## SOLVED CAIIB COMBINED PAPER 3:

**1. Service Sector is also called as ......**

(i) Primary Sector, (ii) Secondary Sector

a. Only (i)

b. Only (ii)

c. Either (i) or (ii)

d. Neither (i) nor (ii)

Ans - d

2. The share of services in the national income from the last 10 years is

a. Decreasing

b. Constant

c. Increasing

d. Nominal

Ans - c

Given,

Recoveries of loan and advance - Rs. 1200 Crores

Misc capital receipt - Rs. 600 Crores

Market loans - Rs. 500 Crores

Short term borrowings - Rs. 800 Crores

External assistance (Net) - Rs. 300 Crores

State provident fund - Rs. 400 Crores

Other receipts (Net) - Rs. 800 Crores

Securities issued against small savings - Rs. 300 Crores

Recoveries of short term loans and advances from states and loans to govt servants - Rs. 600 Crores

Total Non Tax Revenue - Rs. 3000 Crores

Net Tax Revenue - Rs. 1000 Crores

Draw down cash balance - Rs. 2000 Crores

Calculate Capital Receipt ...

a. Rs 2700 Crores

b. Rs 3900 Crores

c. Rs 4300 Crores

d. Rs 5100 Crores

Ans - c

Solution :

Capital Receipt = Non Debt Receipt + Debt Receipt

Let us first calculate Non Debt Receipt,

Non Debt Receipt = Recoveries of loan & advances (duduct recoveries of short term loans & advance from state and loans to govt sarvents) + MISC Capital receipts

= 1200-600+600

= 1200 Crores

Now, let us calculate Debt receipt,

Debt Receipt = Market Loans + Short Term Borrowings + External assistance(NET) + Securities issued against Small savings + State provident fund + other Receipts(Net)

= 500 + 800 + 300 + 300 + 400 + 800

= 3100 Crores

Capital Receipt = Non Debt Receipt + Debt Receipt

= 1200 + 3100

= 4300 Crores

3. The technique of production where machinery is used more than human force is called ......

a. Technology intensive

b. Labour intensive

c. Capital intensive

d. either a or c

Ans - c

4. Demand for a product at Rs. 4 per unit is 50. If the price elasticity of demand is 2, how much the demand will be at Rs. 3 per unit?

a. 25

b. 40

c. 60

d. 75

Ans - d

Solution :

Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price

% Change in Quantity Demanded = x-50/50*100 = (x-50)*2 = 2x-100

% Change in Price = 1/4*100 = 25

Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price

2 = 2x-100/25

50 = 2x-100

50+100 = 2x

2x = 150

x = 150/2 = 75

5. In economics 'Value of next best alternative foregone' is not called as ......

(i) Propensity, (ii) Opportunity Cost, (iii) Sacrifice Cost

a. Only (i) and (ii)

b. Only (i) and (iii)

c. Only (ii) and (iii)

d. (i), (ii) and (iii)

Ans - b

6. Narrow Money consists of ......

(i) Time deposits,

(ii) Currency with the Public Demand Deposits,

(iii) Other Deposits with the RBI

a. Only (i) and (ii)

b. Only (i) and (iii)

c. Only (ii) and (iii)

d. (i), (ii) and (iii)

Ans - c

7. Unemployment of men and materials is widespread during ...... phase of business cycle.

a. boom

b. recession

c. depression

d. recovery

Ans - c

8. Given,

Recoveries of loan and advance - Rs. 1200 Crores

Misc capital receipt - Rs. 600 Crores

Market loans - Rs. 500 Crores

Short term borrowings - Rs. 800 Crores

External assistance (Net) - Rs. 300 Crores

State provident fund - Rs. 400 Crores

Other receipts (Net) - Rs. 800 Crores

Securities issued against small savings - Rs. 300 Crores

Recoveries of short term loans and advances from states and loans to govt servants - Rs. 600 Crores

Total Non Tax Revenue - Rs. 3000 Crores

Net Tax Revenue - Rs. 1000 Crores

Draw down cash balance - Rs. 2000 Crores

Calculate Total Receipt ...

a. Rs 5700 Crores

b. Rs 9900 Crores

c. Rs 10300 Crores

d. Rs 11700 Crores

Ans - C

Solution :

Total Receipt = Total Revenue Receipt + Capital Receipt + Draw down cash balance

Let us first calculate Total Revenue Receipt,

Total Revenue Receipt=Net Tax Revenue + Total Non Tax Revenue

= 1000 + 3000

= 4000 Crores

Now, let us calculate Capital Receipt,

Capital Receipt = Non Debt Receipt + Debt Receipt

Let us first calculate Non Debt Receipt,

Non Debt Receipt = Recoveries of loan & advances (deduct recoveries of short term loans & advance from state and loans to govt servants) + MISC Capital receipts

