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Previous Year Paper (English)
Read the following passage carefully and answer all questions given below it.
John Maynard Keynes, the trendiest dead economist of this apocalyptic moment,
was the godfather of government stimulus. Keynes had the radical idea that
throwing money at recessions through aggressive deficit spending would
resuscitate flatlined economies- and he wasn’t too particular about where the
money was thrown. In the depths of the Depression, he suggested that the
Treasury could “fill old bottles with banknotes, bury them at suitable depths in
disused coal mines” then sit back and watch a money-mining boom create jobs and
prosperity. “It would, indeed, be more sensible to build houses and the like,
“he wrote, but “the above would be better than nothing.”
As President-elect Barack Obama prepares to throw money at the current
downturn-a stimulus package starting at about $800 billion, plus the second $350
billion chunk of the financial bailout-we all really do seem to be Keynesians
now. Just about every expert agrees that pumping $1 trillion into a moribund
economy will rev up the ethereal goods-and-services engine that Keynes called
“aggregate demand” and stimulate at least some shortterm activity, even if it is
all wasted on money pits. But Keynes was also right that there would be more
sensible ways to spend it. There would also be less sensible ways to spend it. A
trillion dollars’ worth of bad ideas-sprawl-inducing highways and bridges to
nowhere, ethanol plants and pipelines that accelerate global warming, tax breaks
for overleveraged McMansion builders and burdensome new long-term federal
entitlements-would be worse than mere waste. It would be smarter to buy every
American an iPod, a set of Ginsu knives and 600 Subway foot-longs.
. What, according to Keynes, is the “aggregate demand” ?
(a) Stimulation of a short-term activity
(b) Goods and Services Sector
(c) Attempting to rev up the sluggish economy
(d) Pumping one trillion dollars into economy
Answer: (b) Goods and Services Sector
2. Which of the following is/are corrective measure(s) as part of the long term
priorities of Obama that was an outcome of his predecessor’s regime ?
(1) Countering recession through immediate rescue operations.
(2) Reining the budget deficit.
(3) Creating a more sustainable economy.
(a) (1) & (2) only
(b) (2) & (3) only
(c) (1) & (3) only
(d) None of these
Answer: (d) None of these
3. John M. Keynes was advocate of which of the following suggestions ?
(a) Spending money recklessly during recessions is suicidal
(b) Government stimulus to economy may not help because of red-tapism
(c) Aggressive deficit spending is likely to be fatal for economic meltdown
(d) Exorbitant spending during recessions is likely to boost economy
Answer: (d) Exorbitant spending during recessions is likely to boost economy
4. The author of the passage calls Barack Obama and his team as “Keynesians”
(a) Barack Obama and his team have decided to fil old bottles with banknotes
(b) His team is advising Barack to refrain from Keynes’ philosophy
(c) Barack Obama has been reluctant to follow Keynes’ philosophy
(d) Building houses has been under the active consideration of Barack Obama and
Answer: (a) Barack Obama and his team have decided to fil old bottles with
5. Which of the following is TRUE about Keynes’ philosophy ?
(a) Actual spending money during meltdown is more important than where and on
what it is spent
(b) Filling old bottles with banknotes and burying them is an atrocious proposal
(c) Government should be selective in approach for spending money during
(d) Creating jobs and prosparity during recessions is almost an impracticable
Answer: (c) Government should be selective in approach for spending money during