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CUET Economics 2025 PYQs16 May Shift 1. Free, no login required.

Macro

past year questions, CUET Economics 2025 16 May Shift 1

National Income

past year questions, Macro, CUET Economics 2025 16 May Shift 1

Medium

Identify the assumptions of the two - sector economy's circular flow of income.

(A) There is no trade with other countries.

(B) Households do not spend all their income.

(C) There is no government.

(D) Households do not save.

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 1

Option 1 -> Includes assumptions (A), (C), and (D) which correctly represent a two-sector economy where there's no foreign trade, no government, and households spend all income without saving.

Option 2 -> Incorrect because (B) contradicts the two-sector model assumption; households must spend all income in this simplified model.

Option 3 -> Incorrect because (B) contradicts the basic assumption that households spend all their income in a two-sector economy.

Option 4 -> Incorrect because it excludes (A) which is a fundamental assumption, and includes (B) which is wrong for a two-sector model.

Hence, Option 1: (A), (C) and (D) only -> In a two-sector circular flow model, the economy consists of only households and firms. The key assumptions are: (A) No international trade - there's no foreign sector; (C) No government - no government intervention, taxes, or spending; (D) Households do not save - all income earned is spent on consumption, ensuring continuous circular flow without leakages. Statement (B) is incorrect because it suggests households save, which contradicts the fundamental assumption that all income circulates back to firms through consumption expenditure. -> correct

Related questions:

2025: 14 May Shift 1

Which of the following indicates the sum total of Net National Product at market prices and other current transfers from the rest of the world:

  1. Private Income.
  2. National Disposable Income.
  3. Gross Value Added.
  4. Transferred Income.

2025: 28 May Shift 2

A country in the year 2000 produced 100 units of bread at price of Rs 10 per bread. GDP at current price was Rs 1,000. In 2001 the same country produced 110 units of bread at price Rs 15 per bread. What is the GDP deflator?

2026: 21 May Shift 2

Match the LIST-I with LIST-II

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A.Consumer DurablesI.Not extinguished by immediate or even short period consumption.
B.Intermediate goodII.Used as raw material or inputs for production of other commodities.
C.Final goodIII.Fixed assets used in production process.
D.Capital goodsIV.Not pass through any more stages of production or transformations.

Choose the correct answer from the options given below:

2026: 21 May Shift 2

An economy produces two goods, bread and wheat. A representative consumer buys 10 units of bread and 50 kg of wheat in a year. In the year 2023 the price of per bread was Rs 20 and wheat per kg was Rs 40. Suppose the price of both goods has gone up to Rs. 30 per bread and Rs. 50/kg wheat in the year 2024. Calculate the Consumer Price Index (CPI).

2026: 11 May Shift 2

Nation X produces two goods; rice and cloth. A consumer buys 100 kg of rice and 10 pieces of cloth in a year. Suppose, in the year 2000, the price of rice was Rs 10/kg and a piece of cloth was Rs 100. Now suppose the prices of a kg rice and a piece of cloth have gone up to Rs 18 and Rs 120 in the year 2005. In the given example, the Consumer Price Index of the current year vis-a-vis the base year will be equal to ________.

2025: 22 May Shift 2

The decision of an individual economic agent is the study of ...................... ?

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