If you want to compare the price of wheat over a period, which index will you use ?

The correct answer is C, Gross investment - Depreciation. Net investment is gross investment minus depreciation, that is, the addition to the stock of capital left after making good the wear and tear of existing machines, buildings and equipment. Gross investment is the whole spending on capital goods in a year, while depreciation, also called consumption of fixed capital, is the fall in the value of capital through normal use and age. The same subtraction turns gross figures into net figures elsewhere in national accounts: gross domestic product minus depreciation gives net domestic product. If net investment is positive the economy's capital stock is growing, and if it is negative the stock is shrinking. A and B are wrong because sudden destruction of capital by accident or by a flood or earthquake is a capital loss and is not counted as depreciation. D is wrong because only one of the three statements is correct. Exam tip: net equals gross minus depreciation, the same rule for investment, GDP and national product.

The correct answer is A, both I and II. A demand curve is the picture of the demand function, which links the quantity a consumer buys to the price of the good, so statement I is correct. Read in the other direction, the same curve tells you the quantity the consumer is willing to buy at each price, which is statement II, so that is correct too. Price is placed on the vertical axis and quantity on the horizontal axis, and the curve slopes downward because of the law of demand. A change in the price of the good moves the consumer along the same curve, while a change in income, in tastes or in the price of a related good shifts the whole curve to a new place. B is wrong because statement I is correct as well. C is wrong because both statements are correct. D is wrong because statement II is also correct. Exam tip: along the curve only the price changes, while a shift of the curve comes from everything else.

The correct answer is A, inversely related to the price of the good. The law of demand says that, other things remaining the same, a consumer buys more of a good when its price falls and less when the price rises, so price and quantity demanded move in opposite directions. That is why the demand curve slopes downward from left to right. Two forces explain it: the income effect, since a lower price leaves more purchasing power in hand, and the substitution effect, since the cheaper good replaces costlier substitutes. The phrase other things remaining the same matters, because income, tastes, the prices of related goods and expectations are all held constant. B is wrong because supply is the seller's side and the law of demand does not tie demand to it. D is wrong for the same reason, as demand is compared with price and not with supply. C is wrong because a direct relation with price would make the demand curve rise, which happens only in exceptional cases such as Giffen goods. Exam tip: price up, quantity demanded down, so the demand curve slopes downward.

The correct answer is B, less elastic. A monopolist is the only seller of a good that has no close substitute, so buyers cannot shift away easily when the price rises and the demand curve the firm faces is steeper, that is less elastic. Under monopolistic competition many firms sell differentiated but similar products, so a buyer put off by one firm's price can move to a near substitute, and the demand curve of each firm is therefore flatter and more elastic. Both curves slope downward, which is why each such firm is a price maker to some degree, but the hold of the monopolist over price is firmer. A is wrong because the two market forms do not face demand of the same elasticity. C is wrong because infinitely elastic, that is horizontal, demand belongs to a firm in perfect competition. D is wrong because more elastic demand is the case of monopolistic competition, not of monopoly. Exam tip: fewer substitutes mean less elastic demand and greater power over price.

The correct answer is C, 1950. The Planning Commission was set up in March 1950 by a resolution of the Union Cabinet, so it was neither a constitutional nor a statutory body. The Prime Minister was its chairman, and Jawaharlal Nehru therefore became the first chairman, with Gulzarilal Nanda as the first deputy chairman. Its task was to assess the country’s resources and draw up five year plans, the first of which ran from 1951 to 1956 and focused on agriculture and irrigation. The commission was replaced on 1 January 2015 by NITI Aayog, which advises rather than allocates funds. A is wrong because 1962 is the year of the India-China war, not of the commission. B is wrong because 1945 is before independence; the Planning and Development Department of that time was a colonial office. D is wrong because 1958 falls in the middle of the second five year plan. Exam tip: fix the pair - Planning Commission in March 1950, NITI Aayog on 1 January 2015.