CUET Economics 2025 Slot 1 Past Year Paper with Solutions

Q1:

Micro

>

Production & Costs

Medium

Match List-I with List-II

List-I	List-II
(A) Relationship between the variable input and output.	(I) Average Product
(B) Output per unit of variable input.	(II) Marginal Product
(C) Change in output per unit of change in the input	(III) Law of variable proportions
(D) The marginal product of a factor input initially rises with its employment level	(IV) Total Product

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 1

Correct Answer

Explanation

Q2:

Micro

>

Production & Costs

Easy

How does technological progress affect the firms' supply curve?

Shift to the right.

Shift to the left.

Remain at same place.

Shift in vertical shape.

Correct Answer

Option 1

Correct Answer

Explanation

Q3:

Micro

>

Production & Costs

Easy

In the long run __________.

At least one of the factor varied.

All factors of production can be varied.

Factor remains fixed.

Only one factor can vary.

Correct Answer

Option 2

Correct Answer

Explanation

Q4:

Micro

>

Production & Costs

Medium

The collection of all possible combinations of the goods and services that can be produced from a given amount of resources and a given stock of technological knowledge is called?

Production Possibility Frontier

Isoquant Curve

Production Possibility Set

Isocost Line

Correct Answer

Option 3

Correct Answer

Explanation

Q5:

Micro

>

Production & Costs

Easy

Marginal cost curve intersects average cost curve at ..........

At maximum point of average cost curve.

At minimum point from of average cost curve.

Do not intersect.

Intersect at mid point at rising average cost curve.

Correct Answer

Option 2

Correct Answer

Explanation

Q6:

Macro

>

National Income

Medium

Arrange the following steps of calculation of National income in sequence.

(A) Deduction of intermediate cost

(B) Estimation of value of output

(C) Add net factor income from abroad

(D) Deduction of depreciation and NIT

Choose the correct answer from the options given below:

(A), (B), (C), (D)

(A), (C), (B), (D)

(B), (A), (D), (C)

(C), (D), (A), (B)

Correct Answer

Option 3

Correct Answer

Explanation

Q7:

Macro

>

National Income

Medium

Arrange the following steps of estimation of National Income by income method in the proper sequence.

(A) Identification and classification of producing firms.

(B) Estimation of NDPFC

(C) Estimation of NNPFC

(D) Classification of factor Income.

Choose the correct answer from the options given below:

(A), (B), (C), (D)

(A), (C), (B), (D)

(A), (D), (B), (C)

(A), (B), (D), (C)

Correct Answer

Option 3

Correct Answer

Explanation

Q8:

Micro

>

Production & Costs

Easy

The point on the supply curve at which a firm earns only normal profit is called ...........

Break-even point.

Average Profit.

Long Run Average Cost.

Fixed Cost.

Correct Answer

Option 1

Correct Answer

Explanation

Q9:

Micro

>

Introduction

Easy

Whether to use more resources in education and health or to use more resources in building military services. Which of the central problems of an economy is accurate for this?

How to produce?

What to produce?

Whom to produced?

Where to produced?

Correct Answer

Option 2

Correct Answer

Explanation

Q10:

Macro

>

Income & Employment

Easy

Who is the author of "The General Theory of Employment, Interest and Money"?

Adam Smith.

David Recardo.

J.S. Mill.

John Maynard Keynes

Correct Answer

Option 4

Correct Answer

Explanation

Q11:

Macro

>

National Income

Easy

When goods and services are evaluated at constant prices, the measured value is known as ........

Nominal GDP.

Inventory.

Inflation.

Real GDP.

Correct Answer

Option 4

Correct Answer

Explanation

Q12:

Macro

>

Balance of Payments

Medium

In deficit condition of Balance of Payment if the central bank sells foreign exchange then this particular transaction is known as .......

Official reserve sale.

Portfolio Investment.

Net Invisibles.

Net factor income.

Correct Answer

Option 1

Correct Answer

Explanation

Q13:

Macro

>

National Income

Medium

Match List-I with List-II

List-I	List-II
(A) Gross Domestic Product at Market Price	(I) NDPMP - Net Product Taxes - Net Production Taxes
(B) Net Domestic Product at Factor Cost	(II) GVA at basic prices - Net Production Taxes
(C) GVA(Gross Value Added) at factor cost	(III) C+I+G+(X-M)
(D) Gross National Product at Factor Cost	(IV) GNPMP - Net Product Taxes - Net Production Taxes

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 2

Correct Answer

Explanation

Q14:

Micro

>

Production & Costs

Easy

________ of an input is defined as the change in output per unit of change in the input when all other inputs are remain constant.

