UGC NET Economics June 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, the number of employees present in office E on Monday is what percent more than the number of employees present in office C on Thursday?

   Day	Office A	Office B	Office C	Office D	Office E
   Monday	139	147	211	141	184
   Tuesday	141	189	164	189	151
   Wednesday	115	141	159	156	136
   Thursday	89	223	120	147	113
   Friday	187	93	257	160	124

   Attendance of employees in five offices across five weekdays

   1. A34.78%
   2. B21.05%
   3. C55.25%
   4. D53.33%

   Answer: (D) 53.33%

   Explanation

   Office E on Monday has 184 employees and office C on Thursday has 120 employees. Percentage more = ((184 − 120) / 120) × 100 = 53.33%.

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2. Question 2

   Based on the table above, what is the respective ratio between the total number of employees present in office B on Wednesday and Thursday together and the total number of employees present in office C on Monday and Friday together?

   Day	Office A	Office B	Office C	Office D	Office E
   Monday	139	147	211	141	184
   Tuesday	141	189	164	189	151
   Wednesday	115	141	159	156	136
   Thursday	89	223	120	147	113
   Friday	187	93	257	160	124

   Attendance of employees in five offices across five weekdays

   1. A11 : 13
   2. B9 : 11
   3. C7 : 9
   4. D7 : 11

   Answer: (C) 7 : 9

   Explanation

   Office B on Wednesday and Thursday together = 141 + 223 = 364. Office C on Monday and Friday together = 211 + 257 = 468. The ratio 364 : 468 simplifies to 7 : 9.

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3. Question 3

   Based on the table above, the number of employees present in office A on Wednesday is what percent of the number of employees present in office D on Friday?

   Day	Office A	Office B	Office C	Office D	Office E
   Monday	139	147	211	141	184
   Tuesday	141	189	164	189	151
   Wednesday	115	141	159	156	136
   Thursday	89	223	120	147	113
   Friday	187	93	257	160	124

   Attendance of employees in five offices across five weekdays

   1. A139 7/8%
   2. B71 7/8%
   3. C63 2/3%
   4. D61 2/3%

   Answer: (B) 71 7/8%

   Explanation

   Office A on Wednesday has 115 employees and office D on Friday has 160 employees. Required percentage = (115 / 160) × 100 = 71.875% = 71 7/8%.

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4. Question 4

   Based on the table above, what is the difference between the total number of employees present in offices C and D together on Tuesday and the total number of employees present in offices A and E together on Thursday?

   Day	Office A	Office B	Office C	Office D	Office E
   Monday	139	147	211	141	184
   Tuesday	141	189	164	189	151
   Wednesday	115	141	159	156	136
   Thursday	89	223	120	147	113
   Friday	187	93	257	160	124

   Attendance of employees in five offices across five weekdays

   1. A147
   2. B271
   3. C151
   4. D171

   Answer: (C) 151

   Explanation

   Offices C and D on Tuesday together = 164 + 189 = 353. Offices A and E on Thursday together = 89 + 113 = 202. Difference = 353 − 202 = 151.

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5. Question 5

   Based on the table above, what is the average number of employees present in office B on Monday, Tuesday and Friday?

   Day	Office A	Office B	Office C	Office D	Office E
   Monday	139	147	211	141	184
   Tuesday	141	189	164	189	151
   Wednesday	115	141	159	156	136
   Thursday	89	223	120	147	113
   Friday	187	93	257	160	124

   Attendance of employees in five offices across five weekdays

   1. A143
   2. B159
   3. C153
   4. D173

   Answer: (A) 143

   Explanation

   Office B on Monday, Tuesday and Friday has 147, 189 and 93 employees. Average = (147 + 189 + 93) / 3 = 429 / 3 = 143.

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6. Question 6

   Match List - I with List - II using the table above.

   List - I	List - II
   A. (343)1/3 − (81)1/4 is equal to ______	I. 1/100
   B. If 28 × 43 × 83 = 2x, then x is equal to	II. 200
   C. ((1.01)2 − (1)2) / (1.01 + 1) is equal to ______	III. 4
   D. A train moving with speed of 90 km/hour crosses a platform of length 100 m in 12 second. The length (m) of the train is ______	IV. 23

   Mathematical expressions and matching values

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

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

   Explanation

   A: cube root of 343 is 7 and fourth root of 81 is 3, so the result is 4 (III). B: 2^8 × 4^3 × 8^3 = 2^8 × 2^6 × 2^9 = 2^23, so x = 23 (IV). C: ((1.01)^2 − 1^2)/(1.01 + 1) = (1.01 − 1) = 0.01 = 1/100 (I). D: 90 km/hour = 25 m/s; in 12 seconds the train covers 300 m, so train length = 300 − 100 = 200 m (II).

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7. Question 7

   Choose the RIGHT statements:
   A. CISCO is a Hockey manufacturer
   B. VLC is Visible Light Communication
   C. SDN is System of Digital Network
   D. HyperCat is an Open JSON based Catalog format
   E. SoC is Sequence of Choice
   Choose the correct answer from the options given below.

   1. AA and B Only
   2. BB and C Only
   3. CC and E Only
   4. DB and D Only

   Answer: (D) B and D Only

   Explanation

   VLC means Visible Light Communication, and HyperCat is an open JSON-based catalogue format. CISCO is a networking technology company, SDN stands for Software Defined Networking, and SoC is commonly System on Chip, not Sequence of Choice.

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8. Question 8

   Arrange the following chronologically on the basis of their launch year:
   A. Swayamprabha
   B. Krishi darshan
   C. Gyandarshan
   D. PM_eVidya
   Choose the correct answer from the options given below.

   1. AC, A, B, D
   2. BA, C, D, B
   3. CB, C, A, D
   4. DA, B, D, C

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

   Explanation

   Krishi Darshan was launched first, followed by Gyan Darshan, then Swayamprabha, and finally PM eVidya. Therefore the chronological order is B, C, A, D.

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9. Question 9

   Arrange the following in increasing order of their values:
   A. (0.1)^3
   B. (1/100)^(1/2)
   C. (0.005)^(1/2)
   D. (0.04)^(1/2)
   Choose the correct answer from the options given below.

   1. AA, C, D, B
   2. BA, C, B, D
   3. CD, B, C, A
   4. DC, B, D, A

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

   Explanation

   A = 0.001, B = 0.1, C = √0.005 ≈ 0.0707, and D = √0.04 = 0.2. Increasing order is A, C, B, D.

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10. Question 10

    The decimal number equivalent to binary digit 110 is ________.

    1. A4
    2. B5
    3. C6
    4. D7

    Answer: (C) 6

    Explanation

    Binary 110 equals 1×2^2 + 1×2^1 + 0×2^0 = 4 + 2 + 0 = 6.

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11. Question 11

    Choose the correct statements regarding environmental incidents from the following:
    A. Bhopal accident was due to methyl isocyanate
    B. Hiroshima and Nagasaki incident was due to radioactivity
    C. Bhuj incident occurred due to poison gas
    D. Fukushima nuclear power plant incident was due to earthquake
    E. Chernobyl accident in Soviet Union occurred due to volcano
    Choose the correct answer from the options given below.

    1. AA, B and C Only
    2. BA, B and D Only
    3. CA, C, and E Only
    4. DC, D and E Only

    Answer: (B) A, B and D Only

    Explanation

    The Bhopal disaster involved methyl isocyanate gas. Hiroshima and Nagasaki involved nuclear/radioactive effects. Fukushima was triggered by an earthquake and tsunami. Bhuj was an earthquake event, not poison gas, and Chernobyl was a nuclear reactor accident, not a volcanic event.

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12. Question 12

    Which of the following are valid deductive forms of reasoning?
    A. Modus Ponens
    B. Modus Tollens
    C. Hypothetical syllogism
    D. Argument from analogy
    Choose the most appropriate answer from the options given below.

    1. AA and B Only
    2. BA, B and C Only
    3. CA, B and D Only
    4. DC and D Only

    Answer: (B) A, B and C Only

    Explanation

    Modus Ponens, Modus Tollens and Hypothetical Syllogism are valid deductive forms. Argument from analogy is generally an inductive or analogical form rather than a strict deductive form.

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13. Question 13

    Choose the RIGHT statements:
    A. IoT term was first used by Ashton in context to supply chain management with RFID-tags
    B. Bluetooth 4.0 is working on the frequency range of 2.4 MHz
    C. Gyroscope is normally related to the motion sensors
    D. IPv6 is related to the coding of vaccines protocol
    E. GSM is global sequence of Mechanics
    Choose the correct answer from the options given below.

    1. AA and B Only
    2. BD and E Only
    3. CA and C Only
    4. DB and D Only

    Answer: (C) A and C Only

    Explanation

    Kevin Ashton is credited with using the term IoT in the context of RFID and supply-chain work, and a gyroscope is associated with motion sensing. Bluetooth operates in the 2.4 GHz band, not 2.4 MHz; IPv6 is an internet protocol, not a vaccine coding protocol; and GSM is Global System for Mobile Communications, not Global Sequence of Mechanics.

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14. Question 14

    In the experiment of determining better 'Yoga Exercise' out of two that can reduce the fat of urban people of different age groups, which of the following is an intervening variable?

    1. AArea
    2. BYoga Exercise
    3. CFood habit
    4. DFat of the people

    Answer: (C) Food habit

    Explanation

    The yoga exercise is the independent variable and fat reduction is the dependent variable. Food habit can come between the exercise and fat reduction outcome, so it functions as an intervening variable.

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15. Question 15

    Which of the following institutions are among Top Ten institutions in the category of research institutions in India Ranking: 2024 released by NIRF?
    A. Indian Institute of Technology, Delhi
    B. Tata Institute of Fundamental Research
    C. Indian Institute of Technology, Kanpur
    D. Indian Institute of Technology, Indore
    E. Indian Institute of Technology, Madras
    Choose the correct answer from the options given below.

    1. AA, C and D Only
    2. BB, D and E Only
    3. CB, C and D Only
    4. DA, C and E Only

    Answer: (D) A, C and E Only

    Explanation

    In the NIRF 2024 research institutions category, IIT Delhi, IIT Kanpur and IIT Madras are among the top institutions listed in the question set. Tata Institute of Fundamental Research and IIT Indore are not the correct selections for this top-ten combination here.

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16. Question 16

    According to Bloom's CAP Classification of Educational Objectives, ________ is an example of Psychomotor Domain.

    1. AOrganizing
    2. BApplication
    3. CManipulation
    4. DComprehension

    Answer: (C) Manipulation

    Explanation

    In Bloom-related classifications, manipulation belongs to the psychomotor domain because it involves physical skill performance. Comprehension and application are cognitive-domain categories, while organizing is associated with the affective domain.

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17. Question 17

    As per Noise Pollution (Regulation and Control) Act (2000), the permissible noise level (Leq) during the day for silence zones is:

    1. A55 dB(A)
    2. B50 dB(A)
    3. C45 dB(A)
    4. D65 dB(A)

    Answer: (B) 50 dB(A)

    Explanation

    For silence zones, the permissible daytime noise level is 50 dB(A). The nighttime standard is lower, at 40 dB(A).

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18. Question 18

    Arrange the important events according to Erikson's Eight Stages of Psychosocial development sequentially:
    A. Toilet training
    B. Feeding
    C. Reflections and acceptance on one's life
    D. Love relation
    E. Peer relationships
    Choose the correct answer from the options given below.

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

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

    Explanation

    In Erikson's sequence, feeding is linked with infancy and trust, toilet training with autonomy, peer relationships with school age, love relations with young adulthood, and reflection/acceptance with old age. Hence the order is B, A, E, D, C.

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19. Question 19

    Match List - I with List - II using the table above.

    List - I (Type of Processor)	List - II (Characteristics)
    A. CISC Processors	I. Operating system controls overall assignment of tasks
    B. RISC Processors	II. Use explicit parallelism
    C. EPIC Processors	III. These possess so many processing features, making the job of machine language programmers easier
    D. Multicore Processors	IV. Have a small instruction set

    Processor types and characteristics

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

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

    Explanation

    CISC processors have many processing features, making machine-language programming easier (III). RISC processors have a small instruction set (IV). EPIC processors use explicit parallelism (II). In multicore processors, task assignment is managed by the operating system (I).

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20. Question 20

    Match List - I with List - II using the table above.

