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CUET Economics 2025 PYQs27 May Shift 2. Free, no login required.

Macro

past year questions, CUET Economics 2025 27 May Shift 2

Income & Employment

past year questions, Macro, CUET Economics 2025 27 May Shift 2

Medium

The value that marginal rate of propensity can take in consumption function.

Solution

✅ Correct Option: 1

Option 1: 0 < MPC<1 -> This correctly represents that MPC is a positive fraction between 0 and 1.

Option 2: 0 < MPC>1 -> This notation is mathematically incorrect and contradictory.

Option 3: 0> MPC<1 -> This notation is mathematically incorrect and suggests MPC is negative.

Option 4: 0 > MPC>1 -> This notation is mathematically incorrect and contradictory.

Hence, Option 1: 0 < MPC<1 -> The Marginal Propensity to Consume (MPC) represents the proportion of additional income that households spend on consumption. It must be positive because people increase consumption when income rises, and it must be less than 1 because people save at least some portion of additional income. For example, if MPC = 0.8, it means 80% of additional income is consumed and 20% is saved. The value always ranges between 0 and 1 (0 < MPC < 1). -> correct

Related questions:

2026: 31 May Shift 1

Calculate the value of the multiplier from the given consumption function C = 100 + 0.8Y.

2026: 21 May Shift 2

What are the equilibrium conditions in two-sector model?

2025: 3 June Shift 2

Arrange the given case study considering this process of ex-ante to ex-post investment.

(A) At the end of the year, his inventory goes up by Rs 70 only

(B) Due to an unforeseen upsurge in demand for his goods in the market, the volume of sales exceeds

(C) The producer plans to add Rs 100 worth of goods to his stock by the end of the year, which is his planned investment

(D) To meet this extra demand, he has to sell goods worth Rs 30 from his stock

Choose the correct answer from the options given below:

2025: 21 May Shift 1

In an economy, the consumption curve and saving curve are parallel to each other. What will be the value of investment multiplier in this economy?

2022: 10 Aug Shift 2

Suppose the producers plans to add Rs. 100 cr worth of goods to her stock by the end of the year. However, due to an unforeseen upsurge of demand for her goods in the market, she had to sell goods worth Rs. 30 cr from her existing stock.

Now, determine Ex-ante Investment and Ex-post Investment from the above information.

2026: 21 May Shift 1

Which one of the following combinations are correct?

(A) ΔC/ΔY=Marginal Propensity to Consume (MPC).

(B) ΔS/ΔY=Marginal Propensity to Save (MPS).

(C) 1/1-APS=Investment Multiplier.

(D) 1/1- C=Investment Multiplier.

Choose the correct answer from the options given below:

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