M.Sc.

Economics
Indian Institute of Technology Delhi
Entrance Examination 2024
SET A
Instructions: Read carefully
1. Write the appropriate question paper set, A or B, in the OMR sheet and darken
the appropriate letter.

2. Please write your application number in the OMR sheet as follows. Write the last 5
digits (or, 4 digits as applicable) of your application number in the box and darken
the correct number in the OMR sheet. For example, if your application number is
PG-242501-0015, then write 0015 in the box starting from the first box and leave
the last box blank. Also darken the appropriate digits below the boxes. If your
application number is PG-242501-00150, then write 00150 in the boxes starting
from the first box and darken the digits below the boxes.

3. Exam duration is 3 hours. You are not allowed to leave the exam hall before the
end of the exam.

4. There are two sections. Section I has 20 one-mark questions. For each question in
Section I, a correct answer fetches one mark, an incorrect answer penalizes negative
1
3
, and no answer gives no marks. Section II has 40 questions, with a correct answer
getting two marks, an incorrect answer getting negative 23 , and no answer to a
question getting zero.

5. Maximum possible marks is 100.

6. You should use a black/blue ballpoint pen to darken the correct responses on the
OMR sheet. See the OMR sheet for instructions on how to fill a bubble correctly.

7. A separate booklet with ruled pages is provided for rough work.

8. You will need to submit the entire question paper along with the OMR sheet. But
take the rough work booklet with you when you leave the hall.

9. There should be 16 pages in the exam booklet. Check your copy and request a new
booklet if you do not have 16 pages.

10. If any candidate is caught using unfair means during the exam, he/she will be
immediately disqualified and will be asked to leave the exam hall.

11. Mobile phones, smart phones, smart watches, calculators, or any other electronic
gadgets are NOT allowed inside the exam hall.

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I Multiple Choice Questions (One mark each)
1. For X and Y , two jointly distributed random variables, which of the following state-
ments is false?
A. If X and Y are independently distributed, then the conditional distribution
of Y given X equals the marginal distribution of Y .
B. If the covariance between X and Y is 0, then X and Y are independent.
C. If covariance between X and Y is 0, then X and Y are not correlated.
D. If X and Y are independently distributed, then the joint density of X and
Y is the product of their marginal densities.

2. In testing a hypothesis Ho , with an alternative HA , Type-I and Type-II error corre-

sponds to
A. wrongly rejecting Ho and falsely accepting HA , respectively.
B. wrongly rejecting HA and falsely accepting Ho , respectively.
C. wrongly rejecting Ho and falsely accepting Ho , respectively.
D. wrongly rejecting HA and falsely accepting HA , respectively.

3. The value of a correlation between x and y is r = −0.5. Which of the following

statements is correct?
A. The x-variable explains 25% of the variation in the y-variable.
B. The x-variable explains -25% of the variation in the y-variable.
C. The x-variable explains 50% of the variation in the y-variable.
D. The x-variable explains -50% of the variation in the y-variable.

4. Which statement is correct about a p-value?

A. The smaller the p-value the stronger the evidence in favor of the alternative
hypothesis.
B. The smaller the p-value the stronger the evidence in favor the null hypothesis
C. The larger the p-value the stronger the evidence in favor of the alternative
hypothesis.
D. Whether a small p-value provides evidence in favor of the null hypothesis
depends on whether the test is one-sided or two-sided

5. The level of significance (usually, 0.05) associated with testing a hypothesis is the
probability
A. that the null hypothesis is true.
B. that the alternative hypothesis is true.
C. of not rejecting a true null hypothesis.

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 D. of rejecting a true null hypothesis.

6. Let u, v be two distinct vectors in Rk such that |u| = |v| = 1, where |u| is length of
vector u. The vectors u+v
2
and u−v
2
are
A. linearly dependent.
B. are independent, but not orthogonal to each other.
C. are orthogonal to each other.
D. None of the above.

 
0 2y z
7. Let A =  x y −z  and A⊤ A = I (A⊤ is transpose of A and I identity matrix),
x −y z
then the value of x2 + y 2 + z 2 is
1
A. 2
.
B. 2.
C. 1.
D. None of the above.

