CUET Economics 2025 Slot 14 Past Year Paper with Solutions

Q1:

Macro

>

Balance of Payments

Medium

Central banks intervene to buy and sell foreign currencies in an attempt to moderate exchange rate movements whenever they feel that such actions are appropriate. What is this move called?

Managed floating.

Official reserve transactions.

Balance of payments.

Autonomous and accommodating transactions.

Correct Answer

Option 1

Correct Answer

Explanation

Q2:

Micro

>

Introduction

Easy

Whether to have more consumption goods or to have investment goods which will boost production and consumption tomorrow, is a part of which of the central problem?

Why these goods produced?

For whom are these goods produced?

How are these goods produced?

What to produced and in what quantities?

Correct Answer

Option 4

Correct Answer

Explanation

Q3:

Macro

>

Income & Employment

Medium

In which year, the book 'The Economic Consequences of the Peace' was written by John Maynard Keynes.

1909

1919

1929

1936

Correct Answer

Option 2

Correct Answer

Explanation

Q4:

Macro

>

Government Budget

Medium

Match List-I with List-II

List-I	List-II
(A) Primary deficit	(I) Net borrowing at home + Borrowing from RBI + Borrowing from abroad
(B) Fiscal deficit	(II) Fiscal deficit – Net interest liabilities
(C) Revenue deficit	(III) Revenue expenditure – Revenue receipts
(D) Revenue Expenditure	(IV) Plan and non-plan expenditure

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 2

Correct Answer

Explanation

Q5:

Macro

>

Introduction

Easy

Individuals or institutions that take economic decisions are known as................

Consumers.

Producers.

Government.

Economic Agents.

Correct Answer

Option 4

Correct Answer

Explanation

Q6:

Macro

>

Income & Employment

Medium

If the marginal propensity to consume is 0.6. Then what will be the value of tax multiplier?

+ 0.25

- 0.25

+ 1.5

- 1.5

Correct Answer

Option 4

Correct Answer

Explanation

Q7:

Micro

>

Production & Costs

Medium

The shape of the average fixed cost curve is ........................

Upward sloping

Rectangular hyperbola

Vertical

Horizontal

Correct Answer

Option 2

Correct Answer

Explanation

Q8:

Macro

>

National Income

Medium

Arrange the following statements in the context of the calculation of Gross National Product at Market price.

(A) Add Net factor income from abroad.

(B) Calculate values of output.

(C) Determine sales for the country.

(D) Deduct intermediate consumption.

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 4

Correct Answer

Explanation

Q9:

Micro

>

Production & Costs

Medium

In a production function $q = f(x_1, x_2)$ where the firm produces q output using $x_1$ of factor 1 and $x_2$ of factor 2. Now suppose the firm decides to increase the employment level of both the factors t (t > 1) times. then which among the following is correct?

$f(tx_1, tx_2) > t f(x_1, x_2)$ i.e. constant returns to scale.

$f(tx_1, tx_2) < t f(x_1, x_2)$ i.e increasing returns to scale.

$f(tx_1, tx_2) < t f(x_1, x_2)$ i.e decreasing returns to scale.

$f(tx_1, tx_2) = t f(x_1, x_2)$ i.e decreasing returns to scale.

Correct Answer

Option 3

Correct Answer

Explanation

Q10:

Micro

>

Market Equilibrium

Medium

Arrange the following statements in chronological sequence about how government intervention in the form of price control has an impact on the market.

(A) There will be an excess demand for sugar in the market at that price.

(B) Government-imposed upper limit on the price of sugar.

(C) Quantity of sugar can be distributed to everyone, through a system of rationing.

(D) It could end up creating a shortage of sugar in the market.

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 3

Correct Answer

Explanation

Q11:

Macro

>

Balance of Payments

Medium

The cost of a bag increased from $8 to$ 12 in the US and ₹ 400 to ₹480 in India. What affect it has on the dollar in respect to exchange price?

Revaluated.

Appreciated.

Depreciated.

Devaluated.

Correct Answer

Option 3

Correct Answer

Explanation

Q12:

Micro

>

Production & Costs

Medium

Which statement is incorrect in the context of relationship between AVC and SMC?

As long as AVC is falling, SMC must be less than the AVC.

SMC curve cuts the AVC curve from below at the minimum point of AVC.

As AVC rises, SMC must be greater than the AVC.

SMC curve cuts the AVC curve from below at the minimum point of SMC.

