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CUET PG Question Papers are the most important study material for effective exam preparation. We at Zollege have provided all CUET PG Previous Year Papers with Solution PDFs here. CUET PG 2024 Economics exam was conducted successfully on March 12 by NTA.

Students can freely download the CUET PG previous year's question paper PDFs along with their solutions here. We strongly encourage CUET PG aspirants to scan through all the CUET PG Question Paper to know the overall difficulty level, CUET PG Syllabus and understand the changes in CUET PG Exam Pattern over the years.

CUET PG 2024 Economics Question Paper with Answer Key PDF

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Economics 2024 Questions with Solutions

Question 1:

A trade-off is:

(a) A transaction at a price either above or below the equilibrium price
(b) Represented by a point outside a PPF
(c) Represented by a point inside a PPF
(d) A constraint that requires giving up one thing to get another

Correct Answer: (d) A constraint that requires giving up one thing to get another.
Solution:

A trade-off in economics refers to the concept where in order to gain something, you must give something up. It reflects the scarcity of resources and the need for choice.

Trade-offs are graphically represented on the Production Possibilities Frontier (PPF), which shows the maximum feasible combinations of two goods that can be produced with available resources and technology. Points inside the PPF represent inefficiency, while points outside are unattainable with current resources. Scarcity forces individuals and societies to make decisions about how to allocate resources, leading to trade-offs.

Question 2:

If a Production Function is given as Q(x, y) = Ax^a y^b, where (a + b) = 2, the function is said to display:

(a) Decreasing returns to scale
(b) Constant returns to scale
(c) Increasing returns to scale
(d) Zero returns to scale

Correct Answer: (c) Increasing returns to scale.
Solution:

Returns to scale refer to how output changes when all inputs are scaled up proportionally. If a + b > 1, the production function displays increasing returns to scale.

For the given production function Q(x, y) = Ax^a y^b, if doubling all inputs (x, y) results in output more than doubling, it implies increasing returns to scale. The sum a + b = 2 is greater than 1, hence doubling inputs will yield more than double the output. This concept is central to understanding economies of scale in production.

Question 3:

In an oligopolistic market, firm i and firm j have constant marginal cost = c for an identical good. In equilibrium, the prices of firms i and j are:

(a) P_i > P_j = c
(b) P_i > P_j > c
(c) P_i < P_j < c
(d) P_i = P_j = c

Correct Answer: (d) P_i = P_j = c.
Solution:

In a Bertrand oligopoly, firms set prices equal to marginal cost to avoid losing customers to competitors.

Bertrand competition assumes firms compete by setting prices, not quantities. If one firm sets a lower price, the other loses all demand. To avoid undercutting and losses, both firms eventually set prices equal to the marginal cost c, leading to P_i = P_j = c in equilibrium.

Question 4:

If Y = F(L, K) is a linear homogeneous production function, then multiplying all inputs by a constant factor α = 2 results in output increasing by a factor of:

(a) 2
(b) greater than 2
(c) less than 2
(d) 1

Correct Answer: (a) 2.
Solution:

A linear homogeneous production function implies that scaling inputs by a constant factor results in output scaling by the same factor.

Homogeneity of degree one (linear homogeneity) is a property of certain production functions. If all inputs are doubled (α = 2), the output also doubles. This property is crucial in analyzing production efficiency and scale economies.

Question 5:

In a Prisoner's Dilemma-like scenario, firm A and firm B should respectively:

(a) cooperate and cooperate
(b) compete and compete
(c) compete and cooperate
(d) cooperate and compete

Correct Answer: (b) compete and compete.
Solution:

In the Nash equilibrium of a Prisoner's Dilemma, both firms choose to compete as it is their dominant strategy.

Even though mutual cooperation leads to a better outcome (higher combined profit), firms fear the other's deviation to competition. As a result, both choose to compete, ensuring they don't end up with the lowest payoff.

Question 6:

Keeping a consumer's income constant, if bundle X is chosen by a consumer when bundle Y is available, then when bundle Y is chosen, X must not be a feasible alternative. This property of consumer behaviour is known as:

(a) The generalized axiom of consumer preference
(b) The weak axiom of revealed preference
(c) The feasibility property
(d) The strong axiom of revealed preference

Correct Answer: (b) The weak axiom of revealed preference.
Solution:

The weak axiom of revealed preference ensures that if a consumer prefers bundle X over bundle Y, then Y must not be preferred over X under any circumstances.

This axiom implies consistency in consumer choices. If X is chosen over Y when both are available, the consumer's revealed preference indicates X is at least as good as Y. Violating this would mean the consumer's behavior is irrational or inconsistent.

Question 7:

In Ronald Coase's Nobel-winning Coase theorem, if two bargaining parties have zero transaction costs, well-defined property rights over the good, and there are no income effects:

(a) They will never reach an efficient bargaining solution for the good.
(b) They will always reach an efficient bargaining solution for the good.
(c) They will reach a bargaining solution with government intervention.
(d) They will never be able to reach an efficient bargaining solution even with governmental intervention.

Correct Answer: (b) They will always reach an efficient bargaining solution for the good.
Solution:

Coase theorem states that under zero transaction costs and well-defined property rights, bargaining between parties leads to an efficient outcome regardless of the initial allocation of rights.

The Coase theorem is foundational in law and economics. It illustrates how externalities can be resolved efficiently through negotiation when transaction costs are negligible and property rights are clearly defined, without requiring government intervention.

Question 8:

For a manufacturing firm, the cost function is given by C = q³ + 2q² + q + 1. The marginal and average costs at q = 10 units are respectively given by:

(a) 300 and 100
(b) 340 and 125
(c) 341 and 121.1
(d) 328 and 110.1

Correct Answer: (c) 341 and 121.1.
Solution:

The marginal cost (MC) is the derivative of the cost function: MC = 3q² + 4q + 1. Substituting q = 10 gives MC = 341. The average cost (AC) is total cost divided by quantity: AC = (q³ + 2q² + q + 1) / q. Substituting q = 10 gives AC = 121.1.

- Marginal Cost (MC) measures the additional cost of producing one more unit of output. - Average Cost (AC) evaluates the cost per unit of output. These calculations are essential for understanding cost behavior and decision-making in production.

Question 9:

An allocation for agents in an economy, x, is said to be Pareto superior to another allocation y if moving from allocation y to allocation x:

(a) Increases some people's welfare while reducing others' welfare
(b) Increases all agents' welfare
(c) Increases no agents' welfare
(d) Creates a fiscal deficit

Correct Answer: (b) Increases all agents' welfare.
Solution:

An allocation is Pareto superior if it makes at least one individual better off without making anyone worse off, thereby improving overall welfare.

Pareto efficiency is a central concept in welfare economics. An allocation is considered Pareto efficient when no further changes can make someone better off without making someone else worse off. Pareto superiority, therefore, is a step toward Pareto efficiency.