    List - I	List - II
    A. Ad hominem	I. Mistaking correlation for causation
    B. Straw man	II. Attacking the person instead of issue
    C. False cause	III. Misrepresenting someone's argument
    D. Red Herring	IV. Diverting attention to another issue

    Fallacies and their descriptions

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

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

    Explanation

    Ad hominem attacks the person rather than the issue (II). Straw man misrepresents an opponent’s argument (III). False cause mistakes correlation for causation (I). Red herring diverts attention to another issue (IV).

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21. Question 21

    Which of the following programmes/software can be used for quantitative data analysis?
    A. MS WORD
    B. MS POWER POINT
    C. MS EXCEL
    D. MS ACCESS
    E. SPSS
    Choose the most appropriate answer from the options given below.

    1. AA, C, D and B Only
    2. BA, D and E Only
    3. CC, D and E Only
    4. DB, D and E Only

    Answer: (C) C, D and E Only

    Explanation

    MS Excel and SPSS are commonly used for quantitative data analysis, and MS Access can be used to store, query and manage quantitative datasets. MS Word and PowerPoint are not data-analysis tools.

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22. Question 22

    In a group of 40 people, 25 people speak Hindi and 20 people speak both Hindi and Urdu. All the people speak at least one of the two languages. How many people speak Urdu?

    1. A65
    2. B15
    3. C45
    4. D20

    Answer: (B) 15

    Explanation

    As written, the total number who speak Urdu would be 35 because 25 + Urdu − 20 = 40. However, 35 is not present in the options. The available answer 15 matches the number who speak only Urdu: 40 − 25 = 15. The question likely intended to ask for only-Urdu speakers.

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23. Question 23

    Match List - I with List - II using the table above.

    List - I	List - II
    A. Mann Whitney	I. Product Moment method of correlation
    B. Kendall	II. Test of homogeneity of variances
    C. Bartlett	III. U Test
    D. Karl Pearson	IV. Tau Test

    Statistical tests and associated methods

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

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

    Explanation

    Mann-Whitney is associated with the U test (III). Kendall is associated with Tau test (IV). Bartlett test is used for homogeneity of variances (II). Karl Pearson is associated with the product moment method of correlation (I).

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24. Question 24

    Which of the following are required to become a good listener?
    A. Keep quiet while listening
    B. Listen with negative attitude towards the speaker
    C. Show interest in the speaker
    D. Focus on the dress and appearance of the speaker
    E. Keep your mind open to every subject and speaker
    Choose the correct answer from the options given below.

    1. AA, B and C Only
    2. BB, C and D Only
    3. CA, C and E Only
    4. DC, D and E Only

    Answer: (C) A, C and E Only

    Explanation

    A good listener remains quiet while listening, shows interest in the speaker, and keeps an open mind. A negative attitude and focusing on dress or appearance are barriers to effective listening.

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25. Question 25

    Match List - I with List - II.

    List - I	List - II
    A. Public Communication	I. Communicating with oneself
    B. Group Communication	II. Face to face communication with another person
    C. Intrapersonal Communication	III. When many people participate in communication with each other
    D. Interpersonal Communication	IV. One person speaking to a large number of people

    Types of communication and their characteristics

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

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

    Explanation

    Public communication involves one person speaking to a large number of people, so A matches IV. Group communication occurs when many people participate in communication with each other, so B matches III. Intrapersonal communication is communication with oneself, so C matches I. Interpersonal communication is face-to-face communication with another person, so D matches II.

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26. Question 26

    Arrange the following examples from higher level to lower level of scales of measurement.

    A. Researcher divides sample into groups based on area of residence like Urban/Rural Area.
    B. Student got 50 out of 60 marks.
    C. Cricketer given tenth rank as allrounder.
    D. Height of a building is double than all other buildings in street.

    1. AD, C, B, A
    2. BA, B, D, C
    3. CC, B, A, D
    4. DD, B, C, A

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

    Explanation

    The higher-to-lower order of measurement scales is ratio, interval, ordinal, nominal. The building-height example is ratio because it involves meaningful multiplication. Marks out of a fixed maximum are treated here as a higher quantitative scale. Rank is ordinal, and Urban/Rural residence is nominal. Hence the order is D, B, C, A.

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27. Question 27

    For fostering the culture of innovation in all Higher Education Institutions across the country, Ministry of Education established Innovation Cell in which year?

    1. A2016
    2. B2018
    3. C2019
    4. D2020

    Answer: (B) 2018

    Explanation

    The Ministry of Education established the Innovation Cell in 2018 to promote innovation and entrepreneurship across higher education institutions in India.

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28. Question 28

    Arrange the following Commissions / Committees in the field of education in chronological order.

    A. GNANAM Committee
    B. Kothari Commission
    C. National Knowledge Commission
    D. MUDALIAR Commission
    E. Yashpal Committee (Advice on Renovation and Rejuvenation of Higher Education)

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

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

    Explanation

    The Mudaliar Commission came first in 1952-53, followed by the Kothari Commission in 1964-66. The Gnanam Committee came later, followed by the National Knowledge Commission in 2005 and the Yashpal Committee report on higher education in 2009. Therefore the sequence is D, B, A, C, E.

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29. Question 29

    'Verbal Association Learning' was proposed by:

    1. AMelton
    2. BThorndike
    3. CCronbach
    4. DGagne

    Answer: (D) Gagne

    Explanation

    In Gagne's hierarchy of learning, verbal association learning refers to learning verbal chains or paired verbal responses. Hence it is associated with Robert M. Gagne.

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30. Question 30

    Match List - I with List - II.

    List - I: Waste Disposal Method	List - II: Characteristics
    A. Modern Landfilling	I. Reduced waste volume
    B. Open land dumping	II. Well engineered and managed facility
    C. Incineration	III. Ecofriendly process
    D. Bioconversion into compost	IV. Low cost of dumping

    Waste disposal methods and their characteristics

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

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

    Explanation

    Modern landfilling is a well-engineered and managed facility, so A matches II. Open land dumping is a low-cost dumping method, so B matches IV. Incineration reduces waste volume, so C matches I. Bioconversion into compost is an eco-friendly process, so D matches III.

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31. Question 31

    PSTN stands for:

    1. APublic Service for Technical Networks
    2. BPublic Switched Telephone Network
    3. CPublic Satellite Television Network
    4. DPublic Safety Trademark Network

    Answer: (B) Public Switched Telephone Network

    Explanation

    PSTN is the standard abbreviation for Public Switched Telephone Network, the traditional circuit-switched telephone network used for landline voice communication.

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32. Question 32

    Which of the following factors affect the internal validity of an experimental research?

    A. Placebo effect
    B. Instrument Decay
    C. Contemporary events
    D. Hawthorne effect
    E. Bias in selecting subjects in sample

    1. AB, C and E Only
    2. BB, C and D Only
    3. CA, C and D Only
    4. DC, D and E Only

    Answer: (A) B, C and E Only

    Explanation

    Internal validity can be affected by instrumentation or instrument decay, history or contemporary events, and selection bias in choosing subjects. Hence B, C and E are the most appropriate threats listed.

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33. Question 33

    Which one is not a type of communication modality?

    1. AProxemics
    2. BHepics
    3. CChronotoxics
    4. DCrestures

    Answer: (C) Chronotoxics

    Explanation

    Proxemics, haptics and gestures are recognized non-verbal communication modalities. 'Chronotoxics' is not a standard communication modality term in this context.

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34. Question 34

    Match List - I with List - II.

    List - I: Four Independent Verticals of HECI	List - II: Major Function
    A. HEGC	I. Frame graduate attributes
    B. GEC	II. Common Single Point Regulator
    C. NAC	III. Funding and Financing of Higher Education
    D. NHERC	IV. Accreditation of Institutions

    Independent verticals of HECI and their major functions

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

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

    Explanation

    HEGC is linked with funding and financing of higher education, GEC frames graduate attributes, NAC handles accreditation of institutions, and NHERC functions as the common single point regulator. Therefore A-III, B-I, C-IV, D-II is correct.

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35. Question 35

    Identify the correct statements:

    A. (216)^(1/3) > (169)^(1/2)

    B. The next term in the series 2, 7, 28, 63, 126, ...... is 217

    C. The area of equilateral triangle of side 10 cm is 25√3

    D. The average of the following observations -2, -1, 0, +1, +2, +3 is 1/2

    1. AC and D Only
    2. BB, C and D Only
    3. CA and D Only
    4. DA, C and D Only

    Answer: (A) C and D Only

    Explanation

    Statement A is false because cube root of 216 is 6 and square root of 169 is 13.

    Statement B is false because the series follows alternating n^3 + 1 and n^3 - 1, so the next term is 215, not 217.

    Statement C is true since area = (√3/4) × 10² = 25√3.

    Statement D is true because the sum is 3 and the average is 3/6 = 1/2.

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36. Question 36

    Some statements are given below. Mark the 'Right' combination:

    A. Teaching is included in learning - True
    B. Post active stage of teaching provides a corrective and remedial scope of teaching - False
    C. Teaching is included in learning - False
    D. Post active stage of teaching provides a corrective and remedial scope of teaching - True

    1. AA and D Only
    2. BC and B Only
    3. CA and B Only
    4. DC and D Only

    Answer: (D) C and D Only

    Explanation

    Learning is broader than teaching, so the statement that teaching is included in learning is taken as false here. The post-active stage of teaching includes evaluation, feedback and remedial/corrective work, so that statement is true. Hence C and D are correct.

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37. Question 37

    Arrange the phases of modern approach to disaster management in order (from initial to final):

    A. Recovery
    B. Preparedness
    C. Response
    D. Mitigation

    1. AC, B, A, D
    2. BD, B, C, A
    3. CA, B, C, D
    4. DB, C, A, D

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

    Explanation

    The disaster management cycle begins with mitigation, followed by preparedness, then response during or immediately after the disaster, and finally recovery. Therefore the order is D, B, C, A.

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38. Question 38

    Arrange the four noble truths of Buddhism in the chronological order:

    A. Nirodha
    B. Marga/Magga
    C. Dukha
    D. Samudaya

    1. AB, A, C, D
    2. BC, D, A, B
    3. CD, C, B, A
    4. DA, C, B, D

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

    Explanation

    The four noble truths are Dukkha, Samudaya, Nirodha and Magga/Marga. Using the given labels, the sequence is C, D, A, B.

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39. Question 39

    The fallacy where the conclusion does not logically follow from the premises is called:

    1. AAdhomineim
    2. BStraw man
    3. CNon-sequitur
    4. DRed herring

    Answer: (C) Non-sequitur

    Explanation

    A non sequitur is a fallacy in which the conclusion does not logically follow from the premises.

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40. Question 40

    Match List - I with List - II.

    List - I: Mental approaches	List - II: Objectives related with
    A. Recall	I. Understanding
    B. Discrimination	II. Knowledge
    C. Hypothesis establishment	III. Creativity
    D. Evaluation	IV. Application

    Mental approaches and related objectives

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

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

    Explanation

    Recall corresponds to knowledge. Discrimination corresponds to understanding. Hypothesis establishment is linked here with application, and evaluation is linked with creativity. Hence A-II, B-I, C-IV, D-III is the keyed match.

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41. Question 41

    A boat takes an hour to cover a certain distance downstream in a river. It takes 1 1/2 hour to cover the same distance upstream. Assuming that the speed of boat is same in both downstream and upstream directions, what is the ratio of speed of boat to that of stream in the river?

    1. A2 : 3
    2. B5 : 1
    3. C3 : 2
    4. D5 : 2

    Answer: (B) 5 : 1

    Explanation

    Let the downstream speed be D and the upstream speed be 2D/3 for the same distance. If boat speed is b and stream speed is s, then b + s = D and b - s = 2D/3. Solving gives b = 5D/6 and s = D/6, so b : s = 5 : 1.

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42. Question 42

    Which model depicts communication as a process by which communicators send messages/feedback simultaneously to one another?

    1. ASocio-cultural
    2. BSocio-psychological
    3. CInteractional
    4. DTransactional

    Answer: (D) Transactional

    Explanation

    The transactional model treats communication as a simultaneous, dynamic process in which participants send and receive messages and feedback at the same time.

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43. Question 43

    Which of the following pertains to Clean Development Mechanism (CDM) under Kyoto Protocol?

