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CUET PG Economics Mock Test- 8 - CUET PG MCQ


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30 Questions MCQ Test - CUET PG Economics Mock Test- 8

CUET PG Economics Mock Test- 8 for CUET PG 2025 is part of CUET PG preparation. The CUET PG Economics Mock Test- 8 questions and answers have been prepared according to the CUET PG exam syllabus.The CUET PG Economics Mock Test- 8 MCQs are made for CUET PG 2025 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for CUET PG Economics Mock Test- 8 below.
Solutions of CUET PG Economics Mock Test- 8 questions in English are available as part of our course for CUET PG & CUET PG Economics Mock Test- 8 solutions in Hindi for CUET PG course. Download more important topics, notes, lectures and mock test series for CUET PG Exam by signing up for free. Attempt CUET PG Economics Mock Test- 8 | 75 questions in 90 minutes | Mock test for CUET PG preparation | Free important questions MCQ to study for CUET PG Exam | Download free PDF with solutions
CUET PG Economics Mock Test- 8 - Question 1
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The expansion path identifies

Detailed Solution for CUET PG Economics Mock Test- 8 - Question 1
Option 1
The least-cost combination of inputs required to produced various levels of output: This is correct. The expansion path highlights the optimal combination of inputs (like labor and capital) that a firm can use to produce different output levels while minimizing costs.
CUET PG Economics Mock Test- 8 - Question 2
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If the demand for money is perfectly interest inelastic, the LM schedule will be

Detailed Solution for CUET PG Economics Mock Test- 8 - Question 2
If the demand for money is perfectly interest inelastic, the LM schedule will be a vertical line. This is because when the demand for money is insensitive to changes in interest rates, the LM curve becomes nearly vertical. The upward sloping nature of the LM curve is typically due to shifts in the demand for real money balances as real output increases. In contrast, when the demand for money is very sensitive to interest rate changes, the LM curve tends to be close to horizontal. Therefore, in a scenario where the demand for money is perfectly interest inelastic, the LM schedule will be represented by a vertical line
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CUET PG Economics Mock Test- 8 - Question 3
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An input-output model which has endogenous final demand vector is known as

Detailed Solution for CUET PG Economics Mock Test- 8 - Question 3
In a closed input-output model, the final demand vector is endogenous, meaning it is determined within the model itself rather than being exogenously given. This implies that the model accounts for the interdependencies between sectors of the economy, including how changes in final demand affect production levels across sectors.
CUET PG Economics Mock Test- 8 - Question 4
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f(x) = 4x³ - 5x² + 10 implies
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 4

First derivative f'(x):
Differentiate f(x) using the power rule: d/dx (xⁿ) = n xⁿ⁻¹
f'(x) = 12x² - 10x
Second derivative f''(x):
Differentiate f'(x) using the power rule again.
f''(x) = 24x - 10

CUET PG Economics Mock Test- 8 - Question 5
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Given below are two statements:
Statement—I: When the economy is in liquidity trap, the LM curve is horizontal.
Statement—II: Fiscal policy is ineffective when the economy is in liquidity trap.
In the light of the above statements, choose the correct answer from the options given below:
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 5
Statement I: True In a liquidity trap, the LM (Liquidity-Money) curve is typically horizontal. This occurs when the demand for money becomes perfectly elastic at very low interest rates, such that changes in the money supply do not affect interest rates. The horizontal LM curve implies that monetary policy becomes ineffective in stimulating investment and output, as interest rates cannot be reduced further to encourage borrowing and spending.
Statement II: False While it's true that monetary policy becomes ineffective in a liquidity trap due to the horizontal LM curve, fiscal policy can still be effective in stimulating aggregate demand and boosting the economy. Fiscal policy involves government spending and taxation decisions aimed at influencing aggregate demand. In a liquidity trap, expansionary fiscal policy—such as increased government spending or tax cuts—can help stimulate demand and lift the economy out of the trap by directly injecting money into the economy or increasing disposable income, respectively.
Therefore, fiscal policy is not necessarily ineffective in a liquidity trap.
CUET PG Economics Mock Test- 8 - Question 6
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Interest payments are subtracted from gross fiscal deficit, the remainder will be
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 6
When interest payments are subtracted from the gross fiscal deficit, the remainder is the gross primary deficit. The gross primary deficit is calculated as the difference between the current year's fiscal deficit and the interest payments made on the previous year's borrowings
CUET PG Economics Mock Test- 8 - Question 7
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Which one of the following is less likely to be affected by extreme values?
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 7
The answer is Interquartile range (IQR).
Mean: Highly sensitive to extreme values. A single outlier can significantly impact the average value.
Range: Highly sensitive to extreme values. Both the minimum and maximum values directly influence the range calculation.
Interquartile range (IQR): Less sensitive to extreme values. It focuses on the middle 50% of the data, filtering out the potential influence of outliers on both ends of the distribution.
Correlation: Not directly affected by extreme values. It measures the linear relationship between two variables, and the presence of an outlier in one variable doesn't necessarily impact its relationship with the other variable.
CUET PG Economics Mock Test- 8 - Question 8
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If the value of byx = 4 in a regression and value of correlation co-efficient is also 4, then value of byx will be:
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 8

