# Quantitative Methods in Economics Questions

## Quantitative Methods for the Economic Analysis practice question paper:

Question: A good index number is one which satisfies
(1) Unit test (2) Time reversal test (3) Factor reversal test
Which of the following is correct?
(a) 1 only
(c) 2 & 3
(b) 2 only
(d) 7,2 & 3

Ans. (c)

Question: __ probability is the probability that an event will occur given that another Event has already occurred
(a) Conditional event
(b) Compound event
(c) Marginal event
(d) both b and c

Ans. (a)

Question: Which of the following is not a correct statement about a probability?
(a) The value of probability lies between 0 and 1
(b) lt can be reported as a decimal or a fraction
(c) A value near L means that the event will occur
(d) lt is only applicable in the case of certain case

Ans. (d)

Question: Fishers ideal index is obtained as :
(a) the sum of Laspeyre’s & paasche’s indices
(b) the geometric mean of Laspeyer’s & paasche’s indices
(c) the arithemetic mean of Laspeyer’s & paasche’s indices
(d) the harmonic mean of Laspeyre’s & paasche’s indices

Ans. (b)

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Question: lf the occurrence of one event means that another cannot happen, then the events are
(a) independent
(b) any event
(c) Mutually Exclusive
(d) none of the above

Ans. (c)

Question: The major purpose of price index is to measure change in the
(a) standard of living
(b) cold content of money
(d) Capacity to produce

Ans. (c)

Question: The joint probability is
(a) The likelihood of two events happening together
(b) The likelihood of an event happening given that another event has already happened
(c) Based on two mutually exclusive events
(d) None of the above

Ans. (a)

Question: For an impossible event the value of probability will be
(a) less than 1
(b) greater than one
(c) 0
(d) 1

Ans. (c)

Question: Making allowances for the effect of changing price levels is called
(a) Splicing
(b) Base shifting
(c) Deflating
(d) None of these

Ans. (c)

Question: If you roll a pair of dice, what is the probability that one of the dice is a 4 or the sum of the dice is 7?
(a) 4/36
(b) 21/36
(c) 13/36
(d) 15/36

Ans. (d)

Question: Which one of the following statements is correct?
(1) Laspeyres’ index shows an upward bias
(2) Paastes’ index shows an upward bias
(3) Paasche index shows an upward bias
(4) Paasche index shows an downward bias
(a) 1& 4
(c) 2 & 3
(b) 1 only
(d) 3 & 4

Ans. (a)

Question: The set of all possible outcomes in an experiment is known as
(a) Sample space
(b) Universal set
(c) Sample point
(d) Random experiment

Ans. (a)

Question: The name associated with Subjective probability is
(a) Ramsey
(b) Kolmogorov
(c) Franklin
(d) None of the above

Ans. (a)

Question: The consumer price index numbers are also known as ” ”
(a) cost of living index number
(b) Price of living index
(c) Retail index
(d) All the above

Ans. (d)

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Question: The outcomes of an experiment are called
(a) trial
(b) event
(c) experiment
(d) random experiment

Ans. (b)

Question: In the consumer price index, the number of weights are determined on the basis of __
(a) Actual price of the index
(b) the consumption pattern of the class of population
(c) Actual consumption expenditure
(d) Both price & consumption expenditure

Ans. (b)

Question: The name associated with Subjective probability is
(a) Ramsey
(b) Kolmogorov
(c) Richard Good
(d) Savage

Ans. (b)

Question: Simple event is also known as
(a) Elementary event
(b) composite event
(c) joint event
(d) None of the above

Ans. (a)

Question: Recurrent variations in time series that usually last longer than a year is known as
(a) Seasonal variation
(b) Secular trend
(c) irregular variation
(d) Cyclical variation

Ans. (d)

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Question: Composite event is also known as
(a) Elementary event
(b) compound event
(c) joint event
(d) None of the above

Ans. (b)

Question: __ probability is the probability of a single event without consideration of any other event
(a) Conditional event
(b) Compound event
(c) Marginal event
(d) none of the above

Ans. (c)

Question: The weighted average of price relations using basic values as weights is same as the __
(a) Laspeyre’s quantity index
(b) Paasche’s price index
(c) Laspeyre’s price index
(d) Kelly’s price index

Ans. (a)

Question: Paasche’s index measures change in
(b) current consumption
(c) both fixed and current market
(d) None

Ans. (b)

Question: The procedure of combining two or more overlapping series of index numbers into one continuous series is called
(a) Splicing
(b) Base shifting
(c) Deflating
(d) None of these

Ans. (a)

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Question: Weather or climate changes are examples of
(a) Secular trend
(b) Seasonal variation
(c) Cyclical variation
(d) Irregular variation

Ans. (b)

Question: Which one of the following indices satisfies both time reversal and factor reversal list?
(a) Lasperyres index number
(b) Fischer’s index number
(c) Paasche’s index number
(d) Bowley’s index number

Ans. (b)

Question: Method of moving average is used to measure
(a) Secular trend
(b) Seasonal Variations
(c) Cyclical variation
(d) Irregular Variation

Ans. (c)

Question: Number of components of a time series are __
(a) Two
(b) Four
(c) Many
(d) Cannot be stated

Ans. (b)

Question: The method which is not used for estimating seasonal components of a time series
(a) Ratio to trend method
(c) Method of simple average
(d) Method of least squares

Ans. (d)

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Question: Which one of the following index numbers is based on Geometric Mean ?
(a) Lasperyres index number
(b) Fischer’s index number
(c) Paasches index number
(d) Bowley’s index number

Ans. (b)

Question: Cost of living index is known as
(a) Consumer Price index
(b) wholesale Price index
(c) Quantity index
(d) None

Ans. (a)

Question: Index Numbers measure
(a) the change in base year prices
(b) the change in current year prices
(c) real changes
(d) None of the above

Ans. (a)

Question: Which of the following is described as’ barometers of economic activity’?
(a) Index number
(b) Correlation
(c) Regression
(d) Time series

Ans. (a)

Question: If the Paasche’s index is 196 and Fishers index is 210, What is the value of the Laspeyre’s index?
(a) 220
(b) 215
(c) 225
(d) 230

Ans. (c)

Question: Test to determine whether a given method will work both forward & backward
(a) Unit test
(b) Factor reversal test
(c) time reversal test
(d) None

Ans. (c)

Question: The day to day irregularities in business activity are the example of
(a) Secular trend
(b) Seasonal fluctuations
(c) Cyclical fluctuations
(d) random or erratic fluctuations

Ans. (d)

Question: A function is said to be maximum at x – a if
(a) f‘(a) is negative and f” (n) zero
(b) f‘(a) is zero and f” (a) is negative
(c) f‘(a) is zero and f” (a) is zero
(d) f‘(a) is negative and f” (a) is negative

Ans. (b)

Question: The price index that uses base year quantities as weights is called __
(a) Paasches index
(b) Lasperyres index
(c) Fischer’s index
(d) whole sale price index

Ans. (b)

Question: A function is said to be minimum
(a) f’ = 0 and f” > 0
(b) f’ = 0 and f ” < 0
(c) f ‘ > 0 and f” = 0
(d) f’ < 0 and f” = 0

Ans. (a)

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Question: Fisher’s ideal index Number satisfies
(a) Time reversal & factor reversal list
(b) only time reversal list
(c) only factor reversal list
(d) circular list

Ans. (a)

Question: Increasing function if and only if its derivatives on (a’ b) is
(a) Negative
(b) Non–negative
(c) Non–positive
(d) None of the above

Ans. (b)