Question 10:

Suppose an individual has a utility function given by U(x, y) = 2x + 3y. We can say that this function displays:

(a) Diminishing marginal rate of substitution
(b) Increasing marginal rate of substitution
(c) Constant marginal rate of substitution
(d) Zero marginal rate of substitution

Correct Answer: (c) Constant marginal rate of substitution.
Solution:

A linear utility function, such as U(x, y) = 2x + 3y, displays a constant marginal rate of substitution (MRS) because the trade-off between goods x and y remains constant.

The marginal rate of substitution is the slope of the indifference curve. For linear utility functions, the MRS remains unchanged, indicating the consumer is willing to trade goods at a constant rate. This reflects perfect substitutability between the goods.

Question 11:

For inferior goods, the substitution effect of a price decrease and the income effect of the same price decrease:

(a) Work in opposite direction
(b) Work in the same direction and decrease the aggregate consumption of the good
(c) Work in opposite direction and decrease aggregate consumption of the good
(d) Work in the same direction

Correct Answer: (a) Work in opposite direction.
Solution:

The substitution effect increases consumption, but the income effect decreases it for inferior goods, resulting in opposite directions.

Inferior goods are those whose demand decreases as consumer income rises. The substitution effect occurs because the lower price makes the good relatively cheaper, increasing demand. Conversely, the income effect reduces consumption because consumers shift to higher-quality goods.

Question 12:

The shutdown point for a profit-maximizing competitive firm in the short run is when the market price is equal to the:

(a) Average fixed cost
(b) Total fixed cost
(c) Average variable cost
(d) Average total cost

Correct Answer: (c) Average variable cost.
Solution:

The shutdown point is where the firm covers its variable costs but cannot cover its fixed costs.

At the shutdown point, the firm's revenue equals variable costs. Operating below this point increases losses because revenue cannot cover variable costs. Hence, shutting down minimizes losses to fixed costs only.

Question 13:

Services such as the provision of clean air and national security are considered to be:

(a) Pure public goods
(b) Pure private goods
(c) Club goods
(d) Nationalist goods

Correct Answer: (a) Pure public goods.
Solution:

Clean air and national security are non-rivalrous and non-excludable, making them public goods.

Public goods are available to everyone without reducing availability for others (non-rivalry) and cannot be restricted to specific users (non-excludability). Examples include national defense and environmental protection.

Question 14:

Debts which have to be paid at some specific future date are known as:

(a) Redeemable Debts
(b) Irredeemable Debts
(c) Treasury
(d) Amortization

Correct Answer: (a) Redeemable Debts.
Solution:

Redeemable debts require repayment at a specific future date, often with periodic interest payments.

Redeemable debts are contractual obligations with clear repayment schedules. They differ from irredeemable debts, which do not have a fixed repayment date and often involve perpetual interest payments.

Question 15:

The mark-up as a fraction of price for the profit-maximizing quantity Q* for a monopolist can be expressed as:

\((p^* - C(Q^*)) / p^* = -1 / e^*\).

We can say from this that:

(a) The mark-up is higher for goods with a higher price elasticity of demand
(b) The mark-up is lower for a good with a higher price elasticity of demand
(c) The mark-up is constant for all price elasticities of demand
(d) The mark-up is lower for goods with a lower price elasticity of demand

Correct Answer: (b) The mark-up is lower for a good with a higher price elasticity of demand.
Solution:

The formula shows an inverse relationship between mark-up and elasticity of demand.

When demand is elastic (e.g., high price elasticity), consumers are sensitive to price changes. This forces monopolists to lower their mark-up to maintain sales volume. Conversely, when demand is inelastic, monopolists can impose higher mark-ups without losing many customers.

Question 16:

If a consumer definitely prefers a payment of INR 50 for sure to a lottery which promises rewards of INR 100 or INR 0 with probabilities of 1/2 each, then we can say that the consumer is:

(a) Risk lover
(b) Risk averse
(c) Risk neutral
(d) Satisficer

Correct Answer: (b) Risk averse.
Solution:

A risk-averse individual prefers a certain outcome over a risky one, even if the expected values are equal.

In this scenario, the expected value of the lottery is INR 50 \((100 \times 0.5 + 0 \times 0.5)\), the same as the guaranteed amount. A risk-averse consumer avoids uncertainty and chooses the guaranteed INR 50 instead of gambling for an uncertain reward.

Question 17:

Mr Tokai is very particular in how he makes his coffee. He is completely inflexible in that he can only take 1 teaspoon of coffee with 2 teaspoons of sugar. Any more coffee or sugar given to him is discarded in his quest for the perfect coffee. Suppose you give him 9 teaspoons of coffee and 2 teaspoons of sugar. How many cups of coffee can he create from this?

(a) 1 cup of coffee
(b) 9 cups of coffee
(c) 2 cups of coffee
(d) 11 cups of coffee

Correct Answer: (a) 1 cup of coffee.
Solution:

Each cup requires 1 teaspoon of coffee and 2 teaspoons of sugar. With 2 teaspoons of sugar available, only 1 cup can be made.

The limiting factor in this scenario is sugar. Even though there are enough coffee teaspoons for multiple cups, the lack of sufficient sugar restricts Mr. Tokai to just 1 cup.

Question 18:

In a 2x2 general equilibrium model of exchange with goods X and Y and two consumers 1 and 2, both of whom have a weakly positive endowment of X and Y. In the exchange equilibrium, we know that:

(a) The MRS_XY for consumer 1 is greater than the MRS_XY for consumer 2
(b) The MRS_XY for consumer 1 is less than the MRS_XY for consumer 2
(c) The MRS_XY for consumer 1 is equal to the MRS_XY for consumer 2
(d) The MRS_XY and MRS_XY are both zero

Correct Answer: (c) The MRS_XY for consumer 1 is equal to the MRS_XY for consumer 2.
Solution:

At equilibrium, the MRS between two goods must be equal for all consumers.

The equality of MRS ensures that no further mutually beneficial trades can be made. Each consumer maximizes utility given their endowment and the market conditions, resulting in a Pareto-efficient allocation.

Question 19:

A utility maximizing consumer has a utility function given by, ( U(X, Y) = 2X + Y ). He has a budget constraint given by ( X + 2Y = 10 ). In equilibrium he purchases:

(a) ( X = 10, Y = 10 )
(b) ( X = 0, Y = 5 )
(c) ( X = 10, Y = 0 )
(d) ( X = 5, Y = 5 )

Correct Answer: (c) ( X = 10, Y = 0 ).
Solution:

To maximize utility, the consumer allocates the entire budget to X, as it provides a higher marginal utility relative to Y.

The utility function suggests that each unit of X contributes twice as much to utility as Y. Solving the budget constraint ( X + 2Y = 10 ) for maximum X gives ( X = 10, Y = 0 ).

