UGC NET Solved Question Paper II in Commerce { 2013 December }

1. Who is the fiscal agent and advisor to Government in monetary and financial matters?




(D) None of the above

Answer: (C)

2. Match the items of List – I with the items of List – II:

List – I                                                                                                            List – II

(a) National Manufacturing Competitiveness Council (NMCC)                    (i) Industrial Licensing Policy

(b) National Investment Fund (NIP)                                                              (ii) Eleventh Five

Year Plan

(c) The Industries (Development and Regulation) Act (IDRA), 1951           (iii) The Competition Act, 2002

(d) Increase in Employment                                                                            (iv) Public Sector Undertakings


        (a) (b) (c) (d)

(A) (iv) (i) (ii) (iii)

(B) (iii) (iv) (i) (ii)

(C) (i) (ii) (iii) (iv)

(D) (iv) (iii) (ii) (i)

Answer: (B)

3. Kyoto Protocol pertains to

(A) Capital formulation

(B) Globalisation

(C) Environmental protection

(D) Unemployment reduction

Answer: (C)

4. Uruguay Round pertains to




(D) World Bank

Answer: (C)

5. Which of the following are outside the scope of the Consumer Protection Act, 1986?

(A) Newspaper industry

(B) Services provided under contract of personal service

(C) Banking industry

(D) Both (A) and (B)

Answer: (B)

6. Which of the following is ‘true’ regarding the Prudence Principle of Accounting?

(A) Taking care of the future losses

(B) Taking care of the future profits

(C) Taking care of bad debts

(D) Taking care of inventory and depreciation

Answer: (A)

7. Which of the following is a non-operating expense?

(A) Salary of Managing Director

(B) Depreciation

(C) Advertisement expenditure

(D) Interest on loan

Answer: (D)

8. A and B are partners sharing profits in the ratio of 3 : 2. Their books showed good will at Rs. 3,000. C is admitted with ¼ th share of profits and brings Rs. 10,000 as his capital. But he is not able to bring in cash for his share of goodwill Rs. 3,000. How will you treat this?

(A) Goodwill is raised by Rs. 12,000

(B) C will remain as debtor for Rs. 3,000

(C) C’s A/c. is debited for Rs. 3,000

(D) Goodwill is raised by Rs. 9,000

Answer: (D)

9. If there is mutual indebtedness between the transferor company and the transferee company in business combination, which of the following is correct?

(A) No adjustment is required in the books of the transferor company.

(B) Adjustment is required in the books of the transferor company.

(C) No adjustment is required in the books of the transferee company.

(D) None of the above

Answer: (A)

10. Improvement of profit-volume ratio can be done by

(A) Increasing selling price

(B) Altering sales mixture

(C) Reducing variable cost

(D) All of the above

Answer: (D)

11. Business Economics is a subject which

(A) Studies economic relationships

(B) Studies economic activities at the aggregate level

(C) Deals with the tools of economics used for decision making in business

(D) Studies optimum allocation of limited resources

Answer: (C)

12. Match List – I with List – II and select the correct code for the answer:

List – I                                                                        List – II

(a) Cross elasticity is zero                                           (i) Price = AVC

(b) Shut-down point                                                   (ii) Two commodities are independent

(c) Slutsky theorem                                                     (iii) Transformation line

(d) Production Possibility Curve                                (iv) Substitution effect


       (a) (b) (c) (d)

(A) (ii) (iv) (i) (iii)

(B) (iii) (ii) (iv) (i)

(C) (i) (iii) (ii) (iv)

(D) (ii) (i) (iv) (iii)

Answer: (D)

13. Assertion (A): The demand curve has negative slope showing inverse relationship between price and the quantity demanded.

Reason (R): This applies only to Giffen goods.


(A) Both (A) and (R) are true.

(B) (A) is true, but (R) is false.

(C) (A) is false, but (R) is true.

(D) Both (A) and (R) are false.

Answer: (B)

14. The consumer is said to be in equilibrium when he plans his expenditure on x, y and z commodities in such a way that he ultimately attains:

(A) MUx = MUy = Mz

(B) MUx / Px = MUy / Py= MUz / Pz

(C) MUx / Px = MUy / Py = MUz / Pz = MUm

(D) MUx / Px < MUy / Py < MUz / Pz < MUm

Answer: (C)

15. Match the items in List – I with those in List – II and select the correct code for the answer:

List – I                                                                        List – II

(a) Monopoly                                                              (i) Price Taker

(b) Monopolistic competition                                      (ii) Homogeneous product’s price maker

(c) Perfect competition                                               (iii) Heterogeneous product

(d) Oligopoly                                                              (iv) Price Rigidity


       (a) (b) (c) (d)

(A) (ii) (iii) (i) (iv)

(B) (i) (ii) (iv) (iii)

(C) (iii) (iv) (ii) (i)

(D) (iv) (i) (iii) (ii)

Answer: (A)

16. Match the following items in List – I with most suitable options in List – II:

List – I                                                                        List – II

(a) Fisher                                                                     (i) Inverse probability

(b) Karl Pearson                                                          (ii) Normal Distribution

