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FPSC · CSS 2014

Economics, Paper I

100 marks · 3 hours · 6 questions
This paper Economics · all yearsQ. 3 · Using the utility maximization model…Q. 4 · Differentiate between monopoly and perfect…Q. 5 · Define and explain the concept…Q. 6 · Given below is the information…Q. 7 · Use the Keynesian Cross to…Q. 8 · Write short NOTES on the…With this paper← 20132014 →
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Part II

Q. 3

Using the utility maximization model show that total price effect is equal to the sum of income and substitution effects.

(20)
Q. 4

Differentiate between monopoly and perfect competition? How price and output is determined under monopoly in the short run?

(20)
Q. 5
  1. (a)Define and explain the concept of average fixed cost, average variable cost, average total cost and marginal cost with the help of diagram. [10]
  2. (b)What is the significance of the point where marginal cost is equal to average cost? Describe this relationship mathematically as well as graphically. [10]
(20)
Q. 6

Given below is the information about money market in a economy (all values in billions): C = Currency in circulation D = Demand deposits = $ 600 X = Excess Reserves r = reserve requirement on Demand Deposits = 0.05 (C/D) = 0.25 (X/D) = 0.05 Calculate the value of the following:

  1. (a)Monetary Base [5]
  2. (b)M1 Money Supply [5]
  3. (c)Money Multiplier [5]
  4. (d)Change in Monetary base required to achieve M1 = $800 [5]
(20)
Q. 7

Use the Keynesian Cross to predict the impact of:

  1. (a)An increase in government purchases [7]
  2. (b)An increase in taxes [7]
  3. (c)An equal increase in government purchases and taxes [6]
(20)
Q. 8

Write short NOTES on the following:

  1. (a)Consumer and producer surplus [7]
  2. (b)Compensating and Equivalent variation [7]
  3. (c)Philips curve [6]
(20)

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About this paper

The 2014 CSS Economics paper set by the FPSC. Question wording only; questions marked “Not yet checked” have not been compared with the official paper yet.

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