    1. AGetting Certified Emission Reductions (CER) credits for industrialised countries
    2. BReducing noise pollution
    3. CDecreasing amount of chlorofloro carbons
    4. DMaintaining ozone layer

    Answer: (A) Getting Certified Emission Reductions (CER) credits for industrialised countries

    Explanation

    Under the Kyoto Protocol, the Clean Development Mechanism allows emission-reduction projects to generate Certified Emission Reduction credits, which can be used by industrialised countries toward emission-reduction commitments.

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44. Question 44

    Which of the following programmes of UGC is not related to promotion of value and ethical practices?

    1. AJeevan Kaushal
    2. BCARE
    3. CMulya Pravah
    4. DNational Resource Centre for Value Education (NRCVE)

    Answer: (D) National Resource Centre for Value Education (NRCVE)

    Explanation

    Jeevan Kaushal, CARE and Mulya Pravah are associated with UGC quality, values, ethics or integrity initiatives. The keyed option in the source is National Resource Centre for Value Education (NRCVE), which is treated here as not the relevant UGC programme in this list.

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45. Question 45

    Two persons A and B finish a work in 10 days. A is twice as efficient than B. How many days A will take to finish the work, if he has to do it alone?

    1. A8 days
    2. B12 days
    3. C15 days
    4. D18 days

    Answer: (C) 15 days

    Explanation

    Let B's one-day work be x, so A's one-day work is 2x. Together they complete 3x per day and finish the work in 10 days, so 3x = 1/10. A's rate is 2x = 1/15, hence A alone takes 15 days.

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46. Question 46

    The word 'drastic' in the passage means:

    The first step is for us to realise that a city need not be a frustrater of life; it can be among other things, a mechanism for enhancing life, for producing possibilities of living which are not to be realized except through cities. But, for that to happen, deliberate and drastic planning is needed. Towns as much as animals, must have their systems of organs-those for transport and circulation are an obvious example.

    What we need now are organ systems for recreation, leisure, culture, community expression. This means abundance of open space, easy access to unspoilt nature, beauty in parks and in fine buildings, gymnasia and swimming baths and recreation grounds in plenty, central spaces for celebrations and demonstrations, halls for citizens' meetings, concert halls and theatres and cinemas that belong to the city.

    And the buildings must not be built anyhow or dumped down anywhere; both they and their grouping should mean something important to the people of the place.

    1. ARadical
    2. BOrderly
    3. CConsistent
    4. DDetermined

    Answer: (A) Radical

    Explanation

    In the passage, 'drastic planning' means strong, far-reaching or radical planning needed to improve city life.

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47. Question 47

    Cities can be made more worth-living if they:

    The first step is for us to realise that a city need not be a frustrater of life; it can be among other things, a mechanism for enhancing life, for producing possibilities of living which are not to be realized except through cities. But, for that to happen, deliberate and drastic planning is needed. Towns as much as animals, must have their systems of organs-those for transport and circulation are an obvious example.

    What we need now are organ systems for recreation, leisure, culture, community expression. This means abundance of open space, easy access to unspoilt nature, beauty in parks and in fine buildings, gymnasia and swimming baths and recreation grounds in plenty, central spaces for celebrations and demonstrations, halls for citizens' meetings, concert halls and theatres and cinemas that belong to the city.

    And the buildings must not be built anyhow or dumped down anywhere; both they and their grouping should mean something important to the people of the place.

    1. Aare vigorously planned to serve the needs of the people
    2. Bhave only good transportation facility
    3. Chave many hospitals
    4. Dhave only more cinemas and sources of entertainment

    Answer: (A) are vigorously planned to serve the needs of the people

    Explanation

    The passage argues that cities can enhance life only through deliberate and drastic planning that provides transport, recreation, culture, community spaces and meaningful buildings. Therefore they must be planned to serve people's needs.

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48. Question 48

    The antonym of the word 'frustrater' used in the passage is __________.

    The first step is for us to realise that a city need not be a frustrater of life; it can be among other things, a mechanism for enhancing life, for producing possibilities of living which are not to be realized except through cities. But, for that to happen, deliberate and drastic planning is needed. Towns as much as animals, must have their systems of organs-those for transport and circulation are an obvious example.

    What we need now are organ systems for recreation, leisure, culture, community expression. This means abundance of open space, easy access to unspoilt nature, beauty in parks and in fine buildings, gymnasia and swimming baths and recreation grounds in plenty, central spaces for celebrations and demonstrations, halls for citizens' meetings, concert halls and theatres and cinemas that belong to the city.

    And the buildings must not be built anyhow or dumped down anywhere; both they and their grouping should mean something important to the people of the place.

    1. APromoter
    2. BApprover
    3. CAdmirer
    4. DDowner

    Answer: (A) Promoter

    Explanation

    A frustrater obstructs or prevents something. Its opposite in this context is a promoter, something that supports or enhances life.

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49. Question 49

    What could be the most suitable title for the passage?

    The first step is for us to realise that a city need not be a frustrater of life; it can be among other things, a mechanism for enhancing life, for producing possibilities of living which are not to be realized except through cities. But, for that to happen, deliberate and drastic planning is needed. Towns as much as animals, must have their systems of organs-those for transport and circulation are an obvious example.

    What we need now are organ systems for recreation, leisure, culture, community expression. This means abundance of open space, easy access to unspoilt nature, beauty in parks and in fine buildings, gymnasia and swimming baths and recreation grounds in plenty, central spaces for celebrations and demonstrations, halls for citizens' meetings, concert halls and theatres and cinemas that belong to the city.

    And the buildings must not be built anyhow or dumped down anywhere; both they and their grouping should mean something important to the people of the place.

    1. ATowns versus Animals
    2. BThe need for planned cities
    3. CModern cities : Benefits and Shortcomings
    4. DHow to develop a Global city

    Answer: (B) The need for planned cities

    Explanation

    The central idea of the passage is that cities should be deliberately and meaningfully planned so that they enhance life. Thus, 'The need for planned cities' is the most suitable title.

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50. Question 50

    The phrase 'Unspoilt Nature' is in the context of __________.

    The first step is for us to realise that a city need not be a frustrater of life; it can be among other things, a mechanism for enhancing life, for producing possibilities of living which are not to be realized except through cities. But, for that to happen, deliberate and drastic planning is needed. Towns as much as animals, must have their systems of organs-those for transport and circulation are an obvious example.

    What we need now are organ systems for recreation, leisure, culture, community expression. This means abundance of open space, easy access to unspoilt nature, beauty in parks and in fine buildings, gymnasia and swimming baths and recreation grounds in plenty, central spaces for celebrations and demonstrations, halls for citizens' meetings, concert halls and theatres and cinemas that belong to the city.

    And the buildings must not be built anyhow or dumped down anywhere; both they and their grouping should mean something important to the people of the place.

    1. ANature is not allowed to be a stumbling block in the human's progress
    2. BBuilding cities with the system of organs like those of animals
    3. CFree access to parks and open spaces
    4. DNature to retain its primitive condition

    Answer: (C) Free access to parks and open spaces

    Explanation

    The phrase appears in the passage where the writer calls for abundance of open space and easy access to unspoilt nature, beauty in parks and recreation grounds. The context is access to parks and open spaces.

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99 questions with the answer key and explanations.

1. Question 1

   Which of the following statements best define property rights?

   1. AProperty rights refer only to government ownership of land and capital.
   2. BProperty rights are informal social rules that cannot be enforced by law.
   3. CProperty rights are the legally enforced rights to determine how a resource is used, owned and transferred.
   4. DProperty rights prevent individuals from profiting from private property.

   Answer: (C) Property rights are the legally enforced rights to determine how a resource is used, owned and transferred.

   Explanation

   Property rights are legally enforceable claims that specify how resources can be owned, used, transferred and benefited from. They are not limited to government ownership, and they do not prevent private profit.

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2. Question 2

   Which of the following is not true?

   1. AThe effect of any tax can be decomposed into an income effect and substitution effect.
   2. BThere is a substitution effect associated with a lump-sum tax, but no income effect.
   3. CThe greater the substitution effect, the greater is the deadweight loss.
   4. DThere is also a deadweight loss associated with the reduction in prices received by producers as a result of imposition of tax.

   Answer: (B) There is a substitution effect associated with a lump-sum tax, but no income effect.

   Explanation

   A lump-sum tax does not change relative prices, so it has no substitution effect. It reduces disposable income and therefore has an income effect. Hence the statement that it has a substitution effect but no income effect is not true.

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3. Question 3

   Arrange the following countries based on the market capitalization to nominal GDP ratio at the end of December 2024 in ascending order (as per the Economic Survey 2024-25).

   A. U.K.
   B. India
   C. China
   D. Brazil
   E. Japan

   1. AB, A, C, E, D
   2. BC, D, B, A, E
   3. CD, C, A, B, E
   4. DA, B, D, C, E

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

   Explanation

   The ascending order implied by the Economic Survey comparison is Brazil, China, U.K., India and Japan. Using the given labels, that sequence is D, C, A, B, E.

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4. Question 4

   Which of the following is not true according to classical's views on public debt?

   1. APublic debt financing requires funds for interest payment and amortization, hence a double burden on tax payers.
   2. BPublic debt financing supports compensatory budget policy as a tool for stimulating aggregate demand.
   3. CPublic debt creates barren production and consumption and burden is transferred to future generation.
   4. DPublic debt destroys capital which otherwise could be used productively.

   Answer: (B) Public debt financing supports compensatory budget policy as a tool for stimulating aggregate demand.

   Explanation

   Classical economists generally viewed public debt as burdensome and unproductive. The idea of using debt-financed compensatory budgeting to stimulate aggregate demand is associated with Keynesian policy, not the classical view.

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5. Question 5

   Assume that the rate of investment is described by the function I(t) = 12t^(1/3) and capital stock k(0) = 25. Find the time path of capital stock k.

   1. A16t^(4/3) + 25
   2. B9t^(4/3) + 25
   3. C-9t^(4/3) + 25
   4. D-16t^(4/3) + 25

   Answer: (B) 9t^(4/3) + 25

   Explanation

   Capital accumulation is dk/dt = I(t) = 12t^(1/3). Integrating gives k(t) = 12 × (3/4)t^(4/3) + C = 9t^(4/3) + C. Since k(0)=25, C=25.

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6. Question 6

   Which of the following is true in case of a good i.e., 'Crowded City side Walk'?

   1. AIt is non-excludable and non-rivalry in nature.
   2. BIt is excludable but non-rivalry in nature.
   3. CIt is non-excludable but rivalry in nature.
   4. DIt is excludable and rivalry in nature.

   Answer: (C) It is non-excludable but rivalry in nature.

   Explanation

   A crowded city sidewalk is generally non-excludable because people cannot easily be prevented from using it, but it is rivalrous when crowding reduces the benefit or space available to others. It is therefore a common-resource type case.

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7. Question 7

   Arrange the following works of J. M. Keynes in chronological order (starting from the oldest to latest).

   A. A Treatise on Money
   B. General Theory of Employment, Interest and Money
   C. Indian Currency and Finance
   D. A Monetary Theory of Production
   E. A Tract on Monetary Reform

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

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

   Explanation

   Keynes's Indian Currency and Finance appeared in 1913, followed by A Tract on Monetary Reform in 1923, A Treatise on Money in 1930, A Monetary Theory of Production in 1933, and The General Theory of Employment, Interest and Money in 1936. Hence the order is C, E, A, D, B.

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8. Question 8

   Match List-I with List-II.

   List-I: Concepts	List-II: Given by
   A. Paradox of thrift	I. K. Boulding
   B. Water-Diamond paradox	II. A.C. Pigou
   C. Wage employment paradox	III. J.M. Keynes
   D. Macroeconomic paradox	IV. Adam Smith

   Economic concepts and associated economists

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

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

   Explanation

   The paradox of thrift is associated with J. M. Keynes, the water-diamond paradox with Adam Smith, the wage-employment paradox with A. C. Pigou, and the macroeconomic paradox with K. Boulding. Therefore A-III, B-IV, C-II, D-I is correct.

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9. Question 9

   Which of the following are correct about the Foreign Trade Policy (FTP) 2023 of India?

   A. India's FTP 2023 promotes cross border trade in digital economy.
   B. FTP 2023 emphasized on creation of E-commerce export hubs (ECEH).
   C. It prohibits export and import of arms and related material from/to Iraq.
   D. It prohibits import of charcoal from Somalia.
   E. It emphasizes strengthening trade with Democratic People's Republic of Korea in combat aircraft, missiles and arms related materials.