(c) Thomas Baye’s                                                      (iii) Correlation Coefficient

(d) Karl Gauss                                                             (iv) Index Numbers


        (a) (b) (c) (d)

(A) (iv) (iii) (ii) (i)

(B) (iv) (iii) (i) (ii)

(C) (iv) (ii) (iii) (i)

(D) (iv) (ii) (i) (iii)

Answer: (B)

17. The law of statistics, which says ‘Moderately large number of items chosen at random from a large group possess the characteristics of the large group’, is referred to as:

(A) The Central Limit Theorem

(B) The Law of Statistical Regularity

(C) The Law of Inertia of Large Numbers

(D) None of the above

Answer: (B)

18. A distribution, where the value of arithmetic mean is maximum as compared to median and mode, is

(A) Normal distribution

(B) Positively-skewed distribution

(C) Negatively-skewed distribution

(D) None of these

Answer: (B)

19. The most appropriate average to be used to compute the average rate of growth in population is

(A) Arithmetic mean

(B) Median

(C) Geometric mean

(D) Harmonic mean

Answer: (C)

20. “The life expectancy of people in Kerala is more than that of Tamil Nadu.” This statement is an example of

(A) Descriptive Hypothesis

(B) Causal Hypothesis

(C) Correlational Hypothesis

(D) None of the above

Answer: (C)

21. Match the items of List – I with the items of List – II and choose the correct answer:

List – I                                                                        List – II

(a) Intrapersonal communication                                (i) Information sharing

(b) Element of a communication event                       (ii) Development of ‘will’ to work

(c) Objective of organisational communication          (iii) Thinking

(d) Goals of organisational communication                (iv) Purpose


      (a) (b) (c) (d)

(A) (i) (ii) (iii) (iv)

(B) (iii) (iv) (ii) (i)

(C) (ii) (iii) (i) (iv)

(D) (iv) (iii) (ii) (i)

Answer: (B)

22. According to the Boston Consulting Group, a business which has a high growth rate but a weak market share is referred to as a

(A) Cash Cow

(B) Dog

(C) Question Mark

(D) Star

Answer: (C)

23. ‘No ideas are ever criticized’ and ‘the more radical the ideas are the better’ – are the rules of which decision making process?

(A) Programmed decision-making

(B) Non-programmed decision making

(C) Brainstorming

(D) Group discussion

Answer: (C)

24. According to McClelland’s Needs Theory, which of the following is not a motivating need?

(A) Need for Power

(B) Need for Security

(C) Need for Achievement

(D) Need for Affiliation

Answer: (B)

25. In the managerial grid, developed by Blake and Mouton, a manager who has high consideration for production but little concern for people is known as

(A) 1.1 Management

(B) 1.9 Management

(C) 9.1 Management

(D) 5.5 Management

Answer: (C)

26. Which of the following is not the major component of holistic marketing?

(A) Relationship marketing

(B) Integrated marketing

(C) Customer satisfaction

(D) Socially-responsible marketing

Answer: (C)

27. Which of the legislations listed below do not form part of the marketing environment of India?

(A) The Drugs and Cosmetics Act, 1940

(B) The Prevention of Food and Adulteration Act, 1954

(C) The Monopolies and Restrictive Trade Practices Act, 1969

(D) Both (B) and (C)

Answer: (D)

28. The set of all actual and potential buyers of a product is known as

(A) Customer group

(B) Industry

(C) Market

(D) None of the above

Answer: (C)

29. In the model of consumer behaviour given by Philip Kotler, what constitutes the marketing stimuli?

(A) Marketing environment

(B) Four P’s of marketing

(C) Consumer needs and wants

(D) None of the above

Answer: (B)

30. The factor that exerts the broadest and deepest influence on consumer behaviour is

(A) Culture

(B) Sub-culture

(C) Social class

(D) Income

Answer: (A)

31. Which one of the following is not among the assumptions of the Modigliani-Miller model?

(A) Perfect capital market

(B) Equivalent risk classes

(C) Unity for dividend payout ratio

(D) Absence of taxes

Answer: (C)

32. The most suitable coverage ratio for deciding the debt capacity of a firm is

(A) Interest Coverage Ratio

(B) Cash Flow Coverage Ratio

(C) Debt Service Coverage Ratio

(D) Fixed Assets Coverage Ratio

Answer: (B)

33. Which one of the following is the most popular method for estimating the cost of equity?

(A) Capital asset pricing model

(B) Dividend yield method

(C) Gordon’s dividend discount model

(D) Earnings yield method

Answer: (A)

34. Which one of the following is not the internal factor affecting the weighted average cost of capital of a firm?

(A) Investment policy of the firm

(B) Capital structure of the firm

(C) Dividend policy followed

(D) Market risk premium for the firm

Answer: (D)

35. Most common approach for analysing the capital structure of a firm is

(A) Ratio Analysis

(B) Cash Flow Analysis

(C) Comparative Analysis

(D) Leverage Analysis

Answer: (C)

36. Who propounded “Theory Z”?

(A) William Ouchi

(B) Peter F. Drucker

(C) Joseph H. Jurau

(D) Douglas McGregor

Answer: (A)