CUET PG Economics Mock Test- 8 - Question 9
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In the Solow model, if capital is in the steady state, output:
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 9
In the Solow model, if capital is in the steady state, output will be in the steady state as well. This means that at the steady state, both capital and output will remain constant without any growth or decline.
CUET PG Economics Mock Test- 8 - Question 10
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Coefficient of variation is given by:
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 10
Option 3
The correct formula for the coefficient of variation is
where σ is the standard deviation and x̅ is the mean of the data set. The coefficient of variation is a dimensionless quantity that shows the extent of variability in relation to the mean of the population. It is given by the ratio of the standard deviation to the mean, multiplied by 100 to express it as a percentage.
CUET PG Economics Mock Test- 8 - Question 11
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Arrange the books in chronological order of publication:
(A) Theories of Surplus Value
(B) The General Theory of Employment, Interest and Money
(C) On the Principles of Political Economy and Taxation
(D) An Inquiry into the Nature and Causes of the Wealth of Nations
Choose the correct answer from the options given below:
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 11
The chronological order of publication of the books is (b) (D), (C), (A), (B)
(D) An Inquiry into the Nature and Causes of the Wealth of Nations: Published in 1776 by Adam Smith.
(C) On the Principles of Political Economy and Taxation: Published in 1817 by David Ricardo.
(A) Theories of Surplus Value: Published posthumously in 1863 by Karl Marx.
(B) The General Theory of Employment, Interest and Money: Published in 1936 by John Maynard Keynes.
CUET PG Economics Mock Test- 8 - Question 12
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The aggregate supply of land is:
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 12
The aggregate supply of land is perfectly inelastic. Land is a fixed factor of production, meaning its quantity cannot be increased or decreased in the short run.
Therefore, the supply of land remains constant regardless of price changes, leading to a perfectly inelastic aggregate supply curve.
CUET PG Economics Mock Test- 8 - Question 13
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The IS-LM Model was developed by
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 13
The IS-LM model was developed by Hicks, and Hansen. It is a two-dimensional macroeconomic model that shows the relationship between interest rates and output in the short run in a closed economy.
The IS curve represents the investment-savings equilibrium, while the LM curve represents the liquidity preference-money supply equilibrium. The intersection of these two curves illustrates the equilibrium point in the economy
CUET PG Economics Mock Test- 8 - Question 14
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Which of the following sets is empty?
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 14

x is a real number such that x ≠ x will be an empty set.
Hint: x = x² will hold true for 1, i.e., x ≠ x² will hold true for all values except 1.

CUET PG Economics Mock Test- 8 - Question 15
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Division of Labour in Adam Smith's analysis implies
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 15
Division of labor in Adam Smith's analysis implies specialization (c).
This means that workers are assigned to specific tasks, which they perform repeatedly, leading to increased efficiency and productivity.
CUET PG Economics Mock Test- 8 - Question 16
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Find the minor of element 8 in the determinant
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 16
The correct option is a.
We have  Minor of 8 =  = 36 - 30 = 6
CUET PG Economics Mock Test- 8 - Question 17
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When α = 1/2 and β = 1/2 for the Cobb Douglas production function, returns to scale are
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 17
The correct option is a.
When α = 1/2 and β = 1/2 for the Cobb Douglas production function, returns to scale are constant.
This can be explained by the formula for returns to scale in the Cobb-Douglas production function, which is simply the sum of the exponents α and β. In this case, α + β = 1/2 + 1/2 = 1. Since the sum is equal to 1, returns to scale are constant. This means that if you proportionally increase all inputs by a certain factor, the output will also increase by the same factor.
  • Increasing returns to scale: This occurs when α + β > 1. In this case, proportionally increasing inputs would lead to a more than proportional increase in output.
  • Decreasing returns to scale: This occurs when α + β < 1. In this case, proportionally increasing inputs would lead to a less than proportional increase in output.
CUET PG Economics Mock Test- 8 - Question 18
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The first dervative of Xx is
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 18

