UGC NET Economics December 2025 Question PaperPaper 1 & Paper 2 with Answer Key

50 questions with the answer key and explanations.

1. Question 1

   Based on the table above, find the overall percentage of students A and G, respectively.

   Student	English (M.M=150)	Economics (M.M=130)	Sociology (M.M=120)	Philosophy (M.M=100)	Psychology (M.M=60)	IT (M.M=40)
   A	80	50	80	60	70	80
   B	90	80	70	40	80	70
   C	80	60	70	70	80	70
   D	70	65	80	80	60	60
   E	70	65	80	75	50	80
   F	60	75	60	80	40	60
   G	60	35	50	70	70	70

   Percentage of marks obtained by seven students in six subjects

   1. A65.5 and 58.5
   2. B69.16 and 55.91
   3. C68.5 and 54.5
   4. D69.76 and 55.79

   Answer: (B) 69.16 and 55.91

   Explanation

   The maximum total marks across all six subjects are 150 + 130 + 120 + 100 + 60 + 40 = 600. For A, marks obtained are 120 + 65 + 96 + 60 + 42 + 32 = 415; hence percentage = 415/600 × 100 = 69.16%. For G, marks obtained are 90 + 45.5 + 60 + 70 + 42 + 28 = 335.5; hence percentage = 335.5/600 × 100 = 55.91%.

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2. Question 2

   Based on the table above, find the average marks in Sociology and IT, respectively, obtained by all students A to G.

   Student	English (M.M=150)	Economics (M.M=130)	Sociology (M.M=120)	Philosophy (M.M=100)	Psychology (M.M=60)	IT (M.M=40)
   A	80	50	80	60	70	80
   B	90	80	70	40	80	70
   C	80	60	70	70	80	70
   D	70	65	80	80	60	60
   E	70	65	80	75	50	80
   F	60	75	60	80	40	60
   G	60	35	50	70	70	70

   Percentage of marks obtained by seven students in six subjects

   1. A84, 28
   2. B82, 30
   3. C80, 28
   4. D83, 30

   Answer: (A) 84, 28

   Explanation

   Sociology has maximum marks 120. The marks are 96, 84, 84, 96, 96, 72, 60, totaling 588; average = 588/7 = 84. IT has maximum marks 40. The marks are 32, 28, 28, 24, 32, 24, 28, totaling 196; average = 196/7 = 28.

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3. Question 3

   Based on the table above, how many students have got 70% or more marks in at least 4 subjects?

   Student	English (M.M=150)	Economics (M.M=130)	Sociology (M.M=120)	Philosophy (M.M=100)	Psychology (M.M=60)	IT (M.M=40)
   A	80	50	80	60	70	80
   B	90	80	70	40	80	70
   C	80	60	70	70	80	70
   D	70	65	80	80	60	60
   E	70	65	80	75	50	80
   F	60	75	60	80	40	60
   G	60	35	50	70	70	70

   Percentage of marks obtained by seven students in six subjects

   1. A3
   2. B6
   3. C4
   4. D5

   Answer: (C) 4

   Explanation

   Count subjects with marks percentage at least 70 for each student. A has 4, B has 5, C has 5, D has 3, E has 4, F has 2, and G has 3. Therefore, students A, B, C and E meet the condition, giving a total of 4 students.

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4. Question 4

   Based on the table above, find the overall percentage in the subjects English, Philosophy and IT, respectively.

   Student	English (M.M=150)	Economics (M.M=130)	Sociology (M.M=120)	Philosophy (M.M=100)	Psychology (M.M=60)	IT (M.M=40)
   A	80	50	80	60	70	80
   B	90	80	70	40	80	70
   C	80	60	70	70	80	70
   D	70	65	80	80	60	60
   E	70	65	80	75	50	80
   F	60	75	60	80	40	60
   G	60	35	50	70	70	70

   Percentage of marks obtained by seven students in six subjects

   1. A71.5, 66.5 and 69.5
   2. B70.2, 66.2 and 68.2
   3. C72.2, 65.5 and 70
   4. D72.85, 67.85 and 70

   Answer: (D) 72.85, 67.85 and 70

   Explanation

   For a subject, the overall percentage is the average percentage across the 7 students because the maximum marks for that subject are the same for all students. English: (80+90+80+70+70+60+60)/7 = 72.85. Philosophy: (60+40+70+80+75+80+70)/7 = 67.85. IT: (80+70+70+60+80+60+70)/7 = 70.

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5. Question 5

   Based on the table above, find the aggregate marks obtained by students C and F, respectively.

   Student	English (M.M=150)	Economics (M.M=130)	Sociology (M.M=120)	Philosophy (M.M=100)	Psychology (M.M=60)	IT (M.M=40)
   A	80	50	80	60	70	80
   B	90	80	70	40	80	70
   C	80	60	70	70	80	70
   D	70	65	80	80	60	60
   E	70	65	80	75	50	80
   F	60	75	60	80	40	60
   G	60	35	50	70	70	70

   Percentage of marks obtained by seven students in six subjects

   1. A390, 428
   2. B449, 390
   3. C428, 387.5
   4. D420, 385

   Answer: (C) 428, 387.5

   Explanation

   For C: English 120, Economics 78, Sociology 84, Philosophy 70, Psychology 48, IT 28; total = 428. For F: English 90, Economics 97.5, Sociology 72, Philosophy 80, Psychology 24, IT 24; total = 387.5.

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6. Question 6

   Which of the following statements are logically equivalent?

   A. No cars are non-vehicles
   B. Some cars are vehicles
   C. All vehicles are cars
   D. All cars are vehicles

   Choose the correct answer from the options given below.

   1. AB and C only
   2. BB and D only
   3. CA and D only
   4. DA, C and D only

   Answer: (C) A and D only

   Explanation

   The statement No cars are non-vehicles means there is no car outside the class of vehicles; this is equivalent to All cars are vehicles. Statement B is only a particular statement and C is the converse, so they are not logically equivalent to A.

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7. Question 7

   Match List I with List II using the table above. Choose the correct answer from the options given below.

   List I (Communication Elements)	List II (Explanation)
   A. Who	I. The Message
   B. Says what	II. The Communicator
   C. In which channel	III. The Audience
   D. To whom	IV. The Media

   Communication elements and their explanations

   1. AA-I, B-II, C-III, D-IV
   2. BA-IV, B-III, C-II, D-I
   3. CA-II, B-I, C-IV, D-III
   4. DA-III, B-II, C-I, D-IV

   Answer: (C) A-II, B-I, C-IV, D-III

   Explanation

   This is based on Lasswell's communication model: Who is the communicator (II), says what is the message (I), in which channel is the media (IV), and to whom is the audience (III).

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8. Question 8

   Match List I with List II using the table above. Choose the correct answer from the options given below.

   List I (Purpose)	List II (Act)
   A. To form firm beliefs in students	I. Instruction
   B. To shape their behavior and conduct	II. Indoctrination
   C. To improve learning skills	III. Training
   D. To command with knowledge	IV. Conditioning

   Educational purposes and acts

   1. AA-II, B-I, C-IV, D-III
   2. BA-I, B-II, C-III, D-IV
   3. CA-II, B-III, C-IV, D-I
   4. DA-IV, B-III, C-II, D-I

   Answer: (C) A-II, B-III, C-IV, D-I

   Explanation

   The most plausible intended mapping from the given options is: indoctrination forms firm beliefs, training shapes behaviour/conduct, conditioning is linked with learning responses, and instruction is command with knowledge. However, the source options do not include the cleaner textbook mapping in which training improves skills and conditioning shapes behaviour, so this item should be reviewed against the official key.

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9. Question 9

   Which of the following research design entails studying two contrasting cases using more or less identical methods?

   1. AComparative design
   2. BExperimental design
   3. CLongitudinal design
   4. DLatitudinal design

   Answer: (A) Comparative design

   Explanation

   A comparative design studies two or more contrasting cases using broadly similar methods so that similarities and differences can be compared. Experimental design manipulates variables; longitudinal design studies change over time; “latitudinal design” is not the standard term for this approach.

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10. Question 10

    Match List I with List II using the table above. Choose the correct answer from the options given below.

    List I (Digital Initiative)	List II (Description)
    A. SAKSHAT	I. Single point of access to all Government services
    B. IRINS	II. Reduce dependency on proprietary software in Educational Institutions
    C. UMANG	III. A “One Stop Education” Portal
    D. FOSSEE	IV. Web-based Research Information Management

    Digital initiatives and descriptions

    1. AA-III, B-IV, C-I, D-II
    2. BA-IV, B-III, C-II, D-I
    3. CA-II, B-I, C-IV, D-III
    4. DA-I, B-II, C-III, D-IV

    Answer: (A) A-III, B-IV, C-I, D-II

    Explanation

    SAKSHAT is a “One Stop Education” portal (III). IRINS is a web-based research information management system (IV). UMANG provides a single point of access to government services (I). FOSSEE promotes free/open-source software to reduce dependency on proprietary software in educational institutions (II).

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11. Question 11

    Identify the correct sequence of steps A-D followed by the CPU as it processes each instruction in a program.

    A. Store
    B. Decode
    C. Fetch
    D. Execute

    1. AD, C, A, B
    2. BC, B, D, A
    3. CB, C, D, A
    4. DA, D, B, C

    Answer: (B) C, B, D, A

    Explanation

    The standard CPU instruction cycle is Fetch → Decode → Execute → Store. Using the labels given, this is C, B, D, A.

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12. Question 12

    Arrange the following chronologically:
    A. NCERT
    B. NAAC
    C. NIRF
    D. AICTE
    E. UGC
    Choose the correct answer from the options given below.

    1. AB, C, D, E, A
    2. BB, A, E, C, D
    3. CD, E, A, B, C
    4. DE, A, D, B, C

    Answer: (C) D, E, A, B, C

    Explanation

    The chronological order is AICTE (1945), UGC (1956), NCERT (1961), NAAC (1994), and NIRF (2015). Therefore the correct sequence is D, E, A, B, C.

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13. Question 13

    A smart classroom is a:

    1. ATeacher centric classroom
    2. BICT supported classroom
    3. CFlipped and Blended classroom
    4. DLearner centric classroom

    Answer: (B) ICT supported classroom

    Explanation

    A smart classroom primarily refers to a classroom supported by information and communication technology tools such as digital boards, projectors, learning software, and internet-enabled resources.

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14. Question 14

    Match List - I with List - II.

    List - I (Measurement Scale)	List - II (Appropriate Example)
    A. Ordinal	I. Color of Hair
    B. Ratio	II. Satisfaction Level
    C. Nominal	III. Difference in temperature in degree Celsius
    D. Interval	IV. Salary of employees

    Measurement scales and appropriate examples

    1. AA-II, B-I, C-IV, D-III
    2. BA-I, B-III, C-II, D-IV
    3. CA-IV, B-II, C-III, D-I
    4. DA-II, B-IV, C-I, D-III

    Answer: (D) A-II, B-IV, C-I, D-III

    Explanation

    Ordinal scales rank order responses, so satisfaction level is ordinal. Ratio scales have a true zero, so salary is ratio. Nominal scales classify categories, so color of hair is nominal. Interval scales have equal intervals without a true zero, so degree Celsius is interval. Hence A-II, B-IV, C-I, D-III.

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15. Question 15

    Four different populations consist of numbers as given in A-D below. Compute the variance of each different population and arrange in descending order.
    A. 6, 15, 27, 33, 39
    B. 1, 2, 3, 4, 5, 6, 7
    C. 10, 16, 10, 16, 10, 10, 16, 16
    D. 10, 15, 10, 15
    Choose the correct answer from the options given below.

    1. AD, B, A, C
    2. BA, C, D, B
    3. CB, D, C, A
    4. DC, A, B, D

    Answer: (B) A, C, D, B

    Explanation

    Using population variance, A has mean 24 and variance 144; B has mean 4 and variance 4; C has mean 13 and variance 9; D has mean 12.5 and variance 6.25. The descending order is A, C, D, B.

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16. Question 16

    Match List - I with List - II.

    List - I (Biosphere Reserve)	List - II (Location)
    A. Nanda Devi Biosphere Reserve	I. Odisha
    B. Panchmarhi Biosphere Reserve	II. Meghalaya
    C. Simlipal Biosphere Reserve	III. Madhya Pradesh
    D. Nokrek Biosphere Reserve	IV. Uttarkhand

    Biosphere reserves and locations

    1. AA-I, B-II, C-IV, D-III
    2. BA-III, B-IV, C-II, D-I
    3. CA-II, B-III, C-I, D-IV
    4. DA-IV, B-III, C-I, D-II

    Answer: (D) A-IV, B-III, C-I, D-II

    Explanation

    Nanda Devi Biosphere Reserve is in Uttarakhand, Pachmarhi Biosphere Reserve is in Madhya Pradesh, Simlipal Biosphere Reserve is in Odisha, and Nokrek Biosphere Reserve is in Meghalaya. Hence A-IV, B-III, C-I, D-II.

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17. Question 17

    Arrange the following terms in order of increasing extension.
    A. Lotus
    B. Plant
    C. Organism
    D. Flower
    Choose the correct answer from the options given below.

    1. AC, B, A, D
    2. BC, B, D, A
    3. CA, D, B, C
    4. DD, A, B, C

    Answer: (C) A, D, B, C

    Explanation

    Increasing extension moves from the narrowest class to the broadest class. Lotus is a specific flower, flower is included under plant, and plant is included under organism. Hence the order is A, D, B, C.