   1. AA, D & E Only
   2. BD & E Only
   3. CA, B & C Only
   4. DA, B, C & D Only

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

   Explanation

   FTP 2023 promotes digital cross-border trade and e-commerce export hubs. It also carries restrictions/prohibitions related to arms trade with Iraq and import of charcoal from Somalia. It does not promote trade with DPRK in combat aircraft, missiles and arms materials. Hence A, B, C and D are correct.

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10. Question 10

    निम्नलिखित में से कौनसा आर बी आई द्वारा संचालित मौद्रिक नीति का प्रचालन लक्ष्य है?

    1. Aरेपो दर
    2. Bरिवर्स रेपो दर
    3. Cभारित औसत मांग मुद्रा दर
    4. Dसीमांत स्थायी सुविधा दर

    Answer: (C) भारित औसत मांग मुद्रा दर

    Explanation

    In India's monetary policy operating framework, the weighted average call money rate is treated as the operating target of monetary policy. Repo rate is the policy rate/instrument, not the operating target.

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11. Question 11

    Match List-I with List-II.

    List-I	List-II
    A. Playing each strategy with probability	I. Nash equilibrium
    B. Maximum payoff given the strategy of other	II. Grim trigger strategy
    C. Long-run behavior	III. Best response function
    D. Period of punishment is infinite	IV. Mixed strategy

    Game theory concepts and corresponding terms

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

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

    Explanation

    Playing each strategy with a probability is a mixed strategy. The maximum payoff given the other player's strategy is a best response function. Long-run strategic behavior is linked here with Nash equilibrium, and an infinite punishment period is a grim trigger strategy. Hence A-IV, B-III, C-I, D-II.

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12. Question 12

    Match List-I with List-II.

    List-I: Renewable energy sources	List-II: % of total energy production as on Nov 2024 as per Economic Survey 2024-25
    A. Solar energy	I. 10.50%
    B. Hydro energy	II. 20.60%
    C. Nuclear energy	III. 10.30%
    D. Wind energy	IV. 1.80%

    Renewable energy sources and their share of total energy production

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

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

    Explanation

    Solar energy corresponds to 20.60%, hydro energy to 10.30%, nuclear energy to 1.80%, and wind energy to 10.50% of total energy production as per the listed Economic Survey figures. Hence A-II, B-III, C-IV, D-I is correct.

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13. Question 13

    In the context of classical economics, an increase in money supply causes:

    1. AA shift in aggregate demand curve to the left
    2. BA shift in aggregate demand curve to the right
    3. CA shift in aggregate supply curve to the right
    4. DNo change in aggregate demand and aggregate supply, only price increases

    Answer: (B) A shift in aggregate demand curve to the right

    Explanation

    In the classical/quantity-theory framework, an increase in money supply raises nominal spending and shifts aggregate demand to the right. With output fixed at the full-employment level in the long run, the final effect is higher prices.

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14. Question 14

    If the marginal propensity to consume is 0.8 and initial increase in tax revenues by the government is Rs. 100, then the impact on national income would be:

    1. ANational Income will increase by Rs. 100
    2. BNational Income will increase by Rs. 500
    3. CNational Income will decrease by Rs. 400
    4. DNational Income will decrease by Rs. 100

    Answer: (C) National Income will decrease by Rs. 400

    Explanation

    The tax multiplier is -MPC/(1-MPC) = -0.8/0.2 = -4. A tax increase of Rs. 100 therefore changes income by -4 × 100 = -Rs. 400.

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15. Question 15

    Which of the following is likely to lead to a rise in the output cost of disinflation?

    1. AInflation expectations become more accurate.
    2. BSluggish response of wages and prices to monetary contraction.
    3. CGradual policy response.
    4. DRational expectations.

    Answer: (B) Sluggish response of wages and prices to monetary contraction.

    Explanation

    If wages and prices adjust sluggishly after monetary contraction, output and employment must fall more before inflation declines. That increases the output cost or sacrifice ratio of disinflation.

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16. Question 16

    Arrange the following Chairmen of Finance Commission in order of their appointment starting from the oldest.

    A. A. M. Khusro
    B. C. Rangarajan
    C. N. K. P. Salve
    D. K. Brahmananda Reddy
    E. K.C. Pant

    1. AA, C, E, D, B
    2. BC, E, A, D, B
    3. CB, D, E, C, A
    4. DD, C, E, A, B

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

    Explanation

    K. Brahmananda Reddy chaired an earlier Finance Commission, followed by N. K. P. Salve, K. C. Pant, A. M. Khusro and then C. Rangarajan. The chronological sequence is D, C, E, A, B.

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17. Question 17

    In which of the following year, the mandate/preamble of RBI has been amended?

    1. A2019
    2. B2024
    3. C2016
    4. D2007

    Answer: (C) 2016

    Explanation

    The RBI Act was amended in 2016 to provide the statutory basis for the monetary policy framework and inflation-targeting mandate.

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18. Question 18

    Arrange the following environmental conventions/summits in sequence starting from the oldest.

    A. Kyoto Protocol
    B. Minamata Convention
    C. Stockholm Convention
    D. UN-REDD
    E. Rio Summit

    1. AE, A, C, D, B
    2. BE, C, A, B, D
    3. CC, E, A, D, B
    4. DA, B, C, D, E

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

    Explanation

    The Rio Summit was held in 1992, the Kyoto Protocol was adopted in 1997, the Stockholm Convention on Persistent Organic Pollutants was adopted in 2001, UN-REDD was launched in 2008, and the Minamata Convention was adopted in 2013. Hence E, A, C, D, B is correct.

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19. Question 19

    Arrange the following rounds in chronological order (starting from oldest).

    A. Millennium Round of Trade negotiations
    B. Doha Round
    C. Uruguay Round
    D. Kennedy Round
    E. Tokyo Round

    1. AD, E, C, B, A
    2. BD, E, B, C, A
    3. CD, B, E, C, A
    4. DD, E, C, A, B

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

    Explanation

    The Kennedy Round came first, followed by the Tokyo Round, the Uruguay Round, the Millennium Round, and then the Doha Round. Therefore the chronological sequence is D, E, C, A, B.

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20. Question 20

    Which of the following are correct about the revised criteria of MSMEs effective from 01 April 2025 as per union budget 2025-26?

    A. An enterprise is classified as micro enterprise if investment in plant and machinery does not exceed Rs. 2.5 crore.
    B. A medium enterprise is one whose turnover does not exceed Rs. 50 crore.
    C. A small enterprise has investment limit up to Rs. 10 crore.
    D. A micro enterprise is one whose turnover is up to Rs. 10 crore.
    E. A small enterprise has turnover limit up to Rs. 100 crore.

    1. AB, C & D Only
    2. BA, D & E Only
    3. CA, B & E Only
    4. DC, D & E Only

    Answer: (B) A, D & E Only

    Explanation

    Under the revised MSME criteria, micro enterprises have investment up to Rs. 2.5 crore and turnover up to Rs. 10 crore, while small enterprises have turnover up to Rs. 100 crore. The medium turnover limit is not Rs. 50 crore and the small investment limit is not Rs. 10 crore under the revised criteria. Hence A, D and E are correct.

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21. Question 21

    According to Rostow, any industry can play the role of leading sector in the take-off stage provided following conditions are met.

    A. The market for the product is expanding rapidly.
    B. The leading sector generates secondary expansion.
    C. The sector has an adequate and continual supply of capital from ploughed-back profits.
    D. Introduction of new techniques into the sector to increase productivity.
    E. Changes in industrial structure should be structural ones.

    1. AB, C, D & E Only
    2. BA, D & E Only
    3. CA, C & D Only
    4. DA, B, C & D Only

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

    Explanation

    Rostow's leading sectors in the take-off stage require rapidly expanding demand, generation of secondary expansion, availability of reinvested capital, and introduction of new techniques that raise productivity. Thus A, B, C and D are the relevant conditions.

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22. Question 22

    Integrate ∫ (x + 3)/(x + 5) dx.

    1. Ax²/2 - 2 ln|x + 5| + c
    2. Bx²/2 + 2 ln|x + 5| + c
    3. Cx + 2 ln|x + 5| + c
    4. Dx - 2 ln|x + 5| + c

    Answer: (D) x - 2 ln|x + 5| + c

    Explanation

    Rewrite (x+3)/(x+5) as 1 - 2/(x+5). Integrating gives x - 2 ln|x+5| + c.

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23. Question 23

    In the context of IS-LM model, a higher marginal propensity to spend results in:

    1. AA flatter aggregate demand curve and consequently a steeper IS curve
    2. BA steeper aggregate demand curve and consequently a flatter IS curve
    3. CIncrease in aggregate demand and a rightward shift of the IS curve
    4. DIncrease in demand for real balances

    Answer: (B) A steeper aggregate demand curve and consequently a flatter IS curve

    Explanation

    A higher marginal propensity to spend increases the expenditure multiplier, making output more responsive to interest-rate-induced spending changes. This is associated with a flatter IS curve; in the framing of the question, it corresponds to a steeper aggregate demand curve and consequently a flatter IS curve.

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24. Question 24

    Match List-I with List-II.

    List-I: Items of receipts	List-II: Share to total receipt in % as per Union Budget 2025-26
    A. Income tax	I. 4%
    B. Custom	II. 5%
    C. Corporation tax	III. 22%
    D. Union excise	IV. 17%

    Receipt items and share in total receipts

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

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

    Explanation

    As per the Union Budget 2025-26 receipt shares shown, income tax is 22%, customs is 4%, corporation tax is 17%, and union excise is 5%. Hence A-III, B-I, C-IV, D-II is correct.

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25. Question 25

    Arrange the following publications in chronological order starting from the oldest to the latest.

    A. Theory of Economic Growth by Arthur Lewis
    B. A Contribution to the Theory of Economic Growth by Robert Solow
    C. The Stages of Economic Growth: A Non Communist Manifesto by Walt Rostow
    D. Asian Drama: An Inquiry into the Poverty of Nations by Gunnar Myrdal
    E. Strategy of Economic Development by Albert Hirschman

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

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

    Explanation

    Lewis's work was published in 1955, Solow's contribution in 1956, Hirschman's Strategy of Economic Development in 1958, Rostow's Stages of Economic Growth in 1960, and Myrdal's Asian Drama in 1968. Therefore the order is A, B, E, C, D.

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26. Question 26

    The Stolper-Samuelson theorem postulates that:

    1. AAn increase in the relative price of a commodity raises the earnings of the factor used intensively in the production of the commodity.
    2. BAn increase in the relative price of a commodity decreases the earnings of the factor used intensively in the production of the commodity.
    3. CAn increase in the relative price of a commodity raises the earnings of the factor used scarcely in the production of the commodity.
    4. DA decrease in the relative price of a commodity raises the earnings of the factor used intensively in the production of the commodity.

    Answer: (A) An increase in the relative price of a commodity raises the earnings of the factor used intensively in the production of the commodity.

    Explanation

    The Stolper-Samuelson theorem states that a rise in the relative price of a good increases the real return to the factor used intensively in producing that good and lowers the real return to the other factor.

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27. Question 27

    Which of the following are true regarding the outcome of a consumer's optimization process?

    A. The marginal utility per rupee spent on each good is the same.
    B. The marginal rate of substitution between goods is equal to the ratio of the prices between the goods.
    C. The consumer reaches the highest indifference curve in the indifference map.
    D. The consumer indifference curve is tangent to his/her budget line.
    E. From utility point of view, consumer is indifferent between any two points on his/her budget line.

    1. AA, C & E Only
    2. BA, D & E Only
    3. CA, B & D Only
    4. DA, B, D & E Only

    Answer: (C) A, B & D Only

    Explanation

    At an interior consumer optimum, the marginal utility per rupee spent is equalized, MRS equals the price ratio, and the indifference curve is tangent to the budget line. Statement E is false because points on a budget line generally give different utilities. The intended option is A, B and D only.

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28. Question 28

    Which of the following statements are true about the payoff matrix above?

    A. Player-1 has two strictly dominated strategies.
    B. None of the strategies of player-2 are weakly dominated.
    C. Strategy T weakly dominates strategy B.
    D. Strategy M of Player-1 will never be used in Nash-equilibrium.
    E. Strategy M strictly dominates strategy T.