Correct Answer

Option 4

Correct Answer

Explanation

Q13:

Macro

>

Money & Banking

Medium

Match List-I with List-II

List-I	List-II
(A) $M_1$	(I) $M_1$ + Net time deposits of commercial banks
(B) $M_3$	(II) Assets - Liabilities
(C) Net Worth	(III) 1/CRR
(D) Money Multiplier	(IV) Currency + Demand Deposit

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 2

Correct Answer

Explanation

Q14:

Macro

>

Government Budget

Easy

A shock absorber which makes disposable income, and thus consumer spending, less sensitive to fluctuations in GDP is called.

Discretionary fiscal policy.

Government expenditure multiplier.

Automatic stabiliser.

Tax multiplier.

Correct Answer

Option 3

Correct Answer

Explanation

Q15:

Macro

>

National Income

Medium

Identify which of the following is not included while estimating national income?

Rent received from commercial banks located in Delhi.

Salary received by an Indian from any foreign embassy.

Direct purchases by foreigners from Indian markets.

Purchase of new shares of domestic company.

Correct Answer

Option 4

Correct Answer

Explanation

Q16:

Micro

>

Production & Costs

Hard

Arrange the following statements in chronological order in respect to the impact of a unit tax on supply:

(A) Imposition of unit tax increases the price of commodities.

(B) Increased prices will lead to an increase in LRAC and LRMC.

(C) The firm's long run supply curve shifts to the left.

(D) At any given market price, the firm supplies fewer units of output.

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 1

Correct Answer

Explanation

Q17:

Micro

>

Production & Costs

Medium

When the output added by each additional worker is proportionally less, what it shows?

Marginal product fall and average product rises.

Marginal product rises.

Marginal product falls.

Marginal product rise and average product falls.

Correct Answer

Option 3

Correct Answer

Explanation

Q18:

Macro

>

Government Budget

Easy

The government policy affecting the personal disposable income of households by making transfers and collecting taxes is known by...........

Redistribution function.

Stabilization function.

Fiscal policy.

Taxation.

Correct Answer

Option 1

Correct Answer

Explanation

Q19:

Micro

>

Forms of Market

Medium

Identify the incorrect option from the following related to a perfectly competitive market.

The firm's average revenue is equal to the market Price.

The price line shows the relationship between the market price and a firm's output level.

Marginal revenue equals the market price.

Firm's total revenue curve is a straight line horizontally.

Correct Answer

Option 4

Correct Answer

Explanation

Q20:

Micro

>

Forms of Market

Medium

In a perfectly competitive market choose the correct statement from the following.

(A) Equilibrium occurs where market demand equals market supply.

(B) Each firm employs labour upto the point where the marginal revenue of labour equals the wage rate.

(C) Equilibrium price and quantity are determined when there is large number of firms.

(D) Equilibrium price is always equal to minimum average cost of the firms.

Choose the correct answer from the options given below:

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

(A), (C) and (D) only

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

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

Correct Answer

Option 1

Correct Answer

Explanation

Q21:

Macro

>

Income & Employment

Medium

When aggregate output is determined solely by the level of aggregate demand, the relation between aggregate supply and price is?

Less Elastic.

More Elastic.

Perfectly Elastic.

Perfectly Inelastic.

Correct Answer

Option 3

Correct Answer

Explanation

Q22:

Macro

>

National Income

Medium

Match List-I with List-II

List-I	List-II
(A) C + I + G + (X-M) + NFIA	(I) $GDP_{MP}$
(B) $GDP_{MP}$ - Depreciation	(II) Domestic Income
(C) NDP MP - IT + Subsidies	(III) $NDP_{MP}$
(D) $NDP_{MP}$ + Depreciation	(IV) $GNP_{MP}$

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

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

Correct Answer

Option 3

Correct Answer

Explanation

Q23:

Micro

>

Introduction

Easy

An institution which organizes the free interaction of individuals pursuing their respective economic activities, is known as...........

Centrally Planned Economy.

Mixed Economy.

Market Economy.

Colonised Economy.

Correct Answer

Option 3

Correct Answer

Explanation

Q24:

Macro

>

Income & Employment

Medium

The ratio of the total increment in equilibrium value of final goods output to the initial increment in autonomous investment expenditure is known as?

Investment Multiplier.

Autonomous Multiplier.

Credit Multiplier.

Induce Multiplier.

Correct Answer

Option 1

Correct Answer

Explanation

Q25:

Macro

>

National Income

Medium

It may be incorrect to treat GDP as an index of the welfare of the country for the following reasons.