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18. Question 18

    Which of the following propositions are so related that they cannot both be true although they may both be false?
    A. All cars are vehicles.
    B. Some cars are vehicles.
    C. No cars are vehicles.
    D. Some cars are not vehicles.
    Choose the correct answer from the options given below.

    1. AA and D only
    2. BA and C only
    3. CC and D only
    4. DB and C only

    Answer: (B) A and C only

    Explanation

    In the square of opposition, universal affirmative (A proposition) and universal negative (E proposition) are contraries: they cannot both be true, though both may be false. Here, 'All cars are vehicles' and 'No cars are vehicles' have that relation.

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19. Question 19

    Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R).
    Assertion (A): VoIP is an acronym that stands for Voice over Internet Protocol.
    Reason (R): VoIP is a technology that allows you to make voice calls using a broadband Internet connection instead of a regular phone call.
    In the light of the above statements, choose the most appropriate answer from the options given below.

    1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
    2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
    3. C(A) is correct but (R) is not correct
    4. D(A) is not correct but (R) is correct

    Answer: (A) Both (A) and (R) are correct and (R) is the correct explanation of (A)

    Explanation

    VoIP stands for Voice over Internet Protocol. The reason correctly describes VoIP as voice communication carried over a broadband internet connection, which explains the assertion.

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20. Question 20

    Bhopal disaster (1984) is one of the most tragic industrial accident, which happened due to release of ________ gas into the atmosphere from Union Carbide factory.

    1. AMethyl isocyanate
    2. BTriethyl chlorine
    3. CDimethylsulphide
    4. DHydrogen disulphide

    Answer: (A) Methyl isocyanate

    Explanation

    The Bhopal gas disaster of 1984 occurred after the release of methyl isocyanate gas from the Union Carbide pesticide plant in Bhopal.

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21. Question 21

    Arrange the following environment related acts in the chronological order of their enactment.
    A. The Wildlife Protection Act
    B. Air (Prevention and Control of Pollution) Act
    C. The National Green Tribunal Act
    D. Environment (Protection) Act
    E. The Forest (Conservation) Act
    Choose the correct answer from the options given below.

    1. AE, A, D, B, C
    2. BA, E, B, D, C
    3. CA, B, E, C, D
    4. DB, E, A, C, D

    Answer: (B) A, E, B, D, C

    Explanation

    The Wildlife Protection Act was enacted in 1972, the Forest (Conservation) Act in 1980, the Air Act in 1981, the Environment (Protection) Act in 1986, and the National Green Tribunal Act in 2010. Thus the order is A, E, B, D, C.

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22. Question 22

    If (L)ₘ represents a number L in base-M number system, then which of the following numbers are equivalent to (AD)₁₆?
    A. (255)₈
    B. (10101101)₂
    C. (173)₁₀
    D. (1141)₅
    Choose the correct answer from the options given below.

    1. AA, C and D only
    2. BB and D only
    3. CA and B only
    4. DA, B and C only

    Answer: (D) A, B and C only

    Explanation

    (AD)₁₆ equals 10×16 + 13 = 173 in decimal. (255)₈ is 2×64 + 5×8 + 5 = 173, and (10101101)₂ is 173. (1141)₅ equals 171, not 173. Therefore A, B and C only are equivalent.

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23. Question 23

    Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R).
    Assertion (A): India is one of the fastest growing economy of the World.
    Reason (R): To grow fast, India has been spending six percent of GDP on education since 2014.
    In the light of the above statements, choose the most appropriate answer from the options given below.

    1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
    2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
    3. C(A) is correct but (R) is not correct
    4. D(A) is not correct but (R) is correct

    Answer: (C) (A) is correct but (R) is not correct

    Explanation

    India has been among the fastest growing major economies. However, India has not consistently spent six percent of GDP on education since 2014. Therefore the assertion is correct but the reason is not correct.

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24. Question 24

    'It is based on the assumption that mass media have subtle effects on audiences who unknowingly absorb the dominant symbols, images and messages of media.' The above-mentioned communication theory is known by what name and who developed it?

    1. AAgenda Setting by Maxwell McCombs and Donald L. Shaw
    2. BThe Cultivation Theory by George Gerbner
    3. CUses and Gratification Theory by Katz
    4. DSoviet Communist Theory by Wilbur Schramm

    Answer: (B) The Cultivation Theory by George Gerbner

    Explanation

    Cultivation Theory, developed by George Gerbner, argues that long-term exposure to mass media subtly shapes audiences' perceptions of social reality.

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25. Question 25

    The h-index is a metric for the cumulative impact and productivity of a researcher's scholarly output. If Dr Amit has published 10 research papers that have been cited as follows: 9, 7, 3, 11, 4, 8, 2, 12, 6 and 1, then what is the h-index of Dr Amit?

    1. A5
    2. B6
    3. C7
    4. D4

    Answer: (B) 6

    Explanation

    Arrange the citation counts in descending order: 12, 11, 9, 8, 7, 6, 4, 3, 2, 1. The sixth paper has at least 6 citations, but the seventh paper has only 4 citations. Therefore the h-index is 6.

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26. Question 26

    Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R).
    Assertion (A): The UGC made a course on 'research and publication ethics' compulsory for all students pursuing PhD as they all are potential College and University teachers.
    Reason (R): A teacher must have appropriate understanding of research ethics to teach how to produce knowledge ethically.
    In the light of the above statements, choose the most appropriate answer from the options given below.

    1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
    2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
    3. C(A) is correct but (R) is not correct
    4. D(A) is not correct but (R) is correct

    Answer: (A) Both (A) and (R) are correct and (R) is the correct explanation of (A)

    Explanation

    UGC introduced Research and Publication Ethics as a compulsory course for PhD scholars. The reason correctly explains the need for such training: future teachers and researchers require a sound understanding of research ethics to guide ethical knowledge production.

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27. Question 27

    Which of the following technology was introduced in the development of third generation of computers?

    1. ATransistors
    2. BVacuum Tubes
    3. CIntegrated Circuits
    4. DMICR

    Answer: (C) Integrated Circuits

    Explanation

    Third generation computers used integrated circuits. Vacuum tubes belong to the first generation and transistors to the second generation.

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28. Question 28

    Which of the following University is NOT amongst the first three Universities opened in India in 1857?

    1. AUniversity of Delhi
    2. BUniversity of Bombay
    3. CUniversity of Calcutta
    4. DUniversity of Madras

    Answer: (A) University of Delhi

    Explanation

    The first three universities established in India in 1857 were the Universities of Calcutta, Bombay and Madras. The University of Delhi was established later, in 1922.

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29. Question 29

    The average age of a class of 34 students and a teacher reduces by 0.5 years, if the teacher is excluded. The initial average of the class including teacher is 16 years. Find the age of the teacher.

    1. A30 years
    2. B33 years
    3. C35 years
    4. D37 years

    Answer: (B) 33 years

    Explanation

    There are 35 persons including the teacher. Their total age is 35×16 = 560 years. After excluding the teacher, the average reduces to 15.5 years for 34 students, so students' total age is 34×15.5 = 527 years. The teacher's age is 560 - 527 = 33 years.

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30. Question 30

    Ocean acidification occurs due to reaction of atmospheric carbon dioxide with sea water to produce ________.

    1. ACarboxylic acid
    2. BCarbonic acid
    3. CCitric acid
    4. DNitric acid

    Answer: (B) Carbonic acid

    Explanation

    Atmospheric carbon dioxide dissolves in seawater and reacts with water to form carbonic acid, which lowers ocean pH and contributes to ocean acidification.

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31. Question 31

    Which of the following is a flexibility mechanism under Kyoto protocol?
    A. Joint Implementation (JI)
    B. Intended Nationally Determined Contributions (INDC)
    C. Common Minimum Programme (CMP)
    D. International Emission Trading (IET)
    E. Clean Development Mechanism (CDM)
    Choose the correct answer from the options given below.

    1. AA, B and E only
    2. BA, C and E only
    3. CA, C and D only
    4. DA, D and E only

    Answer: (D) A, D and E only

    Explanation

    The Kyoto Protocol flexibility mechanisms are Joint Implementation, Clean Development Mechanism, and International Emissions Trading. INDCs belong to the Paris Agreement context, and Common Minimum Programme is not a Kyoto mechanism.

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32. Question 32

    Arrange the following in the increasing order of their percentage.
    A. 425 out of 500
    B. 384 out of 540
    C. 570 out of 700
    D. 480 out of 660
    Choose the correct answer from the options given below.

    1. AB, D, C, A
    2. BA, B, C, D
    3. CD, C, B, A
    4. DB, D, A, C

    Answer: (A) B, D, C, A

    Explanation

    The percentages are: A = 85%, B = 71.11%, C = 81.43%, and D = 72.73% approximately. In increasing order, they are B, D, C, A.

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33. Question 33

    Select appropriate maxims of Teaching:
    A. Simple to complex
    B. Rural to Urban
    C. Concrete to Abstract
    D. Analysis to Synthesis
    E. Low IQ to High IQ
    Choose the correct answer from the options given below.

    1. AB and E only
    2. BA, B and C only
    3. CD and E only
    4. DA, C and D only

    Answer: (D) A, C and D only

    Explanation

    Common maxims of teaching include moving from simple to complex, concrete to abstract, and analysis to synthesis. 'Rural to urban' and 'Low IQ to High IQ' are not standard maxims of teaching.

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34. Question 34

    If in a certain code language:
    "Very bright boys" is coded as: 654
    "Most boys are allrounder" is coded as: 1432
    "Bright boys are smart" is coded as: 5437
    then how "smart" and "bright" shall be coded in that language, respectively?

    1. A6, 7
    2. B7, 5
    3. C7, 4
    4. D5, 4

    Answer: (B) 7, 5

    Explanation

    The common words in the first and third statements are 'bright' and 'boys', corresponding to the common codes 5 and 4. The common words in the second and third statements are 'boys' and 'are', corresponding to 4 and 3, so 'boys' is 4 and 'bright' is 5. In the third statement the remaining code for 'smart' is 7. Thus smart and bright are coded as 7 and 5.

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35. Question 35

    As a Junior Research Fellow (JRF), you plagiarized someone's work and you are caught, what is the likely consequence?
    A. You will be rewarded for that over time.
    B. The research article is retracted with public documentation explaining the reason.
    C. The institute funding your research takes disciplinary action.
    D. Your academic standing and reputation come into question.
    Choose the correct answer from the options given below.

    1. AC and D only
    2. BB and D only
    3. CB, C and D only
    4. DA, B and C only

    Answer: (C) B, C and D only

    Explanation

    Plagiarism can lead to retraction of the article, institutional disciplinary action, and damage to academic standing and reputation. It is not rewarded.

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36. Question 36

    Match List - I with List - II.

    List - I (Pronouncements)	List - II (Act/Commission)
    A. Allocation of one lakh rupees per year for education	I. Wood's Despatch
    B. English as a medium and as a language is necessary for India's growth	II. Kothari Commission Report
    C. Grant-in-Aid for every educational institution	III. Charter Act of 1813
    D. India's destiny is getting shaped in her classrooms	IV. Macaulay Minutes

    Education pronouncements and associated acts or commissions

    1. AA-III, B-II, C-I, D-IV
    2. BA-IV, B-I, C-II, D-III
    3. CA-III, B-IV, C-I, D-II
    4. DA-IV, B-II, C-III, D-I

    Answer: (C) A-III, B-IV, C-I, D-II

    Explanation

    The Charter Act of 1813 provided for allocation of one lakh rupees per year for education. Macaulay's Minute supported English education. Wood's Despatch introduced the grant-in-aid system. The statement that India's destiny is being shaped in her classrooms is associated with the Kothari Commission Report. Hence A-III, B-IV, C-I, D-II.

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37. Question 37

    Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R).
    Assertion (A): Mass communication is the process of delivering information, ideas and attitudes to a sizable and diversified audience.
    Reason (R): It uses media developed for that purpose.
    In the light of the above statements, choose the most appropriate answer from the options given below.

    1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
    2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
    3. C(A) is correct but (R) is not correct
    4. D(A) is not correct but (R) is correct

    Answer: (A) Both (A) and (R) are correct and (R) is the correct explanation of (A)

    Explanation

    Mass communication involves sending information, ideas and attitudes to a large and diverse audience. It does so through specialized mass media, so the reason correctly explains the assertion.

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38. Question 38

    Which of the following characteristics of Mass Communication are true?
    A. It needs a mass medium
    B. It is impersonal communication
    C. It has gatekeepers
    D. The feedback is ultrafast
    E. It is very cheap/no cost involved
    Choose the correct answer from the options given below.

    1. AA, D and E only
    2. BD and E only
    3. CA, B and C only
    4. DC, D and E only

    Answer: (C) A, B and C only

    Explanation

    Mass communication uses mass media, is generally impersonal, and involves gatekeeping. Feedback in mass communication is usually delayed rather than ultrafast, and it is not necessarily cheap or cost-free.

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39. Question 39

    If 40% of a number x is added to another number y, then y becomes 125% of its previous value. Find which of the following is true regarding the values of x and y?

    1. Ax/y = 8/5
    2. Bx = y
    3. Cx/y = 5/8
    4. Dx/y = 3/4

    Answer: (C) x/y = 5/8

    Explanation

    Adding 40% of x to y makes it 125% of y, so y + 0.40x = 1.25y. Therefore 0.40x = 0.25y, giving x/y = 0.25/0.40 = 5/8.

