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CUET PG Economics Mock Test- 6 - CUET PG MCQ


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30 Questions MCQ Test - CUET PG Economics Mock Test- 6

CUET PG Economics Mock Test- 6 for CUET PG 2025 is part of CUET PG preparation. The CUET PG Economics Mock Test- 6 questions and answers have been prepared according to the CUET PG exam syllabus.The CUET PG Economics Mock Test- 6 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- 6 below.
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CUET PG Economics Mock Test- 6 - Question 1
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What is RBI’s target of inflation for the period 2021-26?

Detailed Solution for CUET PG Economics Mock Test- 6 - Question 1
Option 4
The Reserve Bank of India (RBI) targets an inflation rate of 4% with a tolerance band of +/- 2% for the period 2021-26. This means that the RBI aims to maintain the average annual inflation rate around 4%, with acceptable deviations ranging from 2% to 6%.
CUET PG Economics Mock Test- 6 - Question 2
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Given below are two statements:
Statement I: Coefficient of correlation can not be less than – 1.
Statement II: Regression coefficient can not be less than – 1.
In the light of the above statements, choose the correct answer from the options given below:

Detailed Solution for CUET PG Economics Mock Test- 6 - Question 2

Statement I: The coefficient of correlation cannot be less than -1. This statement is true.

  • The Pearson correlation coefficient ranges from -1 to +1.
  • It cannot be less than -1 because it indicates the strength and direction of the linear relationship between two variables.

Statement II: The regression coefficient cannot be less than -1. This statement is false.

  • Regression coefficients can indeed take values less than -1.
  • The regression coefficient represents the slope of the regression line, and slopes can be negative, including values smaller than -1.
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CUET PG Economics Mock Test- 6 - Question 3
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What is the number of degrees of freedom of the residual sum of squares in a simple bivariate linear regression with 100 observations?

Detailed Solution for CUET PG Economics Mock Test- 6 - Question 3

The degrees of freedom (df) refer to the number of independent pieces of information used to estimate the parameters of a model. In simple linear regression, we estimate two parameters: the intercept and the slope. With 100 observations, one might think that the df would be 100. However, while each observation provides one piece of information, we lose one degree of freedom for every parameter that is estimated. Therefore, the formula for df in this case is:
df = n - p, where n is the number of observations and p is the number of parameters. Thus, for this case, df = 100 - 2 = 98.

CUET PG Economics Mock Test- 6 - Question 4
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Which one of the following renowned economists was a member of the Royal Commission on Currency and Finance of 1913?
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 4
Option 2
John Maynard Keynes: He was a young but already prominent economist at the time, known for his work on "Indian Currency and Finance" published in 1913. His expertise and rising star power likely led to his appointment on the commission.
CUET PG Economics Mock Test- 6 - Question 5
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Match List I with List II

Choose the correct answer from the options given below:
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 5
A-IV, B-I, C-III, D-II is the correct match between the authors in List I and their respective works in List II.
Explanation:
A. An inquiry into the Nature and Causes of Wealth of Nations (1776):
  • This seminal work is indeed by Adam Smith (IV), considered the father of modern economics.
B. Principles of Political Economy and Taxation (1817):
  • This treatise was written by David Ricardo (I), a prominent figure in classical economics.
C. Theories of Surplus Value (1863):
  • This foundational work on Marxist economics was authored by Karl Marx (III).
D. General Theory of Employment Interest and Money (1936):
  • This influential book revolutionized macroeconomics and was written by John Maynard Keynes (II).
CUET PG Economics Mock Test- 6 - Question 6
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The function - 1 / e² x² is:
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 6

The given function, − 1 / e² x², is neither convex nor concave everywhere. To analyze its behavior, we need to examine its second derivative.
Here's the breakdown:
First derivative:

  • f'(x) = −2x / e²

Second derivative:

  • f''(x) = −2 / e² for all values of x.

Since the second derivative is negative for all values of x, the function is always concave.
Therefore, the correct answer is (b) concave for |x| < 1 and concave for |x| > 1.

CUET PG Economics Mock Test- 6 - Question 7
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Suppose the correlation coefficient between two variables X and Y is 0.6, what proportion of variation in Y is explained by variation in X?
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 7

Correct Proportion of variation in Y is explained by variation in X = r².
In this case, the correlation coefficient is given as 0.6. Therefore:
r² = 0.6² = 0.36
So, 36% of the variation in Y can be explained by the variation in X.