8. Let β be a real number. Consider the matrix

 
β 0 1
A =  2 1 −2  .
3 1 −2

Then |det(A)|
A. β.
B. 2.
C. 1.
D. 1+β.

9. Let x and y be the only two commodities a person consumes. There is a rise in Px
and the quantity demanded of y rises. Here:
A. the income effect dominates the substitution effect.
B. the substitution and income effects cancel each other.
C. none of the answers is correct.
D. the substitution effect dominates the income effect.

10. An expected utility function is:

A. quadratic in probabilities.
B. non-linear in probabilities.

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 C. linear in probabilities.
D. ordinal because the utility numbers have no meaning.

11. Consumer surplus is:

A. the area above the market price and below the demand curve.
B. a measure of the net welfare gained by consumers buying a particular good.
C. the difference between the amounts people are willing to pay for specific
quantities of goods and the amounts they pay at market prices.
D. all of the above.

12. Consider a Walrasian equilibrium with production.

A. There is no excess supply.
B. The firms choose production to maximise profits.
C. The Walras law holds if and only if production technologies exhibit constant
returns to scale.
D. there is no excess demand.

13. Which of the following statements is false?

A. An externality is an indirect effect that a firm’s production bears on a
consumer’s utility function.
B. In a Walrasian equilibrium, a firm exhibiting a negative externality produces
too much.
C. In a Walrasian equilibrium, a firm exhibiting a positive externality produces
too little.
D. A Walrasian equilibrium of an economy with externalities need not be
Pareto efficient.

14. Nash equilibrium in a normal form game is:

A. a strategy profile that maximises the sum of utilities of all players.
B. a strategy profile that maximises the utility of one of the players.
C. a strategy profile that is randomly selected by the players together.
D. none of the above.

15. The Lagrange multiplier in a constrained optimization problem, say in utility maxi-
mization problem subject to budget constraint, can be interpreted as:
A. the change in the objective function by relaxing the constraint by one unit.
B. marginal utility of money in utility maximization problem.
C. shadow price.

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 D. all of the above.

16. If the government of country Z increases spending by Rs 12 million and raises tax
collections by the same amount, then what will be the overall impact of these moves
on real GDP in country Z?
A. Real GDP will increase by Rs 6 million
B. Real GDP will remain unchanged
C. Real GDP will increase by Rs 12 million
D. Real GDP will decrease by Rs12 million

17. Suppose the Central Bank makes an open market purchase of Rs 3 million. Assume
that the money multiplier equals 2. What is the change in the money supply?
A. The money supply has increased by Rs 1.5 million
B. The money supply has increased by Rs 6 million
C. The money supply had decreased by Rs 1.5 million
D. The money supply has decreased by Rs 6 million

18. Consider an economy with a total population of 10,000 people. The size of the labour
force is 8,000, while the number of people employed is 7,000. What is the unemploy-
ment rate in this economy?
A. 10 per cent
B. 12.5 per cent
C. 20 per cent
D. 30.33 per cent

19. Assume a simple Keynesian model of a closed economy with no government sector
and autonomous investment. The marginal propensity to save (MPS) is 0.2. There
is a sudden drop in investment spending by 100 million. By how much will output
eventually fall?
A. 20 million
B. 100 million
C. 500 million
D. 125 million

20. In an AD-AS diagram, an increase in nominal money supply is represented by:

A. A shift of the AS-curve to the right
B. A shift of the AD-curve to the right
C. Movement along the AD-curve from right to left
D. Movement along the AD-curve from left to right

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 II Multiple Choice Questions (Two marks each)

21. Let A = {1, 2, 3, 4, 5, 6, 7}. Then the relation R = {(x, y) ∈ A × A : x + y = 7} is

A. symmetric, but neither reflexive nor transitive.
B. reflexive, but neither symmetric nor transitive.
C. transitive, but neither symmetric nor reflexive.
D. an equivalence relation.

22. Totrep has constant absolute risk aversion and initial wealth y and does not prefer to
accept a gamble such that with probability 0.5 she would win a and with probability
0.5 she would lose b. Is it possible that if Totrep’s wealth were much higher, she would
like to accept the gamble:
A. There is not enough information to be able to answer.
B. No.
C. Yes, for some parameter values.
D. It depends on the functional form of the utility function.