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40. Question 40

    Select the CORRECT statements:
    A. Chanakya composed Arthashastra at the Vallabhi University.
    B. Panini who wrote Ashtadhyayi was an alumni of Takshashila.
    C. Acharya Shilbhadra was the highest living authority in Odantpuri.
    D. Agraharas was an educational institution with a whole settlement of Brahmanas.
    E. Jain educational institutions are also known as Basadis.
    Choose the correct answer from the options given below.

    1. AB, C, D and E only
    2. BA, C, D and E only
    3. CA and C only
    4. DB, D and E only

    Answer: (D) B, D and E only

    Explanation

    Chanakya is associated with Takshashila, not Vallabhi. Shilabhadra is generally associated with Nalanda, not Odantpuri. Panini is associated with Takshashila, Agraharas were Brahmana settlements connected with education, and Jain educational institutions are known as Basadis. Therefore B, D and E only are correct.

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41. Question 41

    "Statistically speaking, men who eat more bananas are more likely to be in committed relations. So start eating more bananas." Which of the following fallacies is committed in the above argument?

    1. AFalse cause
    2. BSlippery slope
    3. CRed herring
    4. DAppeal to ignorance

    Answer: (A) False cause

    Explanation

    The argument treats a statistical association as if it proves causation. That is the false cause fallacy.

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42. Question 42

    Select the correct statements:
    A. Teachers in HEIs must be strict disciplinarian.
    B. Teachers in HEIs must motivate her learners to learn independently.
    C. Teachers in HEIs must not use any technology.
    D. Teachers in HEIs must not interact with students outside classroom.
    E. Teachers in HEIs must be an avid reader and a participant in her discipline's discourse.
    Choose the correct answer from the options given below.

    1. AA and C only
    2. BB and E only
    3. CC and D only
    4. DA, B, C, D and E

    Answer: (B) B and E only

    Explanation

    Good HEI teachers encourage independent learning and remain active readers and participants in their discipline. They are not required to be strict disciplinarians, avoid technology, or avoid student interaction outside the classroom.

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43. Question 43

    Arrange the following in chronological order as per year of their enactment.
    A. Working Journalists (Fixation of Rates of Wages) Act
    B. First Press Regulation Act
    C. Contempt of Courts Act
    D. The Indecent Representation of Women (Prohibition) Act
    Choose the correct answer from the options given below.

    1. AA, B, C, D
    2. BB, A, C, D
    3. CD, C, B, A
    4. DA, C, D, B

    Answer: (B) B, A, C, D

    Explanation

    The First Press Regulation Act came earliest, followed by the Working Journalists wage legislation, the Contempt of Courts Act, and finally the Indecent Representation of Women (Prohibition) Act of 1986. Therefore the chronological order is B, A, C, D.

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44. Question 44

    Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R).
    Assertion (A): As per classical Indian school of logic the argument 'the sky-Lotus is fragrant, because it is a Lotus, like the Lotus of a Lake' is fallacious.
    Reason (R): In the above argument the middle term is non exclusive.
    In the light of the above statements, choose the most appropriate answer from the options given below.

    1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
    2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
    3. C(A) is correct but (R) is not correct
    4. D(A) is not correct but (R) is correct

    Answer: (C) (A) is correct but (R) is not correct

    Explanation

    The argument is fallacious because the subject, a sky-lotus, is an unreal or unestablished entity; in Nyaya terminology this is closer to an unproved-subject/unproved-middle defect than to a non-exclusive middle term. Therefore the assertion is correct, but the reason as stated is not correct.

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45. Question 45

    Find the missing term in the series.
    -1, 2, 7, ?, 23, 34

    1. A16
    2. B15
    3. C14
    4. D18

    Answer: (C) 14

    Explanation

    The differences are consecutive odd numbers: +3, +5, +7, +9, +11. Therefore the missing term is 7 + 7 = 14.

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46. Question 46

    The fundamental value in inter-personal human relationships in society is ________.

    Socialism aims at equality and social justice through government ownership and control over the means of production. Yet, no socialist country has been able to realise these aims. Even in Russia which is the pioneer of Socialism, much injustice, oppression and inequality prevails. There are glaring disparities between the elite and the masses. On the contrary, the Capitalist system is based on private property and voluntary exchange. People have disliked it on the presumption that it serves narrow and vested interests only. However, Capitalist countries have shown better results as people there enjoy comparatively more freedom and prosperity, and less injustice and inequality. It would be incorrect to say that socialism or communism was made corrupt by wicked and incompetent rulers or that capitalism has been successful in spite of the prevalence of immoral values in it. No political system can succeed unless its good and moral qualities are sustained. However idealistic any particular system may be, it can be upheld only by ensuring respect for the dignity and individuality of each person, his rights and values, and by guaranteeing his personal freedom. Compulsion and the use of force, or exertion of psychological pressure should give way to gentle urging, reasoning and convincing. This is the fundamental value in inter-personal human relationships in society.

    1. Acollective freedom
    2. Bfeeling of over dependence on others
    3. Crespect for the dignity of each person
    4. Dcollaboration with external agencies

    Answer: (C) respect for the dignity of each person

    Explanation

    The passage says that any system can be upheld only by ensuring respect for the dignity and individuality of each person, and then calls this the fundamental value in inter-personal human relationships.

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47. Question 47

    No socialist country has been able to realise the aims of socialism because:

    Socialism aims at equality and social justice through government ownership and control over the means of production. Yet, no socialist country has been able to realise these aims. Even in Russia which is the pioneer of Socialism, much injustice, oppression and inequality prevails. There are glaring disparities between the elite and the masses. On the contrary, the Capitalist system is based on private property and voluntary exchange. People have disliked it on the presumption that it serves narrow and vested interests only. However, Capitalist countries have shown better results as people there enjoy comparatively more freedom and prosperity, and less injustice and inequality. It would be incorrect to say that socialism or communism was made corrupt by wicked and incompetent rulers or that capitalism has been successful in spite of the prevalence of immoral values in it. No political system can succeed unless its good and moral qualities are sustained. However idealistic any particular system may be, it can be upheld only by ensuring respect for the dignity and individuality of each person, his rights and values, and by guaranteeing his personal freedom. Compulsion and the use of force, or exertion of psychological pressure should give way to gentle urging, reasoning and convincing. This is the fundamental value in inter-personal human relationships in society.

    1. AIt shows narrow and vested interests only.
    2. BPeople enjoy more freedom and prosperity in capitalism.
    3. CIt is made corrupt by incompetent rulers.
    4. DIts good and moral qualities are not sustained.

    Answer: (D) Its good and moral qualities are not sustained.

    Explanation

    The passage states that no political system can succeed unless its good and moral qualities are sustained. This is presented as the underlying reason political systems fail to realise their aims.

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48. Question 48

    The capitalist countries perform even better as compared to the socialism because it is based on:

    Socialism aims at equality and social justice through government ownership and control over the means of production. Yet, no socialist country has been able to realise these aims. Even in Russia which is the pioneer of Socialism, much injustice, oppression and inequality prevails. There are glaring disparities between the elite and the masses. On the contrary, the Capitalist system is based on private property and voluntary exchange. People have disliked it on the presumption that it serves narrow and vested interests only. However, Capitalist countries have shown better results as people there enjoy comparatively more freedom and prosperity, and less injustice and inequality. It would be incorrect to say that socialism or communism was made corrupt by wicked and incompetent rulers or that capitalism has been successful in spite of the prevalence of immoral values in it. No political system can succeed unless its good and moral qualities are sustained. However idealistic any particular system may be, it can be upheld only by ensuring respect for the dignity and individuality of each person, his rights and values, and by guaranteeing his personal freedom. Compulsion and the use of force, or exertion of psychological pressure should give way to gentle urging, reasoning and convincing. This is the fundamental value in inter-personal human relationships in society.

    1. APrivate property and voluntary exchange
    2. BPublic property and voluntary exchange
    3. CPrivate property and involuntary exchange
    4. DPublic property and involuntary exchange

    Answer: (A) Private property and voluntary exchange

    Explanation

    The passage explicitly states that the capitalist system is based on private property and voluntary exchange.

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49. Question 49

    According to the passage, the key to success in any political system lies with its ________.

    Socialism aims at equality and social justice through government ownership and control over the means of production. Yet, no socialist country has been able to realise these aims. Even in Russia which is the pioneer of Socialism, much injustice, oppression and inequality prevails. There are glaring disparities between the elite and the masses. On the contrary, the Capitalist system is based on private property and voluntary exchange. People have disliked it on the presumption that it serves narrow and vested interests only. However, Capitalist countries have shown better results as people there enjoy comparatively more freedom and prosperity, and less injustice and inequality. It would be incorrect to say that socialism or communism was made corrupt by wicked and incompetent rulers or that capitalism has been successful in spite of the prevalence of immoral values in it. No political system can succeed unless its good and moral qualities are sustained. However idealistic any particular system may be, it can be upheld only by ensuring respect for the dignity and individuality of each person, his rights and values, and by guaranteeing his personal freedom. Compulsion and the use of force, or exertion of psychological pressure should give way to gentle urging, reasoning and convincing. This is the fundamental value in inter-personal human relationships in society.

    1. Agood and moral qualities
    2. Bhard work and perseverance only
    3. Cpeople who are always concerned about their rights
    4. Dpeople who use criticality to analyse government sponsored schemes and policies

    Answer: (A) good and moral qualities

    Explanation

    The passage says no political system can succeed unless its good and moral qualities are sustained.

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50. Question 50

    The advocates of socialism believe that equality can be ensured through:

    Socialism aims at equality and social justice through government ownership and control over the means of production. Yet, no socialist country has been able to realise these aims. Even in Russia which is the pioneer of Socialism, much injustice, oppression and inequality prevails. There are glaring disparities between the elite and the masses. On the contrary, the Capitalist system is based on private property and voluntary exchange. People have disliked it on the presumption that it serves narrow and vested interests only. However, Capitalist countries have shown better results as people there enjoy comparatively more freedom and prosperity, and less injustice and inequality. It would be incorrect to say that socialism or communism was made corrupt by wicked and incompetent rulers or that capitalism has been successful in spite of the prevalence of immoral values in it. No political system can succeed unless its good and moral qualities are sustained. However idealistic any particular system may be, it can be upheld only by ensuring respect for the dignity and individuality of each person, his rights and values, and by guaranteeing his personal freedom. Compulsion and the use of force, or exertion of psychological pressure should give way to gentle urging, reasoning and convincing. This is the fundamental value in inter-personal human relationships in society.

    1. Athe mixed economy
    2. Bthe government ownership
    3. Cequal distribution of the profit to all
    4. Dpublic-private partnership model

    Answer: (B) the government ownership

    Explanation

    The opening line of the passage states that socialism aims at equality and social justice through government ownership and control over the means of production.

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99 questions with the answer key and explanations.

1. Question 1

   Which approach included time deposits with commercial banks in the definition of money supply?

   1. AThe Conventional Approach
   2. BThe Chicago Approach
   3. CThe Fed Approach
   4. DThe Walters Approach

   Answer: (B) The Chicago Approach

   Explanation

   The Chicago approach to money supply, associated with Friedman-style monetary analysis, treated money more broadly and included commercial-bank time deposits because they are close substitutes for demand deposits. The conventional narrow approach excludes them.

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2. Question 2

   Match List I with List II using the table above, as per the Union Budget 2025-26.

   List I	List II
   A. Pensions as % of Central Government Expenditure	I. 22%
   B. State's share of taxes and duties as % of Central Government Expenditure	II. 18%
   C. Tax-GDP ratio of India	III. 81.3%
   D. Debt-GDP ratio of India	IV. 4%

   Union Budget 2025-26 fiscal indicators

   1. AA-II, B-I, C-III, D-IV
   2. BA-II, B-III, C-I, D-IV
   3. CA-IV, B-III, C-I, D-II
   4. DA-IV, B-I, C-II, D-III

   Answer: (D) A-IV, B-I, C-II, D-III

   Explanation

   In the budget figures shown, pensions correspond to 4%, the state share of taxes and duties to 22%, the tax-GDP ratio to 18%, and the debt-GDP ratio to 81.3%. Therefore the mapping is A-IV, B-I, C-II, D-III.

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3. Question 3

   Match List I with List II using the table above.

   List I	List II
   A. 14th Finance Commission	I. Vertical Tax Devolution 41 percent
   B. 15th Finance Commission	II. Vertical Tax Devolution 42 percent
   C. 12th Finance Commission	III. State's share 32% of the central taxes
   D. 13th Finance Commission	IV. State's share 30.5 percent of central taxes

   Finance Commissions and tax devolution recommendations

   1. AA-IV, B-III, C-II, D-I
   2. BA-IV, B-III, C-I, D-II
   3. CA-III, B-IV, C-I, D-II
   4. DA-II, B-I, C-IV, D-III

   Answer: (D) A-II, B-I, C-IV, D-III

   Explanation

   The 14th Finance Commission recommended 42% vertical tax devolution, while the 15th recommended 41%. The 12th recommended a 30.5% states' share and the 13th raised it to 32%. Hence A-II, B-I, C-IV, D-III.

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4. Question 4

   In which year were the notes of ₹1000 denomination demonetised for the first time in India?