(A) Externalities.

(B) Distribution of GDP is not uniform.

(C) Monetary exchanges.

(D) Non-monetary exchanges.

Choose the correct answer from the options given below:

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

(A), (C) and (D) only

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

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

Correct Answer

Option 1

Correct Answer

Explanation

Q26:

Macro

>

Balance of Payments

Medium

In the balance of payments, the transactions of bonds and equity shares are placed under which of the following account?

Trading Account.

Financial Account.

Current Account.

Errors and Omissions.

Correct Answer

Option 2

Correct Answer

Explanation

Q27:

Micro

>

Market Equilibrium

Medium

Match List-I with List-II

List-I	List-II
(A) Leftward shift in both the supply and demand curve	(I) Equilibrium price remains unchanged
(B) Rightward shift in both supply and demand curve	(II) Equilibrium quantity increases
(C) Equal percentage of increase in both demand and supply curves	(III) Equilibrium quantity decreases
(D) Shifts in supply curve towards right and demand curve shifts left	(IV) Equilibrium quantity remains unchanged

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

Correct Answer

Option 4

Correct Answer

Explanation

Q28:

Macro

>

Balance of Payments

Medium

If ₹150 is required to buy 2 Dollar, instead of ₹100 earlier, then:

(A) Domestic currency has depreciated.

(B) Domestic currency has appreciated.

(C) The rupee value of the import bill will increase.

(D) Selling foreign exchange from its reserves by the reserve bank of India.

Choose the correct answer from the options given below:

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

(A), (C) and (D) only

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

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

Correct Answer

Option 2

Correct Answer

Explanation

Q29:

Macro

>

Balance of Payments

Medium

Choose the correct statements from the following in respect of exchange rate system.

(A) Floating Exchange Rate exchange rate is determined by the market forces of demand and supply.

(B) In a fixed exchange rate system, making domestic currency cheaper is called Devaluation.

(C) Increase in exchange rate implies that the price of foreign currency has increased and is called depreciation.

(D) Exchange rates between any two currencies adjust to reflect differences in the price levels in the two countries.

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 4

Correct Answer

Explanation

Q30:

Macro

>

Money & Banking

Medium

Consider the following steps taken by the Reserve Bank of India with respect to money supply and arrange them in the appropriate sequence.

(A) Increase in lending rates by commercial banks.

(B) Contraction in credit.

(C) Increase in bank rates by the Reserve bank of India.

(D) Increase in cost of borrowings by commercial banks.

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 3

Correct Answer

Explanation

Q31:

Macro

>

Income & Employment

Medium

Suppose autonomous investment and consumption expenditure (A) in a hypothetical economy is ₹50 crores. MPS is 0.2 and the level of income is ₹4000 crores. The value of ex-ante aggregate demand would be _________

4000

4200

3250

3300

Correct Answer

Option 3

Correct Answer

Explanation

Q32:

Macro

>

National Income

Easy

Identify which of the following statements is true about the final goods?

Passes through the stages of production.

Undergo transformation by the action of the retailer.

A product that will not pass through any more stages of production or transformation.

Resale of the product by traders.

Correct Answer

Option 3

Correct Answer

Explanation

Q33:

Micro

>

Forms of Market

Easy

The demand curve that a firm faces in a perfectly competitive market is...........

More elastic.

Less elastic.

Perfectly inelastic.

Perfectly elastic.

Correct Answer

Option 4

Correct Answer

Explanation

Q34:

Macro

>

Money & Banking

Easy

At a given cash reserve ratio of 50% with deposits of ₹ 1000, the amount which can be used to give loans by the bank.

₹ 50

₹ 500

₹100

₹1000

Correct Answer

Option 2

Correct Answer

Explanation

Q35:

Micro

>

Production & Costs

Medium

Match List-I with List-II

List-I	List-II
(A) Production function	(I) $f(tx_1, tx_2) > t f(x_1, x_2)$
(B) Constant returns to scale	(II) $f(tx_1, tx_2) < t f(x_1, x_2)$
(C) Increasing returns to scale	(III) $f(x_1, x_2)$
(D) Decreasing returns to scale	(IV) $f(tx_1, tx_2) = t f(x_1, x_2)$

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 4

Correct Answer

Explanation

Q36:

Macro

>

Money & Banking

Easy

Suppose, in a hypothetical economy, the cash reserve ratio is 20% and initial deposits are Rs.100. The value of money which a bank can use to give as a loan in the first round would be

80

100

120

90

Correct Answer

Option 1

Correct Answer

Explanation

Q37:

Micro

>

Production & Costs

Medium

Choose the correct equations in the context of costs.

