices of…
3. Q3For the production function Q=F(K,L)=√KL with P_K=4 and P_L=2, find the values of K and L that will minimize the cost of producing 2 units of output.
4. Q4If the sum of price elasticities of imports and exports of a country exceeds unity, then a depreciation of domestic currency will ultimately result in
5. Q5To determine the relationship between y and x₁, Rohit estimated two different OLS models. In the first model, Rohit regressed y on x₁ and x₂ as…
6. Q6XYZ Co. Ltd. is a costless monopoly from suburban Mumbai producing and selling exotic mushrooms. The demand for mushrooms is given by Q=700-100P Do…
7. Q7In a demand function estimation of a good X, a researcher collected data on various households' consumption of good X (Qₓ) for various price levels.…
8. Q8Consider a duopoly market in which the market demand function is as follows: P=40-Q. For the two firms producing with identical marginal costs of…
9. Q9What would be the consequences for the OLS estimator if heteroscedasticity is present in a regression model but ignored? Assume that all the other…
10. Q10Walras' Law implies that if there are N markets in the economy, then one only needs to find equilibrium prices in
11. Q11There are many reasons why a poor country may fail to catch up with a rich neighbour. Which of the following is NOT one of these reasons?
12. Q12In a two country model, an increase in foreign country's national income generally leads to:
13. Q13Piku faces a lottery with outcomes of ₹24, ₹12, ₹48 and ₹6 given by the following probability distribution | Lottery Outcome | ₹24 | ₹12 | ₹48 | ₹6…
14. Q14Consider a regression model y=β₀+β x+u where the continuous variable y is regressed on a dummy variable x, which takes the value either 1 or 0.…
15. Q15Assuming that external economies exist, when demand increases in a perfectly competitive market, in the long-run, the price of the product
16. Q16Consider an individual who maximizes her expected utility having Bernoulli utility function u(w)=α-β e^(-rw); w>0 is wealth. The individual displays…
17. Q17For an open economy, the 'twin deficits' can be expressed by: [where S = Savings; I = Gross Private Investment; G = Government Expenditures; TR =…
18. Q18If expectations about inflation are formed as per the rational expectations hypothesis, then the short-run Philips curve will be
19. Q19As economic development proceeds, income inequality tends to follow a(n) curve.
20. Q20India has the highest amount of foreign debt in the form of
21. Q21Let A and B be two events with probabilities P(A)=3/4 and P(B)=1/3; then which of the following options is true?
22. Q22If S²=1/(n-1)Σᵢ₌₁ⁿ(xᵢ-x̄)² is an unbiased and consistent estimator of the population variance, then one can conclude that S=√(1/(n-1)Σᵢ₌₁ⁿ(xᵢ-x̄)²)…
23. Q23Consider the following demand-supply model, where Demand function: P=Q²-12Q+35 Supply function: 4P-3Q=0 The stable market equilibrium price-quantity…
24. Q24Trisha's consumption preference on biryani (x) and pudding (y) is given by the utility function U(x,y)=x+4y. The price per unit of biryani is ₹2 and…
25. Q25Consider a Cournot type n -firm natural spring oligopoly where the market demand for natural spring water is given by P(Q)=a-Q, a>0. The n firms are…
26. Q26Goods and Services Tax (GST) is
27. Q27Consider an intersection of roads without any traffic light. Two cars A and B approach an intersection and they want to proceed as indicated by… · diagram
28. Q28A Government Security (G-Sec)
29. Q29If a country has flexible exchange rate regime with perfect capital mobility, then according to the Mundell-Fleming Model, an expansionary fiscal…
30. Q30The basic tenets of 'Monetarism' are
31. Q31Two farmers, Rohit and Harish, graze their animals on a common land. They can choose to use this common resource 'lightly' or 'heavily' and the…
32. Q32Suppose Vijay has purchased a high-speed car worth ₹1000000. During the purchase, an Insurance company has shared the latest available road safety…
33. Q33Consider the following Table. | Month | Currency in Circulation | Cash with Banks | Currency with the Public | Other Deposits with the RBI |…
34. Q34Consider two regression models estimated on a sample of 350 observations. y = β₀+β₁x₁+β₂x₂+β₃x₃+β₄x₄+β₅x₅+u (1) y = α₀+α₁x₁+α₂x₂+v (2) The R² in…
35. Q35Consider a competitive market where the demand and supply functions are given by q^D=12-2P and q^S=4P, respectively. The tax rate per unit of output…
36. Q36Suppose the demand for a new pharmaceutical drug, on which the manufacturer has a patent monopoly, is given by: Q=(100-P)A⁰·⁵; where Q is output, P…
37. Q37Let the rate of inflation in an economy be 4.2%, the growth rate of velocity of money be 2% and, the growth rate of real GDP be 6%. According to…
38. Q38The long-run cost function of all identical firms in a perfectly competitive industry is given by: C=25q-3q²+1.5q³ The market demand function is…
39. Q39Given below is an inter-industry transactions matrix. If final demand for the agriculture sector changes from 150 units to 300 units and for the…
40. Q40Consider that a sample of size 3 is randomly drawn from a population that takes only two values, equally likely: -1 and 1. Let z=max (x₁,x₂,x₃)…