23. Which of the following statements is false?

A. the convexity of the production possibility set implies that the production
function is weakly concave.
B. the convexity of the production possibility set implies the convexity of the
input requirement set.
C. the convexity of the production possibility set implies constant returns to
scale.
D. the convexity of the input requirement set implies that the production func-
tion is quasi-concave.

√
24. Consider the following utility function: u(x, y) = xy. Here x and y are
A. net and gross substitutes.
B. net substitutes and gross complements.
C. net substitutes and neither gross substitutes nor complements.
D. net and gross complements.

25. Totrep owns a cargo flight worth 5 crores. With a probability of p = 0.1 the flight
crashes and its worth becomes 0. Totrep is risk loving and no further information on
her risk attitudes is available. Would she sell the ship for 4.75 crores?
A. Yes.
B. No.

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 C. She would be indifferent between selling at this price and not selling.
D. The information provided does not suffice to answer the question.

26. A firm produces one commodity with the production function y = f (x) = x1/3 . The
factor price w and the price p for the commodity are fixed. Pick the true statement:
A. The production function exhibits increasing returns to scale.
B. The production function exhibits decreasing returns to scale.
C. The production function exhibits constant returns to scale.
D. It is not possible to find the answer based on the information provided.

27. Consider the same production function: y = f (x) = x1/3 and factor and commodity
prices w and p, respectively. The cost function is:
1
A. C(y) = w.y 3 .
B. C(y) = w.y 3
1
C. C(y) = y.w 3 .
1
D. C(y) = w + y 3 .

28. Again consider the same production environment as in the last two questions. The
input demand function is:
2
p 3
A. x = ( 3.w ) .
2
3 3
B. x = ( p.w ) .
3
p 2
C. x = ( 3.w ) .
3
D. x = ( 3p
w
)4 .

29. Again consider the same production environment as in the last three questions. The
supply function is:
1
p 3
A. y = ( 3.w ) .
1
3 3
B. x = ( p.w ) .
1
p 2
C. x = ( 3.w ) .
1
D. x = ( 3p
w
)3 .

30. Consider the following normal form game and pick the correct statement:

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 A. (C, A) is the only Nash equilibrium in this game.
B. (C, A) and (D, B) are pure strategy Nash equilibria and there is a mixed
strategy Nash equilibrium where the row player chooses C with probability
1
2
and the column player chooses A with probability 31 .
C. (C, A) and (D, B) are pure strategy Nash equilibria and there is no mixed
strategy Nash equilibrium in this game.
D. (C, A) and (D, B) are pure strategy Nash equilibria and there is a mixed
strategy Nash equilibrium where the row player chooses C with probability
1
3
and the column player chooses A with probability 41 .

31. Consider the following figures and pick the correct statement:

A. Choices in figure A satisfy WARP, choices in figure B do not satisfy WARP.

B. Choices in figure B satisfy WARP, choices in figure A do not satisfy WARP
C. Choices in figure A and B satisfy WARP
D. Choices in figure A and B do not satisfy WARP

Page 9
32. A family has two children. The probability of a child being a boy is 0.4 and it is
independent of the other. We know that one of them is a boy. What is the probability
that the other one is also a boy?
A. 0.16
B. 0.24
C. 0.25
D. 0.33

33. X and Y are two jointly distributed random variables. The conditional mean and
variance of Y given X are given by 3X and 9X. The unconditional mean and variance
of X are 3 and 9, respectively. What is the unconditional variance of Y?
A. 90
B. 108
C. 12
D. 144

34. A box contains eight balls. Three of them are blue, three are green, and the remaining
two are red. Balls of same color are identical to each other. Five balls are chosen
randomly, one after the other, without replacement. What is the probability that two
of will be blue, two green, and one red?
2
A. 9
9
B. 28
3
C. 26
5
D. 16

35. Let X be a discrete random variable with a probability mass function.

 2c

 − n if n = −1, −2

d if n = 0.
P (X = n) =


 cn if n = 1, 2

0 Otherwise

where c and d are positive real numbers. If P (|X| ≤ 1) = 0.75, then E[X] equals
A. 1/12
B. 1/6
C. 1/3
D. 1/2