The correct option is d.
The first derivative of xx can be found using the chain rule of differentiation. Let y = xx.
Taking the natural logarithm of both sides, we get ln (y) = ln(xx) = x ln(x).
Now, differentiating both sides with respect to x gives:

Since 
ln(x) = loge (x), and the options use "log" (commonly interpreted as natural log in calculus unless specified otherwise), the derivative x2 (1+logx) matches option D.

CUET PG Economics Mock Test- 8 - Question 19
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Given the following total cost and demand functions of a firm, find the price at which profits would be maximised: 
C = 5Q2 + 20Q + 5
P = 100 - 3Q
Where C = Total cost Q = Output P= Price   
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 19
The correct option is B.
Given TC = 5Q² + 20Q + 5
MC = 10Q + 20
P = 100 - 3Q
TR = P × Q = (100 - 3Q)Q
TR = 100Q - 3Q²
MR = 100 - 6Q
Profit maximization occurs where MR = MC
100 - 6Q = 10Q + 20
100 - 20 = 10Q + 6Q
16Q = 80
Q = 80/16 = 5
P = 100 - 3(5)
P = 85
CUET PG Economics Mock Test- 8 - Question 20
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When marginal costs are below average total costs,
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 20
When MC < ATC, each additional unit costs less than the average, pulling ATC down.
CUET PG Economics Mock Test- 8 - Question 21
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Assertion (A): The long run cost curve is L shaped rather than U shaped.
Reason (R): The new technique of production of large plants reduces the total cost per unit of output in the long run. Codes:
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 21
The correct option is a.
  • Assertion (A): The statement "The long run cost curve is L shaped rather than U shaped" is true. Modern cost theory suggests that the long run average cost (LRAC) curve is L-shaped.
  • Reason (R): The statement "The new technique of production of large plants reduce the total cost per unit of output in the long run" is also true. This is one of the reasons why the LRAC curve might be L-shaped. Economies of scale, including the use of new techniques in large plants, can lead to a decrease in cost per unit as production increases, contributing to the initial downward slope of the L-shaped curve.
CUET PG Economics Mock Test- 8 - Question 22
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What is the main feature of primary markets?
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 22
The primary market is where companies issue a new security, not previously traded on any exchange. A company offers securities to the general public to raise funds to finance its long-term goals. The primary market may also be called the New Issue Market (NIM). lets check the incorrect options, Option (a) is incorrect as it is a feature of secondary market Option (c) is incorrect because it is in secondary market where high liquidity is found
CUET PG Economics Mock Test- 8 - Question 23
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What is inflation?
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 23
Inflation refers to the persistent rise in the overall level of prices in an economy, leading to a decrease in purchasing power over time. Here is why the other options are incorrect:
B) Decrease in the money supply: While a decrease in the money supply can influence inflation, not have a direct definition. Inflation is more about the overall price level rising, not necessarily caused by a single factor like money supply.
C) Increase in the value of a country's currency: This is called appreciation and has the opposite effect of inflation. Appreciation makes imports cheaper and exports more expensive, decreasing the purchasing power of the domestic currency.
D) Decrease in exports: A decrease in exports might impact economic growth but is not the definition of inflation. Inflation refers specifically to a rise in the general price level of goods and services in an economy. As prices go up, your money buys less, effectively decreasing purchasing power.
CUET PG Economics Mock Test- 8 - Question 24
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In the following equation,  the slope of the budget line of a firm is?
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 24

Here in this equation,  is the money available to the firm to start with w is the wage per labour unit r is the rent per capital unit Now, Here the slope of the iso-cost line or the budget line for firm is  and on the other hand the vertical intercept is 