Marginal Product.

Average Product.

Total Product.

Returns to Scale.

Correct Answer

Option 1

Correct Answer

Explanation

Q15:

Micro

>

Production & Costs

Medium

Shape of Average Fixed Cost Curve is:

Constant

'U' Shaped.

Rectangular Hyperbola

Reverse Hyperbola

Correct Answer

Option 3

Correct Answer

Explanation

Q16:

Micro

>

Consumer Behaviour

Easy

Budget Set is __________

Given the prices of the goods and the income of a consumer.

Any bundle as long as it costs less than or equal to the income

A set of price available to producer.

Set of bundles available to the consumer

Correct Answer

Option 4

Correct Answer

Explanation

Q17:

Micro

>

Forms of Market

Easy

Which of the following is an example of floor price?

Minimum Support Price for Foodgrain

Price printed on any article.

Price taken by Seller

Price asked by buyer to buy.

Correct Answer

Option 1

Correct Answer

Explanation

Q18:

Macro

>

Money & Banking

Easy

Currency notes and coins are called:

Fiat Money

Broad Money

Currency Base

Narrow Money.

Correct Answer

Option 1

Correct Answer

Explanation

Q19:

Macro

>

Income & Employment

Hard

With keeping tax rate (T) constant if government purchases(G) increase, then arrange the following statement considering the effect on total income and output.

(A) Rise in Plan Aggregate expenditure.

(B) Government runs a deficit when G exceeds T.

(C) Equilibrium income level increased.

(D) Aggregate demand schedule shifts upward.

Choose the correct answer from the options given below:

(B), (A), (D), (C)

(A), (C), (B), (D)

(A), (B), (D), (C)

(C), (B), (D), (A)

Correct Answer

Option 1

Correct Answer

Explanation

Q20:

Micro

>

Forms of Market

Medium

With the shifting demand curve leftward, arrange the following statement in sequential order.

(A) At any given price, demand is less.

(B) Excess supply will be there.

(C) Some producers will decrease the prices of commodity.

(D) At new equilibrium, quantity and price will be less.

Choose the correct answer from the options given below:

(B), (A), (C), (D)

(A), (C), (B), (D)

(B), (A), (D), (C)

(D), (B), (C), (A)

Correct Answer

Option 1

Correct Answer

Explanation

Q21:

Macro

>

Balance of Payments

Easy

When an individual buys foreign goods, this spending is known as .....

Injection in the economy.

Exchange rate market.

Leakages from economy.

Direct investment.

Correct Answer

Option 3

Correct Answer

Explanation

Q22:

Macro

>

National Income

Easy

The index of prices of a given basket of commodities which are bought by the representative consumer is known as :

Consumer Price Index

Wholesale Price Index.

Capital Good Index.

Inflation.

Correct Answer

Option 1

Correct Answer

Explanation

Q23:

Micro

>

Market Equilibrium

Medium

Suppose an individual buy 30 bananas when its price is Rs. 10 per banana. When the price increases to Rs. 14 per banana, she reduces her demand to 24 bananas. In this case,what will be the price elasticity of demand?

0.3

0.2

0.5

0.4

Correct Answer

Option 3

Correct Answer

Explanation

Q24:

Macro

>

Money & Banking

Hard

Arrange the following conditions from most to least liquid form:

(A) Currency + Demand Deposit+Savings deposits with Post Office savings banks.

(B) Currency + Demand Deposit + Net time deposits of commercial banks+ Total deposits with Post Office savings organisations.

(C) Currency + Demand Deposit.

(D) Currency + Demand Deposit + Net time deposits of commercial banks.

Choose the correct answer from the options given below:

(A), (B), (C), (D)

(C), (A), (D), (B)

(B), (A), (D), (C)

(C), (B), (D), (A)

Correct Answer

Option 2

Correct Answer

Explanation

Q25:

Micro

>

Consumer Behaviour

Easy

The relation between the consumer's optimal choice of the quantity of a good and its price is called ?

