CUET Economics 2025 Slot 16 Past Year Paper with Solutions

Q1:

Micro

>

Market Equilibrium

Medium

Arrange the following statement in the context of elasticity along a linear demand curve (left to right).

(A) e_d = 1

(B) e_d > 1

(C) e_d = 0

(D) e_d < 1

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 3

Correct Answer

Explanation

Q2:

Micro

>

Market Equilibrium

Medium

The q (1 + e_p) < 0, and hence, ΔE (expenditure) has the opposite sign as Δp (price), if ...................

e_p > -1

e_p < -1

e_p = -1

e_p = 0

Correct Answer

Option 2

Correct Answer

Explanation

Q3:

Macro

>

Income & Employment

Medium

By what value equilibrium output and aggregate demand will change, when the value of parameter c changes from 0.8 to 0.5 at a given A = 50?

250

100

150

300

Correct Answer

Option 3

Correct Answer

Explanation

Q4:

Micro

>

Consumer Behaviour

Medium

Match List-I with List-II

List-I	List-II
(A) Substitution effect stronger than the income effect	(I) Inferior goods
(B) Income effect stronger than the substitution effect	(II) Complementary goods
(C) Demands and income move opposite direction	(III) Normal goods
(D) Goods consumed together	(IV) Giffen goods

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 2

Correct Answer

Explanation

Q5:

Micro

>

Market Equilibrium

Medium

How government intervention through price control policy will have an impact on the market?

(A) The government imposed lower limit on the price that may be charged

(B) For certain goods and services, a fall in price below a particular level is not desirable

(C) Thereby leading to an excess supply in the market

(D) Government needs to buy the surplus at the predetermined price

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 1

Correct Answer

Explanation

Q6:

Micro

>

Production & Costs

Medium

From the following which production function exhibits increasing returns to scale?

$f(tx, ty) > t f(x, y)$ .

$f(tx, ty) < t f(x, y)$ .

$f(tx, ty) = t f(x, y)$ .

$x^α y^β$ .

Correct Answer

Option 1

Correct Answer

Explanation

Q7:

Macro

>

Money & Banking

Medium

Which statement is not true for M3 as a measure of money supply.

M3 is known as Aggregate Monetary Resources.

M3 is the most commonly used measure of money supply.

M3 = M4 - Total deposits with Post Office savings organizations (excluding National Savings Certificates).

M3 = M1 + Saving deposits with a post office savings bank.

Correct Answer

Option 4

Correct Answer

Explanation

Q8:

Macro

>

National Income

Medium

From the following find the statements related to GDP and the welfare of the economy

(A) The domestic services that women perform at home are considered in the calculation of GDP.

(B) Harmful effects caused due to carbon emissions from factory production are not counted as GDP.

(C) The rise in GDP may be concentrated in the hands of very few individuals or firms.

(D) Higher levels of GDP always ensure higher welfare.

Choose the correct answer from the options given below:

(B) and (C) only

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

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

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

Correct Answer

Option 1

Correct Answer

Explanation

Q9:

Macro

>

Income & Employment

Medium

If all the people in 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 situation is known as...................

Deficient Saving.

Paradox of Thrift.

Excess Demand.

Excess Investment.

Correct Answer

Option 2

Correct Answer

Explanation

Q10:

Micro

>

Market Equilibrium

Easy

A functional relation between the two variables expressed $y = 50 - x$ , will have slope.

Downward

Upward

Vertical

Horizontal

Correct Answer

Option 1

Correct Answer

Explanation

Q11:

Micro

>

Production & Costs

Medium

Choose the correct statements from the options given below in terms of the shapes of the short run cost curves.

(A) Average fixed cost curve is a rectangular hyperbola.

(B) Total fixed cost is horizontal straight line.

(C) Average variable cost is upward sloping.

(D) Marginal cost is U shaped.