(A) TFC = AFC × quantity

(B) LRMC = (TC at $q_n$ units) – (TC at $q_{n-1}$ units)

(C) TC = TVC × TFC

(D) LRAC = TC/q

Choose the correct answer from the options given below:

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

(A), (C) and (D) only

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

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

Correct Answer

Option 1

Correct Answer

Explanation

Q38:

Micro

>

Production & Costs

Medium

The set of all possible combinations of the two inputs that yield the same maximum possible level of output is known as...........

Isocost.

Indifference curve.

Isoquant.

Budget line.

Correct Answer

Option 3

Correct Answer

Explanation

Q39:

Macro

>

Money & Banking

Medium

Arrange the following statements in chronological order with respect to open market operation.

(A) Bonds payments increases total reserves in the economy.

(B) RBI buys government bonds from the market.

(C) RBI sell bond if there is excess money supply.

(D) Higher reserves Increase money supply in the economy.

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 3

Correct Answer

Explanation

Q40:

Macro

>

Government Budget

Easy

When goods are financed through the budget and can be used without any direct payment, they are known as.......

Public goods.

Public provision.

Public production.

Private goods.

Correct Answer

Option 2

Correct Answer

Explanation

Q41:

Micro

>

Consumer Behaviour

Medium

Comprehension:

Read the passage carefully and answer the questions based on the passage:

Equality of the Marginal Rate of Substitution and the Ratio of the Prices

The optimum bundle of the consumer is located at the point where the budget line is tangent to one of the indifference curves. If the budget line is tangent to an indifference curve at a point, the absolute value of the slope of the indifference curve and that of the budget line are the same at that point. The slope of the indifference curve is the rate at which the consumer is willing to substitute one good for the other. The slope of the budget line is the rate at which the consumer is able to substitute one good for the other in the market. At the optimum, the two rates should be the same. To see why, consider a point where this is not so. Suppose the marginal rate of substitution at such a point is 2 and suppose the two goods have the same price. At this point, the consumer is willing to give up 2 mangoes if she is given an extra banana. But in the market, she can buy an extra banana if she gives up just 1 mango. Therefore, if she buys an extra banana, she can have more of both the goods compared to the bundle represented by the point, and hence, move to a preferred bundle. Thus, a point at which the MRS is greater, the price ratio cannot be the optimum. A similar argument holds for any point at which the MRS is less than the price ratio.

The economic concept at which the consumer is willing to substitute one good for the other?

Price Ratio.

Marginal rate of substitution.

Marginal rate of technical substitution.

Diminishing marginal rate.

Correct Answer

Option 2

Correct Answer

Explanation

Q42:

Micro

>

Consumer Behaviour

Easy

Comprehension:

Read the passage carefully and answer the questions based on the passage:

Equality of the Marginal Rate of Substitution and the Ratio of the Prices

The optimum bundle of the consumer is located at the point where the budget line is tangent to one of the indifference curves. If the budget line is tangent to an indifference curve at a point, the absolute value of the slope of the indifference curve and that of the budget line are the same at that point. The slope of the indifference curve is the rate at which the consumer is willing to substitute one good for the other. The slope of the budget line is the rate at which the consumer is able to substitute one good for the other in the market. At the optimum, the two rates should be the same. To see why, consider a point where this is not so. Suppose the marginal rate of substitution at such a point is 2 and suppose the two goods have the same price. At this point, the consumer is willing to give up 2 mangoes if she is given an extra banana. But in the market, she can buy an extra banana if she gives up just 1 mango. Therefore, if she buys an extra banana, she can have more of both the goods compared to the bundle represented by the point, and hence, move to a preferred bundle. Thus, a point at which the MRS is greater, the price ratio cannot be the optimum. A similar argument holds for any point at which the MRS is less than the price ratio.

The rate at which the consumer is able to substitute one good for the other in the market is called?

Price Ratio.

Marginal rate of substitution.

Marginal rate of technical substitution.

Diminishing marginal rate.