36. Consider the following two simple linear regression models where the dependent and
independent variables are flipped
yi = α1 + β1 xi + ϵi (1)

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 xi = α2 + β2 yi + νi (2)
If α̂i and β̂i are the Ordinary Least Square estimators of αi and βi , Ri2 denote the
R-square from equation (i) and ρxy denote the correlation coefficient between x and
y, then
A. α̂1 × α̂2 = 1
B. β̂1 × β̂2 = R12
C. α̂1 × β̂1 = ρxy
p
D. α̂1 × β̂2 = R22

37. Four balls of different colors are randomly placed in four identical boxes. After the
allocation, some boxes may remain empty, while others may have multiple balls. Find
the probability that exactly one box will remain empty.
3
A. 32
9
B. 16
96
C. 256
16
D. 64

38. Professor Calculus has 10 keys on his key ring. He forgot which one opens the door
to his office and started trying them at random, discarding those that do not work.
What is the probability that the 8th key will open the door?
A. 0.100
B. 0.150
C. 0.133
D. 0.033

39. A masters student is using data from a representative sample of n = 20 male IIT
Delhi students to estimate the parameters of a regression equation

y = β0 + β1 x + ϵ,

where y = weight (kg), x = height (cm), and ϵ is the error. The estimated least
squares regression with standard errors in parenthesis below the point estimates is
reported below
ŷ = 30.34 + 2.00 × x.
(43.05) (0.50)

The student is testing the following hypothesis

H0 : β1 = 0

Ha : β1 ̸= 0.
What is the value of the appropriate test statistic for testing H0 ?
A. 2

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 B. 0.25
C. 4
D. 2.5

f (7x)
40. Let f : R → (0, ∞) be an increasing function such that limx→∞ f (x)
= 1. Then
h i
f (5x)
limx→∞ f (x) − 1 =
A. 0.
B. 2.
C. 4.
D. 1.

41. If the equation system Ax = b has no solution (where A is a matrix and b is a vector),
then
A. b belongs to the null space of A.
B. b belongs to the null space of A⊤ .
C. b belongs to the column space of A⊤ .
D. b belongs to the column space of A.

2n n n2 +3n



42. If 3
/ 3
= 10, then the ratio n2 −3n+4
is equal to:
A. 27/11.
B. 35/16.
C. 65/37.
D. 2.

1

1
R2
43. Let 5f (x) + 4f x
= x
+ 3, x > 0. Then 18 1
f (x)dx is equal to:
A. 5 loge 2 − 3.
B. 5 loge 2 + 3.
C. 10 loge 2 + 6.
D. 10 loge 2 − 6.

1 11

11
and x−7 in ax − 1


44. If coefficient of x7 in ax2 + 2bx 3bx2
are equal, then
A. 32ab = 729.
B. 64ab = 243.
C. 243ab = 64.
D. 729ab = 32.

Pn
1+2+...+K j=1 Sj
45. If SK = K
, then limn→∞ n3
is

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 A. 1/12.
B. 1/24.
C. 0.
D. 1/6.

46. For any set A ⊂ Rk , lets define

δ(q) = sup q ⊤ x.
x∈A

A. δ(·) is a convex function.

B. δ(·) is a linear function.
C. δ(·) is a concave function.
D. None of the above.

 
cos x − sin x 0
47. If f (x) =  sin x cos x 0 .
0 0 1
Statement I: f (x)f (y) = f (x + y).
Statement II: f (x) is invertible for all x.
A. Statement I is True, Statement II is False.
B. Statement I is False, Statement II is True.
C. Statement I is True, Statement II is True.
D. Statement I is False, Statement II is False.

48. Suppose A1 , A2 , . . . , is a countably infinite family of subsets of a vector space. Suppose

all of these sets are linearly independent, and that A1 ⊆ A2 ⊆ . . . . Then ∪∞ i=1 Ai is

A. a linearly dependent set of vectors.

B. a linearly independent set of vectors.
C. linearly independent provided the vectors are orthogonal.
D. not necessarily either dependent or independent.