Question 20:

Stagflation describes a situation of:

(a) Rising prices and rising output
(b) Rising prices and falling or stagnant output
(c) Falling or stagnant prices and rising output
(d) Falling or stagnant prices and falling or stagnant output

Correct Answer: (b) Rising prices and falling or stagnant output.
Solution:

Stagflation is an economic phenomenon where inflation occurs alongside stagnant or declining output.

Stagflation presents a challenge for policymakers, as conventional tools for controlling inflation (e.g., raising interest rates) can further suppress output, while measures to boost output may exacerbate inflation.

Question 21:

The current account balance in an open economy:

(a) Always includes the balance on investment income
(b) Never includes the balance on investment income
(c) Includes the balance on investment income and flows of investment
(d) Includes flows of investment but not the balance on investment income

Correct Answer: (a) Always includes the balance on investment income.
Solution:

The current account balance includes income from foreign investments, reflecting net flows of income from foreign assets owned by residents.

The current account balance captures the trade balance, net income from abroad (including dividends, interest, and profits), and current transfers such as remittances. It provides insights into the economic interactions between an economy and the rest of the world.

Question 22:

Transfer pricing refers to:

(a) Tariffs that change the value of goods when they are traded
(b) The movement of factors that causes changes in prices
(c) The over or under-pricing of goods in intra-firm cross-border trade of multinational companies
(d) The price at which skilled and professional workers are transferred by companies

Correct Answer: (c) The over or under-pricing of goods in intra-firm cross-border trade of multinational companies.
Solution:

Transfer pricing involves setting prices for goods, services, or intangible assets traded between subsidiaries of multinational companies to optimize costs and tax liabilities.

This practice can affect tax revenues of countries involved. Transfer pricing regulations aim to ensure fair pricing based on the arm's length principle, which mimics transactions between independent entities.

Question 23:

If a group of countries abolish trade barriers between themselves and set common tariffs for other countries, this is known as:

(a) A common market
(b) A customs union
(c) A free trade area
(d) A federation

Correct Answer: (b) A customs union.
Solution:

A customs union eliminates internal trade barriers among member countries while implementing a common external tariff for non-members.

Examples include the European Union’s customs union. Such arrangements facilitate trade among members and establish uniform trade policies toward external countries, enhancing economic cooperation.

Question 24:

Match List-I with List-II:

List-I	List-II
(A) y = ln(x)	(I) 1/x
(B) y = x²/4	(II) x/2
(C) y = x³	(III) 3x²
(D) y = x+1	(IV) 1

Choose the correct answer:

(a) A-(I), B-(III), C-(II), D-(IV)
(b) A-(I), B-(III), C-(II), D-(IV)
(c) A-(III), B-(II), C-(I), D-(IV)
(d) A-(II), B-(III), C-(I), D-(IV)

Correct Answer: (b) A-(I), B-(III), C-(II), D-(IV).
Solution:

The derivatives match as follows: y = ln(x) → 1/x; y = x²/4 → x/2; y = x³ → 3x²; y = x+1 → 1.

Calculating derivatives: d/dx[ln(x)] = 1/x, d/dx[x²/4] = x/2, d/dx[x³] = 3x², d/dx[x+1] = 1.

Question 25:

Match List-I with List-II:

List-I (Scenarios)	List-II (Type of Externality)
(A) Apple farmer near a beekeeper	(III) Positive Production
(B) Villages downstream of a manufacturing plant	(IV) Negative Production
(C) Unvaccinated family next to vaccinated neighbors	(I) Positive Consumption
(D) Rice farmer near a chemical plant	(II) Negative Consumption

Choose the correct answer:

(a) A-(III), B-(II), C-(I), D-(IV)
(b) A-(III), B-(IV), C-(I), D-(II)
(c) A-(I), B-(IV), C-(III), D-(II)
(d) A-(I), B-(II), C-(III), D-(IV)

Correct Answer: (b) A-(III), B-(IV), C-(I), D-(II).
Solution:

Externalities match as follows: A-Positive Production, B-Negative Production, C-Positive Consumption, D-Negative Consumption.

Positive externalities (e.g., pollination from bees) benefit others, while negative externalities (e.g., pollution) impose costs. Classifying these externalities helps in policy-making.

Question 26:

What does a bank do if there are no excess reserves?

(a) Stop Client's transaction
(b) Borrow reserves from other bank
(c) Ask clients to repay loans
(d) Increases lending rate

Correct Answer: (b) Borrow reserves from other bank.
Solution:

When a bank has no excess reserves, it may borrow reserves from other banks to meet its reserve requirements. Borrowing reserves ensures compliance with regulatory requirements and liquidity management.

Banks manage reserves to meet customer withdrawals and legal requirements. Borrowing from other banks is a common interbank mechanism to maintain financial stability and ensure reserve adequacy.

Question 27:

Which of the following is not a part of the national income?

(a) Income from government expenditure
(b) The interest amount on the unproductive national debt
(c) Undisputed profit
(d) Household payment to firms for purchasing goods and services

Correct Answer: (b) The interest amount on the unproductive national debt.
Solution:

Income from productive activities, such as government expenditure and household payments, forms part of the national income. However, interest on unproductive national debt does not, as it is not derived from economic production.

National income is calculated based on productive activities within an economy. Unproductive debts do not contribute to value creation and are excluded from national income assessments.

Question 28:

Why is the Phillips curve negatively sloped?

(a) The bargaining power of the labor unions increases with rise in unemployment
(b) The bargaining power of the labor unions decreases with rise in unemployment
(c) The bargaining power of the capitalists decreases with rise in unemployment
(d) The bargaining power of the capitalists increases with rise in unemployment

Correct Answer: (b) The bargaining power of the labor unions decreases with rise in unemployment.
Solution:

The Phillips curve reflects an inverse relationship between inflation and unemployment. As unemployment rises, workers have less bargaining power, reducing wages and inflation, leading to the curve's negative slope.

The Phillips curve demonstrates how low unemployment increases wage pressures and inflation, while high unemployment diminishes labor's negotiating power, leading to lower inflation rates.

Question 29:

If the GDP of an economy is Rs.100 and the autonomous aggregate investment and ex-post aggregate saving are Rs.30 in equilibrium, what would be the aggregate saving in equilibrium in that economy if the aggregate investment remains at Rs.30 and the average saving propensity increases from 30% to 40%?

(a) Rs. 40.
(b) More than Rs. 30.
(c) Rs. 30.
(d) More than Rs. 40.

Correct Answer: (c) Rs. 30.
Solution:

Even though the average saving propensity increases, the equilibrium saving remains at Rs.30 because savings cannot exceed the autonomous investment level in equilibrium.

Savings are limited by investment in equilibrium. Any increase in saving propensity adjusts the consumption pattern, but the total saving aligns with investment for equilibrium in a closed economy.

Question 30:

The GDP of an economy is Rs.100 crores. The aggregate saving is Rs.30 crores. If the autonomous aggregate investment rises from Rs.30 crores to Rs.45 crores, ceteris paribus, what would be the GDP in that economy in the new equilibrium?