Supply function

Demand Function

Cost Function

Output function

Correct Answer

Option 2

Correct Answer

Explanation

Q26:

Macro

>

Money & Banking

Medium

Match List-I with List-II

List-I	List-II
(A) Cash Reserve Ratio (CRR)	(I) Central Bank of the Country
(B) Statutory Liquidity Ratio (SLR).	(II) The interest rate at which the money lent by Central Bank
(C) Lender of last resort.	(III) Percentage of deposits which must kept as cash reserves with the Central bank.
(D) Repo Rate	(IV) Reserves in liquid form in the short term

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 4

Correct Answer

Explanation

Q27:

Macro

>

Balance of Payments

Medium

Suppose an Indian manufacturer of steel acquires a steel manufacturing unit in Europe. This type of transactions are recorded in which of the following.

Current Account.

Capital Account

Capital Market

Net Invisibles.

Correct Answer

Option 2

Correct Answer

Explanation

Q28:

Macro

>

National Income

Easy

To measure consumer price index (CPI) which of the following years are taken into consideration?

(A) Current Year.

(B) Preceeding Year.

(C) Base Year.

(D) Succeeding Year.

Choose the correct answer from the options given below:

(A), (B) and (D) only

(A) and (C) only

(A), (B) and (C) only

(B), (C) and (D) only

Correct Answer

Option 2

Correct Answer

Explanation

Q29:

Micro

>

Production & Costs

Medium

Consider the production function $q = f(x_1, x_2)$ where the firm produces q amout of output $x_1$ amount of factor 1 and $x_2$ amount of factor 2. The firm decides to increase the employment level of both the factors t (t > 1). Identify the equation for decreasing returns to scale from the following.

$q = f(x_1, x_2)$

$f (tx_1, tx_2) = tf (x_1, x_2)$

$f (tx_1, tx_2) < tf (x_1, x_2)$

$f (tx_1, tx_2) > tf x_1, x_2)$

Correct Answer

Option 3

Correct Answer

Explanation

Q30:

Macro

>

Money & Banking

Medium

Among the following, which are the functions of money?

(A) Medium of exchange.

(B) Unit of account.

(C) Bartering

(D) Store of value

Choose the correct answer from the options given below:

(A), (B) and (D) only

(A), (B) and (C) only

(A), (B), (C) and (D)

(B), (C) and (D) only

Correct Answer

Option 1

Correct Answer

Explanation

Q31:

Macro

>

Income & Employment

Easy

Ex-post is depicted by which of the following ........

What actually has happened.

What actually will happen?

What is actually planned?

What should plan be.

Correct Answer

Option 1

Correct Answer

Explanation

Q32:

Macro

>

Government Budget

Medium

When governments intervene in the market to expand or reduce the demand, this course of action is .......

Allocative Function

Distribution Fuction

Stabilization Function

Fiscal Function.

Correct Answer

Option 3

Correct Answer

Explanation

Q33:

Macro

>

Balance of Payments

Easy

The difference between the value of exports and the value of imports of goods of a country in a given period of time is known as by what name?

Balance of Trade

Balance of Payment

Capital Account Deficit

Net Invisibles.

Correct Answer

Option 1

Correct Answer

Explanation

Q34:

Micro

>

Production & Costs

Easy

The change in total cost per unit of change in output is known as by which name

Average Cost

Variable Cost

Fixed Cost

Short Run Marginal Cost

Correct Answer

Option 4

Correct Answer

Explanation

Q35:

Micro

>

Production & Costs

Medium

Which of the following conditions must hold for a firm to maximise its profit.

(A) Price= Short run marginal Cost

(B) Short Run marginal cost curve is non-decreasing

(C) Price ≤ Marginal Cost

(D) Price ≥ Average variable cost

Choose the correct answer from the options given below:

(B), (C) and (D) only

(A), (B) and (C) only

(A), (B), (C) and (D)

(A), (B) and (D) only

Correct Answer

Option 4

Correct Answer

Explanation

Q36:

Micro

>

Production & Costs

Easy

The difference between the revenue and cost is known as________

Cost of Production

Input cost

Marginal Cost

Profit

Correct Answer

Option 4

Correct Answer

Explanation

Q37:

Micro

>

Consumer Behaviour

Easy

Match List-I with List-II

List-I	List-II
(A) Analysis assumes that level of utility can be expressed in numbers.	(I) Cardinal Utility
(B) Change in total utility due to consumption of one additional unit of a commodity	(II) Law of Diminishing Marginal Utility.
(C) Marginal utility from consuming each additional unit of a commodity declines as its consumption increases.	(III) Marginal Utility
(D) The amount of mangoes that the consumer has to forego in order to get an additional banana, her total utility level being the same.	(IV) Marginal rate of substitution

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 2

Correct Answer

Explanation

Q38:

Micro

>

Consumer Behaviour

Medium

Find the correct statement/statements.