    Player 1 / Player 2	L	R
    T	1, 5	0, 3
    M	2, 6	1, 4
    B	3, 7	2, 2

    Payoff matrix for Player 1 and Player 2

    1. AA, B, C & E Only
    2. BA, D & E Only
    3. CB, C & D Only
    4. DC, D & E Only

    Answer: (B) A, D & E Only

    Explanation

    For Player 1, B strictly dominates both M and T, and M strictly dominates T; hence Player 1 has two strictly dominated strategies and M will not be used in Nash equilibrium. For Player 2, R is dominated by L, so statement B is false, and T does not dominate B. Thus A, D and E are true.

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29. Question 29

    Arrange the following sectors in descending order as per their share in total FDI in India in H1 FY 2025 as per the Economic Survey 2024-25.

    A. Automobile Industry
    B. Hospital and Diagnostic Centers
    C. Cement and Gypsum Products
    D. Computer Software and Hardware
    E. Non-conventional Energy

    1. AD, E, C, A, B
    2. BD, C, E, B, A
    3. CE, B, A, D, C
    4. DE, D, C, B, A

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

    Explanation

    The source keys the descending order as Computer Software and Hardware, Non-conventional Energy, Cement and Gypsum Products, Automobile Industry, and Hospital and Diagnostic Centers. This gives D, E, C, A, B.

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30. Question 30

    Which of the following conditions are required for the set of consumers to exhibit parallel, straight wealth expansion paths at any price vector P?

    A. Preferences admit indirect utility function of the Gorman form.
    B. Preferences are heterogeneous.
    C. Wealth is equally distributed among all consumers.
    D. All consumers have identical preferences that are homothetic.
    E. All consumers have preferences that are quasilinear with respect to the same good.

    1. AA, B & C Only
    2. BA, D & E Only
    3. CB, C & D Only
    4. DA, B & D Only

    Answer: (B) A, D & E Only

    Explanation

    Parallel straight wealth expansion paths are associated with restrictions such as Gorman-form preferences, identical homothetic preferences in the relevant aggregation setting, or quasilinear preferences with respect to the same good. Heterogeneity and equal wealth distribution are not the required conditions here.

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31. Question 31

    If the demand law is P = √(9 - x) and the demand is fixed at x₀ = 5, find the consumer's surplus.

    1. A8/3
    2. B11/15
    3. C8/15
    4. D7/3

    Answer: (A) 8/3

    Explanation

    At x₀=5, price is √(9-5)=2. Consumer surplus is ∫₀⁵√(9-x)dx - 2×5 = (2/3)(27-8) - 10 = 38/3 - 30/3 = 8/3.

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32. Question 32

    Match List-I with List-II.

    List-I	List-II
    A. Specific factors model	I. Prebisch-Singer hypothesis
    B. Immiserizing growth	II. Thomas Mun
    C. Mercantilism theory of international trade	III. Jagdish Bhagwati
    D. Secular deterioration of terms of trade	IV. Paul Samuelson and Ronald Jones

    Trade and development concepts and associated economists/hypotheses

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

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

    Explanation

    The specific factors model is associated with Paul Samuelson and Ronald Jones. Immiserizing growth is associated with Jagdish Bhagwati. Mercantilist trade theory is associated with Thomas Mun. Secular deterioration of terms of trade is associated with the Prebisch-Singer hypothesis.

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33. Question 33

    The idea of constructing poverty-weighted indices of growth is:

    1. ATo give at least equal weight to all income groups in society.
    2. BTo achieve high growth rate.
    3. CTo facilitate foreign trade on equal basis.
    4. DTo assign more value or weight on income group of richest population and no weight on lower-income group.

    Answer: (A) To give at least equal weight to all income groups in society.

    Explanation

    Poverty-weighted growth indices are designed to make growth assessment sensitive to distribution, especially the welfare of poorer groups. Among the options, giving at least equal weight to all income groups best captures the intended idea.

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34. Question 34

    According to classical economics, an increase in government deficit spending leads to:

    A. a shift in the demand for loanable fund to the right
    B. decline in interest rate
    C. increase in investment
    D. increase in saving equal to decline in consumption
    E. decrease in investment and consumption that balances the increase in government spending

    1. AA, B & D Only
    2. BA, D & E Only
    3. CA, B, C & D Only
    4. DC, D & E Only

    Answer: (B) A, D & E Only

    Explanation

    In the classical loanable-funds view, deficit spending raises demand for loanable funds and tends to crowd out private spending. Interest rates do not decline and investment does not increase; rather, saving rises with reduced consumption and investment/consumption adjust to balance government spending.

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35. Question 35

    According to neoclassical growth theory, an increase in saving rate:

    1. ARaises the growth rate of output in the short run.
    2. BIncreases long run growth rate of output.
    3. CDecreases the steady-state capital-labor ratio.
    4. DDecreases the long-run level of capital and output per head.

    Answer: (A) Raises the growth rate of output in the short run.

    Explanation

    In the Solow/neoclassical growth model, a higher saving rate raises capital accumulation and output growth during transition, but it does not raise the long-run steady-state growth rate, which depends on technology and population growth. It raises, not lowers, steady-state capital per worker.

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36. Question 36

    Match List-I with List-II.

    List-I	List-II
    A. Theory of population growth and resource limits	I. Alfred Sauvy
    B. Demographic transition theory	II. John Graunt
    C. Father of demography	III. Warren Thompson
    D. Coined the term 'third World'	IV. Thomas Malthus

    Demography concepts and associated persons

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

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

    Explanation

    The standard matching is: theory of population growth and resource limits with Thomas Malthus, demographic transition theory with Warren Thompson, father of demography with John Graunt, and the term 'third World' with Alfred Sauvy. The exact mapping A-IV, B-III, C-II, D-I is not present among the options; option D preserves the first two key matches but swaps the last two, so this item needs review.

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37. Question 37

    If Q = f(K, L) is a homogeneous production function of degree one, which of the following satisfies Euler's theorem?

    1. A(∂Q/∂K) + (∂Q/∂L) = Q
    2. B(∂Q/∂K)K + (∂Q/∂L)L = Q
    3. C(∂Q/∂K)K + (∂Q/∂L)L > 1
    4. D(∂Q/∂K) + (∂Q/∂L) = 1

    Answer: (B) (∂Q/∂K)K + (∂Q/∂L)L = Q

    Explanation

    Euler's theorem for a homogeneous function of degree one states that KQ_K + LQ_L = Q. Therefore the correct expression is (∂Q/∂K)K + (∂Q/∂L)L = Q.

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38. Question 38

    The data about the sales and advertisement expenditure of a firm is given below. Estimate the likely sales for the proposed advertisement of Rs. 10 crore.

    Sales mean = 40 crore, sales standard deviation = 10 crore. Advertisement expenditure mean = 6 crore, advertisement standard deviation = 1.5 crore. Coefficient of correlation r = 0.9.

    1. ARs. 60 crore
    2. BRs. 64 crore
    3. CRs. 70 crore
    4. DRs. 74 crore

    Answer: (B) Rs. 64 crore

    Explanation

    Using the regression of sales on advertisement: y - 40 = r(σ_y/σ_x)(x - 6). With r=0.9, σ_y=10, σ_x=1.5 and x=10, y - 40 = 0.9×(10/1.5)×4 = 24. Thus expected sales are Rs. 64 crore.

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39. Question 39

    If x̄ = 32, ȳ = 38, the regression coefficients bxy = -0.2337, byx = -0.6643. Find the equation of the line of regression of y on x.

    1. Ay = -0.2337x + 40.8806
    2. By = -0.2337x - 40.8806
    3. Cy = -0.6643x - 59.2576
    4. Dy = -0.6643x + 59.2576

    Answer: (D) y = -0.6643x + 59.2576

    Explanation

    For the regression of y on x, use y - ȳ = byx(x - x̄). Thus y - 38 = -0.6643(x - 32), giving y = -0.6643x + 59.2576.

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40. Question 40

    If both input and output markets are competitive and firms are profit maximizing, then in equilibrium each factor of production earns:

    1. AAn amount equal to the price of output times total output.
    2. BThe amount allocated by political process
    3. CAn equal share of output.
    4. DThe value of its marginal product.

    Answer: (D) The value of its marginal product.

    Explanation

    Under competitive input and output markets, profit-maximizing firms hire each factor up to the point where the factor price equals the value of its marginal product.

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41. Question 41

    If the value of Keynesian investment multiplier is 4, which one of the following will be the corresponding saving function?

    1. AS = -4 + 0.4Y_D
    2. BS = -10 + 0.75Y_D
    3. CS = -12 + 0.25Y_D
    4. DS = -6 + 0.35Y_D

    Answer: (C) S = -12 + 0.25Y_D

    Explanation

    The investment multiplier k = 1/MPS. If k = 4, then MPS = 1/4 = 0.25. The saving function must therefore have slope 0.25, which matches S = -12 + 0.25Y_D.

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42. Question 42

    Which of the following game does not have any Nash Equilibrium?

    1. ABoS Game
    2. BStag Hunt Game
    3. CMatching Pennies Game
    4. DPrisoner's Dilemma

    Answer: (C) Matching Pennies Game

    Explanation

    The intended answer is Matching Pennies because it has no pure-strategy Nash equilibrium. Strictly speaking, it does have a mixed-strategy Nash equilibrium, so the wording 'does not have any Nash Equilibrium' is imprecise and needs review.

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43. Question 43

    Which of the following are true pertaining to the problems of asymmetric information?

    A. Sellers can deal with the problem of asymmetric information by sending buyers signals about the quality of product.
    B. If a seller of a product has better information about its quality than buyer, then bad products tend to drive good products out of the market.
    C. According to the efficiency wage theory, a wage lower than the competitive wage increases worker productivity by discouraging workers from shirking on the job.
    D. Adverse selection arises because of asymmetric information in insurance market.
    E. Owners can avoid principal agent problem by designing contracts that give their agents incentive to perform better.

    1. AA & B Only
    2. BA, B & C Only
    3. CB, C & D Only
    4. DA, B, D & E Only

    Answer: (D) A, B, D & E Only

    Explanation

    Signalling can reduce asymmetric information, the lemons problem means bad products may drive out good products, adverse selection is common in insurance markets, and incentive-compatible contracts can reduce principal-agent problems. Statement C is false because efficiency wage theory argues that wages above, not below, the competitive wage can improve productivity and reduce shirking.

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44. Question 44

    According to Coase theorem, which of the following are possible outcomes of assigning property rights?

    A. The polluter pays the victim to continue polluting.
    B. The victim pays the polluter to reduce pollution.
    C. The government must set pollution taxes to ensure efficiency.
    D. Market outcomes can achieve efficiency even if externalities exist.
    E. The polluter and victim always have equal bargaining power.

    1. AA, B & C Only
    2. BA, B & D Only
    3. CB, C & D Only
    4. DC, D & E Only

    Answer: (B) A, B & D Only

    Explanation

    Under the Coase theorem, if property rights are assigned and bargaining is possible with low transaction costs, private bargaining can lead to efficient outcomes. Depending on who holds the right, either the polluter may pay the victim or the victim may pay the polluter. Government taxes are not required by the theorem, and equal bargaining power is not assumed as an always-true condition.

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45. Question 45

    The null hypothesis that all slope coefficients are simultaneously equal to zero is tested in logit model by:

    1. AF-test
    2. Bt-test
    3. CChi-square test
    4. DLikelihood ratio statistics

    Answer: (D) Likelihood ratio statistics

    Explanation

    In logit models, the joint significance of slope coefficients is commonly tested using the likelihood ratio statistic, which asymptotically follows a chi-square distribution.

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46. Question 46

    Given U = (x + 2)(y + 1), Px = 4, Py = 6 and budget (B) = 130. Find the optimum levels of purchase of x* and y*.

    1. Ax* = 11, y* = 16
    2. Bx* = 15, y* = 28
    3. Cx* = 18, y* = 8
    4. Dx* = 16, y* = 11

    Answer: (D) x* = 16, y* = 11

    Explanation

    For U=(x+2)(y+1), MRS = (y+1)/(x+2). At the interior optimum, (y+1)/(x+2)=Px/Py=4/6=2/3. This gives 3y+3=2x+4, or 2x-3y=-1. With the budget 4x+6y=130, i.e. 2x+3y=65, solving gives x=16 and y=11.

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47. Question 47

    अंतर्राष्ट्रीय व्यापार के उत्पाद चक्र मॉडल में, किस चरण में नकल/अनुकरण करने वाला देश तृतीयक बाजारों में नवोन्मेषी देश से कम बिक्री करना शुरू करता है?