(a) Rs. 100 crores.
(b) Rs. 130 crores.
(c) Rs. 145 crores.
(d) Rs. 150 crores.

Correct Answer: (d) Rs. 150 crores.
Solution:

An increase in autonomous investment raises the GDP due to the multiplier effect. With an investment rise from Rs.30 crores to Rs.45 crores, the GDP increases to Rs.150 crores in equilibrium.

The investment multiplier amplifies the effect of increased investment on GDP. The economy adjusts to the new equilibrium with higher investment and proportional output growth.

Question 31:

Match List-I with List-II:

List-I (Works)	List-II (Authors)
(A) Theory of Moral Sentiments	(III) Adam Smith
(B) Theories of Surplus Value	(IV) Karl Marx
(C) General Theory	(I) J.M. Keynes
(D) On Liberty	(II) J.S. Mill

Choose the correct answer:

(a) (A)-(I), (B)-(III), (C)-(III), (D)-(IV)
(b) (A)-(I), (B)-(III), (C)-(III), (D)-(IV)
(c) (A)-(III), (B)-(II), (C)-(I), (D)-(IV)
(d) (A)-(III), (B)-(IV), (C)-(I), (D)-(II)

Correct Answer: (d) (A)-(III), (B)-(IV), (C)-(I), (D)-(II).
Solution:

The works match with the authors as follows: (A) Adam Smith, (B) Karl Marx, (C) J.M. Keynes, and (D) J.S. Mill.

Key contributions in economics and philosophy include Adam Smith's foundational work on moral sentiments, Marx's exploration of surplus value, Keynes' theory on employment and money, and Mill's advocacy of liberty.

Question 32:

Arrange the following events in chronological order:

(a) (A), (B), (C), (D)
(b) (B), (D), (C), (A)
(c) (D), (B), (C), (A)
(d) (B), (C), (D), (A)

Correct Answer: (b) (B), (D), (C), (A).
Solution:

The correct order is: (B) Drain of Wealth, (D) Monopolies Inquiry Commission, (C) White Revolution, (A) New Economic Policy.

The Drain of Wealth occurred during British rule, the Monopolies Inquiry Commission was set up in 1977, the White Revolution occurred in the 1970s and 1980s, and liberalization policies were introduced in 1991.

Question 33:

Which of the followings are correct in the context of inflation?

(a) (A), (B) and (D) only
(b) (A), (B) and (C) only
(c) (A), (B), (C) and (D)
(d) (B), (C) and (D) only

Correct Answer: (c) (A), (B), (C) and (D).
Solution:

All statements are true: higher demand, production costs, international prices, and fiscal policies can all contribute to inflation.

Inflation can stem from demand-pull factors, cost-push factors, global price increases, and domestic policy changes like taxes and subsidies.

Question 34:

Arrange the following rates in ascending order:

(a) (D), (A), (C), (B)
(b) (A), (B), (C), (D)
(c) (D), (A), (B), (C)
(d) (A), (D), (B), (C)

Correct Answer: (a) (D), (A), (C), (B).
Solution:

The ascending order is: (D) Reverse Repo Rate, (A) Repo Rate, (C) Deposit Rate, (B) Lending Rate.

Reverse repo and repo rates are central bank tools, with lending rates typically higher than deposit rates in the banking system.

Question 35:

Which statutory body determines the criteria for tax devolution from the divisible pool to the States in India?

(a) Reserve Bank of India
(b) Niti Aayog
(c) Finance Commission of India
(d) Ministry of Commerce

Correct Answer: (c) Finance Commission of India.
Solution:

The Finance Commission recommends how taxes from the central divisible pool should be shared with states to promote fiscal federalism.

Established under Article 280 of the Constitution, the Finance Commission ensures fair distribution of resources between the Centre and States.

Question 36:

What would be the slope of the LM curve in the interest rate-income plane, if the rate of interest is exogenously determined by the Central Bank?

(a) Positively sloped.
(b) Negatively Sloped.
(c) Horizontal.
(d) Vertical.

Correct Answer: (c) Horizontal.
Solution:

If the interest rate is fixed by the central bank, it does not change with income levels, resulting in a horizontal LM curve.

A fixed interest rate implies that monetary policy is fully effective in controlling the interest rate, leaving the LM curve horizontal in the interest-income space.

Question 37:

What would be the slope of the labour supply curve if there is large-scale involuntary unemployment in the economy, if the wage rate is measured along the vertical axis and labour supply is measured along the horizontal axis?

(a) Horizontal.
(b) Vertical.
(c) Positively sloped.
(d) Negatively sloped.

Correct Answer: (a) Horizontal.
Solution:

Involuntary unemployment implies that the labour supply does not change regardless of wage levels, resulting in a horizontal supply curve.

Labour supply remains unaffected by wage changes during large-scale involuntary unemployment, as workers are willing to work at the prevailing wage but cannot find jobs.

Question 38:

Tax holidays and cash grants are examples of:

(a) Tariffs
(b) Subsidies
(c) Quotas
(d) Discounts

Correct Answer: (b) Subsidies.
Solution:

Tax holidays and cash grants are financial incentives provided by the government to promote business activities, categorized as subsidies.

Subsidies aim to reduce costs for businesses, encouraging investment and economic activity. Examples include tax breaks, direct grants, and reduced interest loans.

Question 39:

What would happen to the rate of interest, in new equilibrium, if the money supply rises in the Mundell-Fleming model under the flexible exchange rate and absolutely free capital mobility, if the international interest rate remains the same?

(a) It will rise.
(b) It will fall.
(c) It would either rise or fall.
(d) It would remain constant.

Correct Answer: (d) It would remain constant.
Solution:

Under free capital mobility and a flexible exchange rate, the domestic interest rate aligns with the international rate, and any increase in money supply does not affect it.

The Mundell-Fleming model demonstrates that monetary policy becomes ineffective in altering the interest rate under these conditions due to capital inflows and outflows.

Question 40:

If the expected rate of return from the investment projects in India be 10% per annum, and if the exchange rate becomes Rs.88 per USD from Rs.80 per USD in one year, what would be the expected amount of profit in terms of US Dollar from an investment project of 100 Million USD in India from the point of view of an investor from the USA?

(a) Zero.
(b) USD 110 Million.
(c) USD 80 Million.
(d) USD 88 Million.

Correct Answer: (a) Zero.
Solution:

The expected return in India is 10%, increasing the investment to USD 110 Million. However, rupee depreciation (Rs.88 per USD) offsets the gains, resulting in no profit in USD terms.

Exchange rate changes play a crucial role in determining the profitability of foreign investments. Depreciation can negate returns, leaving the profit effectively zero.

Question 41:

Arrange the following statements based on Keynesian theory:

(A) Level of aggregate income rises in Keynesian world.
(B) Aggregate Saving as a function of GDP rises.
(C) Government expenditure rises.
(D) Fiscal deficit rises, given revenue receipts.