   1. A2016
   2. B1978
   3. C1969
   4. D1980

   Answer: (B) 1978

   Explanation

   Among the options given, 1978 is the intended answer: high-denomination notes including ₹1000 were demonetised under the High Denomination Bank Notes (Demonetisation) Act, 1978. Historically, high-denomination notes had also been demonetised in 1946, but that year is not present in the options.

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5. Question 5

   Based on the following statements, choose the correct answer.

   A. Matrix addition is not commutative.
   B. Matrix addition is associative.
   C. Matrix multiplication is commutative.
   D. Matrix multiplication is associative if the product exists.

   1. AA and C only
   2. BA and D only
   3. CB and C only
   4. DB and D only

   Answer: (D) B and D only

   Explanation

   Matrix addition is commutative, so A is false. It is associative, so B is true. Matrix multiplication is generally not commutative, so C is false, but it is associative whenever the relevant products are defined, so D is true.

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6. Question 6

   Given samples of sizes 20 and 15 with respective sample variances 35.53 and 34.92, what is the calculated value of the F-statistic?

   1. A1.02
   2. B0.98
   3. C0.76
   4. D1.31

   Answer: (A) 1.02

   Explanation

   For an F statistic comparing variances, place the larger variance in the numerator: F = 35.53 / 34.92 = 1.0175, which rounds to 1.02.

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7. Question 7

   Match List I with List II using the table above.

   List I	List II
   A. Slack Variable	I. Best of all feasible solutions
   B. Surplus Variable	II. Solution violating at least one condition
   C. Optimal Solution	III. Used when there are less than or equal to (≤) type inequalities
   D. Infeasible Solution	IV. Used when there are greater than or equal to (≥) type inequalities

   Linear programming terms and meanings

   1. AA-IV, B-III, C-I, D-II
   2. BA-IV, B-III, C-II, D-I
   3. CA-III, B-IV, C-II, D-I
   4. DA-III, B-IV, C-I, D-II

   Answer: (D) A-III, B-IV, C-I, D-II

   Explanation

   A slack variable is used for ≤ constraints, while a surplus variable is used for ≥ constraints. An optimal solution is the best feasible solution, and an infeasible solution violates at least one condition. Thus the mapping is A-III, B-IV, C-I, D-II.

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8. Question 8

   The basic propositions of neo-classical growth theory are:

   A. The growth of output depends on the rate of growth of labour productivity.
   B. The growth of output depends on the level of per capita income.
   C. The ratio of savings and investment determines economic growth.
   D. Only investment determines economic growth.

   1. AA and C only
   2. BA and B only
   3. CC and D only
   4. DB and C only

   Answer: (B) A and B only

   Explanation

   Neo-classical growth theory relates output growth to productivity growth and convergence dynamics, where initial per-capita income matters for growth. C is closer to Harrod-Domar-style savings-investment reasoning, and D is too narrow because growth is not determined only by investment.

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9. Question 9

   The Human Development Index (HDI) is used to rank countries based on which indicators?

   1. ALife expectancy at birth, adult illiteracy rate and the percentage of population without access to safe water.
   2. BReal per capita income, percentage of underweight children under 5 years and percentage of population not expected to survive to the age of 40.
   3. CLife expectancy at birth, educational attainment and real per capita income at purchasing power parity.
   4. DIncome inequality and percentage of population living in urban areas.

   Answer: (C) Life expectancy at birth, educational attainment and real per capita income at purchasing power parity.

   Explanation

   The HDI combines three dimensions: health measured by life expectancy at birth, education measured through schooling/educational attainment indicators, and standard of living measured by per-capita income in purchasing-power terms.

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10. Question 10

    Given below are two statements, one labelled Assertion (A) and the other Reason (R).

    Assertion (A): The all-India annual unemployment rate (UR) for individuals aged 15 years and above has steadily declined from 6 percent in 2017-2018 to 3.2 percent in 2023-2024.

    Reason (R): According to RBI data, India's foreign exchange reserves on December 26, 2025 were around 693 billion dollars.

    1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
    2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
    3. C(A) is correct but (R) is not correct
    4. D(A) is not correct but (R) is correct

    Answer: (B) Both (A) and (R) are correct but (R) is not the correct explanation of (A)

    Explanation

    The unemployment-rate statement is consistent with PLFS trends, and the foreign-exchange-reserve statement is a separate macro fact. However, reserve levels do not explain the decline in unemployment, so both statements may be correct but R is not the explanation of A.

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11. Question 11

    When public revenue increases by more than 1% for a 1% increase in GDP, it is known as:

    1. ACENVAT
    2. BInelastic Tax system
    3. CProportional Tax system
    4. DTax buoyancy

    Answer: (D) Tax buoyancy

    Explanation

    Tax buoyancy measures the responsiveness of tax revenue to changes in GDP. If revenue rises by more than 1% for a 1% rise in GDP, buoyancy is greater than one.

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12. Question 12

    Match List I with List II using the table above.

    List I	List II
    A. Kenneth Boulding	I. Pollution Tax
    B. Georgescu-Roegen	II. Spaceship Earth and Ecological Limits
    C. Elinor Ostrom	III. Managing Common Property Resources
    D. A. C. Pigou	IV. Energy as a limiting factor

    Environmental economics thinkers and concepts

    1. AA-I, B-III, C-II, D-IV
    2. BA-III, B-II, C-I, D-IV
    3. CA-II, B-I, C-IV, D-III
    4. DA-II, B-IV, C-III, D-I

    Answer: (D) A-II, B-IV, C-III, D-I

    Explanation

    Kenneth Boulding is associated with Spaceship Earth and ecological limits; Georgescu-Roegen emphasized energy as a limiting factor; Elinor Ostrom studied common property resources; and A. C. Pigou is linked with the pollution tax. Hence A-II, B-IV, C-III, D-I.

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13. Question 13

    Which one of the following holds true at the equilibrium level of demand for labour by a perfectly competitive firm?

    1. AVMP_L < MRP_L
    2. BVMP_L = MRP_L
    3. CVMP_L > MRP_L
    4. DVMP_L + MRP_L = W*

    Answer: (B) VMP_L = MRP_L

    Explanation

    For a perfectly competitive firm, product price equals marginal revenue, so the value of marginal product of labour equals the marginal revenue product of labour: VMP_L = MRP_L.

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14. Question 14

    Given the demand function Q = 100 - P - P², the elasticity of demand (e_d) at price P = 5 is:

    1. Aelastic
    2. Binelastic
    3. Cunitary elastic
    4. Dinfinitely elastic

    Answer: (B) inelastic

    Explanation

    At P = 5, Q = 100 - 5 - 25 = 70 and dQ/dP = -1 - 2P = -11. The point elasticity in absolute value is |(-11)(5/70)| = 55/70 ≈ 0.79, which is less than 1, so demand is inelastic.

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15. Question 15

    In case of a balanced budget multiplier:

    A. Output increases less than the increase in government spending.
    B. Output increases more than the increase in government spending.
    C. Government spending and taxes are raised in equal amounts.
    D. The value of multiplier is equal to 1.

    1. AC and D only
    2. BB and C only
    3. CA, B and C only
    4. DB and D only

    Answer: (A) C and D only

    Explanation

    A balanced-budget change raises government spending and taxes by the same amount. In the simple Keynesian model, the balanced-budget multiplier equals 1, so output rises by exactly the change in government spending, not less or more.

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16. Question 16

    Recently, inflation rates have trended downward and are steadily approaching Central Bank target levels. In this context, which of the following are correct?

    A. Supply chains are adapting to economic uncertainties.
    B. Easing monetary policy.
    C. Tighter monetary policy.
    D. Increase in aggregate demand is more than increase in aggregate supply.

    1. AA and B only
    2. BB and D only
    3. CA and C only
    4. DC and D only

    Answer: (A) A and B only

    Explanation

    As inflation moderates toward target, improving/adapting supply chains and a shift toward easier monetary policy are consistent with the described context. Tighter policy and demand growth outpacing supply would more typically sustain inflationary pressure.

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17. Question 17

    For a Cobb-Douglas production function with two inputs, Q = AK^αL^β, where A > 0 and α and β are positive, the marginal products are:

    Statement	Formula
    A	`MP_K = (α/K)Q`
    B	`MP_K = (β/K)Q`
    C	`MP_L = (α/L)Q`
    D	`MP_L = (β/L)Q`

    Candidate marginal-product formulae for Cobb-Douglas production

    1. AA and C only
    2. BA and D only
    3. CB and C only
    4. DB and D only

    Answer: (B) A and D only

    Explanation

    For Q = AK^αL^β, MP_K = ∂Q/∂K = αQ/K and MP_L = ∂Q/∂L = βQ/L. Therefore statements A and D are correct.

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18. Question 18

    Given GNP at market price of Rs. 14400 crores, consumption Rs. 12000 crores, government purchases Rs. 1200 crores, exports Rs. 1000 crores and imports Rs. 1500 crores, the value of investment will be:

    1. ARs. 1200 Crores
    2. BRs. 2000 Crores
    3. CRs. 1500 Crores
    4. DRs. 1700 Crores

    Answer: (D) Rs. 1700 Crores

    Explanation

    Using Y = C + I + G + X - M: 14400 = 12000 + I + 1200 + 1000 - 1500, so 14400 = 12700 + I, giving I = 1700 crores.

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19. Question 19

    Given below are two statements, one labelled Assertion (A) and the other Reason (R).

    Assertion (A): Since about the mid-seventies, protectionism has grown alarmingly in the developed countries. This has taken mainly the form of non-tariff barriers (NTBs).

    Reason (R): The growing protectionism in industrialised countries is due to the increasing competition from developing and South-East Asian countries.

    1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
    2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
    3. C(A) is correct but (R) is not correct
    4. D(A) is not correct but (R) is correct

    Answer: (A) Both (A) and (R) are correct and (R) is the correct explanation of (A)

    Explanation

    The rise of non-tariff protection in developed economies has often been explained by competitive pressure from developing economies, including South-East Asian exporters. Thus both statements are correct and R explains A.

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20. Question 20

    Choose the correct statements.

    A. In a barter system, if there are 3 goods to be exchanged, the required number of prices will be 3.
    B. Money does not play its functions in case of inflation.
    C. Double coincidence of wants is not a problem in barter system.
    D. Paper currencies are token money.

    1. AA, B and D only
    2. BB and D only
    3. CA and D only
    4. DB, C and D only

    Answer: (C) A and D only

    Explanation

    With n goods in barter, the number of relative prices is n(n-1)/2; for 3 goods this is 3, so A is true. Double coincidence of wants is a central problem in barter, so C is false. Paper currency is token money, so D is true. B is too sweeping: inflation weakens money's functions but does not mean money ceases to perform them.

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21. Question 21

    Which tax is also popularly known as the destination tax?

    1. ACustoms Duty
    2. BCorporate Tax
    3. CGoods and Services Tax
    4. DCentral Excise Duty

    Answer: (C) Goods and Services Tax

    Explanation

    GST is a destination-based consumption tax, meaning revenue accrues to the jurisdiction where goods or services are consumed rather than where they are produced.

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22. Question 22

    Match List I with List II using the table above.

    List I	List II
    A. Debt-deflation theory	I. Falling price levels raises the income levels
    B. Pigou effect	II. A policy of announcing future monetary action
    C. Forward guidance	III. The effects of unexpected fall in price level could depress income
    D. Okun's law	IV. An inverse relationship between unemployment and real GDP

    Macroeconomic concepts and meanings

    1. AA-I, B-III, C-II, D-IV
    2. BA-III, B-II, C-IV, D-I
    3. CA-III, B-I, C-II, D-IV
    4. DA-IV, B-I, C-II, D-III

    Answer: (C) A-III, B-I, C-II, D-IV

    Explanation

    Debt-deflation theory concerns the depressive effects of unexpected price falls; the Pigou effect says falling prices raise real balances and income/wealth effects; forward guidance is announcing future monetary action; and Okun's law links unemployment inversely with real GDP. Thus A-III, B-I, C-II, D-IV.

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23. Question 23

    The Salmon War was between:

    1. AUSA and Cuba
    2. BFrance and UK
    3. CNorway and Scotland
    4. DSweden and Germany

    Answer: (C) Norway and Scotland

    Explanation

    The dispute commonly referred to as the Salmon War involved conflict over salmon trade and farming interests between Norway and Scotland, not the other country pairs listed.

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24. Question 24

    Given below are two statements, one labelled Assertion (A) and the other Reason (R).

    Assertion (A): The presence of heteroscedasticity in regression analysis implies that least-squares estimators are still unbiased but inefficient.

    Reason (R): The estimates of the variances are also unbiased.

    1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
    2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
    3. C(A) is correct but (R) is not correct
    4. D(A) is not correct but (R) is correct

    Answer: (C) (A) is correct but (R) is not correct

    Explanation

    Under heteroscedasticity, OLS coefficient estimates remain unbiased and consistent under standard exogeneity assumptions, but they are no longer efficient. The usual OLS variance estimates are biased/inconsistent, so R is not correct.

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25. Question 25

    Based on beta (β₂) and gamma (γ₂) coefficients, if β₂ < 3 or γ₂ < 0, then the curve is said to be:

    1. ANormal Curve
    2. BLeptokurtic
    3. CPlatykurtic
    4. DInsufficient Data

    Answer: (C) Platykurtic

    Explanation

    For kurtosis, a normal curve has β₂ = 3 and γ₂ = 0. If β₂ < 3 or γ₂ < 0, the distribution is flatter than normal, i.e. platykurtic.