    1. Aचरण-II
    2. Bचरण-III
    3. Cचरण-IV
    4. Dचरण-V

    Answer: (C) चरण-IV

    Explanation

    Product cycle theory describes movement from innovation to imitation and eventual competition by imitating countries in third-country markets. The source identifies this situation with चरण-IV.

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48. Question 48

    The indirect least square is applied to estimate the coefficient of the:

    1. AStructural equation
    2. BOver identified equation
    3. CReduced form equation
    4. DUnder identified equation

    Answer: (A) Structural equation

    Explanation

    Indirect least squares is used for exactly identified simultaneous-equation models to recover the coefficients of the structural equation from reduced-form estimates.

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49. Question 49

    If the income effect is in the opposite direction as the substitution effect, but the substitution effect dominates, then the good is ________.

    1. ANormal
    2. BInferior but not giffen
    3. CGiffen
    4. DThere is not enough information to answer

    Answer: (B) Inferior but not giffen

    Explanation

    For an inferior good, income and substitution effects move in opposite directions. If the substitution effect dominates, demand still moves in the normal direction after a price change, so the good is inferior but not Giffen.

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50. Question 50

    Evaluate ∫₁² e^(-2x) dx.

    1. Ae^-2 - e^-4
    2. B-1/2(e^-2 - e^-4)
    3. C1/2(e^-2 - e^-4)
    4. D1/2(e^-2 + e^-4)

    Answer: (C) 1/2(e^-2 - e^-4)

    Explanation

    The antiderivative of e^(-2x) is -1/2 e^(-2x). Evaluating from 1 to 2 gives -1/2 e^-4 + 1/2 e^-2 = 1/2(e^-2 - e^-4).

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51. Question 51

    Which of the following statements correctly describe the concept of efficiency in environmental economics?

    A. All allocation is Pareto efficient if no one can be made better off without making someone else worse off.
    B. Efficiency ensures a fair and equitable distribution of resources among all individuals.
    C. Market allocations are efficient only in the absence of market failures such as externalities.
    D. Efficiency is a normative concept concerned with what should be done based on societal value.
    E. Environmental policies that internalize externalities can improve efficiency.

    1. AA, B & D Only
    2. BA, B & E Only
    3. CA, C & E Only
    4. DB, C & D Only

    Answer: (C) A, C & E Only

    Explanation

    Pareto efficiency means no one can be made better off without making someone else worse off. Market allocations are efficient only when market failures such as externalities are absent or corrected, and policies that internalize externalities can improve efficiency. Efficiency is not the same as equity, and statement D describes a broader normative judgement rather than efficiency itself.

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52. Question 52

    Match List-I with List-II.

    List-I	List-II
    A. The mean of a Hypergeometric distribution	I. q/p²
    B. The moment generating function of negative binomial distribution	II. (Q - Pe^t)^-r
    C. The coefficient of Kurtosis of a binomial distribution	III. nM/N
    D. The variance of geometric distribution	IV. (1 - 6pq)/(npq) + 3

    Distribution properties and formulas

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

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

    Explanation

    For the hypergeometric distribution, the mean is nM/N. The negative binomial moment generating function corresponds to (Q - Pe^t)^-r in the notation used. The binomial kurtosis coefficient corresponds to 3 + (1-6pq)/(npq), and the geometric variance is q/p². Hence A-III, B-II, C-IV, D-I.

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53. Question 53

    Match List-I with List-II.

    List-I	List-II
    A. Inverted 'U' hypothesis	I. Herman Daly
    B. Sustainable development	II. Garrett Hardin
    C. Ecological Economics	III. Simon Kuznets
    D. Tragedy of the commons	IV. Gro Harlem Brundtland

    Environmental and development concepts and associated thinkers

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

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

    Explanation

    The inverted-U hypothesis is associated with Simon Kuznets, sustainable development with Gro Harlem Brundtland, ecological economics with Herman Daly, and tragedy of the commons with Garrett Hardin. Thus A-III, B-IV, C-I, D-II is correct.

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54. Question 54

    Match List-I with List-II.

    List-I	List-II
    A. β₂ for Chi-square distribution	I. (n-2)
    B. Skewness for Chi-square distribution	II. 48n + 12n²
    C. Mode for Chi-square distribution	III. (12/n)+3
    D. μ₃ for Chi-square distribution	IV. √(2/n)

    Chi-square distribution quantities and formulas

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

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

    Explanation

    The keyed/source match is A-III, B-IV, C-I, D-II. However, some formulas shown for the chi-square distribution do not align cleanly with the standard skewness and central moment formulas, so this item needs review against the official key/source.

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55. Question 55

    Which of the following are true about New Classical approach?

    A. The main protagonist was R. E. Lucas Jr.
    B. It is based on adaptive expectation.
    C. It was developed during 1950s.
    D. Complete wage and price flexibility.
    E. Difference between actual and expected price is a random error.

    1. AA, B & E Only
    2. BA, D & E Only
    3. CB, C, D & E Only
    4. DA, B & D Only

    Answer: (B) A, D & E Only

    Explanation

    The New Classical approach is associated with Robert Lucas, rational expectations, flexible wages and prices, and forecast errors that are random. It is not based on adaptive expectations and was not developed in the 1950s. Therefore A, D and E are true.

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56. Question 56

    Match List-I with List-II.

    List-I: Criteria of 15th Finance Commission	List-II: Weights for horizontal devolution
    A. Income distance	I. 15%
    B. Population	II. 12.5%
    C. Demographic performance	III. 45%
    D. Forest and Ecology	IV. 10%

    15th Finance Commission horizontal devolution criteria and weights

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

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

    Explanation

    For the 15th Finance Commission horizontal devolution criteria, income distance has weight 45%, population 15%, demographic performance 12.5%, and forest and ecology 10%. Hence A-III, B-I, C-II, D-IV.

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57. Question 57

    Which of the following are the effects of increase in government spending in IS-LM framework in a closed economy?

    A. Increase in income by multiplier times government expenditure.
    B. Shift in IS curve to the right leading to disequilibrium in money market at given level of interest rate.
    C. Quantity of money demand will be higher.
    D. Interest rate will decrease.
    E. Private investment will increase leading to increase in aggregate demand.

    1. AB, C & D Only
    2. BC, D & E Only
    3. CA, B & C Only
    4. DB, D & E Only

    Answer: (C) A, B & C Only

    Explanation

    Higher government spending shifts the IS curve right. At the initial interest rate, income and money demand rise, creating money-market disequilibrium and upward pressure on interest rates. Interest rates do not decrease, and private investment is crowded out rather than increased. Thus A, B and C are correct.

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58. Question 58

    Which of the following indicate that country 'B' is capital abundant country?

    Statement	Condition
    A	(Total Capital / Total Labour)_B > (Total Capital / Total Labour)_A
    B	(Total Capital / Total Labour)_B < (Total Capital / Total Labour)_A
    C	(Price of Capital / Price of Labour)_B < (Price of Capital / Price of Labour)_A
    D	(Price of Capital / Price of Labour)_B > (Price of Capital / Price of Labour)_A
    E	(Total Labour / Total Capital)_B > (Price of Capital / Price of Labour)_A

    Capital abundance conditions

    1. AA & B Only
    2. BA & C Only
    3. CB & D Only
    4. DC & E Only

    Answer: (B) A & C Only

    Explanation

    A country is capital abundant relative to another if its capital-labour ratio is higher. In factor-price terms, capital abundance is also reflected in a lower relative price of capital to labour. Therefore statements A and C indicate that country B is capital abundant.

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59. Question 59

    Match List-I with List-II.

    List-I	List-II
    A. Income induced adjustment process of balance of payments	I. Paul Samuelson
    B. Absorption approach of BoPs	II. Keynes, J.M.
    C. Impossible trinity	III. Sidney S. Alexander
    D. Factor price equalization theorem	IV. Mundell-Fleming

    Balance of payments/trade concepts and associated economists

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

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

    Explanation

    The income-induced adjustment process of balance of payments is associated with J. M. Keynes, the absorption approach with Sidney S. Alexander, impossible trinity with Mundell-Fleming, and factor price equalization theorem with Paul Samuelson. Hence A-II, B-III, C-IV, D-I.

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60. Question 60

    According to Lucas Critique:

    1. AIt assumes monetary policy not to be neutral with respect to real variables.
    2. BDrifting coefficients can make macro econometric models more reliable.
    3. CKeynesian models correctly consider the impact of policies on future expectations.
    4. DThe stability of coefficients of models are important for policy predictions.

    Answer: (D) The stability of coefficients of models are important for policy predictions.

    Explanation

    The Lucas Critique argues that policy changes can alter the structural relationships estimated in macroeconometric models because expectations and behaviour change. Stable structural coefficients are therefore crucial for reliable policy prediction.

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61. Question 61

    Arrange the following union government deficits as percentage of GDP for the year 2023-24 in ascending order as per union budget 2025-26.

    A. Fiscal deficit
    B. Effective Revenue deficit
    C. Primary deficit
    D. Current Account deficit
    E. Revenue deficit

    1. AD, B, A, C, E
    2. BD, A, B, C, E
    3. CD, B, C, E, A
    4. DD, C, B, E, A

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

    Explanation

    The ascending order as per the source is Current Account deficit, Effective Revenue deficit, Primary deficit, Revenue deficit and Fiscal deficit. Thus the sequence is D, B, C, E, A.

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62. Question 62

    Arrange the following derivative markets in India in chronological order (starting from oldest to latest).

    A. Commencement of trading in options on individual securities
    B. Introduction of interest rate futures
    C. Commencement of trading in Stock Futures
    D. Introduction of Futures trading based on the Index
    E. Commencement of trading in Index options

    1. AD, C, E, A, B
    2. BD, E, A, C, B
    3. CD, A, E, B, C
    4. DD, C, E, B, A

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

    Explanation

    The chronological sequence of major derivative market introductions in India is index futures first, followed by index options, options on individual securities, stock futures and later interest rate futures. Therefore the order is D, E, A, C, B.

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63. Question 63

    Which of the followings are correct in case of Normal distribution?

    A. μ3 for Normal distribution is 0.
    B. β2 for Normal distribution is 0.
    C. Mean deviation (about mean) for Normal distribution is 4/5 σ
    D. μ4 for Normal Distribution is 2σ^4
    E. Characteristic function for Normal distribution is e^(iμt - t^2σ^2/2)

    1. AA, C & E Only
    2. BA, B, C & E Only
    3. CB, C & D Only
    4. DA, C & D Only

    Answer: (A) A, C & E Only

    Explanation

    For a normal distribution, the third central moment is zero. The coefficient β2 is 3, not 0, and the fourth central moment is 3σ^4, not 2σ^4. The mean deviation about the mean is commonly approximated as 4/5 σ, and the stated characteristic function is correct. Hence A, C and E are correct.

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64. Question 64

    Which of the following comprises the current account of the balance of payments?

    A. Invisible exports and imports
    B. Direct investment
    C. Unilateral transfers
    D. SDR allocations
    E. Borrowings from foreign countries

    1. AA & E Only
    2. BC & E Only
    3. CA & C Only
    4. DA & B Only

    Answer: (C) A & C Only

    Explanation

    The current account includes trade in goods and services, invisibles and unilateral transfers. Direct investment, SDR allocations and foreign borrowings are recorded under the capital/financial account or reserves. Therefore A and C are correct.

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65. Question 65

    Which of the followings are not true pertaining to Wagner’s Law of increasing state activities?

    A. Wagner’s Law is classified as positive theory of public expenditure.
    B. Public sector in industrializing nations grow as a proportion of total economic activity with the increase in per capita income and output.
    C. Proportionate increase in public sector is not constant but increasing with the increase in total economic activity.
    D. The law accounts for the effect of war on public expenditure.
    E. Public expenditure tends to grow in a stepwise manner.

    1. AA, B & D Only
    2. BB, C & E Only
    3. CB & C Only
    4. DD & E Only

    Answer: (D) D & E Only

    Explanation

    Wagner’s Law explains the long-run tendency of state activities and public expenditure to expand with economic development, making A, B and C consistent with the law. War-related displacement effects and stepwise growth of expenditure are associated with other theories such as Peacock-Wiseman, not Wagner’s Law. Hence D and E are not true for Wagner’s Law.