Correct Answer: (b) (C), (D), (A), (B).
Solution:

In Keynesian theory, government expenditure increases, causing a rise in fiscal deficit, which subsequently raises income levels and aggregate saving as a function of GDP.

Keynesian theory emphasizes the role of government spending in driving economic growth, particularly during periods of low private sector demand.

Question 42:

Suppose a small country imposes an import tariff on a good. Which of the following statements is false?

(a) Consumer surplus from the goods will decrease.
(b) Producer surplus from the goods will decrease.
(c) Producer surplus from the goods will increase.
(d) Decrease in quantity imported.

Correct Answer: (b) Producer surplus from the goods will decrease.
Solution:

An import tariff raises the price of imported goods, benefiting domestic producers by increasing their market share and producer surplus. Consumer surplus decreases, and the quantity imported reduces.

Import tariffs are used to protect domestic industries by increasing the cost of foreign goods, thereby incentivizing domestic production.

Question 43:

Arrange the following in the correct order:

(A) Employment and income come down.
(B) Investment demand comes down.
(C) Demand-pull inflation rate comes down.
(D) Repo rate or policy interest rate rises.

Correct Answer: (c) (D), (B), (A), (C).
Solution:

When the repo rate rises, investment demand falls, leading to reduced employment and income, which eventually decreases demand-pull inflation.

The repo rate is a monetary policy tool used by central banks to control inflation by influencing borrowing and spending patterns.

Question 44:

Match List-I with List-II:

List-I	List-II
(A) Money supply is exogenously given.	(III) Monetarism
(B) Money supply is demand driven and credit led.	(I) Post-Keynesian school
(C) Rational expectation.	(IV) Neo-classical school
(D) Supply creates its own demand.	(II) Say's law

Options:

(a) (A) - (III), (B) - (I), (C) - (IV), (D) - (II)
(b) (A) - (I), (B) - (III), (C) - (IV), (D) - (II)
(c) (A) - (II), (B) - (III), (C) - (I), (D) - (IV)
(d) (A) - (III), (B) - (I), (C) - (IV), (D) - (II)

Correct Answer: (d) (A) - (III), (B) - (I), (C) - (IV), (D) - (II).
Solution:

Monetarism emphasizes exogenous money supply; Post-Keynesian theory emphasizes endogenous money; rational expectations belong to the Neo-classical school; and Say's law reflects classical economics.

Understanding economic schools of thought and their principles helps in matching theoretical perspectives with specific doctrines.

Question 45:

Match List-I with List-II:

List-I	List-II
(A) Fiscal Deficit	(IV) Capital expenditure plus revenue deficit
(B) Primary Deficit	(III) Fiscal deficit minus interest payment
(C) Revenue Deficit	(II) Revenue expenditure minus revenue receipt
(D) Current Account Deficit	(I) Import minus export of goods and services

Options:

(a) (A) - (IV), (B) - (III), (C) - (II), (D) - (I)
(b) (A) - (I), (B) - (III), (C) - (II), (D) - (IV)
(c) (A) - (IV), (B) - (III), (C) - (II), (D) - (I)
(d) (A) - (II), (B) - (IV), (C) - (III), (D) - (I)

Correct Answer: (a) (A) - (IV), (B) - (III), (C) - (II), (D) - (I).
Solution:

Fiscal deficit includes capital and revenue expenditure; primary deficit excludes interest payments; revenue deficit is the gap between revenue income and expenditure; and current account deficit relates to net exports.

Familiarity with fiscal and current account terms aids in comprehending government budgeting and international trade balances.

Question 46:

Which of the following statements are true in case of public goods?

(a) Public goods are non-divisible.
(b) Public goods are non-excludable.
(c) Whatever government purchases is called public good.
(d) Whatever the public consumes is called public good.

Correct Answer: (b) (A) and (B) only.
Solution:

Public goods are characterized by non-excludability and non-rivalry. This means they are available for everyone, and one person’s use does not reduce availability for others. Government purchases or public consumption are not definitive criteria for public goods.

Examples of public goods include national defense, clean air, and public parks. They are provided without profit and are accessible to all members of society.

Question 47:

Order the following countries based on nominal per capita income in the year 2022, from the highest to lowest:

(a) China
(b) Brazil
(c) Russia
(d) India

Correct Answer: (a) (C), (A), (B), (D).
Solution:

According to nominal per capita income rankings in 2022:

(C) Russia
(A) China
(B) Brazil
(D) India

Nominal per capita income reflects the average income of individuals in a country, calculated as GDP divided by population.

Question 48:

Arrange the following in the correct order:

(a) Procurement of food grains by the Food Corporation of India.
(b) Production of food grains in the agricultural sector.
(c) Distribution of food grains through fair price shops.
(d) Minimum support prices for food grains are decided.

Correct Answer: (d) (B), (A), (D), (C).
Solution:

The process starts with production (B), followed by procurement by the Food Corporation of India (A), then deciding minimum support prices (D), and finally distribution through fair price shops (C).

This sequence highlights the flow of food grain management in India, from production to distribution under public welfare schemes.

Question 49:

Given a cubic cost function C(Q) = Q^3 + Q^2 + Q + 1, arrange Total Cost (TC), Marginal Cost (MC), Average Cost (AC), and Average Fixed Cost (AFC) in increasing order when Q = 2:

(a) AFC
(b) TC
(c) MC
(d) AC

Correct Answer: (b) (A), (B), (C), (D).
Solution:

At Q = 2, the values are calculated as:

AFC: Fixed cost divided by quantity.
TC: Total cost as given by the cost function C(Q).
MC: Derivative of the cost function C(Q) at Q = 2.
AC: Total cost divided by quantity.

AFC is the smallest, while AC, which accounts for total costs divided by output, is typically the largest.

Question 50:

Assuming x is a whole number greater than or equal to 2, arrange the following in decreasing order:

(a) 1/x
(b) 1/x^2
(c) 1/(1+x)
(d) 1/(1+x)^2

Correct Answer: (a) (A), (C), (B), (D).
Solution:

For x >= 2, the expressions in decreasing order are:

(A) 1/x
(C) 1/(1+x)
(B) 1/x^2
(D) 1/(1+x)^2

Larger denominators result in smaller fractions. Hence, terms with smaller denominators are ranked higher.

Question 51:

Suppose X takes the values -10 and 20 with probability 1/4 and 3/4 respectively, calculate E(X²):

1. 225
2. 275
3. 325
4. 375

Correct Answer: (c) 325.
Solution:

The expected value of X², denoted as E(X²), is calculated by summing the square of each value of X, weighted by its probability.

Step 1: Apply the formula: E(X²) = Σ [P(X) * X²].
Step 2: Substitute the values:
P(X = -10) = 1/4, X² = (-10)² = 100.
P(X = 20) = 3/4, X² = (20)² = 400.
Step 3: Calculate the sum:
E(X²) = (1/4 * 100) + (3/4 * 400) = 25 + 300 = 325.