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26. Question 26

    Choose the correct statements.

    A. Reserve Money = C + OD + CR
    B. M1 = C + OD
    C. Money Multiplier (m) = M/RM
    D. Narrow Money Supply = M3

    Here C = currency, OD = other deposits with RBI, CR = cash reserve of banks, M = money supply, and RM = reserve money.

    1. AA and D only
    2. BB and C only
    3. CA and B only
    4. DA and C only

    Answer: (D) A and C only

    Explanation

    Reserve money is C + OD + CR, so A is correct. The money multiplier is the ratio of money supply to reserve money, M/RM, so C is correct. M1 also includes demand deposits with banks, and narrow money is M1, not M3.

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27. Question 27

    In a population of men in a city, 3% suffer from cancer, 15% are smokers, while 10% are either smokers or cancer patients. If a man is selected at random, what is the probability that he is a smoker and suffering from cancer?

    1. A0.08
    2. B0.8
    3. C0.02
    4. D0.2

    Answer: (A) 0.08

    Explanation

    Using inclusion-exclusion: P(S ∩ C) = P(S) + P(C) - P(S ∪ C) = 0.15 + 0.03 - 0.10 = 0.08.

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28. Question 28

    Match List I with List II using the table above.

    List I	List II
    A. Type I error	I. Accept `H0` when it is false
    B. Type II error	II. `H0: μ = μ0` and `σ² = σ0²`
    C. Simple Hypothesis	III. Reject `H0` when it is true
    D. Composite Hypothesis	IV. `H0: μ = μ0` and `σ²` is unknown

    Errors and hypotheses in statistical testing

    1. AA-III, B-I, C-IV, D-II
    2. BA-I, B-III, C-II, D-IV
    3. CA-III, B-I, C-II, D-IV
    4. DA-I, B-III, C-IV, D-II

    Answer: (C) A-III, B-I, C-II, D-IV

    Explanation

    A Type I error is rejecting H0 when it is true, and a Type II error is accepting/failing to reject H0 when it is false. A simple hypothesis fully specifies parameters, while a composite hypothesis leaves at least one parameter unspecified. Hence A-III, B-I, C-II, D-IV.

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29. Question 29

    Given below are two statements, one labelled Assertion (A) and the other Reason (R).

    Assertion (A): When everyone trades in the competitive market place, all mutually beneficial trades are completed and the resulting equilibrium allocation of resources is economically efficient.

    Reason (R): Even if a trade from an inefficient allocation makes everyone better off, the new allocation is not necessarily efficient.

    1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
    2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
    3. C(A) is correct but (R) is not correct
    4. D(A) is not correct but (R) is correct

    Answer: (A) Both (A) and (R) are correct and (R) is the correct explanation of (A)

    Explanation

    Competitive equilibrium is efficient when all mutually beneficial trades are exhausted. R explains why merely making one Pareto-improving trade from an inefficient allocation is not enough; efficiency requires that no further mutually beneficial trades remain.

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30. Question 30

    Match List I with List II using the table above.

    List I	List II
    A. Harrod and Domar	I. Constancy of the capital-output ratio
    B. Lucas and Romer	II. Dual economy with a capitalist and non-capitalist sector
    C. Arthur Lewis	III. Investment as a double-edged sword
    D. Michael Todaro	IV. Rural-urban migration

    Growth and development theorists

    1. AA-IV, B-III, C-I, D-II
    2. BA-III, B-I, C-II, D-IV
    3. CA-I, B-II, C-III, D-IV
    4. DA-II, B-IV, C-III, D-I

    Answer: (B) A-III, B-I, C-II, D-IV

    Explanation

    Harrod-Domar analysis treats investment as a double-edged sword, Lucas and Romer are associated here with capital-output/productivity growth foundations, Arthur Lewis with the dual economy, and Todaro with rural-urban migration. Hence A-III, B-I, C-II, D-IV.

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31. Question 31

    Arrange the following in correct chronological order.

    A. Shankar Acharya Committee on shifting financial year from April-March to January-December.
    B. Parthasarathy Shome Committee on retrospective tax laws.
    C. Vijay Kelkar Committee on tax reforms.
    D. Arvind Subramanian Committee on revenue-neutral GST.

    1. AA, B, C, D
    2. BC, A, D, B
    3. CC, B, D, A
    4. DA, D, B, C

    Answer: (C) C, B, D, A

    Explanation

    The Kelkar tax reform committee came first, followed by the Shome committee on retrospective taxation, the Arvind Subramanian committee on revenue-neutral GST, and then the Shankar Acharya committee on the financial-year shift. So the order is C, B, D, A.

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32. Question 32

    Choose the correct statements.

    A. Innovation Theory of Business Cycle was given by Jorgenson.
    B. Pure Monetary Theory of Business Cycle was given by Hawtrey.
    C. Monetary-over-investment Theory of Business Cycle was given by Clark.
    D. Multiplier-Acceleration Interaction Theory of Business Cycle was given by Samuelson.

    1. AA and B only
    2. BB and D only
    3. CA, B and C only
    4. DA and D only

    Answer: (B) B and D only

    Explanation

    The innovation theory is associated with Schumpeter, not Jorgenson. Hawtrey gave the pure monetary theory, and Samuelson developed multiplier-accelerator interaction. Monetary over-investment theory is associated with Hayek, not Clark.

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33. Question 33

    Which of the following are called club goods?

    A. Railways
    B. Swimming pool
    C. Defense
    D. Gym

    1. AB and D only
    2. BA and B only
    3. CB and C only
    4. DA and D only

    Answer: (A) B and D only

    Explanation

    Club goods are excludable but non-rival up to congestion. A swimming pool and a gym fit this category. Defense is a public good, and railways are more naturally congestible/toll goods rather than the standard club-good pair intended here.

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34. Question 34

    Given below are two statements.

    Statement I: Green Revolution led to increase in the production of fine cereals. High incentives and application of high-yielding varieties of seeds, fertilisers and chemicals made this a good success.

    Statement II: Green Revolution led to decline in the production of coarse cereals and area under coarse cereals shifted to other crops.

    1. ABoth Statement I and Statement II are correct
    2. BBoth Statement I and Statement II are incorrect
    3. CStatement I is correct but Statement II is incorrect
    4. DStatement I is incorrect but Statement II is correct

    Answer: (A) Both Statement I and Statement II are correct

    Explanation

    The Green Revolution sharply increased wheat and rice output using HYV seeds, fertilisers and irrigation. It also shifted acreage and policy attention away from coarse cereals, causing relative decline in their area and production share.

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35. Question 35

    If P(A) = 1/5 and P(B) = 1/3, and A and B are two mutually exclusive events, then the probability that neither A nor B will occur is:

    1. A8/25
    2. B1/15
    3. C7/15
    4. D1/5

    Answer: (C) 7/15

    Explanation

    Since A and B are mutually exclusive, P(A ∪ B) = 1/5 + 1/3 = 8/15. Therefore P(neither A nor B) = 1 - 8/15 = 7/15.

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36. Question 36

    Given below are two statements, one labelled Assertion (A) and the other Reason (R).

    If X is a given series of observations, and a and b are constants, consider standard deviation.

    Assertion (A): SD(X+a) = SD(X-b) = SD(X) and SD(aX) = a² SD(X).

    Reason (R): Standard deviation is independent of change of origin, but not of scale.

    1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
    2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
    3. C(A) is correct but (R) is not correct
    4. D(A) is not correct but (R) is correct

    Answer: (D) (A) is not correct but (R) is correct

    Explanation

    Standard deviation is unaffected by adding or subtracting a constant, but under scaling SD(aX) = |a| SD(X), not a² SD(X). Thus A is false while R is true.

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37. Question 37

    The main feature of embodied technical progress is:

    1. AExogenous technical progress that is not dependent on capital accumulation is embodied progress.
    2. BTechnical improvements that can only be introduced into the productive system by new investment is embodied progress.
    3. CLop-sided productivity increase is embodied progress.
    4. DThis is dependent on government support.

    Answer: (B) Technical improvements that can only be introduced into the productive system by new investment is embodied progress.

    Explanation

    Embodied technical progress is built into new capital goods or new investment. It enters production when firms install newer, more productive capital equipment.

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38. Question 38

    Which one of the following is NOT true about rational expectations?

    1. ARational expectations theory has been developed by Hansen.
    2. BIt is about decision making by households, firms and labour while forming expectations.
    3. CRational expectations uses all relevant information.
    4. DEconomic agents do not make systematic forecast errors under rational expectations.

    Answer: (A) Rational expectations theory has been developed by Hansen.

    Explanation

    Rational expectations is associated especially with John Muth and later new classical economists such as Lucas, not Hansen. The other statements capture the idea that agents use available relevant information and avoid systematic errors.

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39. Question 39

    Identify the correct statement regarding Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).

    1. AThe draft proposed by the National Advisory Council (NAC) envisaged legal guarantee to every household in rural areas for 120 days for doing casual manual work.
    2. B90 percent of the cost of employment provided is borne by the Centre.
    3. CIn the first phase of implementation, 150 most backward districts were covered.
    4. DFrom 2nd October, 2010, National Rural Employment Guarantee Scheme (NREGS) has been renamed as Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).

    Answer: (B) 90 percent of the cost of employment provided is borne by the Centre.

    Explanation

    MGNREGS/NREGA provides a 100-day guarantee, not 120 days; the first phase covered 200 districts, not 150; and the renaming was from 2 October 2009, not 2010. The cost-sharing structure means the Centre bears the dominant share, commonly stated around 90%.

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40. Question 40

    Match List I with List II using the table above.

    List I	List II
    A. Neo-Chamberlinian Model	I. Horizontal differentiation of products
    B. Neo-Hotelling Model	II. Vertical differentiation of products
    C. Brander-Krugman Model	III. Product differentiation
    D. Neo-Heckscher-Ohlin Model	IV. Reciprocal dumping

    New trade theory models and product differentiation concepts

    1. AA-IV, B-III, C-I, D-II
    2. BA-I, B-II, C-IV, D-III
    3. CA-I, B-III, C-II, D-IV
    4. DA-III, B-I, C-IV, D-II

    Answer: (D) A-III, B-I, C-IV, D-II

    Explanation

    Neo-Chamberlinian models are associated with product differentiation; Neo-Hotelling with horizontal differentiation; Brander-Krugman with reciprocal dumping; and Neo-Heckscher-Ohlin with vertical differentiation. Hence A-III, B-I, C-IV, D-II.

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41. Question 41

    A natural monopoly occurs when:

    1. AAverage cost keeps on rising with increase in output over the relevant range of output.
    2. BAverage cost remains constant with increase in output over the relevant range of output.
    3. CAverage cost first decreases and then rises with increase in output over the relevant range of output.
    4. DAverage cost keeps on decreasing with increase in output over the relevant range of output.

    Answer: (D) Average cost keeps on decreasing with increase in output over the relevant range of output.

    Explanation

    A natural monopoly arises when economies of scale are so large that average cost continues to fall over the relevant range of market demand, making one producer cheaper than multiple firms.

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42. Question 42

    The origin of Big-Push theory of development is based on:

    1. AUnbalanced Economic Growth
    2. BLow Level Equilibrium Trap and Critical Minimum Effort
    3. CKaldor's Growth Laws
    4. DHarrod's Knife-edged Instability

    Answer: (B) Low Level Equilibrium Trap and Critical Minimum Effort

    Explanation

    Big-Push theory addresses coordination failure and the difficulty of escaping a low-level equilibrium without a sufficiently large, coordinated investment effort. The closest option is Low Level Equilibrium Trap and Critical Minimum Effort, though the classic formulation is also tied to indivisibilities and external economies.

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43. Question 43

    Given the demand function P = 80 - 3Q and cost function TC = 120 + 8Q, consider the statements:

    A. Maximum Revenue occurs at Q = 12.
    B. Maximum Revenue occurs at Q = 3.
    C. Maximum Revenue is 528.
    D. Maximum Revenue is 213.

    1. AA and C only
    2. BA and D only
    3. CB and C only
    4. DB and D only

    Answer: (A) A and C only

    Explanation

    Using both demand and cost, the source appears to intend profit maximisation: TR = 80Q - 3Q², MR = 80 - 6Q, and MC = 8; setting MR = MC gives Q = 12. At Q = 12, revenue is 80(12) - 3(12²) = 528. The wording says maximum revenue, but the cost function is only relevant for profit, so this item is internally noisy.

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44. Question 44

    Given below are two statements, one labelled Assertion (A) and the other Reason (R).

    Assertion (A): Prices of diesel and petroleum products are different in different states of India.

    Reason (R): The above products have not yet been brought under the coverage of GST by the GST Council.

    1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
    2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
    3. C(A) is correct but (R) is not correct
    4. D(A) is not correct but (R) is correct

    Answer: (A) Both (A) and (R) are correct and (R) is the correct explanation of (A)

    Explanation

    Petroleum products remain outside GST coverage and are taxed by states through VAT and related levies. This causes state-wise price differences, so R correctly explains A.

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45. Question 45

    The Coasian Bargaining Approach will work when:

    A. The rights of the bargaining parties are transferable.
    B. The bargaining parties are equally informed.
    C. The property rights are legally established.
    D. The resources are universally owned.