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 2

Correct Answer

Explanation

Q12:

Macro

>

Money & Banking

Medium

Match List-I with List-II

List-I	List-II
(A) Buying and selling of bonds	(I) Transaction Motive
(B) Hold money is to carry out expenses	(II) Open Market Operations
(C) The number of times a unit of money changes hands during the unit period	(III) Velocity of circulation
(D) Hold money in terms of bonds	(IV) Speculative Motive

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 1

Correct Answer

Explanation

Q13:

Macro

>

Income & Employment

Medium

The ratio of the total increment in equilibrium value of final goods output to the initial increment in autonomous expenditure is called...................

Autonomous investment.

Investment multiplier.

Ex-ante investment.

GDP multiplier.

Correct Answer

Option 2

Correct Answer

Explanation

Q14:

Macro

>

National Income

Medium

Which statement is not related to the inventory.

Unsold finished, or semifinished goods which a firm carries to the next year.

Inventory may have a higher value at the end of the year.

The change of inventories of a firm during a year = production – Sale

It is a flow variable.

Correct Answer

Option 4

Correct Answer

Explanation

Q15:

Macro

>

National Income

Medium

Match List-I with List-II

List-I	List-II
(A) Open Economy	(I) Equity and Bonds.
(B) Financial Market	(II) Demand and supply of workforce.
(C) Output Market	(III) Various economic avenues available.
(D) Labor Market	(IV) Visible and Invisible Trade.

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 3

Correct Answer

Explanation

Q16:

Macro

>

Money & Banking

Medium

Arrange the following in ascending order in respect of evolution of money.

(A) Coin exchanges.

(B) Barter exchanges.

(C) E-money.

(D) Paper currency.

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 3

Correct Answer

Explanation

Q17:

Macro

>

National Income

Medium

Consider the following statement related to Aggregate Income

(A) Aggregate revenue received by the firms is paid out to the factors of production it is considered as aggregate income.

(B) Aggregate Income can be calculated by calculating the aggregate value of goods and services produced by the firms.

(C) Income is being spent on the goods and services produced by the firms. It takes the form of aggregate expenditure received by firms.

(D) Aggregate Income can not only be calculated through aggregate expenditure. There are other methods that exist.

Which of the following combination of statements best explains the concept of Aggregate Income?

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

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

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

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

Correct Answer

Option 3

Correct Answer

Explanation

Q18:

Micro

>

Consumer Behaviour

Medium

What are the features of an Indifference Curve?

(A) Indifference curve slopes upwards from left to right.

(B) Higher indifference curve gives greater level of utility.

(C) Indifference curve slopes downwards from left to right

(D) Two indifference curves never intersect each other

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 4

Correct Answer

Explanation

Q19:

Macro

>

Government Budget

Medium

Net borrowing at home included which of the following?

directly borrowed from the public through debt instruments.

Borrowing from Federal body of banking system.

Gross fiscal deficit.

Borrowing from abroad through debt instruments.

Correct Answer

Option 1

Correct Answer

Explanation

Q20:

Micro

>

Production & Costs

Easy

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

Production Possibility Frontier.

Production Possibility Set.

Isoquant Curve.

Production Function.

Correct Answer

Option 2

Correct Answer

Explanation

Q21:

Macro

>

Balance of Payments

Medium

Under this system, official reserve transactions are not equal to zero.

Fixed Exchange Rate.

Flexible Exchange Rate.

Managed Floating Exchange Rate.

Speculation.

Correct Answer

Option 3

Correct Answer

Explanation

Q22:

Micro

>

Production & Costs

Medium

A firm wishes to maximize its profit, find the correct conditions from the following, that must be held by the firm at q₂ at which its profit is maximum.