Question 52:

If Y = 20 + 10X, then Var(Y) is:

1. 100 * Var(X)
2. 10 * Var(X)
3. 400 + 100 * Var(X)
4. 20 + 10 * Var(X)

Correct Answer: (a) 100 * Var(X).
Solution:

The formula for variance in a transformed variable Y = a + bX is given by Var(Y) = b² * Var(X).

Step 1: Identify constants in the transformation:
In Y = 20 + 10X, the constant 20 does not affect variance as it does not vary.
Step 2: Use the formula:
Var(Y) = 10² * Var(X) = 100 * Var(X).
The variance scales by the square of the coefficient multiplying X.

Question 53:

Let Y = exp(a + bX), where a and b are constants. Calculate dY/dX:

1. exp(a + bX)
2. a * exp(a + bX)
3. b * exp(a + bX)
4. (a + b) * exp(a + bX)

Correct Answer: (c) b * exp(a + bX).
Solution:

Using the chain rule, the derivative of exp(u) is exp(u) * du/dX, where u = a + bX.

Step 1: Identify the function to differentiate:
Y = exp(a + bX). Here, the exponent is u = a + bX.
Step 2: Apply the chain rule:
dY/dX = exp(a + bX) * d/dX(a + bX).
Step 3: Differentiate the exponent:
d/dX(a + bX) = b.
Step 4: Combine results:
dY/dX = b * exp(a + bX).

Question 54:

The relationship between a country’s per capita income and its inequality of income distribution is known as:

1. Lorenz curve
2. Phillips curve
3. Laffer curve
4. Kuznets curve

Correct Answer: (d) Kuznets curve.
Solution:

The Kuznets curve describes how inequality evolves with economic growth.

As an economy develops:
- In early industrialization, wealth concentrates in urban areas, increasing inequality.
- Over time, more people access economic opportunities, reducing inequality.
The curve typically has an inverted-U shape.

Question 55:

A dice is rigged in a way that each odd number is twice as likely to occur as each even number. When a dice is rolled, what is the probability that the outcome is greater than 3?

1. 2/3
2. 1/3
3. 5/9
4. 4/9

Correct Answer: (d) 4/9.
Solution:

Assign probabilities to outcomes based on the given condition.

Step 1: Assign weights:
Odd numbers (1, 3, 5) have twice the probability of even numbers (2, 4, 6).
Step 2: Normalize probabilities:
Let p = probability of an even number. Then the probability of an odd number = 2p.
Total probability = 3(2p) + 3(p) = 9p = 1 → p = 1/9.
Step 3: Calculate P(4, 5, 6):
P(4) = p, P(5) = 2p, P(6) = p.
Total = p + 2p + p = 4p = 4/9.

Question 56:

In how many ways can 10 economists attending a conference be accommodated in 2 triple-sharing and 2 double-sharing hotel rooms?

1. 210
2. 420
3. 840
4. 1260

Correct Answer: (a) 210.
Solution:

Break the problem into steps using combinations and partitions.

Step 1: Select 6 economists for the triple-sharing rooms:
This can be done in C(10, 6) = 210 ways.
Step 2: Assign them to two triple-sharing rooms:
There is only 1 way to do this.
Step 3: Remaining 4 economists go to double-sharing rooms:
Assign them in pairs, which can also be done in 1 way.
Total = 210 ways.

Question 57:

Suppose we have three coins. The first coin has heads on both sides. The second coin has tails on both sides. The third coin has a head on one side and a tail on the other. One coin is randomly selected and tossed. The upper side is a head. What is the probability that the other side is a tail?

1. 1/2
2. 1/3
3. 1/4
4. 1/6

Correct Answer: (b) 1/3.
Solution:

Use conditional probability to calculate the likelihood that the chosen coin is the third coin.

The first coin always shows heads on both sides, so it cannot have a tail. The second coin always shows tails, so it cannot be selected as the side visible is a head. The third coin has one head and one tail. When the visible side is heads, the chance of the coin being the third is 1/3, as only one out of three coins fits this condition. Using Bayes' theorem, we calculate this probability based on favorable and total outcomes.

Question 58:

Consider a binomial distribution with parameters n and p. The variance of this distribution is:

1. np
2. np²
3. p(1-p)
4. np(1-p)

Correct Answer: (d) np(1-p).
Solution:

The variance of a binomial distribution depends on the number of trials and the probability of success.

A binomial distribution models the number of successes in n independent trials, where p is the probability of success. The variance is calculated as np(1-p). Here, n represents the number of trials, p is the success probability, and (1-p) is the failure probability. The product np(1-p) gives the expected variability in the distribution.

Question 59:

Which of the following statements are correct?

(A) For a continuous random variable X, the cumulative distribution function (CDF) can be obtained by differentiating the PDF with respect to x.
(B) For a discrete random variable X, the CDF can be obtained by differentiating the PDF with respect to x.
(C) For a continuous random variable X, the PDF can be obtained by differentiating the CDF with respect to x.
(D) For a discrete random variable X, the PDF can be obtained by differentiating the CDF with respect to x.

(a) (A) and (B) only
(b) (A) only
(c) (C) only
(d) (C) and (D) only

Correct Answer: (c) (C) only.
Solution:

The PDF of a continuous random variable is obtained as the derivative of its CDF.

For continuous random variables, the cumulative distribution function (CDF) represents the probability that the variable takes on a value less than or equal to x. Its derivative with respect to x gives the probability density function (PDF), which describes the likelihood of specific outcomes. For discrete variables, the CDF is the cumulative sum of probabilities, and its PDF (or probability mass function) is obtained as differences, not derivatives.

Question 60:

Consider a binomial distribution with a very large N. This distribution can be approximated by:

1. Bernoulli Distribution
2. Poisson Distribution
3. Normal Distribution
4. Hypergeometric Distribution

Correct Answer: (c) Normal Distribution.
Solution:

For large values of N, the binomial distribution can be approximated by a normal distribution.

The Central Limit Theorem states that for a large number of independent trials, the sum (or mean) of these trials tends to follow a normal distribution, regardless of the underlying distribution. In the binomial case, as the number of trials N increases, and if the success probability p is neither too close to 0 nor 1, the binomial distribution approximates a normal distribution, with mean np and variance np(1-p).