CUET PG Economics Mock Test- 6 - Question 8
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What is the degree homogeneity of f(x, y) = x³ / y + y³ / x
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 8

The correct option is 3
The degree of homogeneity of a function f(x, y) refers to the exponent n such that for any positive constant t, we have:
f(tx, ty) = tⁿ f(x, y)
Let's analyze the given function f(x, y) = x³ / y + y³ / x:
Consider t as a positive constant and apply it to both x and y:
f(tx, ty) = (tx)³ / (ty) + (ty)³ / (tx)
Simplify the equation:
f(tx, ty) = (t³ x³ / (t y)) + (t³ y³ / (t x))
f(tx, ty) = t² × (x³ / y + y³ / x)
Compare with the original function:
t² × f(x, y) = t² × (x³ / y + y³ / x)
Observe the equality:
f(tx, ty) = t² f(x, y)
This shows that the degree of homogeneity n for this function is 2, as t² raised to the power of 2 affects the function in the same way.

CUET PG Economics Mock Test- 6 - Question 9
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Given below are two statements: one is labelled as Assertion A and the other is labelled as Reason R.
  • Assertion (A):According to the Heckscher-Ohlin model, free trade results in equalisation of factor prices across nations.
  • Reason (R): This is because the model assumes perfect international mobility of the factors of production.
In the light of the above statements, choose the correct answer from the options given below:
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 9

Assertion A:
According to the Heckscher-Ohlin model, free trade results in the equalization of factor prices across nations.This statement is true.

  • The Heckscher-Ohlin model suggests that, under certain conditions, free trade can lead to the equalization of factor prices (such as wages for labor and returns on capital) between countries.
  • This implies that workers with the same skills and capitalists investing in similar types of assets would earn the same, regardless of the country they are in.

Reason R:
This is because the model assumes perfect international mobility of the factors of production. This statement is false.

  • The Heckscher-Ohlin model does not assume perfect international mobility of factors. In fact, one of its critical assumptions is that labor is immobile across nations, meaning workers cannot freely move to countries where wages are higher.
  • Similarly, capital is also assumed to be immobile or only partially mobile in the standard model.
CUET PG Economics Mock Test- 6 - Question 10
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Suppose massive capital outflows cause nominal exchange rate to depreciate by 10%. At the same time, foreign and domestic price levels rise by 5% and 20% respectively. What will be the approximate change in real exchange rate?
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 10

The real exchange rate depreciates by approximately 25%, calculated as the nominal exchange rate depreciation (10%) plus the domestic price increase (20%) minus the foreign price increase (5%), or precisely as 
1.10 x 1.20/1.05, yielding a 25.71% increase (depreciation) in the real exchange rate.

CUET PG Economics Mock Test- 6 - Question 11
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Arrange the following in correct chronological order starting with the earliest:
A. 1st meeting of Monetary Policy committee
B. Export Import Bank of India commenced operations
C. Enactment of FEMA
D. Digital India campaign
E. Narasimhan Committee-II
Choose the correct answer from the options given below:
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 11
Correct Option is 3 - B, E, C, D, A
B. Export Import Bank of India commenced operations (1981-82):
  • The earliest event, marking the establishment of the Export-Import Bank of India in 1982.
  • The Export Import Bank of India Act was passed in September 1981, and the bank started operations in March 1982.
E. Narasimhan Committee-II (1998):
  • Formed to recommend financial sector reforms in India.
  • Though not an event, its recommendations had significant implications for the financial sector.
C. Enactment of FEMA (29th December 1999):
  • The Foreign Exchange Management Act (FEMA) was enacted to regulate and liberalize foreign exchange transactions in India.
  • FEMA was passed after the recommendations of the Narasimhan Committee-II.
D. Digital India campaign (1 July, 2015):
  • A government initiative aimed at transforming India into a digitally empowered society.
  • Launched much later than the previous events.
A. 1st meeting of Monetary Policy Committee (3rd October 2016):
  • The Monetary Policy Committee (MPC) was established under the RBI Act to determine India’s monetary policy.
  • The first meeting of the MPC took place in 2016, the most recent event among the listed options.
CUET PG Economics Mock Test- 6 - Question 12
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The rate of growth of the output of an economy during a period is 5% If the shares of capital and labour are 0.6 and 0.4 respectively and capital and labour grow at 10% and 5% respectively, what is the solow residual for the output function given as y = A · kα L(1-α)
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 12