5 3
 
49. If M = 2 2 , then which of the following matrices is equal to M 2022 ?
− 23 − 12
 
3034 3033
A. .
−3033 −3032
 
3034 −3033
B. .
3033 −3032
 
3033 3032
C. .
−3032 −3031

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3032 3031
D. .
−3031 −3030

50. Let f : [0, 2] → R be a function which is continuous on [0, 2] and its differentiable on
(0, 2) with f (0) = 1. Let
Z x2 √
F (x) = f ( t)dt
0
′ ′
for x ∈ [0, 2]. If F (x) = f (x) for all x belongs to (0, 2), then F (2) equals
A. e2 − 1.
B. e4 − 1.
C. e − 1.
D. e4 .

51. For positive integer n, define

16 + 5n − 3n2 32 + n − 3n2 48 − 3n − 3n2 25n − 7n2

f (n) = n + + + + · · · + .
4n + 3n2 8n + 3n2 12n + 3n2 7n2
Then, the value of limn→∞ f (n) is equal to
A. 3 + 34 loge 7.
B. 4 − 43 loge 7


3
.
C. 4 − 34 loge 7


3
.
D. 3 + 43 loge 7.

x2 −3x−6
52. Let f : R → R be defined by f (x) = x2 +2x+4
. Then which of the following statements
is TRUE?
A. f is decreasing in the interval (−2, −1).
B. f is decreasing in the interval (1, 2).
C. f is onto.
D. f is increasing in the interval (−2, −1).

53. The function f (x) = log(1 + exp(x)) is

A. Concave.
B. Convex.
C. Convex for x < 0 and concave for x > 0.
D. Neither concave nor convex.

54. Suppose year 1 is taken as the base period. The nominal GDP in year 1 is Rs 500
billion. The nominal GDP has reached Rs 700 billion in year 2, and the GDP deflator
is 125. What will the real GDP be each year?

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 A. Rs 625 billion in year 1 and Rs 560 billion in year 2
B. Rs 625 billion in year 1 and Rs 700 billion in year 2
C. Rs 500 billion in year 1 and Rs 560 billion in year 2
D. Rs 500 billion in year 1 and Rs 700 billion in year 2

55. An important assumption underlying the Classical monetary theory is the idea that
an increase in the money supply causes a proportional increase in the price level
because the:
A. Marginal propensity to consume is constant
B. Money supply is continuous
C. Exchange rate is fixed
D. Velocity of money is constant

56. A liquidity trap refers to a situation when:

A. The economy reaches the full employment level
B. A rise in interest rates causes people to want to hold less money
C. Households’ wealth becomes trapped in assets that cannot be easily ex-
changed into money
D. The general public has a strong preference for holding the most liquid asset,
money

57. Suppose the investment (I) in the goods market is not responsive to the interest rate.
Then:
A. The IS curve is a vertical line and monetary policy is very effective in raising
output
B. The IS curve is a horizontal line and monetary policy is very effective in
raising output
C. The IS curve is a vertical line and monetary policy does not affect output
D. The IS curve is a horizontal line and monetary policy does not affect output

58. Assume a Cobb-Douglas production function where the output is Y , the share of
capital (K) is 1/4 and the share of labor (L) is 3/4. If the growth in total factor
productivity is zero and labor and capital each grow by 1%, then
A. Output growth is 1% and the marginal product of capital is Y/4K
B. Output growth is 1% and the marginal product of capital is Y/K
C. Output growth is 1% and the marginal product of labor is Y/4N
D. Output growth is 2% and the marginal product of labor is 3Y/4N

59. In an IS-LM framework, an increase in autonomous saving will result in

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 A. A decrease in income but an increase in the interest rate
B. A decrease in both income and the interest rate
C. An increase in both income and the interest rate
D. An increase in income but a decrease interest rates

60. Assume an aggregate production function with a constant marginal product of capital
and with capital as the only factor of production, such that Y = aK. If the rate of
population growth is n = 0.03, the rate of depreciation is d = 0.05, the savings rate
is s = 0.08 and a = 1.5, then the growth rate of per capita output is
A. 0.04
B. 0.004
C. 0.40
D. 0.20

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