Question 61:

Match List-I with List-II:

List-I (Characteristics)	List-II (Stages)
(A) High Birth Rate and High Death Rate	(I) Stage I
(B) Low Birth Rate and High Death Rate	(II) Stage II
(C) High Birth Rate and Low Death Rate	(III) Stage III
(D) Low Birth Rate and Low Death Rate	(IV) Not a part of this model

Choose the correct answer from the options given below:

(a) (A) - (I), (B) - (II), (C) - (III), (D) - (IV)
(b) (A) - (I), (B) - (IV), (C) - (II), (D) - (III)
(c) (A) - (II), (B) - (I), (C) - (IV), (D) - (III)
(d) (A) - (III), (B) - (II), (C) - (IV), (D) - (I)

Correct Answer: (b) (A) - (I), (B) - (IV), (C) - (II), (D) - (III).
Solution:

The stages of the demographic transition model are matched as follows:

(A) corresponds to Stage I with high birth and death rates.
(B) corresponds to Stage II with declining death rates but high birth rates.
(C) corresponds to Stage III with both declining birth and death rates.
(D) is not part of this model, as it represents a stable population with low birth and death rates.

The demographic transition model explains population changes over time due to shifts in birth and death rates associated with development stages.

Question 62:

Which of the following statements are valid assumptions of the Ordinary Least Squares regression model?

(A) Expected value of the error term is zero
(B) Heteroskedasticity
(C) The model is linear in parameters
(D) Autocorrelation

Choose the correct answer from the options given below:

(a) (A) and (D) only
(b) (B) and (C) only
(c) (C) and (D) only
(d) (A) and (C) only

Correct Answer: (d) (A) and (C) only.
Solution:

The valid assumptions for the Ordinary Least Squares (OLS) model include:

(A) The error term has an expected value of zero.
(C) The model is linear in parameters.

Heteroskedasticity and autocorrelation violate OLS assumptions, making them invalid.

OLS regression assumes linearity, no autocorrelation, homoscedasticity (constant variance), and that the error term has an expected value of zero.

Question 63:

In a Poisson distribution \( \rho(x) = \frac{e^{-2} (2)^3}{3!} \), the mean value is:

1. 4
2. 3
3. 2
4. 1

Correct Answer: (c) 2.
Solution:

In a Poisson distribution, the mean is represented by \( \lambda \), which is given as 2 in this case.

The Poisson distribution models the number of occurrences of an event in a fixed interval. Both the mean and variance are equal to \( \lambda \).

Question 64:

Which of the following statements hold true when steady state is attained in the Solow Model?

(A) Capital-Labour ratio does not change
(B) Depreciation does not change
(C) Income per capita does not change
(D) Inequality does not change

Choose the correct answer from the options given below:

(a) (A) only
(b) (A) and (B) only
(c) (A) and (C) only
(d) (A) and (D) only

Correct Answer: (c) (A) and (C) only.
Solution:

At steady state in the Solow model:

(A) The capital-labor ratio stabilizes.
(C) Income per capita remains constant if there is no technological progress.

The Solow model explains long-term economic growth and indicates a steady-state where net investments equal depreciation, stabilizing capital per worker.

Question 65:

Which of the following statements reflects a property of the t-distribution?

(A) It ranges from -∞ to +∞
(B) Its mean is the average of X
(C) It ranges from 0 to +∞
(D) It does not vary with the change in degrees of freedom

Choose the correct answer from the options given below:

(a) (A) and (B) only
(b) (B) and (C) only
(c) (C) and (D) only
(d) (A) and (C) only

Correct Answer: (d) (A) and (C) only.
Solution:

The t-distribution is symmetric about zero and extends from -∞ to +∞. It changes with degrees of freedom.

The t-distribution is used in hypothesis testing when the sample size is small, and the population standard deviation is unknown.

Question 66:

Which of the following are instruments of trade policies?

(A) Tariffs
(B) Quotas
(C) Sales taxes
(D) Anti-dumping duties

Choose the correct answer from the options given below:

(a) (A), (B) and (D) only
(b) (A), (B) and (C) only
(c) (A), (B), (C) and (D)
(d) (B), (C) and (D) only

Correct Answer: (a) (A), (B) and (D) only.
Solution:

Instruments of trade policies are tools used by governments to regulate international trade:

(A) Tariffs: Taxes on imports to protect domestic industries.
(B) Quotas: Limits on the quantity of imports.
(D) Anti-dumping duties: Imposed to counteract foreign imports priced below market value.

Sales taxes (C) are not typically considered instruments of trade policy.

Trade policy instruments like tariffs, quotas, and anti-dumping duties are designed to manage trade flows and protect domestic industries from unfair competition.

Question 67:

Calculate the weighted arithmetic mean of 10, 20, and 30, when the given weights are:

(A) 3, 2, and 1 respectively
(B) 1, 1, and 3 respectively
(C) 1, 2, and 3 respectively
(D) 2, 1, and 2 respectively

Choose the correct answer from the options given below:

(a) (A), (B), (C), (D)
(b) (B), (C), (D), (A)
(c) (B), (A), (D), (C)
(d) (C), (B), (D), (A)

Correct Answer: (b) (B), (C), (D), (A).
Solution:

Weighted arithmetic mean is calculated using:

Mean = (Σ(value × weight)) / (Σ weights)

For (B): Weights are 1, 1, and 3:

Mean = (10 × 1 + 20 × 1 + 30 × 3) / (1 + 1 + 3) = (10 + 20 + 90) / 5 = 24.

The weighted arithmetic mean assigns more influence to values with higher weights, providing an accurate reflection of their relative importance.

Question 68:

Match List-I with List-II:

List-I (Pricing Strategies)	List-II (Type of Price Discrimination)
(A) Locating individual consumers and charging each of them a unique price	(III) First degree price discrimination
(B) Dividing consumers into two markets with different elasticities and charging separate unique prices	(IV) Third degree price discrimination
(C) Including extra units of another good with the main good sold and charging the consumer a higher price	(I) Bundling
(D) Charging customers a different price depending on the day of the week	(II) Second degree price discrimination

Choose the correct answer from the options given below:

(a) (A) - (II), (B) - (III), (C) - (IV), (D) - (I)
(b) (A) - (III), (B) - (III), (C) - (I), (D) - (IV)
(c) (A) - (IV), (B) - (III), (C) - (II), (D) - (I)
(d) (A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Correct Answer: (d) (A) - (III), (B) - (IV), (C) - (I), (D) - (II).
Solution:

Price discrimination strategies and their corresponding types are:

(A) First-degree price discrimination: Charging consumers their maximum willingness to pay.
(B) Third-degree price discrimination: Dividing consumers into groups based on elasticities.
(C) Bundling: Selling a package of goods at a combined price.
(D) Second-degree price discrimination: Charging different prices based on purchase quantities or time.

Price discrimination allows firms to maximize profits by charging different prices for the same or similar goods based on consumer characteristics or consumption behavior.

Question 69:

The existence of purchasing power parity in an open economy implies that:

(A) The purchasing power of individuals depends on the inflation rate
(B) The exchange rate between two countries' currencies is equal to the ratio of their price levels
(C) The law of one price holds
(D) The price levels of all countries are equal when measured in terms of the same currency

Choose the correct answer from the options given below:

(a) (A), (B) and (D) only
(b) (A), (B) and (C) only
(c) (A), (B), (C) and (D)
(d) (B), (C) and (D) only

Correct Answer: (d) (B), (C) and (D) only.
Solution:

Purchasing power parity (PPP) theory states:

(B) Exchange rates are determined by relative price levels between two countries.
(C) The law of one price holds, ensuring identical goods cost the same across countries when converted to a common currency.
(D) Price levels are equal when measured in the same currency, under ideal conditions.