(A) Goods which are consumed together are called complementary goods.

(B) The market demand curve can be derived as a vertical summation of the individual demand curves.

(C) Price elasticity of demand is a measure of the responsiveness of the demand for a good to changes in its price.

(D) If the consumer's preferences change in favor of a good, the demand curve for such a good shifts leftward.

Choose the correct answer from the options given below:

(A) and (C) only

(A), (B) and (C) only

(A) and (D) Only

(B), (C) and (D) only

Correct Answer

Option 1

Correct Answer

Explanation

Q39:

Macro

>

Money & Banking

Easy

Money deposited in the banks are considered ______________ of the banks.

Asset.

Net Worth.

Liabilities.

Statuary Liquid Ratio.

Correct Answer

Option 3

Correct Answer

Explanation

Q40:

Macro

>

Income & Employment

Medium

If all the people of the economy increase the proportion of income they save, the total value of savings in the economy will not increase - it will either decline or remain unchanged. This result is known as .......

Multiplier Mechanism.

Paradox of Thrift.

Deficient Demand.

Investment.

Correct Answer

Option 2

Correct Answer

Explanation

Q41:

Macro

>

Income & Employment

Easy

Comprehension:

OUTPUT AND EMPLOYMENT

The equilibrium output in the economy also determines the level of employment, given the quantities of other factors of production (think of a production function at aggregate level). This means that the level of output determined by the equality of Y with AD does not necessarily mean the level of output at which everyone is employed. Full employment level of income is that level of income where all the factors of production are fully employed in the production process. Recall that equilibrium attained at the point of equality of Y(Income) and AD by itself does not signify full employment of resources. Equilibrium only means that, if left to itself, the level of income in the economy will not change even when there is unemployment in the economy. The equilibrium level of output may be more or less than the full employment level of output. If it is less than the full employment of output, it is due to the fact that demand is not enough to employ all factors of production. This situation is called the situation of deficient demand. It leads to a decline in prices in the long run. On the other hand, if the equilibrium level of output is more than the full employment level, it is due to the fact that the demand is more than the level of output produced at full employment level. This situation is called the situation of excess demand. It will lead to a rise in prices in the long run.

Excess demand is the situation where ......

Output level is less than the full employment level.

Output level is equal to the full employment level.

Demand is more than output level at full employment level.

Output level is marginally increasing.

Correct Answer

Option 3

Correct Answer

Explanation

Q42:

Macro

>

Income & Employment

Easy

Comprehension:

OUTPUT AND EMPLOYMENT

The equilibrium output in the economy also determines the level of employment, given the quantities of other factors of production (think of a production function at aggregate level). This means that the level of output determined by the equality of Y with AD does not necessarily mean the level of output at which everyone is employed. Full employment level of income is that level of income where all the factors of production are fully employed in the production process. Recall that equilibrium attained at the point of equality of Y(Income) and AD by itself does not signify full employment of resources. Equilibrium only means that, if left to itself, the level of income in the economy will not change even when there is unemployment in the economy. The equilibrium level of output may be more or less than the full employment level of output. If it is less than the full employment of output, it is due to the fact that demand is not enough to employ all factors of production. This situation is called the situation of deficient demand. It leads to a decline in prices in the long run. On the other hand, if the equilibrium level of output is more than the full employment level, it is due to the fact that the demand is more than the level of output produced at full employment level. This situation is called the situation of excess demand. It will lead to a rise in prices in the long run.

If output equilibrium is less than the full employment level, then this condition is known as:

Deficient Demand.

Constant Demand.

Marginal Demand.

Aggregate Demand.