Given information:

  • Output growth rate (g) = 5%
  • Capital share (α) = 0.6
  • Labor share (1 − α) = 0.4
  • Capital growth rate (nk) = 10%
  • Labor growth rate (nl) = 5%

Solow residual formula:
Solow residual = g − α × nk − (1 − α) × nl
Calculation:
Solow residual = 0.05 − 0.6 × 0.1 − 0.4 × 0.05
= 0.05 − 0.06 − 0.02
= −0.03 (or −3%)
The Solow residual for the given scenario is -3%. This negative value indicates that the actual output growth is lower than what could be explained by the growth of capital and labor alone, suggesting the presence of other factors affecting economic growth. These factors could include technological advancements, institutional changes, or resource discoveries.

CUET PG Economics Mock Test- 6 - Question 13
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Match List I with List II

Choose the correct answer from the options given below:
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 13
CUET PG Economics Mock Test- 6 - Question 14
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Given below are two statements:
  • Statement I: When the economy is in liquidity trap, the LM curve is vertical.
  • Statement II: Monetary 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- 6 - Question 14

Statement I:False

  • In a liquidity trap, the interest rate is at or near zero, and further reduction wouldn't incentivize borrowing or spending.
  • This means any increase in money supply wouldn't affect the demand for money, making the LM curve horizontal, not vertical.

Statement II:True

  • In a liquidity trap, with the LM curve horizontal, changes in the money supply have no effect on interest rates.
  • Since interest rates are the primary tool of monetary policy, it becomes ineffective in stimulating the economy through traditional methods like lowering interest rates.
CUET PG Economics Mock Test- 6 - Question 15
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Given below are two statements:
Statement-I: In the short-run, the rising part of the marginal cost curve is due to diminishing marginal product.
Statement-II: In the short-run. The falling part of the marginal cost curve implies existence of diminishing marginal product.
In the light of the above statements, choose the correct answer from the options given below:
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 15
In the context of the given statements:
Statement-I is true: In the short-run, the rising part of the marginal cost curve is indeed due to diminishing marginal product.
Statement-II is false: In the short-run, the falling part of the marginal cost curve does not necessarily imply the existence of diminishing marginal product
CUET PG Economics Mock Test- 6 - Question 16
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A shut down point is point where:
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 16
A shutdown point is the point where the marginal cost curve meets the average variable cost curve. At this point, the firm is indifferent between continuing production or shutting down, as the price is equal to the minimum average variable cost, which is the shutdown point. If the price is above the shutdown point, the firm will continue to produce, making economic losses. If the price is below the shutdown point, the firm will shut down, as it cannot even cover its variable costs.
CUET PG Economics Mock Test- 6 - Question 17
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What does autarchy refer to?
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 17
Autarchy refers to a state or condition where a country does not engage in international trade, aiming to be self-sufficient and not relying on imports or exports.
CUET PG Economics Mock Test- 6 - Question 18
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What are the values of x that satisfy the equation x2 + 4x + 3 = 0
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 18

Given x² + 4x + 3 = 0
x² + 3x + x + 3 = 0
x(x + 3) + 1(x + 3)
(x + 1)(x + 3)
x = -1
or x = -3.

CUET PG Economics Mock Test- 6 - Question 19
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Suppose in an economy, Y = C + I, C = 500 + 0. 8Y, I = 1000, supply of money (MS) = 1000, transaction demand for money (MDT) = 0. 1Y, speculative demand for money (MDS)= 1000 - 75r, where r is the percentage rate of interest. What is the equilibrium value of r in the economy?
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 19

To find the equilibrium interest rate (r), we first determine income (Y) from the goods market, then use it in the money market equilibrium.

Goods Market Equilibrium:
The equation is Y = C + I.
Given: C = 500 + 0.8Y and I = 1000.
Substitute into the equation: Y = 500 + 0.8Y + 1000.
Simplify: Y - 0.8Y = 1500.
So, 0.2Y = 1500.
Solve: Y = 1500 / 0.2 = 7500.
Money Market Equilibrium:
Money supply (MS) = 1000.
Money demand (MD) = transaction demand (MDT) + speculative demand (MDS).
Given: MDT = 0.1Y and MDS = 1000 - 75r.
Using Y = 7500:
MDT = 0.1 × 7500 = 750.
MD = 750 + (1000 - 75r) = 1750 - 75r.
Set MS = MD: 1000 = 1750 - 75r.
Solve: 75r = 1750 - 1000.
75r = 750.
r = 750 / 75 = 10.
The equilibrium interest rate is 10%.