= 1200-600+600

= 1200 Crores

Now, let us calculate Debt receipt,

Debt Receipt = Market Loans + Short Term Borrowings + External assistance(NET) + Securities issued against Small savings + State provident fund + other Receipts(Net)

= 500 + 800 + 300 + 300 + 400 + 800

= 3100 Crores

Capital Receipt = Non Debt Receipt + Debt Receipt

= 1200 + 3100

= 4300 Crores

So,

Total Receipt = Total Revenue Receipt + Capital Receipt + Draw down cash balance

= 4000 + 4300 + 2000

= 10300 Crores

9. IS curve and Lm curve are related to ......

(i) Demand, (ii) Income, (iii) Rate of interest

a. Only (i) and (ii)

b. Only (i) and (iii)

c. Only (ii) and (iii)

d. (i), (ii) and (iii)

Ans - c

10. Given,

Corporation tax - Rs. 500 Crores

Income tax - Rs. 400 Crores

Other taxes and duties - RS. 200 Crores

Customs - RS. 500 Crores

Union exercise tax - Rs. 400 Crores

Service tax - Rs. 700 Crores

Tax of union territories- Rs. 200 Crores

Interest receipt - Rs. 500 Crores

Dividend & profit - Rs. 800 Crores

External grant - Rs. 200 Crores

Other non tax revenue - Rs. 900 Crores

State Share - Rs. 500 Crores

Receipt of union territories - Rs. 700 Crores

Trf to NCCD (National Calamity Contingency fund) - Rs. 200 Crores

Calculate Gross Tax Revenue ...

a. Rs 1900 Crores

b. Rs 2200 Crores

c. Rs 2900 Crores

d. Rs 3800 Crores

Ans - c

Solution :

Gross Tax revenue = Corporation Tax + Income tax + other tax & duties + customs + union excise duties + service Tax + taxes on union territories

= 500+400+200+500+400+700+200

= 2900 Crores

11. Business Cycle is also known as

a. Entrepreneur cycle

b. Economic cycle

c. Vicious circle

d. None of the above

Ans - b

(i) Primary Sector, (ii) Secondary Sector

a. Only (i)

b. Only (ii)

c. Either (i) or (ii)

d. Neither (i) nor (ii)

Ans - d

2. The share of services in the national income from the last 10 years is

a. Decreasing

b. Constant

c. Increasing

d. Nominal

Ans - c

Given,

Recoveries of loan and advance - Rs. 1200 Crores

Misc capital receipt - Rs. 600 Crores

Market loans - Rs. 500 Crores

Short term borrowings - Rs. 800 Crores

External assistance (Net) - Rs. 300 Crores

State provident fund - Rs. 400 Crores

Other receipts (Net) - Rs. 800 Crores

Securities issued against small savings - Rs. 300 Crores

Recoveries of short term loans and advances from states and loans to govt servants - Rs. 600 Crores

Total Non Tax Revenue - Rs. 3000 Crores

Net Tax Revenue - Rs. 1000 Crores

Draw down cash balance - Rs. 2000 Crores

Calculate Capital Receipt ...

a. Rs 2700 Crores

b. Rs 3900 Crores

c. Rs 4300 Crores

d. Rs 5100 Crores

Ans - c

Solution :

Capital Receipt = Non Debt Receipt + Debt Receipt

Let us first calculate Non Debt Receipt,

Non Debt Receipt = Recoveries of loan & advances (duduct recoveries of short term loans & advance from state and loans to govt sarvents) + MISC Capital receipts

= 1200-600+600

= 1200 Crores

Now, let us calculate Debt receipt,

Debt Receipt = Market Loans + Short Term Borrowings + External assistance(NET) + Securities issued against Small savings + State provident fund + other Receipts(Net)

= 500 + 800 + 300 + 300 + 400 + 800

= 3100 Crores

Capital Receipt = Non Debt Receipt + Debt Receipt

= 1200 + 3100

= 4300 Crores

3. The technique of production where machinery is used more than human force is called ......

a. Technology intensive

b. Labour intensive

c. Capital intensive

d. either a or c

Ans - c

4. Demand for a product at Rs. 4 per unit is 50. If the price elasticity of demand is 2, how much the demand will be at Rs. 3 per unit?

a. 25

b. 40

c. 60

d. 75

Ans - d

Solution :

Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price

% Change in Quantity Demanded = x-50/50*100 = (x-50)*2 = 2x-100

% Change in Price = 1/4*100 = 25

Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price

2 = 2x-100/25

50 = 2x-100

50+100 = 2x

2x = 150

x = 150/2 = 75

5. In economics 'Value of next best alternative foregone' is not called as ......

(i) Propensity, (ii) Opportunity Cost, (iii) Sacrifice Cost

a. Only (i) and (ii)

b. Only (i) and (iii)

c. Only (ii) and (iii)

d. (i), (ii) and (iii)

Ans - b

6. Narrow Money consists of ......

(i) Time deposits,

(ii) Currency with the Public Demand Deposits,

(iii) Other Deposits with the RBI

a. Only (i) and (ii)

b. Only (i) and (iii)

c. Only (ii) and (iii)

d. (i), (ii) and (iii)

Ans - c

7. Unemployment of men and materials is widespread during ...... phase of business cycle.

a. boom

b. recession

c. depression

d. recovery

Ans - c

8. Given,

Recoveries of loan and advance - Rs. 1200 Crores

Misc capital receipt - Rs. 600 Crores

Market loans - Rs. 500 Crores

Short term borrowings - Rs. 800 Crores

External assistance (Net) - Rs. 300 Crores

State provident fund - Rs. 400 Crores

Other receipts (Net) - Rs. 800 Crores

Securities issued against small savings - Rs. 300 Crores

Recoveries of short term loans and advances from states and loans to govt servants - Rs. 600 Crores

Total Non Tax Revenue - Rs. 3000 Crores

Net Tax Revenue - Rs. 1000 Crores

Draw down cash balance - Rs. 2000 Crores

Calculate Total Receipt ...

a. Rs 5700 Crores

b. Rs 9900 Crores

c. Rs 10300 Crores

d. Rs 11700 Crores

Ans - C

Solution :

Total Receipt = Total Revenue Receipt + Capital Receipt + Draw down cash balance

Let us first calculate Total Revenue Receipt,

Total Revenue Receipt=Net Tax Revenue + Total Non Tax Revenue

= 1000 + 3000

= 4000 Crores

Now, let us calculate Capital Receipt,

Capital Receipt = Non Debt Receipt + Debt Receipt

Let us first calculate Non Debt Receipt,

Non Debt Receipt = Recoveries of loan & advances (deduct recoveries of short term loans & advance from state and loans to govt servants) + MISC Capital receipts

= 1200-600+600

= 1200 Crores

Now, let us calculate Debt receipt,

Debt Receipt = Market Loans + Short Term Borrowings + External assistance(NET) + Securities issued against Small savings + State provident fund + other Receipts(Net)

= 500 + 800 + 300 + 300 + 400 + 800

= 3100 Crores

Capital Receipt = Non Debt Receipt + Debt Receipt

= 1200 + 3100

= 4300 Crores

So,

Total Receipt = Total Revenue Receipt + Capital Receipt + Draw down cash balance

= 4000 + 4300 + 2000

= 10300 Crores

9. IS curve and Lm curve are related to ......

(i) Demand, (ii) Income, (iii) Rate of interest

a. Only (i) and (ii)

b. Only (i) and (iii)

c. Only (ii) and (iii)

d. (i), (ii) and (iii)

Ans - c

10. Given,

Corporation tax - Rs. 500 Crores

Income tax - Rs. 400 Crores

Other taxes and duties - RS. 200 Crores

Customs - RS. 500 Crores

Union exercise tax - Rs. 400 Crores

Service tax - Rs. 700 Crores

Tax of union territories- Rs. 200 Crores

Interest receipt - Rs. 500 Crores

Dividend & profit - Rs. 800 Crores

External grant - Rs. 200 Crores

Other non tax revenue - Rs. 900 Crores

State Share - Rs. 500 Crores

Receipt of union territories - Rs. 700 Crores

Trf to NCCD (National Calamity Contingency fund) - Rs. 200 Crores

Calculate Gross Tax Revenue ...

a. Rs 1900 Crores

b. Rs 2200 Crores

c. Rs 2900 Crores

d. Rs 3800 Crores

Ans - c

Solution :

Gross Tax revenue = Corporation Tax + Income tax + other tax & duties + customs + union excise duties + service Tax + taxes on union territories

= 500+400+200+500+400+700+200

= 2900 Crores

11. Business Cycle is also known as

a. Entrepreneur cycle

b. Economic cycle

c. Vicious circle

d. None of the above

Ans - b