    1. AA and D only
    2. BB and D only
    3. CB and C only
    4. DA and C only

    Answer: (D) A and C only

    Explanation

    Coasian bargaining requires well-defined and transferable property rights, along with low transaction costs. Universally owned resources do not fit the bargaining condition. Among the given pairs, A and C are the core requirements.

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46. Question 46

    When high-cost domestic production is replaced by lower-cost imports from another member nation, the union is known as:

    1. ATrade Diverting Customs Union
    2. BTrade Creating Customs Union
    3. CPreferential Trade Agreement
    4. DFree Trade Agreement

    Answer: (B) Trade Creating Customs Union

    Explanation

    Trade creation occurs when a customs union causes consumers to replace higher-cost domestic output with lower-cost imports from a partner country.

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47. Question 47

    Which of the following commodities are not covered by GST till now?

    A. Mobile phones
    B. Electricity
    C. Textiles
    D. Alcohol

    1. AA and C only
    2. BB and C only
    3. CA and D only
    4. DB and D only

    Answer: (D) B and D only

    Explanation

    Electricity and alcoholic liquor for human consumption are outside GST. Mobile phones and textiles are covered under GST.

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48. Question 48

    Match List I with List II using the table above.

    List I	List II
    A. nth term of an Arithmetic Progression	I. `n/2[2a + (n - 1)d]`
    B. nth term of a Geometric Progression	II. `a(r^n - 1)/(r - 1)`, `r > 1`
    C. Sum to n terms of an Arithmetic Progression	III. `a + (n - 1)d`
    D. Sum to n terms of a Geometric Progression	IV. `ar^(n-1)`

    AP and GP formulae

    1. AA-III, B-IV, C-II, D-I
    2. BA-III, B-IV, C-I, D-II
    3. CA-IV, B-III, C-I, D-II
    4. DA-IV, B-I, C-II, D-III

    Answer: (B) A-III, B-IV, C-I, D-II

    Explanation

    The nth term of an AP is a + (n - 1)d; the nth term of a GP is ar^(n-1); the AP sum is n/2[2a + (n - 1)d]; and the GP sum for r > 1 is a(r^n - 1)/(r - 1). Thus A-III, B-IV, C-I, D-II.

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49. Question 49

    Increased fiscal deficit leads to:

    A. Increase in government spending
    B. Increase in domestic interest rate
    C. Fall in private investment
    D. Fall in total borrowing by the government

    1. AA, B and D only
    2. BA, B and C only
    3. CB, C and D only
    4. DB and D only

    Answer: (B) A, B and C only

    Explanation

    A larger fiscal deficit often reflects higher government spending, raises government borrowing pressure, can push up domestic interest rates, and may crowd out private investment. It does not imply a fall in total government borrowing.

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50. Question 50

    Match List I with List II using the table above.

    List I	List II
    A. Amartya Sen	I. Rise and fall of inequality with economic growth
    B. Simon Kuznets	II. Circular and cumulative causation of economic underdevelopment
    C. Gunnar Myrdal	III. Geographic pattern of economic development
    D. Paul Krugman	IV. Entitlements, capabilities and freedom of choice

    Development economists and associated concepts

    1. AA-II, B-IV, C-I, D-III
    2. BA-III, B-II, C-IV, D-I
    3. CA-I, B-II, C-III, D-IV
    4. DA-IV, B-I, C-II, D-III

    Answer: (D) A-IV, B-I, C-II, D-III

    Explanation

    Amartya Sen is associated with entitlements, capabilities and freedom of choice; Simon Kuznets with the rise and fall of inequality with growth; Gunnar Myrdal with circular and cumulative causation; and Paul Krugman with geographic patterns of economic development. Hence A-IV, B-I, C-II, D-III.

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51. Question 51

    Consider the following items and figures. What is the amount of primary deficit?

    Item	Amount (Rs. crores)
    Total revenue receipts	5600
    Total capital receipts	3000
    Interest payments	800
    Disinvestment receipts	400
    Total expenditure	8600
    Recovery of loans	150

    Budget items for deficit calculation

    1. ARs. 2140 crores
    2. BRs. 3000 crores
    3. CRs. 1650 crores
    4. DRs. 2450 crores

    Answer: (C) Rs. 1650 crores

    Explanation

    Fiscal deficit = total expenditure - (revenue receipts + non-debt capital receipts). Non-debt capital receipts are disinvestment receipts plus recovery of loans: 400 + 150 = 550. Fiscal deficit = 8600 - (5600 + 550) = 2450. Primary deficit = fiscal deficit - interest payments = 2450 - 800 = 1650 crores.

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52. Question 52

    Which one of the following is true for the phenomenon of Liquidity Trap?

    1. AThe entire additional money supply is spent on buying bonds
    2. BThe level of rate of interest is very high
    3. CThe entire additional money supply is held by the public as idle cash balance
    4. DThe interest rate will decrease from the point of liquidity trap

    Answer: (C) The entire additional money supply is held by the public as idle cash balance

    Explanation

    In a liquidity trap, interest rates are very low and people prefer to hold additional money as idle cash balances rather than bonds, so monetary expansion becomes ineffective.

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53. Question 53

    Choose the correct pair(s).

    A. SEBI - Advisory body
    B. GST Council - Statutory body
    C. NITI Aayog - Advisory body
    D. RBI - Statutory body

    1. AA and B
    2. BA and C
    3. CB and D
    4. DC and D

    Answer: (D) C and D

    Explanation

    NITI Aayog is an advisory policy institution, and RBI is a statutory body. SEBI is also statutory, not advisory. The GST Council is a constitutional body, so calling it merely statutory is not the best match here.

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54. Question 54

    The Headcount Index of poverty measurement is based on:

    1. AThe number of people who fall below the poverty line.
    2. BThe poverty line itself.
    3. CThe "Bottom Billion".
    4. DVertical inequality of income.

    Answer: (A) The number of people who fall below the poverty line.

    Explanation

    The headcount index measures the proportion or count of people whose income or consumption falls below the poverty line.

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55. Question 55

    Which of the following is not correct in case of Rural Infrastructure Development Fund (RIDF)?

    1. AProviding funds to state governments and state-owned corporations for rural infrastructure projects
    2. BScheduled commercial banks contribute funds to RIDF
    3. CCreation of RIDF in 1995-96 in NABARD with a corpus of Rs. 2000 crore
    4. DNow RIDF scheme is merged with Kisan Credit Card (KCC)

    Answer: (D) Now RIDF scheme is merged with Kisan Credit Card (KCC)

    Explanation

    RIDF was created in NABARD in 1995-96, funded by contributions from banks that do not meet priority-sector lending targets, and supports state rural infrastructure projects. It has not been merged with Kisan Credit Card.

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56. Question 56

    The development of economic growth theory in chronological order would be:

    A. Harrod-Domar Growth Model
    B. Solow's Neoclassical Growth Model
    C. Endogenous Growth Theory
    D. Adam Smith's "division of labour" and "increasing returns" theory

    1. AD, C, B, A
    2. BD, B, C, A
    3. CD, A, B, C
    4. DB, D, A, C

    Answer: (C) D, A, B, C

    Explanation

    Adam Smith comes first historically, followed by Harrod-Domar, then Solow's neoclassical model, and later endogenous growth theory. Thus the order is D, A, B, C.

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57. Question 57

    Welfare criterion based on compensation payments is known as:

    1. ADalton-Friedman Compensation Criterion
    2. BAmartya Sen Compensation Criterion
    3. CPareto-Bains Compensation Criterion
    4. DKaldor-Hicks Compensation Criterion

    Answer: (D) Kaldor-Hicks Compensation Criterion

    Explanation

    The Kaldor-Hicks compensation criterion judges an allocation improvement by whether gainers could hypothetically compensate losers and still remain better off.

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58. Question 58

    The range of the function y = f(x) = √(1 - x²) is:

    1. A[0, 1]
    2. B[1, 0]
    3. C[1, ∞]
    4. D[1, 2]

    Answer: (A) [0, 1]

    Explanation

    For real values, 1 - x² ≥ 0, so -1 ≤ x ≤ 1. The square root is non-negative, with maximum 1 at x = 0 and minimum 0 at x = ±1; hence the range is [0, 1].

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59. Question 59

    For the given information regarding an economy, the value of equilibrium level of income is: C = 100 + 0.75Yd, G = 40, I = 60, t = 0.2. Here, C = consumption, Yd = disposable income, G = government expenditure, I = investment, and t = tax rate.

    1. A200
    2. B500
    3. C400
    4. D450

    Answer: (B) 500

    Explanation

    With proportional tax, Yd = (1 - t)Y = 0.8Y. Thus C = 100 + 0.75(0.8Y) = 100 + 0.6Y. Equilibrium: Y = C + I + G = 100 + 0.6Y + 60 + 40, so 0.4Y = 200 and Y = 500.

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60. Question 60

    Which of the following is not a function of the Securities and Exchange Board of India (SEBI)?

    1. AProhibiting insider trading in securities
    2. BPromoting and regulating self-regulatory organisations
    3. CUnderwriting new capital issues
    4. DRegulating portfolio managers

    Answer: (C) Underwriting new capital issues

    Explanation

    SEBI regulates securities markets, intermediaries, insider trading, self-regulatory organisations and portfolio managers. Underwriting new capital issues is performed by market intermediaries, not as a SEBI function.

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61. Question 61

    Given the difference equation Y_{t+1} - 1.2Y_t = 0, the general expression Y_t in terms of t can be:

    1. AY_t = (1.2)^t Y_1
    2. BY_t = (1.2)^{t+1} Y_0
    3. CY_t = (1.2)^{t-1} Y_1
    4. DY_t = (1.2)^{t-1} Y_0 + C

    Answer: (C) Y_t = (1.2)^{t-1} Y_1

    Explanation

    The recurrence is Y_{t+1}=1.2Y_t. If the initial value is written as Y_1, then Y_t = (1.2)^{t-1}Y_1. If indexed from Y_0, it would be (1.2)^tY_0, which is not one of the printed options.

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62. Question 62

    Among the following types of treasury-bill auctions, identify the correct ones.

    A. Adjusted price auction
    B. Uniform price auction
    C. Multiple price auction
    D. Readjusted price auction

    1. AA and B only
    2. BB and C only
    3. CC and D only
    4. DA and D only

    Answer: (B) B and C only

    Explanation

    Treasury bills are issued through auction methods such as uniform price auction and multiple price auction. Adjusted and readjusted price auctions are not standard types here.

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63. Question 63

    Given the structural model:

    y1 = 3y2 - 2x1 + x2 + u1
y2 = y3 + x3 + u2
y3 = y1 - y2 - 2x3 + u3

    Based on the order condition, the second equation is:

    1. Aover identified
    2. Bexactly identified
    3. Cunder identified
    4. Dinformation not sufficient

    Answer: (A) over identified

    Explanation

    There are three endogenous variables. In the second equation, one additional endogenous variable appears with y2, so the required number of excluded exogenous variables is 1. Since x1 and x2 are excluded from the second equation, the order condition is more than satisfied, making it over-identified.

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64. Question 64

    Given below are two statements, one labelled Assertion (A) and the other Reason (R).

    Assertion (A): Deficit spending by the government leads to crowding-out effect on private investment.

    Reason (R): When the government finances its deficit by borrowing from the market, bond prices go up and the rate of interest falls.

    1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
    2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
    3. C(A) is correct but (R) is not correct
    4. D(A) is not correct but (R) is correct

    Answer: (C) (A) is correct but (R) is not correct

    Explanation

    Government borrowing can crowd out private investment by raising demand for loanable funds and pushing interest rates up. The reason reverses the bond-price/interest-rate movement expected from higher borrowing, so R is incorrect.

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65. Question 65

    Match List I with List II using the table above.

    List I	List II
    A. Q theory	I. Unemployment and inflation
    B. Phillips curve	II. Unemployment and output
    C. Okun's Law	III. Investment
    D. Liquidity trap	IV. Demand for money and interest rate

    Macroeconomic concepts and associated variables

    1. AA-III, B-I, C-II, D-IV
    2. BA-I, B-II, C-IV, D-III
    3. CA-III, B-II, C-I, D-IV
    4. DA-II, B-IV, C-I, D-III

    Answer: (A) A-III, B-I, C-II, D-IV

    Explanation

    Q theory concerns investment; the Phillips curve links unemployment and inflation; Okun's law links unemployment and output; and a liquidity trap concerns money demand and interest rates. Hence A-III, B-I, C-II, D-IV.

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66. Question 66

    As per Dalton's optimum population formula M = (A - O) / O, where M is degree of mal-adjustment, A is actual population and O is optimum population, a country is said to have optimum population if:

    1. AM is positive
    2. BM is negative
    3. CM is zero
    4. DO is zero

    Answer: (C) M is zero

    Explanation

    At optimum population, actual population equals optimum population: A = O. Therefore M = (A - O)/O = 0.

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67. Question 67

    NSSO and CSO come under:

    1. AMinistry of Home Affairs
    2. BMinistry of Finance
    3. CMinistry of Industry and Commerce
    4. DMinistry of Statistics and Programme Implementation (MoSPI)

    Answer: (D) Ministry of Statistics and Programme Implementation (MoSPI)

    Explanation

    The National Sample Survey Office and Central Statistics Office are part of India's official statistical system under the Ministry of Statistics and Programme Implementation.

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68. Question 68

    Choose the correct statements.