Correct Answer

Option 1

Correct Answer

Explanation

Q43:

Macro

>

Income & Employment

Medium

Comprehension:

OUTPUT AND EMPLOYMENT

The equilibrium output in the economy also determines the level of employment, given the quantities of other factors of production (think of a production function at aggregate level). This means that the level of output determined by the equality of Y with AD does not necessarily mean the level of output at which everyone is employed. Full employment level of income is that level of income where all the factors of production are fully employed in the production process. Recall that equilibrium attained at the point of equality of Y(Income) and AD by itself does not signify full employment of resources. Equilibrium only means that, if left to itself, the level of income in the economy will not change even when there is unemployment in the economy. The equilibrium level of output may be more or less than the full employment level of output. If it is less than the full employment of output, it is due to the fact that demand is not enough to employ all factors of production. This situation is called the situation of deficient demand. It leads to a decline in prices in the long run. On the other hand, if the equilibrium level of output is more than the full employment level, it is due to the fact that the demand is more than the level of output produced at full employment level. This situation is called the situation of excess demand. It will lead to a rise in prices in the long run.

Level of employment is determined by which of the following?

Output Eqilibrium.

Factor of Production

Capital Employed.

Availability of Raw Material.

Correct Answer

Option 1

Correct Answer

Explanation

Q44:

Macro

>

Income & Employment

Medium

Comprehension:

OUTPUT AND EMPLOYMENT

The equilibrium output in the economy also determines the level of employment, given the quantities of other factors of production (think of a production function at aggregate level). This means that the level of output determined by the equality of Y with AD does not necessarily mean the level of output at which everyone is employed. Full employment level of income is that level of income where all the factors of production are fully employed in the production process. Recall that equilibrium attained at the point of equality of Y(Income) and AD by itself does not signify full employment of resources. Equilibrium only means that, if left to itself, the level of income in the economy will not change even when there is unemployment in the economy. The equilibrium level of output may be more or less than the full employment level of output. If it is less than the full employment of output, it is due to the fact that demand is not enough to employ all factors of production. This situation is called the situation of deficient demand. It leads to a decline in prices in the long run. On the other hand, if the equilibrium level of output is more than the full employment level, it is due to the fact that the demand is more than the level of output produced at full employment level. This situation is called the situation of excess demand. It will lead to a rise in prices in the long run.

The level of output is determined by the .....

Full Employment.

Excessive Demand.

Marginal Output.

Equality of Income (Y) with Aggregate Demand (AD)

Correct Answer

Option 4

Correct Answer

Explanation

Q45:

Macro

>

Income & Employment

Easy

Comprehension:

OUTPUT AND EMPLOYMENT

The equilibrium output in the economy also determines the level of employment, given the quantities of other factors of production (think of a production function at aggregate level). This means that the level of output determined by the equality of Y with AD does not necessarily mean the level of output at which everyone is employed. Full employment level of income is that level of income where all the factors of production are fully employed in the production process. Recall that equilibrium attained at the point of equality of Y(Income) and AD by itself does not signify full employment of resources. Equilibrium only means that, if left to itself, the level of income in the economy will not change even when there is unemployment in the economy. The equilibrium level of output may be more or less than the full employment level of output. If it is less than the full employment of output, it is due to the fact that demand is not enough to employ all factors of production. This situation is called the situation of deficient demand. It leads to a decline in prices in the long run. On the other hand, if the equilibrium level of output is more than the full employment level, it is due to the fact that the demand is more than the level of output produced at full employment level. This situation is called the situation of excess demand. It will lead to a rise in prices in the long run.

Full employment level is the level where ........

Everyone in the economy got employment

Maximum Capital investment.

all the factors of production are fully employed in the production process.

Excessive Demand.

Correct Answer

Option 3

Correct Answer

Explanation

Q46:

Macro

>

Government Budget

Medium

Comprehension:

GST: One Nation, One Tax, One Market

Goods and Service Tax (GST) is the single comprehensive indirect tax, operational from 1 July 2017, on supply of goods and services, right from the manufacturer/service provider to the consumer. It is a destination based consumption tax with facility of Input Tax Credit in the supply chain. It is applicable throughout the country with one rate for one type of goods/service. It has amalgamated a large number of Central and State taxes and cesses. It has replaced large number of taxes on goods and services levied on production/sale of goods or provision of service. As there have been a number of intermediate goods/services, which were manufactured/provided in the economy, the pre GST tax regime imposed taxes not on the value added at each stage but on the total value of the commodity/service with minimal facility of utilisation of Input Tax Credit (ITC). The total value included taxes paid on intermediate goods/services. This amounted to cascading of tax. Under GST, the tax is discharged at every stage of supply and the credit of tax paid at the previous stage is available for set off at the next stage of supply of goods and/or services. It is thus effectively a tax on value addition at each stage of supply. In view of our large and fast growing economy, it addresses to establish parity in taxation across the country, and extend principles of ‘value- added taxation’ to all goods and services. It has replaced various types of taxes/cesses, levied by the Central and State/UT Governments. Some of the major taxes that were levied by Centre were Central Excise Duty, Service Tax, Central Sales Tax, Cesses like KKC and SBC. The major State taxes were VAT/Sales Tax, Entry Tax, Luxury Tax, Octroi, Entertainment Tax, Taxes on Advertisements, Taxes on Lottery /Betting/Gambling, State Cesses on goods etc. These have been subsumed in GST.

Goods & Services Tax (GST) is which of the following type of tax?

Destination Based Tax.

Direct Tax.

Local Tax

Lump Sum Tax.

Correct Answer

Option 1

Correct Answer

Explanation

Q47:

Macro

>

Government Budget

Medium

Comprehension:

GST: One Nation, One Tax, One Market

Goods and Service Tax (GST) is the single comprehensive indirect tax, operational from 1 July 2017, on supply of goods and services, right from the manufacturer/service provider to the consumer. It is a destination based consumption tax with facility of Input Tax Credit in the supply chain. It is applicable throughout the country with one rate for one type of goods/service. It has amalgamated a large number of Central and State taxes and cesses. It has replaced large number of taxes on goods and services levied on production/sale of goods or provision of service. As there have been a number of intermediate goods/services, which were manufactured/provided in the economy, the pre GST tax regime imposed taxes not on the value added at each stage but on the total value of the commodity/service with minimal facility of utilisation of Input Tax Credit (ITC). The total value included taxes paid on intermediate goods/services. This amounted to cascading of tax. Under GST, the tax is discharged at every stage of supply and the credit of tax paid at the previous stage is available for set off at the next stage of supply of goods and/or services. It is thus effectively a tax on value addition at each stage of supply. In view of our large and fast growing economy, it addresses to establish parity in taxation across the country, and extend principles of ‘value- added taxation’ to all goods and services. It has replaced various types of taxes/cesses, levied by the Central and State/UT Governments. Some of the major taxes that were levied by Centre were Central Excise Duty, Service Tax, Central Sales Tax, Cesses like KKC and SBC. The major State taxes were VAT/Sales Tax, Entry Tax, Luxury Tax, Octroi, Entertainment Tax, Taxes on Advertisements, Taxes on Lottery /Betting/Gambling, State Cesses on goods etc. These have been subsumed in GST.

Which of the following feature of GST removes/reduces the cascading effect?

Destination Based Tax

Unified Tax

Input Tax Credit(ITC)

Unified Market.

Correct Answer

Option 3

Correct Answer

Explanation

Q48:

Macro

>

Government Budget

Medium

Comprehension:

GST: One Nation, One Tax, One Market

Goods and Service Tax (GST) is the single comprehensive indirect tax, operational from 1 July 2017, on supply of goods and services, right from the manufacturer/service provider to the consumer. It is a destination based consumption tax with facility of Input Tax Credit in the supply chain. It is applicable throughout the country with one rate for one type of goods/service. It has amalgamated a large number of Central and State taxes and cesses. It has replaced large number of taxes on goods and services levied on production/sale of goods or provision of service. As there have been a number of intermediate goods/services, which were manufactured/provided in the economy, the pre GST tax regime imposed taxes not on the value added at each stage but on the total value of the commodity/service with minimal facility of utilisation of Input Tax Credit (ITC). The total value included taxes paid on intermediate goods/services. This amounted to cascading of tax. Under GST, the tax is discharged at every stage of supply and the credit of tax paid at the previous stage is available for set off at the next stage of supply of goods and/or services. It is thus effectively a tax on value addition at each stage of supply. In view of our large and fast growing economy, it addresses to establish parity in taxation across the country, and extend principles of ‘value- added taxation’ to all goods and services. It has replaced various types of taxes/cesses, levied by the Central and State/UT Governments. Some of the major taxes that were levied by Centre were Central Excise Duty, Service Tax, Central Sales Tax, Cesses like KKC and SBC. The major State taxes were VAT/Sales Tax, Entry Tax, Luxury Tax, Octroi, Entertainment Tax, Taxes on Advertisements, Taxes on Lottery /Betting/Gambling, State Cesses on goods etc. These have been subsumed in GST.