Correct Answer

Option 1

Correct Answer

Explanation

Q43:

Micro

>

Consumer Behaviour

Medium

Comprehension:

Read the passage carefully and answer the questions based on the passage:

Equality of the Marginal Rate of Substitution and the Ratio of the Prices

The optimum bundle of the consumer is located at the point where the budget line is tangent to one of the indifference curves. If the budget line is tangent to an indifference curve at a point, the absolute value of the slope of the indifference curve and that of the budget line are the same at that point. The slope of the indifference curve is the rate at which the consumer is willing to substitute one good for the other. The slope of the budget line is the rate at which the consumer is able to substitute one good for the other in the market. At the optimum, the two rates should be the same. To see why, consider a point where this is not so. Suppose the marginal rate of substitution at such a point is 2 and suppose the two goods have the same price. At this point, the consumer is willing to give up 2 mangoes if she is given an extra banana. But in the market, she can buy an extra banana if she gives up just 1 mango. Therefore, if she buys an extra banana, she can have more of both the goods compared to the bundle represented by the point, and hence, move to a preferred bundle. Thus, a point at which the MRS is greater, the price ratio cannot be the optimum. A similar argument holds for any point at which the MRS is less than the price ratio.

The exceptional case in optimal choice of the consumer is where ..................

One good is more preferred than another.

Entire income is spent on one of the goods only.

Partial spending of income on both goods.

Both goods are preferred in same quantity.

Correct Answer

Option 2

Correct Answer

Explanation

Q44:

Micro

>

Consumer Behaviour

Medium

Comprehension:

Read the passage carefully and answer the questions based on the passage:

Equality of the Marginal Rate of Substitution and the Ratio of the Prices

The optimum bundle of the consumer is located at the point where the budget line is tangent to one of the indifference curves. If the budget line is tangent to an indifference curve at a point, the absolute value of the slope of the indifference curve and that of the budget line are the same at that point. The slope of the indifference curve is the rate at which the consumer is willing to substitute one good for the other. The slope of the budget line is the rate at which the consumer is able to substitute one good for the other in the market. At the optimum, the two rates should be the same. To see why, consider a point where this is not so. Suppose the marginal rate of substitution at such a point is 2 and suppose the two goods have the same price. At this point, the consumer is willing to give up 2 mangoes if she is given an extra banana. But in the market, she can buy an extra banana if she gives up just 1 mango. Therefore, if she buys an extra banana, she can have more of both the goods compared to the bundle represented by the point, and hence, move to a preferred bundle. Thus, a point at which the MRS is greater, the price ratio cannot be the optimum. A similar argument holds for any point at which the MRS is less than the price ratio.

The optimum bundle of the consumer is located at the point where..................?

Budget line is tangent to the indifference curves.

Budget line is tangent to one of the indifference curves.

Budget line is equal indifference curves.

Marginal rate of transformation is tangent to the price ratio.

Correct Answer

Option 2

Correct Answer

Explanation

Q45:

Micro

>

Consumer Behaviour

Medium

Comprehension:

Read the passage carefully and answer the questions based on the passage:

Equality of the Marginal Rate of Substitution and the Ratio of the Prices

The optimum bundle of the consumer is located at the point where the budget line is tangent to one of the indifference curves. If the budget line is tangent to an indifference curve at a point, the absolute value of the slope of the indifference curve and that of the budget line are the same at that point. The slope of the indifference curve is the rate at which the consumer is willing to substitute one good for the other. The slope of the budget line is the rate at which the consumer is able to substitute one good for the other in the market. At the optimum, the two rates should be the same. To see why, consider a point where this is not so. Suppose the marginal rate of substitution at such a point is 2 and suppose the two goods have the same price. At this point, the consumer is willing to give up 2 mangoes if she is given an extra banana. But in the market, she can buy an extra banana if she gives up just 1 mango. Therefore, if she buys an extra banana, she can have more of both the goods compared to the bundle represented by the point, and hence, move to a preferred bundle. Thus, a point at which the MRS is greater, the price ratio cannot be the optimum. A similar argument holds for any point at which the MRS is less than the price ratio.

A consumer is willing to give up 4 bananas if it is given an extra mango, but in the market, if it gives up 6 bananas, this bundle will be considered.

Preferred bundle.

Optimum bundle.

Most preferred bundle.

Inferior bundle.