(A) The price must be less than the average variable cost

(B) The price must be greater than the average variable cost

(C) Marginal cost must be non-decreasing

(D) The price, p, must equal MC

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 4

Correct Answer

Explanation

Q23:

Micro

>

Production & Costs

Medium

Match List-I with List-II

List-I	List-II
(A) Production function	(I) $x_1^α x_2^β$
(B) Constant return to scale	(II) $α + β = 1$
(C) Increasing return to scale	(III) $α + β < 1$
(D) Decreasing return to scale	(IV) $α + β > 1$

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 3

Correct Answer

Explanation

Q24:

Macro

>

National Income

Easy

Consider the following statement

Net Investment = Rs. 5 Cr.

Gross Investment = Rs 7.73 Cr.

Find the value of Depreciation

Rs 2.073 Cr

Rs 2.73 Cr

Rs 12.73 Cr

Rs 2.730 Cr

Correct Answer

Option 2

Correct Answer

Explanation

Q25:

Macro

>

Government Budget

Medium

Which of the following is the best example of Public provision and Public Production respectively?

Opening up of 11 Central University in next 5 years worth of 20,000 cr from annual budget 2024-25, BSNL.

Airtel, BSNL.

AIIMS, Coal India Limited.

5 lacs brick homes to people from 'Below Poverty Line' strata, Loan of up to 10 lac to women entrepreneurs.

Correct Answer

Option 1

Correct Answer

Explanation

Q26:

Micro

>

Production & Costs

Medium

Arrange the given statements to show the impact on a firm's supply curve due to its determinants.

(A) Organisational innovation allows the firm to use fewer units of inputs.

(B) Any factor that affects a firm's marginal cost curve is a determinant of its supply curve.

(C) At any given market price, the firm now supplies more units of output.

(D) The marginal cost will shift downward.

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 3

Correct Answer

Explanation

Q27:

Macro

>

Government Budget

Medium

The Fiscal Responsibility and Budget Management Act 2003 mandates the central government to lay before both houses of parliament. Which of the three statements along with the Annual Financial Statement?

Medium Term Fiscal Policy Statement, Fiscal Policy Strategy Management, and The Macroeconomic Framework Statement.

Medium Term Fiscal Policy Statement, Quarterly Macroeconomic Policy, and Microeconomic Accounting standard.

Fiscal Policy Review Report , Fiscal Policy Recommended Report, Field Survey on Macroeconomic Benchmarks.

Annual Stock Performance Data, Field Surveys on Unemployment Report, Citizen Feedback on Economy Data.

Correct Answer

Option 1

Correct Answer

Explanation

Q28:

Micro

>

Production & Costs

Medium

The point of minimum average cost at which the supply curve cuts the long run average cost curve is called?

Super Normal Profit.

Opportunity cost.

Break Even Point.

Shut Down Point.

Correct Answer

Option 3

Correct Answer

Explanation

Q29:

Macro

>

Money & Banking

Easy

Demonetization refers to :

Restricting money supply in the economy by the government.

Restricting new currency and coin printing by the government.

Declaring any existing hard currency or coins as no longer a legal tender for some time.

Declaring all or few existing hard currency or coins as no longer a legal tender forever.

Correct Answer

Option 4

Correct Answer

Explanation

Q30:

Macro

>

National Income

Easy

Consider the following data:

Nominal GDP : 1900

Real GDP : 1300

What is the GDP deflator in the above conditions ?

1.405

1.046

1.45

1.46

Correct Answer

Option 4

Correct Answer

Explanation

Q31:

Macro

>

Income & Employment

Medium

If the government changes transfer payments ( $\overline{TR}$ ), autonomous spending ( $A$ ) will change by?