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66. Question 66

    If U = 6x² + y², and 4x - y = 1. What is the value of U?

    1. A4/15
    2. B3/11
    3. C3/16
    4. D4/21

    Answer: (B) 3/11

    Explanation

    The question appears to intend the constrained minimum of U subject to 4x - y = 1. Using the Lagrange conditions gives y = -3x/2 and, with the constraint, x = 2/11 and y = -3/11. Then U = 6(2/11)² + (-3/11)² = 33/121 = 3/11.

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67. Question 67

    Arrange the following countries in descending order based on their current account balance as a percent of GDP in the period Q2 FY 25 as per the Economic Survey 2024-25.

    A. India
    B. Russia
    C. China
    D. U.K.
    E. South Africa

    1. AD, A, B, C, E
    2. BB, C, A, D, E
    3. CC, B, A, E, D
    4. DA, C, E, B, D

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

    Explanation

    The sequence indicated by the source is China, Russia, India, South Africa and U.K. in descending order of current account balance as a percentage of GDP for Q2 FY25. Therefore the order is C, B, A, E, D.

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68. Question 68

    Arrange the following crisis in chronological order (starting from oldest).

    A. OPEC Oil Crisis
    B. International Debt Crisis
    C. East Asian Financial Crisis
    D. Argentinian Economic Crisis
    E. Eurozone Crisis

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

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

    Explanation

    The OPEC oil crisis occurred in the 1970s, followed by the international debt crisis of the early 1980s, the East Asian financial crisis in 1997, the Argentinian economic crisis around 1998-2002, and the Eurozone crisis beginning after 2009. Hence the chronological order is A, B, C, D, E.

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69. Question 69

    Arrange the following tax reform committees on the basis of their year of constitution starting from the oldest.

    A. Raja Chelliah tax reform committee
    B. T. R. Rastogi Committee on Service tax reforms
    C. Vijay Kelkar committee on tax reforms
    D. Parthasarathi Shome committee on direct tax
    E. K. L. Rekhi committee on indirect tax

    1. AA, E, C, B, D
    2. BE, A, C, B, D
    3. CA, E, D, C, B
    4. DD, E, A, C, B

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

    Explanation

    The source sequence places the Raja Chelliah tax reform committee first, followed by the K. L. Rekhi committee on indirect tax, the Vijay Kelkar committee on tax reforms, the T. R. Rastogi Committee on service tax reforms, and the Parthasarathi Shome committee on direct tax. Therefore the order is A, E, C, B, D.

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70. Question 70

    In the context of neoclassical growth model, the effects of an increase in population growth rate is/are.

    A. Reduction in steady-state level of capital per head
    B. Increase in per capita output
    C. Increase in steady state rate of growth of aggregate output
    D. Decrease in capital-output ratio
    E. An inward shift in production possibility curve.

    1. AA, B & C Only
    2. BB, C, D & E Only
    3. CA & C Only
    4. DC, D & E Only

    Answer: (C) A & C Only

    Explanation

    In the Solow neoclassical growth model, a higher population growth rate reduces steady-state capital per worker and raises the steady-state growth rate of aggregate output through faster labour-force growth. It does not increase steady-state per capita output, nor does it imply an inward shift of the production possibility curve. Hence A and C are correct.

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71. Question 71

    Match List-I with List-II.

    List-I	List-II
    A. Income elasticity greater than one	I. Substitute goods
    B. Positive cross price elasticity	II. Inferior goods
    C. Downward sloping price consumption curve (PCC)	III. Luxurious goods
    D. Negative income effect	IV. Relative elastic demand

    Demand concepts and related goods or demand properties

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

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

    Explanation

    Income elasticity greater than one characterizes luxurious goods. Positive cross price elasticity indicates substitute goods. A downward sloping price consumption curve is associated with relatively elastic demand, and a negative income effect is associated with inferior goods. Therefore A-III, B-I, C-IV, D-II is correct.

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72. Question 72

    A candidate is selected for interview for three posts. For the first post, there are 3 candidates, for the second 4 candidates and for the third 2 candidates. What is the probability that the candidate is selected for at least one post?

    1. A1/4
    2. B1/2
    3. C3/4
    4. D1/9

    Answer: (C) 3/4

    Explanation

    The probability of not being selected for the three posts is (2/3) × (3/4) × (1/2) = 1/4. Therefore the probability of being selected for at least one post is 1 - 1/4 = 3/4.

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73. Question 73

    Bootstrapping technique is use to __________.

    1. ATests for specification bias
    2. BObtain the sampling distribution of parameters of interest
    3. CTest for autocorrelation
    4. DTest for normality of error term

    Answer: (B) Obtain the sampling distribution of parameters of interest

    Explanation

    Bootstrapping repeatedly resamples from the observed data to approximate the sampling distribution of an estimator or parameter of interest. It is therefore used to obtain the sampling distribution of parameters of interest.

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74. Question 74

    By using the uniqueness property of moment generating function (M.G.F.), which of the followings are correct distribution if M.G.F. is as follows?

    A. M(t) = (1/2 + 1/2 e^t)^6 is a poisson distribution.
    B. M(t) = (1 + e^t)^5 / 32 is a binomial distribution.
    C. M(t) = e^(3(e^t - 1)) is poisson distribution.
    D. M(t) = e^((e^t - 1)/4) is poisson distribution.
    E. M(t) = 4(3e^-t - 1)^-2 is binomial distribution.

    1. AA, B, C & D Only
    2. BB, C & D Only
    3. CB, C, D & E Only
    4. DA, B, C, D & E

    Answer: (B) B, C & D Only

    Explanation

    A is actually a binomial MGF, not a Poisson MGF. B can be written as (1/2 + 1/2e^t)^5, so it is binomial. C is a Poisson MGF with mean 3, and D is a Poisson MGF with mean 1/4. E is not a binomial MGF. Hence B, C and D only are correct.

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75. Question 75

    Arrange the following items on the basis of the expenditure allocation made in the union budget 2025-26 in descending order.

    A. Agriculture and Allied activities
    B. Education
    C. Defense
    D. Commerce and Industry
    E. Rural Development

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

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

    Explanation

    As per the source ordering for Union Budget 2025-26 expenditure allocations, Defence is highest among the listed heads, followed by Rural Development, Agriculture and Allied activities, Education, and Commerce and Industry. Therefore the descending order is C, E, A, B, D.

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76. Question 76

    Which of the following is not correct about Harrod-Domar model of economic growth?

    1. AThe natural rate of growth is made up of growth of labor force and labor productivity.
    2. BIf actual growth (g) is greater than warranted rate of growth (g_w), g can continue to diverge from g_w only until it hits natural growth rate (g_n).
    3. Cg can be greater than g_n in the long-run.
    4. DFull employment of labor and capital require g = g_w = g_n.

    Answer: (C) g can be greater than g_n in the long-run.

    Explanation

    In the Harrod-Domar framework, the natural rate of growth acts as the upper long-run limit set by labour-force and productivity growth. For full employment of both labour and capital, actual, warranted and natural growth must be equal. Thus the statement that g can be greater than g_n in the long run is not correct.

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77. Question 77

    A company has examined its costs and revenue structure and has determined that C-total cost, R-the total revenue and X-the number of units produced are related as: C = 100 + 0.015X² and R = 3X. Find the product level X that will maximize profit for this company.

    1. A120
    2. B80
    3. C150
    4. D100

    Answer: (D) 100

    Explanation

    Profit is π = R - C = 3X - 100 - 0.015X². Maximizing gives dπ/dX = 3 - 0.03X = 0, so X = 100. The second derivative is negative, confirming a maximum.

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78. Question 78

    Which of following are not an assumptions of policy ineffectiveness propositions?

    A. Rational expectation
    B. Policy changes are not anticipated
    C. Economic agents have full information
    D. Nominal variables influence economic decision
    E. Output and employment are at their natural level

    1. AB & D Only
    2. BA, C & D Only
    3. CA, B, D & E Only
    4. DC, D & E Only

    Answer: (A) B & D Only

    Explanation

    The policy ineffectiveness proposition is built around rational expectations, information use by agents and natural-rate outcomes. Unanticipated policy changes are not an assumption in the stated form, and the proposition does not assume that nominal variables systematically influence real economic decisions. Hence B and D are not assumptions.

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79. Question 79

    Which of the following correctly state the formula to compute the rate of effective protection? Where, g = the rate of effective protection to producers of final commodities, t = the nominal tariff rate on consumers of the final commodity, t_i = the nominal tariff rate on the imported input and a_i = the ratio of the cost of the imported input to the price of the final commodity in the absence of tariffs.

    1. Ag = (t - a_i t_i) / (1 - a_i)
    2. Bg = (t + a_i t_i) / (1 - a_i)
    3. Cg = (t - a_i t_i) / (1 + a_i)
    4. Dg = (t + a_i t_i) / (1 + a_i)

    Answer: (A) g = (t - a_i t_i) / (1 - a_i)

    Explanation

    The standard effective rate of protection formula with an imported input is g = (t - a_i t_i) / (1 - a_i), where the input tariff reduces the value added protection to domestic producers. Hence option A is correct.

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80. Question 80

    Which of the following causes a positive output gap, where, output gap = Actual output - Potential output?

    1. APopulation growth
    2. BTechnological progress
    3. COveremployment of factors of production
    4. DUnder utilization of resources

    Answer: (C) Overemployment of factors of production

    Explanation

    A positive output gap occurs when actual output exceeds potential output. This is typically associated with overemployment or overutilization of factors of production rather than idle resources.

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81. Question 81

    Which of the followings are true in case of externality?

    A. In case of externality, all costs and benefits associated with the goods are not internalized by households and firms involved in buying and productions.
    B. Presence of externality results either under production or over production of the good.
    C. Market based decision making yields an efficient outcome in the presence of externality.
    D. In case of negative externality, the marginal social cost is higher than marginal cost.
    E. Well defined property right can solve the problem of externality.

    1. AA, B & D Only
    2. BB, D & E Only
    3. CA, B, D & E Only
    4. DB, C, D & E Only

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

    Explanation

    Externalities mean private agents do not internalize all costs or benefits, causing overproduction or underproduction. With a negative externality, marginal social cost exceeds private marginal cost. Well-defined property rights can help solve externality problems under Coasean conditions. Market decisions alone are not generally efficient in the presence of externalities, so C is false. Hence A, B, D and E are true.

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82. Question 82

    According to Granger and Newbold, a good rule of thumb to suspect that the estimated regression is spurious is given by:

    1. AHigh R² with low t-value (R² > t)
    2. BHigh t values with low Durbin-Watson d value (t > d)
    3. CHigh R² and low Durbin-Watson d value (R² > d)
    4. DHigh R² and low F value (R² > F)

    Answer: (C) High R² and low Durbin-Watson d value (R² > d)

    Explanation

    Granger and Newbold suggested that a regression may be spurious when it has a high R² but a low Durbin-Watson statistic. A common rule of thumb is to suspect spurious regression when R² is greater than the Durbin-Watson d value.

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83. Question 83

    Match List-I with List-II.

    List-I: Concepts	List-II: Their expression
    A. Kaldor’s first law of growth	I. P_m = f(g_m), f' > 0
    B. Kaldor’s second law of growth	II. y* = -e(u - u*)
    C. Kaldor’s third law of growth	III. g_GDP = f(g_m), f' > 0
    D. Okun’s law	IV. P_nm = f(g_m), f' > 0

    Kaldor’s laws, Okun’s law and their expressions

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

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

    Explanation

    Kaldor’s first law links GDP growth with manufacturing output growth, so A matches III. Kaldor’s second law, or Verdoorn’s law, links manufacturing productivity growth with manufacturing output growth, so B matches I. Kaldor’s third law links productivity outside manufacturing with manufacturing output growth, so C matches IV. Okun’s law relates output and unemployment, so D matches II.

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84. Question 84

    If X is a poisson variate with mean λ, then P(x+1) is:

    1. Aλ/(x+1) P(x)
    2. Bλ/x
    3. C(x+1)/λ P(x)
    4. Dx/λ P(x)

    Answer: (A) λ/(x+1) P(x)

    Explanation

    For a Poisson random variable, P(X=x) = e^-λ λ^x / x!. Therefore P(x+1)/P(x) = λ/(x+1), so P(x+1) = [λ/(x+1)] P(x).

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85. Question 85

    Match List-I with List-II.