Correct Answer

Option 4

Correct Answer

Explanation

Q46:

Macro

>

Income & Employment

Easy

Comprehension:

Read the passage carefully and answer the questions based on the passage:

Aggregate Demand and Its Components

Consumption may denote not what people have actually consumed in a given year, but what they had planned to consume during the same period. Similarly, investment can mean the amount a producer plans to add to her inventory. It may be different from what she ends up doing. The planned values of the variables are called their ex ante measures. The most important determinant of consumption demand is household income. A consumption function describes the relation between consumption and income. The simplest consumption function assumes that consumption changes at a constant rate as income changes. Of course, even if income is zero, some consumption still takes place. Since this level of consumption is independent of income, it is called autonomous consumption. The induced component of consumption, cY shows the dependence of consumption on income.

Which one is not the component of a aggregate demand for final goods?

Price.

Consumption.

Investment.

Government spending.

Correct Answer

Option 1

Correct Answer

Explanation

Q47:

Macro

>

Income & Employment

Easy

Comprehension:

Read the passage carefully and answer the questions based on the passage:

Aggregate Demand and Its Components

Consumption may denote not what people have actually consumed in a given year, but what they had planned to consume during the same period. Similarly, investment can mean the amount a producer plans to add to her inventory. It may be different from what she ends up doing. The planned values of the variables are called their ex ante measures. The most important determinant of consumption demand is household income. A consumption function describes the relation between consumption and income. The simplest consumption function assumes that consumption changes at a constant rate as income changes. Of course, even if income is zero, some consumption still takes place. Since this level of consumption is independent of income, it is called autonomous consumption. The induced component of consumption, cY shows the dependence of consumption on income.

In a given consumption function C=50+0.5Y, autonomous consumption is.

0.5

50

25

10

Correct Answer

Option 2

Correct Answer

Explanation

Q48:

Macro

>

Income & Employment

Medium

Comprehension:

Read the passage carefully and answer the questions based on the passage:

Aggregate Demand and Its Components

Consumption may denote not what people have actually consumed in a given year, but what they had planned to consume during the same period. Similarly, investment can mean the amount a producer plans to add to her inventory. It may be different from what she ends up doing. The planned values of the variables are called their ex ante measures. The most important determinant of consumption demand is household income. A consumption function describes the relation between consumption and income. The simplest consumption function assumes that consumption changes at a constant rate as income changes. Of course, even if income is zero, some consumption still takes place. Since this level of consumption is independent of income, it is called autonomous consumption. The induced component of consumption, cY shows the dependence of consumption on income.

Savings are that part of income that is not consumed. What is the marginal propensity to save?

S/Y

C/Y

ΔS

1-c

Correct Answer

Option 4

Correct Answer

Explanation

Q49:

Macro

>

Income & Employment

Medium

Comprehension:

Read the passage carefully and answer the questions based on the passage:

Aggregate Demand and Its Components

Consumption may denote not what people have actually consumed in a given year, but what they had planned to consume during the same period. Similarly, investment can mean the amount a producer plans to add to her inventory. It may be different from what she ends up doing. The planned values of the variables are called their ex ante measures. The most important determinant of consumption demand is household income. A consumption function describes the relation between consumption and income. The simplest consumption function assumes that consumption changes at a constant rate as income changes. Of course, even if income is zero, some consumption still takes place. Since this level of consumption is independent of income, it is called autonomous consumption. The induced component of consumption, cY shows the dependence of consumption on income.

Which of the following is not correct for marginal propensity to consume?

MPC=0

MPC=1

0 < MPC > 1

0< MPC<1

Correct Answer

Option 3

Correct Answer

Explanation

Q50:

Macro

>

Income & Employment

Medium

Comprehension:

Read the passage carefully and answer the questions based on the passage:

Aggregate Demand and Its Components

Consumption may denote not what people have actually consumed in a given year, but what they had planned to consume during the same period. Similarly, investment can mean the amount a producer plans to add to her inventory. It may be different from what she ends up doing. The planned values of the variables are called their ex ante measures. The most important determinant of consumption demand is household income. A consumption function describes the relation between consumption and income. The simplest consumption function assumes that consumption changes at a constant rate as income changes. Of course, even if income is zero, some consumption still takes place. Since this level of consumption is independent of income, it is called autonomous consumption. The induced component of consumption, cY shows the dependence of consumption on income.

Machines produced in an economy in a given year are a part of ................

Consumption goods.

Normal goods.

Intermediate goods.

Final goods.

Correct Answer

Option 4

Correct Answer

Explanation

CUET Economics 2025 PYQs29 May Shift 2. Free, no login required.

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CUET Economics 2025 29 May Shift 2 Past Year Question Paper

CUET Economics Past Year Questions (Topic-Wise)