$ΔTR$

$c ΔTR$

$\frac{Δy}{ΔTR}$

$1 - c ΔTR$

Correct Answer

Option 2

Correct Answer

Explanation

Q32:

Micro

>

Market Equilibrium

Medium

Match List-I with List-II

List-I	List-II
(A) Demand and supply curve shift leftward	(I) Quantity may increase, decrease or remain unchanged and price decreases
(B) Demand and supply curve shift rightward	(II) Quantity may increase, decrease or remain unchanged and price increases
(C) Demand curve shifts leftward and supply curve rightward	(III) Quantity decreases and price may increase, decrease or remain unchanged
(D) Demand curve shifts rightward and supply curve leftward	(IV) Quantity increases and prices may increase, decrease or remain unchanged

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 2

Correct Answer

Explanation

Q33:

Macro

>

National Income

Medium

The well-being and wealth of the economy may not resonate only with possession of resources. It should ....................

Consider for how long the resources are held.

Consider how these resources are used in generating a continuous flow of income and wealth.

Consider whether the possession of resources is increasing with the passage of time or not.

Consider whether the resources fulfill the need for next 10 years or not.

Correct Answer

Option 2

Correct Answer

Explanation

Q34:

Macro

>

Balance of Payments

Medium

Arrange the following components as per the sample of Balance of Payments for India.

(A) Trade Balance.

(B) Net Invisibles.

(C) Current Account Balance.

(D) Errors and Omissions.

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 1

Correct Answer

Explanation

Q35:

Macro

>

Balance of Payments

Easy

Gifts, remittances and grants in current account are the components of ?

Transfer Payments.

Net Factor Income.

Trade in Goods.

Net Non-factor Income.

Correct Answer

Option 1

Correct Answer

Explanation

Q36:

Macro

>

Introduction

Easy

The study of total output, employment and aggregate price level of an economy.

Macro Economics.

Micro Economics.

Positive Economics.

Normative Economics.

Correct Answer

Option 1

Correct Answer

Explanation

Q37:

Macro

>

Balance of Payments

Medium

In modern economies, countries interact through various channels, Which market is not an example of these linkages?

Output Market.

Money Market.

Financial Market.

Labour Market.

Correct Answer

Option 2

Correct Answer

Explanation

Q38:

Macro

>

Money & Banking

Easy

When the Reserve Bank of India was established?

1932

1933

1934

1935

Correct Answer

Option 4

Correct Answer

Explanation

Q39:

Macro

>

Government Budget

Medium

Which of the following best explains the constitutional aspect of Goods and Services Tax implementation in India?

104th Constitutional Ammendment and Introduction of Article 26A.

101 Constitutional Amendment and Introduction of Article 246A.

101st Constitutional Amendment and Introduction of Article 26A.

104th Constitutional Ammendment and Introduction of Article 24A.

Correct Answer

Option 2

Correct Answer

Explanation

Q40:

Micro

>

Introduction

Medium

Which statement is not true for Adam Smith?

Professor at University of Glasgow

'The Economic Consequences of the Peace' written in 1919.

'An Enquiry into the Nature and Cause of the Wealth of Nations' Published in 1776

Founder of political economy

Correct Answer

Option 2

Correct Answer

Explanation

Q41:

Micro

>

Production & Costs

Medium

Comprehension:

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

Long Run Costs

In the long run, all inputs are variable. There are no fixed costs. The total cost and the total variable cost therefore, coincide in the long run. Long run marginal cost is the change in total cost per unit of change in output. Increasing returns to scale implies that if we increase all the inputs by a certain proportion, output increases by more than that proportion. Decreasing returns to scale implies that if we want to increase the output by a certain proportion, inputs need to be increased by more than that proportion. Constant returns to scale implies a proportional increase in inputs resulting in a proportional increase in output. So the average cost remains constant as long as CRS operates. The LRAC curve is a ‘U’-shaped curve. Its downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed. For the first unit of output, both LRMC and LRAC are the same. Then, as output increases, LRAC initially falls, and then, after a certain point, it rises. As long as average cost is falling, marginal cost must be less than the average cost. When the average cost is rising, marginal cost must be greater than the average cost. LRMC cuts the LRAC curve from below at the minimum point of the LRAC.

The equation of long-run marginal cost.