    List-I	List-II
    A. ∫₀^∞ 1/(1+x²) dx	I. does not exist
    B. ∫₁^∞ 1/√x dx	II. 1/3
    C. ∫₋∞⁻¹ 1/x⁴ dx	III. π/2
    D. ∫₋∞^+∞ 1/(1+x²) dx	IV. π

    Improper integrals and their values

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

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

    Explanation

    The integral of 1/(1+x²) from 0 to infinity is π/2, so A matches III. The integral of 1/√x from 1 to infinity diverges, so B matches I. The integral of 1/x⁴ from negative infinity to -1 is 1/3, so C matches II. The integral of 1/(1+x²) over the whole real line is π, so D matches IV.

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86. Question 86

    Arrange the expenditure allocation to following items, as % of total union government expenditure as per the union budget 2025-26 in ascending order.

    A. Finance Commission and Other Transfers
    B. Interest Payment
    C. Pensions
    D. Major Subsidies
    E. Central Sector Schemes (excluding capital outlay on defense and subsidies)

    1. AA, D, E, C, B
    2. BC, D, A, E, B
    3. CE, C, D, A, B
    4. DC, D, E, B, A

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

    Explanation

    The source ordering for these heads as a percentage of total Union Government expenditure in Budget 2025-26 is Pensions, Major Subsidies, Finance Commission and Other Transfers, Central Sector Schemes, and Interest Payment. Thus the ascending order is C, D, A, E, B.

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87. Question 87

    The management of a manufacturing firm wishes to determine the average time required to complete a certain manual operation. There should be 0.95 confidence that error in the estimate will not exceed 2 minutes. What sample size is estimated by a time and motion study expert as 16 minutes?

    1. A96
    2. B300
    3. C255
    4. D246

    Answer: (D) 246

    Explanation

    For estimating a mean with 95% confidence, n = (Zσ/E)². Using Z = 1.96, σ = 16 and allowable error E = 2 gives n = (1.96 × 16 / 2)² = 245.86, which is rounded up to 246.

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88. Question 88

    Match List-I with List-II.

    List-I: Monetary policy regime	List-II: Periods
    A. Fiscal dominance	I. 2016 onwards
    B. Multiple indicator approach	II. 1951-1985
    C. Monetary targeting with feedbacks	III. 1998-2016
    D. Flexible inflation targeting	IV. 1985-1998

    Monetary policy regimes in India and their periods

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

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

    Explanation

    India’s monetary policy regime is commonly classified as fiscal dominance during 1951-1985, monetary targeting with feedback during 1985-1998, the multiple indicator approach during 1998-2016, and flexible inflation targeting from 2016 onwards. Hence A-II, B-III, C-IV, D-I is correct.

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89. Question 89

    Arrange the following rates in ascending order, as decided in 54th meeting of monetary policy committee of RBI.

    A. Marginal Standing Facility Rate
    B. Standing Deposit Facility Rate
    C. CRR
    D. Reverse Repo Rate
    E. Repo Rate

    1. AC, D, A, B, E
    2. BB, C, D, A, E
    3. CD, C, B, E, A
    4. DC, D, E, B, A

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

    Explanation

    The reverse repo rate is the lowest among the listed rates, followed by CRR, the standing deposit facility rate, the repo rate and the marginal standing facility rate. Hence the ascending order is D, C, B, E, A.

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90. Question 90

    Find the P(A∩B).

    Two fair dice are thrown independently. Three events A, B, and C are defined as follows:
    A: odd face with first dice
    B: odd face with second dice
    C: sum of points on two dice is odd

    1. A0
    2. B3/4
    3. C7/12
    4. D1/4

    Answer: (D) 1/4

    Explanation

    A and B mean that both dice show odd faces. Each die has probability 1/2 of showing an odd face, and the dice are independent. Therefore P(A∩B) = 1/2 × 1/2 = 1/4.

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91. Question 91

    Find the P(A∩B∩C).

    Two fair dice are thrown independently. Three events A, B, and C are defined as follows:
    A: odd face with first dice
    B: odd face with second dice
    C: sum of points on two dice is odd

    1. A0
    2. B1/2
    3. C1/4
    4. D1/6

    Answer: (A) 0

    Explanation

    If both A and B occur, both dice show odd faces and their sum is even. This cannot occur together with C, which requires the sum to be odd. Therefore P(A∩B∩C) = 0. The source page appears to highlight 1/4, so this item is flagged for review.

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92. Question 92

    Find the P(C).

    Two fair dice are thrown independently. Three events A, B, and C are defined as follows:
    A: odd face with first dice
    B: odd face with second dice
    C: sum of points on two dice is odd

    1. A1/4
    2. B1/2
    3. C3/4
    4. D5/6

    Answer: (B) 1/2

    Explanation

    The sum of two dice is odd when one die is odd and the other is even. There are 18 such outcomes out of 36 equally likely outcomes, so P(C) = 18/36 = 1/2.

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93. Question 93

    Find the P(A∩C).

    Two fair dice are thrown independently. Three events A, B, and C are defined as follows:
    A: odd face with first dice
    B: odd face with second dice
    C: sum of points on two dice is odd

    1. A0
    2. B1/2
    3. C1/6
    4. D1/4

    Answer: (D) 1/4

    Explanation

    A requires the first die to be odd. For C to also occur, the second die must be even. There are 3 odd choices for the first die and 3 even choices for the second die, giving 9 outcomes out of 36. Hence P(A∩C) = 1/4.

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94. Question 94

    Find the P(B∩C).

    Two fair dice are thrown independently. Three events A, B, and C are defined as follows:
    A: odd face with first dice
    B: odd face with second dice
    C: sum of points on two dice is odd

    1. A1/2
    2. B0
    3. C1/4
    4. D1/36

    Answer: (C) 1/4

    Explanation

    B requires the second die to be odd. For C to also occur, the first die must be even. There are 3 even choices for the first die and 3 odd choices for the second die, giving 9 outcomes out of 36. Hence P(B∩C) = 1/4.

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95. Question 95

    VRRR operations indicate.

    The RBI’s current monetary policy reflects a nuanced response to evolving macroeconomic dynamics. While the repo rate remains unchanged at 6.5%, the policy undertone reveals a calibrated withdrawal of accommodation, signaling a shift from pandemic era stimulus. The RBI’s liquidity management has transitioned from passive surplus absorption to active fine tuning using variable rate reverse repo (VRRR) operations, amid concerns of global spillovers and domestic inflationary pressures. The policy indicates a forward looking stance, focusing on anchoring inflation expectations rather than reacting to transient price shocks. The monetary transmission remains uneven, with sectoral divergences in credit uptake and lending rates. Furthermore the policy indirectly emphasises macro prudential regulation and financial stability, acknowledging risks from global interest rate differentials, capital flows and currency volatility. This reflects an integrated policy framework balancing inflation targeting with broader financial resilience in a globally uncertain environment.

    1. ALong term capital infusion
    2. BStructural adjustment of fiscal deficit
    3. CActive short term liquidity absorption
    4. DDecrease in SLR

    Answer: (C) Active short term liquidity absorption

    Explanation

    The passage states that RBI liquidity management has moved to active fine tuning using variable rate reverse repo operations. VRRR is used to absorb liquidity in the short term, so it indicates active short-term liquidity absorption.

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96. Question 96

    The RBI’s consideration of global interest rate differentials primarily relates to.

    The RBI’s current monetary policy reflects a nuanced response to evolving macroeconomic dynamics. While the repo rate remains unchanged at 6.5%, the policy undertone reveals a calibrated withdrawal of accommodation, signaling a shift from pandemic era stimulus. The RBI’s liquidity management has transitioned from passive surplus absorption to active fine tuning using variable rate reverse repo (VRRR) operations, amid concerns of global spillovers and domestic inflationary pressures. The policy indicates a forward looking stance, focusing on anchoring inflation expectations rather than reacting to transient price shocks. The monetary transmission remains uneven, with sectoral divergences in credit uptake and lending rates. Furthermore the policy indirectly emphasises macro prudential regulation and financial stability, acknowledging risks from global interest rate differentials, capital flows and currency volatility. This reflects an integrated policy framework balancing inflation targeting with broader financial resilience in a globally uncertain environment.

    1. ADomestic food inflation
    2. BForeign portfolio flows and exchange rate management
    3. CRetail credit growth
    4. DAgricultural policy

    Answer: (B) Foreign portfolio flows and exchange rate management

    Explanation

    The passage links global interest rate differentials with capital flows and currency volatility. These are directly related to foreign portfolio flows and exchange rate management.

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97. Question 97

    Which concept is implicit in RBI’s focus on anchoring inflation without immediate rate action?

    The RBI’s current monetary policy reflects a nuanced response to evolving macroeconomic dynamics. While the repo rate remains unchanged at 6.5%, the policy undertone reveals a calibrated withdrawal of accommodation, signaling a shift from pandemic era stimulus. The RBI’s liquidity management has transitioned from passive surplus absorption to active fine tuning using variable rate reverse repo (VRRR) operations, amid concerns of global spillovers and domestic inflationary pressures. The policy indicates a forward looking stance, focusing on anchoring inflation expectations rather than reacting to transient price shocks. The monetary transmission remains uneven, with sectoral divergences in credit uptake and lending rates. Furthermore the policy indirectly emphasises macro prudential regulation and financial stability, acknowledging risks from global interest rate differentials, capital flows and currency volatility. This reflects an integrated policy framework balancing inflation targeting with broader financial resilience in a globally uncertain environment.

    1. APassive targeting
    2. BExpectation management
    3. CCredit rationing
    4. DMonetary expansion

    Answer: (B) Expectation management

    Explanation

    The passage says the RBI focuses on anchoring inflation expectations rather than reacting immediately to transient price shocks. This reflects expectation management as a policy tool.

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98. Question 98

    Which of the following reflects the RBI’s strategy in managing transient inflation shocks?

    The RBI’s current monetary policy reflects a nuanced response to evolving macroeconomic dynamics. While the repo rate remains unchanged at 6.5%, the policy undertone reveals a calibrated withdrawal of accommodation, signaling a shift from pandemic era stimulus. The RBI’s liquidity management has transitioned from passive surplus absorption to active fine tuning using variable rate reverse repo (VRRR) operations, amid concerns of global spillovers and domestic inflationary pressures. The policy indicates a forward looking stance, focusing on anchoring inflation expectations rather than reacting to transient price shocks. The monetary transmission remains uneven, with sectoral divergences in credit uptake and lending rates. Furthermore the policy indirectly emphasises macro prudential regulation and financial stability, acknowledging risks from global interest rate differentials, capital flows and currency volatility. This reflects an integrated policy framework balancing inflation targeting with broader financial resilience in a globally uncertain environment.

    1. AImmediate rate hike
    2. BMaintaining status quo with calibrated liquidity tools
    3. CAggressive tightening
    4. DReducing CRR

    Answer: (B) Maintaining status quo with calibrated liquidity tools

    Explanation

    The passage notes that the repo rate remains unchanged while the RBI uses calibrated liquidity management tools such as VRRR operations. This reflects maintaining the rate status quo with calibrated liquidity tools.

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99. Question 99

    The term withdrawal accommodation in monetary policy implies.

    The RBI’s current monetary policy reflects a nuanced response to evolving macroeconomic dynamics. While the repo rate remains unchanged at 6.5%, the policy undertone reveals a calibrated withdrawal of accommodation, signaling a shift from pandemic era stimulus. The RBI’s liquidity management has transitioned from passive surplus absorption to active fine tuning using variable rate reverse repo (VRRR) operations, amid concerns of global spillovers and domestic inflationary pressures. The policy indicates a forward looking stance, focusing on anchoring inflation expectations rather than reacting to transient price shocks. The monetary transmission remains uneven, with sectoral divergences in credit uptake and lending rates. Furthermore the policy indirectly emphasises macro prudential regulation and financial stability, acknowledging risks from global interest rate differentials, capital flows and currency volatility. This reflects an integrated policy framework balancing inflation targeting with broader financial resilience in a globally uncertain environment.

    1. AIncrease in CRR
    2. BActive bond purchase
    3. CGradual normalization of policy stance
    4. DExpansionary fiscal stimulus

    Answer: (C) Gradual normalization of policy stance

    Explanation

    Withdrawal of accommodation means moving away from an expansionary or stimulus-oriented policy stance toward a more normal policy setting. Hence it implies gradual normalization of the policy stance.

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