    A. The q theory emphasises that investment increases when assets are valuable relative to their reproduction cost.
    B. With a fixed exchange rate, fiscal expansion under free capital mobility is completely ineffective in raising output.
    C. Under investment tax credit, government pays part of the cost of investment.
    D. Under fixed exchange rate and perfect capital mobility, a country cannot pursue an independent monetary policy.

    1. AB and D only
    2. BA and D only
    3. CA, C and D only
    4. DA, B and C only

    Answer: (C) A, C and D only

    Explanation

    Tobin's q theory links investment to the market value of capital relative to replacement cost. Investment tax credits subsidise investment cost, and fixed exchange rates with perfect capital mobility prevent independent monetary policy. Fiscal expansion is effective, not completely ineffective, under fixed exchange rates with free capital mobility.

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69. Question 69

    Based on Economic Survey 2024-25, Indian merchandise trade deficit widened due to:

    A. Decline of non-petroleum and non-gems and jewellery exports
    B. Increase in non-oil and non-gold imports
    C. Imposing of ban on jewellery exports
    D. Gold imports grew due to early purchases ahead of festive spending and demand for safe-haven assets

    1. AA and B only
    2. BB and D only
    3. CC and D only
    4. DA and C only

    Answer: (B) B and D only

    Explanation

    The widening was linked to import-side pressures, including higher non-oil/non-gold imports and increased gold imports. A ban on jewellery exports is not a valid cause, and the decline claim for non-petroleum/non-gems exports is not the best match to the stated survey reasoning.

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70. Question 70

    The following statements are made in the Union Budget for the year 2025-2026:

    A. The FDI limit for the insurance sector will be raised from 74 to 100 percent.
    B. The FDI limit for the insurance sector will be raised from 51 to 74 percent.
    C. An Investment Friendliness Index of states will be formed.
    D. The fiscal deficit is estimated to be 4.4 percent of GDP.

    1. AB, C and D only
    2. BA, C and D only
    3. CA, B and C only
    4. DC and D only

    Answer: (B) A, C and D only

    Explanation

    Budget 2025-26 proposed raising the insurance FDI limit from 74% to 100%, creating an Investment Friendliness Index of states, and targeting fiscal deficit at 4.4% of GDP. Statement B repeats the older 51-to-74 change and is not correct for 2025-26.

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71. Question 71

    Economic Dependency Burden of a country implies:

    A. The non-productive members of the country must be supported by the country's labour force.
    B. The outstanding loan of the country.
    C. Children below the age of 15 and people above the age of 70.
    D. The people working in private sector.

    1. AA and D only
    2. BA and C only
    3. CC and D only
    4. DB and C only

    Answer: (B) A and C only

    Explanation

    Economic dependency burden refers to dependents who must be supported by the working population. It is commonly represented by children and older people relative to the labour force.

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72. Question 72

    Arrange the following theories in chronological order.

    A. Theory of limit pricing (Bain's Model)
    B. Logical ordering theory of demand given by J. R. Hicks
    C. Cardinal utility theory of demand
    D. Walras theory of general equilibrium

    1. AD, C, A, B
    2. BB, C, A, D
    3. CA, B, D, C
    4. DD, B, C, A

    Answer: (A) D, C, A, B

    Explanation

    The closest printed sequence is D, C, A, B. The item is noisy because the historical dating of cardinal utility, Walras and Hicks depends on which formulation is meant, and the available options do not cleanly capture the standard chronology.

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73. Question 73

    Coefficient of Determination (R²):

    A. is an increasing function of the number of regressors
    B. is a decreasing function of the number of regressors
    C. is unaffected by increasing or decreasing the number of regressors
    D. is always positive

    1. AA and B only
    2. BA and C only
    3. CA and D only
    4. DB and C only

    Answer: (C) A and D only

    Explanation

    In ordinary least squares, adding regressors cannot lower R²; it is non-decreasing with the number of regressors. Also R² is non-negative. Therefore A and D are correct.

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74. Question 74

    Given below are two statements, one labelled Assertion (A) and the other Reason (R).

    Assertion (A): With 10% rise in average income of household, there will be 50% rise in investment in health and education of children.

    Reason (R): Investment in health and education of children will raise human capital that will raise human capability and raise economic productivity.

    1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
    2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
    3. C(A) is correct but (R) is not correct
    4. D(A) is not correct but (R) is correct

    Answer: (B) Both (A) and (R) are correct but (R) is not the correct explanation of (A)

    Explanation

    The reason correctly states the human-capital effect of investing in health and education. It does not by itself explain the specific empirical elasticity stated in the assertion, so the safer interpretation is that both are correct but R is not the direct explanation of A.

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75. Question 75

    Given below are two statements, one labelled Assertion (A) and the other Reason (R).

    Assertion (A): OPEC has failed to maintain high prices of petroleum products in the long run.

    Reason (R): For petroleum products, both demand and supply are inelastic in the long run.

    1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
    2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
    3. C(A) is correct but (R) is not correct
    4. D(A) is not correct but (R) is correct

    Answer: (C) (A) is correct but (R) is not correct

    Explanation

    OPEC's long-run price power is limited because demand and supply become more elastic over time and because of substitution and non-OPEC supply responses. The reason incorrectly says both demand and supply are inelastic in the long run.

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76. Question 76

    Choose the correct statements.

    A. Globalisation carries benefits and opportunities as well as costs and risks.
    B. Globalisation leads to flow of capital, technology, goods and services across countries.
    C. The larger the market, the greater the gains from trade and the division of labour.
    D. Globalisation in terms of flow of capital, goods and technology is evenly spread across world nations.

    1. AA, B and C only
    2. BA, B and D only
    3. CB and D only
    4. DB, C and D only

    Answer: (A) A, B and C only

    Explanation

    A, B and C are standard propositions about globalisation and market size. D is false because globalisation's flows and benefits are unevenly distributed across countries.

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77. Question 77

    In a situation of decline in price of a Giffen commodity, we find:

    1. Apositive substitution effect is less than negative income effect
    2. Bpositive substitution effect is more than negative income effect
    3. Cnegative substitution effect is more than positive income effect
    4. Dnegative substitution effect is less than positive income effect

    Answer: (A) positive substitution effect is less than negative income effect

    Explanation

    For a Giffen good, a price fall creates a positive substitution effect, but the negative income effect dominates it, so total quantity demanded falls. Hence the positive substitution effect is less than the negative income effect.

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78. Question 78

    Match List I with List II using the table above.

    List I	List II
    A. Targeted Public Distribution System (TPDS)	I. 1992
    B. Revamped Public Distribution System (RPDS)	II. 2009
    C. Right to Education Act (RTE Act)	III. 1997
    D. National Food Security Act (NFSA Act)	IV. 2013

    Policy programmes and years

    1. AA-I, B-III, C-IV, D-II
    2. BA-IV, B-III, C-I, D-II
    3. CA-III, B-I, C-II, D-IV
    4. DA-II, B-IV, C-I, D-III

    Answer: (C) A-III, B-I, C-II, D-IV

    Explanation

    TPDS was introduced in 1997, RPDS in 1992, the RTE Act in 2009, and the NFSA Act in 2013. Thus A-III, B-I, C-II, D-IV.

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79. Question 79

    Kinked-demand model of oligopoly was developed by which of the following?

    1. AChamberlin
    2. BBertrand
    3. CStackelberg
    4. DSweezy

    Answer: (D) Sweezy

    Explanation

    The kinked-demand curve model of oligopoly is associated with Paul Sweezy.

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80. Question 80

    Based on ε_t as a purely random process with mean zero and variance σ², choose the correct statements.

    A. A process x_t = a1x_{t-1} + a2x_{t-2} + ... + arx_{t-r} + ε_t is called an autoregressive process of order r.
    B. A process x_t = β0ε_t + β1ε_{t-1} + ... + βmε_{t-m} is called a moving-average process of order m.
    C. A process x_t = β0ε_t + β1ε_{t-1} + ... + βmε_{t-m} is called an autoregressive process of order r.
    D. A process x_t = a1x_{t-1} + a2x_{t-2} + ... + arx_{t-r} + ε_t is called a moving-average process of order m.

    1. AA and B only
    2. BA and D only
    3. CB and D only
    4. DC and D only

    Answer: (A) A and B only

    Explanation

    An autoregressive process depends on its own lagged values plus a random shock. A moving-average process depends on current and lagged shocks. Therefore A and B are correct.

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81. Question 81

    Match List I with List II using the table above.

    List I	List II
    A. `|e_d|` for demand function `D = 64 - 8P`, at `P = 6`	I. 6
    B. `e_s` for supply function `S = -25 + 5P`, at `P = 10`	II. 4
    C. The value of MR when `P = 8` and `e_d = 4`	III. 3
    D. The value of `MPP_L` when `VMP_L = 12` and `P = 3`	IV. 2

    Elasticity and marginal-product calculations

    1. AA-III, B-IV, C-I, D-II
    2. BA-II, B-III, C-I, D-IV
    3. CA-I, B-IV, C-II, D-III
    4. DA-III, B-I, C-IV, D-II

    Answer: (A) A-III, B-IV, C-I, D-II

    Explanation

    For D = 64 - 8P at P = 6, Q = 16, so |e_d| = 8 × 6/16 = 3. For S = -25 + 5P at P = 10, Q = 25, so e_s = 5 × 10/25 = 2. With P = 8 and e_d = 4, MR = P(1 - 1/e) = 6. If VMP_L = 12 and P = 3, then MPP_L = 4. Thus A-III, B-IV, C-I, D-II.

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82. Question 82

    Given below are two statements, one labelled Assertion (A) and the other Reason (R).

    Assertion (A): If X and Y are transformed to U = (X - A)/h and V = (Y - B)/K, where A, B, h and K are constants and h and K are non-zero, then r_xy = r_uv.

    Reason (R): The correlation coefficient r is independent of change of origin and scale.

    1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
    2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
    3. C(A) is correct but (R) is not correct
    4. D(A) is not correct but (R) is correct

    Answer: (A) Both (A) and (R) are correct and (R) is the correct explanation of (A)

    Explanation

    Linear transformations of origin and scale do not change the correlation coefficient, provided the scale factors are non-zero. Therefore the reason correctly explains the assertion.

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83. Question 83

    Which one of the following production functions exhibits decreasing returns to scale?

    1. AA K^(1/4) √L
    2. BA K^α L^(1-α)
    3. CA(3K + 5L)
    4. DA√(K L^3)

    Answer: (A) A K^(1/4) √L

    Explanation

    For option A, the degree of homogeneity is 1/4 + 1/2 = 3/4, which is less than 1, so it exhibits decreasing returns to scale. Options B and C are constant returns, while D has degree 2 and increasing returns.

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84. Question 84

    Etymologically, the term money is derived from which language?

    1. AGreek
    2. BLatin
    3. CPersian
    4. DSanskrit

    Answer: (B) Latin

    Explanation

    The word money is commonly traced to Latin moneta, associated with Juno Moneta and the Roman mint.

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85. Question 85

    Match List I with List II using the table above.

    List I	List II
    A. Narasimham Committee I	I. Tax Reform
    B. Narasimham Committee II	II. Banking Sector Reform
    C. Chelliah Committee	III. Financial Sector Reform
    D. C. Rangarajan Committee	IV. Poverty Estimation Committee

    Committees and associated reform areas

    1. AA-IV, B-II, C-I, D-III
    2. BA-II, B-II, C-I, D-IV
    3. CA-II, B-III, C-IV, D-I
    4. DA-I, B-II, C-IV, D-III

    Answer: (B) A-II, B-II, C-I, D-IV

    Explanation

    Chelliah Committee is clearly associated with tax reform and C. Rangarajan Committee with poverty estimation. The Narasimham committees relate to financial/banking sector reforms, but the printed options contain a duplication/error and do not offer a clean standard mapping. Option B is the closest available source option because it preserves C-I and D-IV.

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86. Question 86

    How much revenue will have to be foregone due to different beneficial proposals in the Central Budget 2025-26?

    1. ARs. 2 lakh crore as direct taxes and Rs. 5600 crore as indirect taxes
    2. BRs. 1.5 lakh crore as direct taxes and Rs. 5600 crore as indirect taxes
    3. CRs. 1 lakh crore as direct taxes and Rs. 2600 crore as indirect taxes
    4. DRs. 50,000 crore as direct taxes and Rs. 2000 crore as indirect taxes

    Answer: (C) Rs. 1 lakh crore as direct taxes and Rs. 2600 crore as indirect taxes

    Explanation

    The Budget 2025-26 tax proposals were stated to involve revenue foregone of about Rs. 1 lakh crore in direct taxes and Rs. 2600 crore in indirect taxes.

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87. Question 87

    For analysing effective rent control in the housing sector:

    A. The shortage of housing is small in the short run compared to the long run.
    B. The shortage of housing is large in the short run compared to the long run.
    C. Effective rent control exists when a government places an effective price floor on rent.
    D. Effective rent control exists when a government places an effective price ceiling on rent.

    1. AA and C only
    2. BB and C only
    3. CA and D only
    4. DB and D only

    Answer: (C) A and D only

    Explanation

    Rent control is an effective price ceiling below equilibrium rent. Housing supply and demand are less elastic in the short run, so shortages tend to be smaller initially and larger over the long run.

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88. Question 88

    Monopoly power is explained by which of the following?

    1. A(P - MC) / P
    2. B(P + MC) / P
    3. C(P - AC) / P
    4. D(P + AC) / P

    Answer: (A) (P - MC) / P

    Explanation

    The Lerner index of monopoly power is (P - MC) / P, measuring the price-cost markup as a proportion of price.