TC/q

(TC at q₁ units) – (TC at q₁ – 1 units)

TVC/q

TFC/q

Correct Answer

Option 2

Correct Answer

Explanation

Q42:

Micro

>

Production & Costs

Medium

Comprehension:

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

Long Run Costs

In the long run, all inputs are variable. There are no fixed costs. The total cost and the total variable cost therefore, coincide in the long run. Long run marginal cost is the change in total cost per unit of change in output. Increasing returns to scale implies that if we increase all the inputs by a certain proportion, output increases by more than that proportion. Decreasing returns to scale implies that if we want to increase the output by a certain proportion, inputs need to be increased by more than that proportion. Constant returns to scale implies a proportional increase in inputs resulting in a proportional increase in output. So the average cost remains constant as long as CRS operates. The LRAC curve is a ‘U’-shaped curve. Its downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed. For the first unit of output, both LRMC and LRAC are the same. Then, as output increases, LRAC initially falls, and then, after a certain point, it rises. As long as average cost is falling, marginal cost must be less than the average cost. When the average cost is rising, marginal cost must be greater than the average cost. LRMC cuts the LRAC curve from below at the minimum point of the LRAC.

As long as decreasing returns to scale operates, as the firm increases output, the average cost must be ................

Rising

Falling

Constant

Equal to output

Correct Answer

Option 1

Correct Answer

Explanation

Q43:

Micro

>

Production & Costs

Medium

Comprehension:

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

Long Run Costs

In the long run, all inputs are variable. There are no fixed costs. The total cost and the total variable cost therefore, coincide in the long run. Long run marginal cost is the change in total cost per unit of change in output. Increasing returns to scale implies that if we increase all the inputs by a certain proportion, output increases by more than that proportion. Decreasing returns to scale implies that if we want to increase the output by a certain proportion, inputs need to be increased by more than that proportion. Constant returns to scale implies a proportional increase in inputs resulting in a proportional increase in output. So the average cost remains constant as long as CRS operates. The LRAC curve is a ‘U’-shaped curve. Its downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed. For the first unit of output, both LRMC and LRAC are the same. Then, as output increases, LRAC initially falls, and then, after a certain point, it rises. As long as average cost is falling, marginal cost must be less than the average cost. When the average cost is rising, marginal cost must be greater than the average cost. LRMC cuts the LRAC curve from below at the minimum point of the LRAC.

The optimum output will be when the relationship between LRMC and LRAC.

LRAC cut LRMC from above at the minimum point LRAC.

LRAC cut LRMC from below at the minimum point LRAC.

LRMC cut LRAC from above at the minimum point LRAC.

LRMC cut LRAC from below at the minimum point of LRAC.

Correct Answer

Option 4

Correct Answer

Explanation

Q44:

Micro

>

Production & Costs

Medium

Comprehension:

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

Long Run Costs

In the long run, all inputs are variable. There are no fixed costs. The total cost and the total variable cost therefore, coincide in the long run. Long run marginal cost is the change in total cost per unit of change in output. Increasing returns to scale implies that if we increase all the inputs by a certain proportion, output increases by more than that proportion. Decreasing returns to scale implies that if we want to increase the output by a certain proportion, inputs need to be increased by more than that proportion. Constant returns to scale implies a proportional increase in inputs resulting in a proportional increase in output. So the average cost remains constant as long as CRS operates. The LRAC curve is a ‘U’-shaped curve. Its downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed. For the first unit of output, both LRMC and LRAC are the same. Then, as output increases, LRAC initially falls, and then, after a certain point, it rises. As long as average cost is falling, marginal cost must be less than the average cost. When the average cost is rising, marginal cost must be greater than the average cost. LRMC cuts the LRAC curve from below at the minimum point of the LRAC.

in the long run when the average cost is rising, marginal cost must be.

Equal to average cost.

Less than the average cost.

Greater than the average cost.

Falling.