CUET PG Economics Mock Test- 8 - Question 25
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How much did the Indian population increase between 2001 to 2011?
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 25
The increase in population during 2001 – 2011 is 181 Million.
CUET PG Economics Mock Test- 8 - Question 26
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In the following simultaneous equation models,

Based on the rank condition, find the equation-(2) is _______.
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 26

Given the equations:

Order Condition:
For an equation to be identified: (G - 1) ≤ K - m Where:

  • G = Total number of endogenous variables (here, Y1, Y2, Y3, Y4)
  • K = Total number of exogenous variables (here, X1, X2, X3)
  • m = Number of endogenous variables in the given equation

Applying the Order Condition:
For equation (2):

  • Endogenous variables: Y3 (1 endogenous variable)
  • Excluded exogenous variables: X3 (since X3 does not appear in equation (2))

Number of included exogenous variables = 2 Order condition: (G - 1) = (4 - 1) = 3 K - m = 3 - 2 = 1 Since 1 (excluded exogenous variables) is not greater than or equal to 3 (endogenous variables minus one), the order condition is not satisfied. 

CUET PG Economics Mock Test- 8 - Question 27
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Match the following:
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 27
  • Malhotra Committee – Insurance reform (A-II)
  • Chakravarty Committee – Working on the monetary system and suggesting measures for improving the effectiveness of monetary policy in promoting economic development. (B - I)
  • Tandon committee – System of working capital financing by banks (C - IV)
  • Goiporia Committee – Improvement in the customer services at primary (urban) cooperative banks (D - III)
CUET PG Economics Mock Test- 8 - Question 28
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In the IS-LM model, if the economy is initially at equilibrium and there is an exogenous decrease in the money supply, what will be the likely short-run effect?
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 28
The LM curve shifts leftward, causing a rise in the interest rate and a decrease in output. Explanation: A decrease in the money supply shifts the LM curve to the left. This raises the interest rate and decreases output. This is because with less money available, interest rates increase, leading to reduced investment and consumption, thereby decreasing output.
The incorrect choices are explained as follows:
(b) A decrease in the money supply does not directly affect the IS curve, which represents equilibrium in the goods market. Instead, it influences the LM curve, as described in option A.
(c) A decrease in the money supply shifts the LM curve leftward, which increases the interest rate and decreases output. However, it does not directly affect the IS curve.
(d) A decrease in the money supply shifts the LM curve leftward (as explained in option A), but it does not directly affect the IS curve. Therefore, there's no reason for both curves to shift rightward in response to a decrease in the money supply.
CUET PG Economics Mock Test- 8 - Question 29
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Read the following statement carefully.
Statement 1: The IHDI is the actual level of human development (accounting for inequality), while the HDI can be viewed as an index of 'potential' human development (or the maximum level of HDI) that could be achieved if there were no inequality.
Statement 2: Mathematically, a ratio of Geometric mean to Arithmetic mean is calculated for each of the three variables used to calculate HDI within a particular country
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 29
  • Calculation of the index combines four major indicators: life expectancy for health, expected years of schooling, mean of years of schooling for education and Gross National Income per capita for standard of living.
  • The 2010 Human Development Report introduced an Inequality-adjusted Human Development Index (IHDI). While the simple HDI remains useful, it stated that "the IHDI is the actual level of human development (accounting for inequality), while the HDI can be viewed as an index of 'potential' human development (or the maximum level of HDI) that could be achieved if there were no inequality. Mathematically, a ratio of Geometric mean to Arithmetic mean is calculated for each of the three variables used to calculate HDI within a particular country. This ratio is subtracted from 1 to represent inequality in these parameters.This inequality coefficient for each distribution (for life-expectancy, education and standard of living) is then multiplied with each of the indices. Geometric mean of these new indices provides the value for IHDI. Inequality Adjusted HDI (IHDI).
CUET PG Economics Mock Test- 8 - Question 30
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In the Lewis model of unlimited supply of labor, what happens at the subsistence wage level?
Detailed Solution for CUET PG Economics Mock Test- 8 - Question 30
W.A Lewis gave the theory of unlimited supply of labor in the year 1954. This is a dual-sector model. Lewis's model of an unlimited supply of labor says that the supply of labor exceeds the demand for labor. As the marginal product of workers in the subsistence sector is equal to or less than the substance wage, a reduction in the number of workers would not lower the average product of labor and might even raise it. The marginal product of labor is zero or negative.
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