PPP explains long-term exchange rate determination by focusing on price level differences. It assumes no transportation costs or trade barriers.

Question 70:

Match the measures with the concept that is being measured:

List-I (Indicators)	List-II (Description)
(A) Gini Coefficient	(IV) Measures inequality
(B) GDP Deflator	(III) Measures changes in price level
(C) Head Count Ratio	(II) Measures poverty
(D) Depreciation	(I) Measures the wearing out of capital

Choose the correct answer from the options given below:

(a) (A) - (I), (B) - (II), (C) - (III), (D) - (IV)
(b) (A) - (IV), (B) - (III), (C) - (II), (D) - (I)
(c) (A) - (I), (B) - (II), (C) - (IV), (D) - (III)
(d) (A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Correct Answer: (b) (A) - (IV), (B) - (III), (C) - (II), (D) - (I).
Solution:

The indicators and their descriptions are matched as follows:

(A) Gini Coefficient: Measures inequality.
(B) GDP Deflator: Measures changes in price level.
(C) Head Count Ratio: Measures poverty.
(D) Depreciation: Measures the wearing out of capital.

These economic indicators help analyze key aspects of a country's economy, including inequality, inflation, poverty, and capital usage.

Question 71:

Which of the following statements are correct?

(I) Monopolistic firms face a horizontal market demand curve
(II) Perfectly competitive firms sell differentiated products
(III) Output of one Cournot duopoly firm depends on the output of the other firm
(IV) Monopolistic firms do not have a supply curve

Choose the correct answer from the options given below:

(a) (I) and (II)
(b) (II) and (III)
(c) (III) and (IV)
(d) (I) and (IV)

Correct Answer: (c) (III) and (IV).
Solution:

In the context of market structures:

Monopolistic firms do not have a supply curve as they set prices, unlike perfectly competitive firms.
In Cournot duopoly, each firm’s output decision is based on the other’s output.

Monopolistic firms have downward-sloping demand curves, allowing them to set prices. Cournot duopolies depend on competitors' output decisions, demonstrating strategic interdependence.

Question 72:

List the following outcomes in descending order:

(A) Probability of a head when one coin is tossed
(B) Probability of 5 heads when 10 coins are tossed independently
(C) Probability of 10 heads when 20 coins are tossed independently
(D) Probability of 50 heads when 100 coins are tossed independently

Choose the correct answer from the options given below:

(a) (A), (B), (C), (D)
(b) (D), (C), (A), (B)
(c) (D), (B), (A), (C)
(d) (C), (D), (B), (A)

Correct Answer: (a) (A), (B), (C), (D).
Solution:

The probability of a head when one coin is tossed is the highest (50%).

With more coins tossed, the probabilities of achieving exact numbers of heads decrease due to the binomial distribution. Larger sample sizes introduce greater variability in specific outcomes, making exact counts less probable.

Question 73:

Match List-I with List-II:

List-I (Statistical Concepts)	List-II (Descriptions)
(A) Power of a test	(I) 1 - probability of making type II error
(B) Multicollinearity	(III) Correlation between explanatory variables in a regression
(C) Biased estimator	(II) Where the sample mean differs from the population mean
(D) White noise error	(IV) Errors with zero mean and constant standard deviation

Choose the correct answer from the options given below:

(a) (A) - (I), (B) - (II), (C) - (III), (D) - (IV)
(b) (A) - (I), (B) - (III), (C) - (II), (D) - (IV)
(c) (A) - (IV), (B) - (II), (C) - (III), (D) - (I)
(d) (A) - (II), (B) - (I), (C) - (IV), (D) - (III)

Correct Answer: (b) (A) - (I), (B) - (III), (C) - (II), (D) - (IV).
Solution:

(A) Power of a test corresponds to (I), 1 - probability of making type II error.
(B) Multicollinearity corresponds to (III), the correlation between explanatory variables in a regression.
(C) Biased estimator corresponds to (II), where the sample mean differs from the population mean.
(D) White noise error corresponds to (IV), errors with zero mean and constant standard deviation.

These statistical concepts are foundational to econometrics and statistical analysis, with specific roles in testing, regression, and error analysis.

Question 74:

Match List-I with List-II:

List-I (Economic Concepts)	List-II (Descriptions)
(A) Kuznets Curve	(III) Describes the relationship between income and inequality
(B) Fisher Effect	(IV) Describes the relationship between expected inflation rate and interest rate
(C) J Curve Effect	(I) Describes the relationship between currency depreciation and current account balance
(D) Multiplier Effect	(II) Describes the relationship between autonomous investment and output

Choose the correct answer from the options given below:

(a) (A) - (I), (B) - (II), (C) - (III), (D) - (IV)
(b) (A) - (III), (B) - (II), (C) - (I), (D) - (IV)
(c) (A) - (I), (B) - (IV), (C) - (III), (D) - (II)
(d) (A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Correct Answer: (d) (A) - (III), (B) - (IV), (C) - (I), (D) - (II).
Solution:

(A) Kuznets Curve describes the relationship between income and inequality.
(B) Fisher Effect describes the relationship between expected inflation rate and interest rate.
(C) J Curve Effect describes the relationship between currency depreciation and current account balance.
(D) Multiplier Effect describes the relationship between autonomous investment and output.

Understanding these economic concepts helps in analyzing macroeconomic trends and relationships.

Question 75:

Satish is very conscious of the food he eats. He eats only rotis and dal. A cup of dal costs Rs 2 while a roti costs Rs 1, and Satish decides to spend only Rs 13 per day on food. Also, he decides to consume only 5500 calories a day. He has been told that each day:

(a) He consumes 3 rotis and 5 cups of dal
(b) He consumes no more than 3 rotis per day
(c) He consumes 5 rotis and 5 cups of dal per day
(d) He consumes 5 cups of dal per day

Correct Answer: (a) He consumes 3 rotis and 5 cups of dal.
Solution:

Satish spends Rs 13 per day:

Roti costs Rs 1 and dal costs Rs 2. He consumes 3 rotis and 5 cups of dal per day to meet the calorie intake limit.
Total expenditure: 3 × 1 + 5 × 2 = 3 + 10 = 13.

Satish's expenditure and calorie goals align with his daily consumption of 3 rotis and 5 cups of dal, meeting both constraints.

*The article might have information for the previous academic years, please refer the official website of the exam.

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CUET PG 2024 Question Paper with Answer Key PDF for Economics (March 12 - Shift 2)

CUET PG 2024 Economics Question Paper with Answer Key PDF

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