Correct Answer

Option 3

Correct Answer

Explanation

Q45:

Micro

>

Production & Costs

Medium

Comprehension:

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

Long Run Costs

In the long run, all inputs are variable. There are no fixed costs. The total cost and the total variable cost therefore, coincide in the long run. Long run marginal cost is the change in total cost per unit of change in output. Increasing returns to scale implies that if we increase all the inputs by a certain proportion, output increases by more than that proportion. Decreasing returns to scale implies that if we want to increase the output by a certain proportion, inputs need to be increased by more than that proportion. Constant returns to scale implies a proportional increase in inputs resulting in a proportional increase in output. So the average cost remains constant as long as CRS operates. The LRAC curve is a ‘U’-shaped curve. Its downward sloping part corresponds to IRS and upward rising part corresponds to DRS. At the minimum point of the LRAC curve, CRS is observed. For the first unit of output, both LRMC and LRAC are the same. Then, as output increases, LRAC initially falls, and then, after a certain point, it rises. As long as average cost is falling, marginal cost must be less than the average cost. When the average cost is rising, marginal cost must be greater than the average cost. LRMC cuts the LRAC curve from below at the minimum point of the LRAC.

The shape of the long-run average cost curve and long-run marginal cost curve.

Only LRAC is U shaped.

LRAC is U shaped and LRMC upward sloping.

Rectangular hyperbole.

U shaped.

Correct Answer

Option 4

Correct Answer

Explanation

Q46:

Macro

>

Income & Employment

Medium

Comprehension:

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

Determination of Income and Employment

When, at a particular price level, aggregate demand for final goods equals aggregate supply of final goods, the final goods or product market reaches its equilibrium. Aggregate demand for final goods consists of ex ante consumption, ex ante investment, government spending etc. The rate of increase in ex ante consumption due to a unit increment in income is called marginal propensity to consume. For simplicity we assume a constant final goods price and constant rate of interest over short run to determine the level of aggregate demand for final goods in the economy. We also assume that the aggregate supply is perfectly elastic at this price. Under such circumstances, aggregate output is determined solely by the level of aggregate demand. This is known as effective demand principle. An increase in autonomous spending causes aggregate output of final goods to increase by a larger amount through the multiplier process. Full employment level of income is that level of income where all the factors of production are fully employed in the production process. The equilibrium attained at the point of equality of Y 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.

A change in autonomous spending causes aggregate output of final goods to change by a large or small amount due to?

Change in Consumption.

Change in Investment.

Constant Price and Interest rate.

Multiplier Mechanism.

Correct Answer

Option 4

Correct Answer

Explanation

Q47:

Macro

>

Income & Employment

Medium

Comprehension:

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

Determination of Income and Employment

When, at a particular price level, aggregate demand for final goods equals aggregate supply of final goods, the final goods or product market reaches its equilibrium. Aggregate demand for final goods consists of ex ante consumption, ex ante investment, government spending etc. The rate of increase in ex ante consumption due to a unit increment in income is called marginal propensity to consume. For simplicity we assume a constant final goods price and constant rate of interest over short run to determine the level of aggregate demand for final goods in the economy. We also assume that the aggregate supply is perfectly elastic at this price. Under such circumstances, aggregate output is determined solely by the level of aggregate demand. This is known as effective demand principle. An increase in autonomous spending causes aggregate output of final goods to increase by a larger amount through the multiplier process. Full employment level of income is that level of income where all the factors of production are fully employed in the production process. The equilibrium attained at the point of equality of Y 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.

When the aggregate output is determined solely by the level of aggregate demand. Then what it called?

Effective investment.

Effective consumtiopn.

Effective demand.

Effective supply.