Why GST is considered as unified tax system?

Because it is combination of multiple taxes.

Because now country have only GST as indirect tax.

Because it brought uniformity in tax rate across the country.

Because it is a simple tax.

Correct Answer

Option 3

Correct Answer

Explanation

Q49:

Macro

>

Government Budget

Medium

Comprehension:

GST: One Nation, One Tax, One Market

Goods and Service Tax (GST) is the single comprehensive indirect tax, operational from 1 July 2017, on supply of goods and services, right from the manufacturer/service provider to the consumer. It is a destination based consumption tax with facility of Input Tax Credit in the supply chain. It is applicable throughout the country with one rate for one type of goods/service. It has amalgamated a large number of Central and State taxes and cesses. It has replaced large number of taxes on goods and services levied on production/sale of goods or provision of service. As there have been a number of intermediate goods/services, which were manufactured/provided in the economy, the pre GST tax regime imposed taxes not on the value added at each stage but on the total value of the commodity/service with minimal facility of utilisation of Input Tax Credit (ITC). The total value included taxes paid on intermediate goods/services. This amounted to cascading of tax. Under GST, the tax is discharged at every stage of supply and the credit of tax paid at the previous stage is available for set off at the next stage of supply of goods and/or services. It is thus effectively a tax on value addition at each stage of supply. In view of our large and fast growing economy, it addresses to establish parity in taxation across the country, and extend principles of ‘value- added taxation’ to all goods and services. It has replaced various types of taxes/cesses, levied by the Central and State/UT Governments. Some of the major taxes that were levied by Centre were Central Excise Duty, Service Tax, Central Sales Tax, Cesses like KKC and SBC. The major State taxes were VAT/Sales Tax, Entry Tax, Luxury Tax, Octroi, Entertainment Tax, Taxes on Advertisements, Taxes on Lottery /Betting/Gambling, State Cesses on goods etc. These have been subsumed in GST.

From the following which product has been kept out from the GST ambit?

Gold

Silver

Luxury Consumables.

Tobacco.

Correct Answer

Option 4

Correct Answer

Explanation

Q50:

Macro

>

Government Budget

Medium

Comprehension:

GST: One Nation, One Tax, One Market

Goods and Service Tax (GST) is the single comprehensive indirect tax, operational from 1 July 2017, on supply of goods and services, right from the manufacturer/service provider to the consumer. It is a destination based consumption tax with facility of Input Tax Credit in the supply chain. It is applicable throughout the country with one rate for one type of goods/service. It has amalgamated a large number of Central and State taxes and cesses. It has replaced large number of taxes on goods and services levied on production/sale of goods or provision of service. As there have been a number of intermediate goods/services, which were manufactured/provided in the economy, the pre GST tax regime imposed taxes not on the value added at each stage but on the total value of the commodity/service with minimal facility of utilisation of Input Tax Credit (ITC). The total value included taxes paid on intermediate goods/services. This amounted to cascading of tax. Under GST, the tax is discharged at every stage of supply and the credit of tax paid at the previous stage is available for set off at the next stage of supply of goods and/or services. It is thus effectively a tax on value addition at each stage of supply. In view of our large and fast growing economy, it addresses to establish parity in taxation across the country, and extend principles of ‘value- added taxation’ to all goods and services. It has replaced various types of taxes/cesses, levied by the Central and State/UT Governments. Some of the major taxes that were levied by Centre were Central Excise Duty, Service Tax, Central Sales Tax, Cesses like KKC and SBC. The major State taxes were VAT/Sales Tax, Entry Tax, Luxury Tax, Octroi, Entertainment Tax, Taxes on Advertisements, Taxes on Lottery /Betting/Gambling, State Cesses on goods etc. These have been subsumed in GST.

GST is the amalgamation of which of the following taxes?

All Central taxes

All State Taxes

Large number of central and state indirect taxes

Large number of central direct taxes.

Correct Answer

Option 3

Correct Answer

Explanation

CUET Economics 2025 PYQs13 May Shift 1. Free, no login required.

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CUET Economics 2025 13 May Shift 1 Past Year Question Paper

CUET Economics Past Year Questions (Topic-Wise)