37. Another name for MATRIX organisation is

(A) Flexible organisation

(B) Geographic organisation

(C) Project organisation

(D) None of the above

Answer: (C)

38. Which of the following are methods of on-the-job training?

(i) Coaching

(ii) Vestibule training

(iii) Demonstration

(iv) Role-playing

(v) Apprenticeship training

Select the right answer from the following codes:

(A) (i), (ii), (iii), (iv)

(B) (i), (iii), (v)

(C) (ii), (iii), (iv)

(D) (i), (ii), (iii), (iv), (v)

Answer: (B)

39. The idea that a manager tends to be promoted to the level of his incompetence is referred to as

(A) The advancement principle

(B) The Parkinson’s law

(C) The Peter principle

(D) The job design principle

Answer: (C)

40. Assertion (A): The emphasis in industrial psychology has shifted from the studies of the isolated individual and the physical environment to the consideration of motivation and morale.

Reason (R): A motivated employee with a high morale will always give high productivity.


(A) Both (A) and (R) are correct, and (R) is the right explanation of (A).

(B) (A) is correct, but (R) is not correct.

(C) Both (A) and (R) are incorrect.

(D) Both (A) and (R) are correct, but (R) is not the right explanation of (A).

Answer: (B)

41. Match the following items of List – I and List – II in terms of functions of commercial banks:

List – I                                                                                    List – II

(a) Letter of reference                                                             (i) Advancing loans

(b) Sale of gold coins                                                              (ii) Receiving deposits

(c) Recurring Account                                                                        (iii) Non-banking function

(d) Overdrafts                                                                                     (iv) Agency function


       (a) (b) (c) (d)

(A) (i) (ii) (iii) (iv)

(B) (iv) (iii) (ii) (i)

(C) (iv) (ii) (iii) (i)

(D) (i) (iii) (ii) (iv)

Answer: (B)

42. Which of the following are included under representation functions of a bank?

(i) Payment of cheques and bills

(ii) Providing remittance facilities

(iii) Underwriting of securities

(iv) Advancing clean credit

(v) Allowing overdrafts on current account

(vi) Purchase and sale of securities


(A) (i), (ii), (iii) and (iv)

(B) (iii), (iv), (v) and (vi)

(C) (i), (ii), (iii) and (vi)

(D) (ii), (iii), (v) and (vi)

Answer: (C)

43. Call money rate is applicable for a very short period to

(A) Inter bank advances

(B) Bank to Reserve Bank advances

(C) Reserve Bank to Bank advances

(D) Commercial Banks to Industrial Banks advances

Answer: (A)

44. Match the following List – I with List – II:

List – I (Name of Securities)                          List – II (Type of Securities)

(a) Bonds of Land Development Banks         (i) Semi-Government Securities

(b) Treasury Bills                                             (ii) First Order Securities

(c) Shares of a Public Ltd. Co.                       (iii) Personal Securities


       (a) (b) (c)

(A) (i) (ii) (iii)

(B) (ii) (i) (iii)

(C) (iii) (ii) (i)

(D) (i) (iii) (ii)

Answer: (A)

45. Reserve Bank of India controls the activities of some of the following banks in India:

(i) Commercial Banks

(ii) Cooperative Banks

(iii) Foreign Banks

(iv) Rural Banks


(A) (i), (ii) and (iii)

(B) (i), (iii) and (iv)

(C) (ii), (iii) and (iv)

(D) (i), (ii), (iii) and (iv)

Answer: (D)

46. Match the following List – I with List – II and select the correct answer:

List – I                                                                                    List – II

(a) Comparative Cost Theory of International Trade             (i) Gottfried Haberler

(b) International Trade Theory of Opportunity Cost              (ii) J.S. Mill

(c) Factor Endowment Theory of International Trade           (iii) David Ricardo

(d) Doctrine of Reciprocal Demand                                       (iv) Hecksher-Ohlin


        (a) (b) (c) (d)

(A) (iii) (ii) (iv) (i)

(B) (i) (iii) (ii) (iv)

(C) (iii) (i) (iv) (ii)

(D) (ii) (i) (iv) (iii)

Answer: (C)

47. Identify the one, from the following, which is not a type of disequilibrium in the balance of payments of a country:

(A) Cyclical disequilibrium

(B) Secular disequilibrium

(C) Structural disequilibrium

(D) Sectoral disequilibrium

Answer: (D)

48. The participants who take advantage of different exchange rates in different markets are

(A) Speculators

(B) Arbitrageurs

(C) Hedgers

(D) Investors

Answer: (B)

49. Assertion (A): The liability of the option buyer is limited in the currency options market.

Reason (R): Option buyer need not exercise the option if the exchange rate is not favourable for him.


(A) (R) is correct and (A) is wrong.

(B) (A) is correct and (R) is wrong.

(C) Both (A) and (R) are correct.

(D) Both (A) and (R) are wrong.

Answer: (C)

50. An MNC that maintains a balance between the home market and host market oriented policies is

(A) Ethnocentric firm

(B) Polycentric firm

(C) Geocentric firm

(D) None of the above

Answer: (C)

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