Correct Answer

Option 3

Correct Answer

Explanation

Q48:

Macro

>

Income & Employment

Medium

Comprehension:

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

Determination of Income and Employment

When, at a particular price level, aggregate demand for final goods equals aggregate supply of final goods, the final goods or product market reaches its equilibrium. Aggregate demand for final goods consists of ex ante consumption, ex ante investment, government spending etc. The rate of increase in ex ante consumption due to a unit increment in income is called marginal propensity to consume. For simplicity we assume a constant final goods price and constant rate of interest over short run to determine the level of aggregate demand for final goods in the economy. We also assume that the aggregate supply is perfectly elastic at this price. Under such circumstances, aggregate output is determined solely by the level of aggregate demand. This is known as effective demand principle. An increase in autonomous spending causes aggregate output of final goods to increase by a larger amount through the multiplier process. Full employment level of income is that level of income where all the factors of production are fully employed in the production process. The equilibrium attained at the point of equality of Y 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.

What is the equilibrium output when autonomous investment increases from 10 to 20 at a given C = 40 + 0.8Y?

250

300

350

400

Correct Answer

Option 2

Correct Answer

Explanation

Q49:

Macro

>

Income & Employment

Medium

Comprehension:

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

Determination of Income and Employment

When, at a particular price level, aggregate demand for final goods equals aggregate supply of final goods, the final goods or product market reaches its equilibrium. Aggregate demand for final goods consists of ex ante consumption, ex ante investment, government spending etc. The rate of increase in ex ante consumption due to a unit increment in income is called marginal propensity to consume. For simplicity we assume a constant final goods price and constant rate of interest over short run to determine the level of aggregate demand for final goods in the economy. We also assume that the aggregate supply is perfectly elastic at this price. Under such circumstances, aggregate output is determined solely by the level of aggregate demand. This is known as effective demand principle. An increase in autonomous spending causes aggregate output of final goods to increase by a larger amount through the multiplier process. Full employment level of income is that level of income where all the factors of production are fully employed in the production process. The equilibrium attained at the point of equality of Y 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 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 as.............

Excess demand.

Deficient demand.

Excess output.

Deficient output.

Correct Answer

Option 1

Correct Answer

Explanation

Q50:

Macro

>

Income & Employment

Medium

Comprehension:

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

Determination of Income and Employment

When, at a particular price level, aggregate demand for final goods equals aggregate supply of final goods, the final goods or product market reaches its equilibrium. Aggregate demand for final goods consists of ex ante consumption, ex ante investment, government spending etc. The rate of increase in ex ante consumption due to a unit increment in income is called marginal propensity to consume. For simplicity we assume a constant final goods price and constant rate of interest over short run to determine the level of aggregate demand for final goods in the economy. We also assume that the aggregate supply is perfectly elastic at this price. Under such circumstances, aggregate output is determined solely by the level of aggregate demand. This is known as effective demand principle. An increase in autonomous spending causes aggregate output of final goods to increase by a larger amount through the multiplier process. Full employment level of income is that level of income where all the factors of production are fully employed in the production process. The equilibrium attained at the point of equality of Y 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.

Which parameter does not determine the income and employment in the economy.

Fixed price level.

Aggregate supply.

Fixed autonomous spending.

Aggregate demand.

Correct Answer

Option 3

Correct Answer

Explanation

CUET Economics 2025 PYQs30 May Shift 2. Free, no login required.

Q1:

Q2:

Q3:

Q4:

Q5:

Q6:

Q7:

Q8:

Q9:

Q10:

Q11:

Q12:

Q13:

Q14:

Q15:

Q16:

Q17:

Q18:

Q19:

Q20:

Q21:

Q22:

Q23:

Q24:

Q25:

Q26:

Q27:

Q28:

Q29:

Q30:

Q31:

Q32:

Q33:

Q34:

Q35:

Q36:

Q37:

Q38:

Q39:

Q40:

Q41:

Q42:

Q43:

Q44:

Q45:

Q46:

Q47:

Q48:

Q49:

Q50:

CUET Economics 2025 30 May Shift 2 Past Year Question Paper

CUET Economics Past Year Questions (Topic-Wise)