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89. Question 89

    A theory that explains the phenomenon of increasing public expenditure and state activity was given by:

    1. AColin Clark
    2. BAllan Peacock
    3. CDalton
    4. DAdolf Wagner

    Answer: (D) Adolf Wagner

    Explanation

    Wagner's law, associated with Adolf Wagner, states that public expenditure tends to rise with economic development and expanding state activity.

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90. Question 90

    Incomplete markets for biodiversity occur because:

    For environmental assets, markets can fail if prices do not communicate society's desires and constraints accurately. The factors leading to habitat destruction and the loss of biodiversity originate in several sources of market failure. First, habitat destruction arises from public ownership of large areas of land with open access and limited government capacity to manage land. The economic incentives encourage the over-exploitation of wildlife, timber, grazing lands and crop lands. Lack of secure land tenure provides little incentive to maintain the habitat necessary for biodiversity conservation. This is a case of non-rivalry and non-excludability that can destroy biodiversity as it itself does not have any price. Such market failures can be linked to incomplete markets. On the other hand, such a situation could also happen from externality if some outside agent disturbs the natural ecosystem. This could lead to a tragic end of the ecosystem unless there is a coordinated effort by the local people to save it.

    1. ABiodiversity does not have a value to society
    2. BFailure to institute well-defined property rights on the forest having biodiversity
    3. CThe forest resource is open for all to exploit
    4. DNo one is willing to pay money to save biodiversity in forest

    Answer: (B) Failure to institute well-defined property rights on the forest having biodiversity

    Explanation

    The passage links biodiversity loss to incomplete markets, insecure tenure and lack of well-defined property rights. Biodiversity has social value, but the absence of clear property rights and market pricing causes failure.

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91. Question 91

    A Common Property Resource (CPR) can survive only under:

    For environmental assets, markets can fail if prices do not communicate society's desires and constraints accurately. The factors leading to habitat destruction and the loss of biodiversity originate in several sources of market failure. First, habitat destruction arises from public ownership of large areas of land with open access and limited government capacity to manage land. The economic incentives encourage the over-exploitation of wildlife, timber, grazing lands and crop lands. Lack of secure land tenure provides little incentive to maintain the habitat necessary for biodiversity conservation. This is a case of non-rivalry and non-excludability that can destroy biodiversity as it itself does not have any price. Such market failures can be linked to incomplete markets. On the other hand, such a situation could also happen from externality if some outside agent disturbs the natural ecosystem. This could lead to a tragic end of the ecosystem unless there is a coordinated effort by the local people to save it.

    1. AStrict property rules
    2. BTaxation
    3. CCredible commitment to the collective living on the CPR
    4. DNon-exclusion

    Answer: (C) Credible commitment to the collective living on the CPR

    Explanation

    The passage says the ecosystem can be saved only through coordinated effort by local people. For CPRs, survival depends on credible collective commitment and governance by the community.

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92. Question 92

    The concept of Tragedy of Commons was founded by:

    For environmental assets, markets can fail if prices do not communicate society's desires and constraints accurately. The factors leading to habitat destruction and the loss of biodiversity originate in several sources of market failure. First, habitat destruction arises from public ownership of large areas of land with open access and limited government capacity to manage land. The economic incentives encourage the over-exploitation of wildlife, timber, grazing lands and crop lands. Lack of secure land tenure provides little incentive to maintain the habitat necessary for biodiversity conservation. This is a case of non-rivalry and non-excludability that can destroy biodiversity as it itself does not have any price. Such market failures can be linked to incomplete markets. On the other hand, such a situation could also happen from externality if some outside agent disturbs the natural ecosystem. This could lead to a tragic end of the ecosystem unless there is a coordinated effort by the local people to save it.

    1. ARobert Solow
    2. BHarold Hotelling
    3. CGarrett Hardin
    4. DPartha Dasgupta

    Answer: (C) Garrett Hardin

    Explanation

    The modern phrase and classic formulation of the Tragedy of the Commons is associated with Garrett Hardin.

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93. Question 93

    Public goods do not have the following property:

    For environmental assets, markets can fail if prices do not communicate society's desires and constraints accurately. The factors leading to habitat destruction and the loss of biodiversity originate in several sources of market failure. First, habitat destruction arises from public ownership of large areas of land with open access and limited government capacity to manage land. The economic incentives encourage the over-exploitation of wildlife, timber, grazing lands and crop lands. Lack of secure land tenure provides little incentive to maintain the habitat necessary for biodiversity conservation. This is a case of non-rivalry and non-excludability that can destroy biodiversity as it itself does not have any price. Such market failures can be linked to incomplete markets. On the other hand, such a situation could also happen from externality if some outside agent disturbs the natural ecosystem. This could lead to a tragic end of the ecosystem unless there is a coordinated effort by the local people to save it.

    1. ANon-rival
    2. BNon-excludable
    3. CCommon property resources controlled by locals
    4. DFree goods

    Answer: (C) Common property resources controlled by locals

    Explanation

    Public goods are defined by non-rivalry and non-excludability. Common property resources controlled by locals are a different institutional category, not a defining property of public goods.

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94. Question 94

    Asymmetric information about a resource occurs when there is:

    For environmental assets, markets can fail if prices do not communicate society's desires and constraints accurately. The factors leading to habitat destruction and the loss of biodiversity originate in several sources of market failure. First, habitat destruction arises from public ownership of large areas of land with open access and limited government capacity to manage land. The economic incentives encourage the over-exploitation of wildlife, timber, grazing lands and crop lands. Lack of secure land tenure provides little incentive to maintain the habitat necessary for biodiversity conservation. This is a case of non-rivalry and non-excludability that can destroy biodiversity as it itself does not have any price. Such market failures can be linked to incomplete markets. On the other hand, such a situation could also happen from externality if some outside agent disturbs the natural ecosystem. This could lead to a tragic end of the ecosystem unless there is a coordinated effort by the local people to save it.

    1. AGovernment intervention
    2. BNon-rivalry
    3. CNon-excludability
    4. DMoral hazard and adverse selection

    Answer: (D) Moral hazard and adverse selection

    Explanation

    Asymmetric information is classically reflected in adverse selection and moral hazard, where one party has information or incentives not fully observable to others.

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95. Question 95

    The important challenge to WTO is:

    The present international economic relations have been least influenced by multilateral forums. Multilateral economic institutions' meetings are not considered seriously by the leaders of important nations. In the past, it was heard that many world leaders were speaking against WTO and prioritising their national interest. Even the forum of WTO was used to speak against multilateral trade. In the beginning of the 1980s, the world was moving towards globalisation and the multilateral lending and trade forums played a crucial role in the economic and trade negotiations. Slowly regional economic associations and bilateral trade forums took the centre stage. The exit of Britain from the European Union and frequent disruptions in the WTO forums and many statements of the U.S. president and many European leaders were giving the message that globalisation is coming to an end. Recent imposition of high tariff on Indian exports and various measures by the USA violate free and fair trade ensured by the multilateral trade and investment forums, and are matters of serious concern. Trade disruptions are not becoming an issue for consideration of the appropriate forums at the international level. People start questioning the relevance of a long list of economic and political institutions built after the Second World War with much enthusiasm and high expectations. Do the present developments indicate a turning point for a new world order?

    1. ARegional economic associations and bilateral trade forums
    2. BThe exit of Britain from European Union
    3. CInternational economic relations not influenced by multilateral forums
    4. DWorld moving towards post-globalisation world order

    Answer: (A) Regional economic associations and bilateral trade forums

    Explanation

    The passage states that regional economic associations and bilateral trade forums have taken centre stage, reducing the role of WTO-led multilateralism.

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96. Question 96

    What violates free and fair trade?

    The present international economic relations have been least influenced by multilateral forums. Multilateral economic institutions' meetings are not considered seriously by the leaders of important nations. In the past, it was heard that many world leaders were speaking against WTO and prioritising their national interest. Even the forum of WTO was used to speak against multilateral trade. In the beginning of the 1980s, the world was moving towards globalisation and the multilateral lending and trade forums played a crucial role in the economic and trade negotiations. Slowly regional economic associations and bilateral trade forums took the centre stage. The exit of Britain from the European Union and frequent disruptions in the WTO forums and many statements of the U.S. president and many European leaders were giving the message that globalisation is coming to an end. Recent imposition of high tariff on Indian exports and various measures by the USA violate free and fair trade ensured by the multilateral trade and investment forums, and are matters of serious concern. Trade disruptions are not becoming an issue for consideration of the appropriate forums at the international level. People start questioning the relevance of a long list of economic and political institutions built after the Second World War with much enthusiasm and high expectations. Do the present developments indicate a turning point for a new world order?

    1. AImposition of high and unfair tariffs
    2. BWeak structure of regional economic associations and bilateral trade forums
    3. CWorld leaders speaking in favour of WTO
    4. DKeen interest by the USA and Europe

    Answer: (A) Imposition of high and unfair tariffs

    Explanation

    The passage directly identifies high tariffs and related measures by the USA as violations of free and fair trade ensured by multilateral forums.

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97. Question 97

    The passage conveys that:

    The present international economic relations have been least influenced by multilateral forums. Multilateral economic institutions' meetings are not considered seriously by the leaders of important nations. In the past, it was heard that many world leaders were speaking against WTO and prioritising their national interest. Even the forum of WTO was used to speak against multilateral trade. In the beginning of the 1980s, the world was moving towards globalisation and the multilateral lending and trade forums played a crucial role in the economic and trade negotiations. Slowly regional economic associations and bilateral trade forums took the centre stage. The exit of Britain from the European Union and frequent disruptions in the WTO forums and many statements of the U.S. president and many European leaders were giving the message that globalisation is coming to an end. Recent imposition of high tariff on Indian exports and various measures by the USA violate free and fair trade ensured by the multilateral trade and investment forums, and are matters of serious concern. Trade disruptions are not becoming an issue for consideration of the appropriate forums at the international level. People start questioning the relevance of a long list of economic and political institutions built after the Second World War with much enthusiasm and high expectations. Do the present developments indicate a turning point for a new world order?

    1. AMultilateral institutions have accepted their weaknesses
    2. BReforms in multilateral institutions
    3. CWTO is becoming more important
    4. DPowerful nations are undermining the role of multilateral institutions for their national interest

    Answer: (D) Powerful nations are undermining the role of multilateral institutions for their national interest

    Explanation

    The central idea is that powerful countries are prioritising national interest and weakening multilateral institutions such as WTO.

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98. Question 98

    Globalisation is an outcome of:

    The present international economic relations have been least influenced by multilateral forums. Multilateral economic institutions' meetings are not considered seriously by the leaders of important nations. In the past, it was heard that many world leaders were speaking against WTO and prioritising their national interest. Even the forum of WTO was used to speak against multilateral trade. In the beginning of the 1980s, the world was moving towards globalisation and the multilateral lending and trade forums played a crucial role in the economic and trade negotiations. Slowly regional economic associations and bilateral trade forums took the centre stage. The exit of Britain from the European Union and frequent disruptions in the WTO forums and many statements of the U.S. president and many European leaders were giving the message that globalisation is coming to an end. Recent imposition of high tariff on Indian exports and various measures by the USA violate free and fair trade ensured by the multilateral trade and investment forums, and are matters of serious concern. Trade disruptions are not becoming an issue for consideration of the appropriate forums at the international level. People start questioning the relevance of a long list of economic and political institutions built after the Second World War with much enthusiasm and high expectations. Do the present developments indicate a turning point for a new world order?

    1. AExit of Britain from the European Union
    2. BInitiatives of the USA
    3. CThe role played by the multilateral lending and trade forums
    4. DThe outcome of the Second World War

    Answer: (C) The role played by the multilateral lending and trade forums

    Explanation

    The passage says that in the beginning of the 1980s, multilateral lending and trade forums played a crucial role in economic and trade negotiations as globalisation advanced.

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99. Question 99

    The nature of present international economic relations is that:

    The present international economic relations have been least influenced by multilateral forums. Multilateral economic institutions' meetings are not considered seriously by the leaders of important nations. In the past, it was heard that many world leaders were speaking against WTO and prioritising their national interest. Even the forum of WTO was used to speak against multilateral trade. In the beginning of the 1980s, the world was moving towards globalisation and the multilateral lending and trade forums played a crucial role in the economic and trade negotiations. Slowly regional economic associations and bilateral trade forums took the centre stage. The exit of Britain from the European Union and frequent disruptions in the WTO forums and many statements of the U.S. president and many European leaders were giving the message that globalisation is coming to an end. Recent imposition of high tariff on Indian exports and various measures by the USA violate free and fair trade ensured by the multilateral trade and investment forums, and are matters of serious concern. Trade disruptions are not becoming an issue for consideration of the appropriate forums at the international level. People start questioning the relevance of a long list of economic and political institutions built after the Second World War with much enthusiasm and high expectations. Do the present developments indicate a turning point for a new world order?

    1. AUSA and European countries are not violating international understandings
    2. BMultilateral forums are relegated to the background
    3. CIncreased role is given to multilateral economic and political institutions
    4. DWorld leaders are giving the message that globalisation is improving

    Answer: (B) Multilateral forums are relegated to the background

    Explanation

    The passage repeatedly says multilateral forums are being sidelined while bilateral and regional forums and national-interest policies take centre stage.

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