CUET PG Economics Mock Test- 6 - Question 20
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The first attempt to initiate economic planning in India was made by:
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 20
The first attempt to initiate economic planning in India was made by M. Visvesvaraya. He is regarded as a pioneer of economic planning in India and published a book titled "Planned Economy for India" in 1934, suggesting a ten-year plan with specific economic goals. His contributions laid the foundation for economic planning in India, which later evolved with the establishment of the Planning Commission and subsequent Five Year Plans.
CUET PG Economics Mock Test- 6 - Question 21
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Consider the following centrally schemes in India and the right sequence of time (year) when they were launched, from earliest to latest.
(A) Right to Education
(B) Ujjwala
(C) Swachh Bharat Abhiyan
(D) Beti Bachao Beti Padhao
Choose the correct answer from the options given below:
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 21
The correct answer is (A), (C), (D), (B)
(A) Right to Education: Launched in 2009.
(C) Swachh Bharat Abhiyan: Launched in 2014.
(D) Beti Bachao Beti Padhao: Launched in 2015.
(B) Ujjwala Yojana: Launched in 2016.
CUET PG Economics Mock Test- 6 - Question 22
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In the WTO’s agreement on agriculture, ‘blue box’ subsidies refer to
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 22

In the World Trade Organization’s (WTO) Agreement on Agriculture, subsidies are categorized into "boxes" based on their trade-distorting effects. The "blue box" refers to subsidies that require farmers to limit production (e.g., set-aside programs) while providing direct payments. These are typically income support measures tied to production-limiting conditions, distinguishing them from "green box" (minimally distorting) and "amber box" (trade-distorting) subsidies.

A: Incorrect—export subsidies fall under the amber box or are specifically regulated, not blue box.
B: Correct—blue box subsidies support farmer income through payments linked to production limits.
C: Incorrect—environmental incentives align more with the green box.
D: Incorrect—crop protection isn’t a blue box feature; it’s unrelated to production limits.

CUET PG Economics Mock Test- 6 - Question 23
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Match List – with List – II:

Choose the correct answer from the options given below:
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 23
The correct match between List I and List II is as follows:

A. First, let's find the partial derivatives of the utility function with respect to each variable:

CUET PG Economics Mock Test- 6 - Question 24
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The money multiplier in an economy increases with ____.
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 24
The correct option is c.
The money multiplier in an economy rises in tandem with the banking habits of the population. It quantifies the extent to which commercial banks generate money from their deposits while maintaining reserves.
Therefore, as people's banking habits improve, deposits grow, subsequently boosting the value of the money multiplier.
CUET PG Economics Mock Test- 6 - Question 25
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The MRTP Act of 1969 has been
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 25
The correct option is a.
The Monopolies and Restrictive Trade Practices Act (MRTP Act) of 1969 was an Indian law aimed at curbing monopolies and promoting fair competition in the market. The Competition Act, 2002 was enacted to replace the MRTP Act and establish a more comprehensive legal framework for promoting and regulating competition.
This includes prohibiting anti-competitive agreements, abuse of dominant position, and mergers and acquisitions that could have an adverse effect on competition. Therefore, the MRTP Act was indeed replaced by the Competition Act, solidifying the shift in approach towards promoting competition in the Indian market.
CUET PG Economics Mock Test- 6 - Question 26
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Lilly and Kylie are stranded together on a desert island. In a single day Kylie can make either 2 straw shelters or catch 10 fish. Lily can make 4 straw shelters or catch 8 fish in a day. Which of the following is the correct reason that Kylie should specialize in producing fish?
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 26
The correct option is b.
The basis for specialization and trade is comparative advantage. Whoever has comparative advantage in producing a good (they can produce a good at a lower opportunity cost) should specialize in producing that good. In that case, Kylie has comparative advantage in producing fish as her opportunity cost for producing fish is 1/5 of a shelter, rather than ½ of a shelter. Lilly has comparative advantage in producing shelter as her opportunity cost of producing shelter is only is only 2 fish as opposed to the 5 fish Kylie gives up whenever she builds a shelter. Therefore, Kylie should specialize in producing fish and Lilly should specialize in producing shelter.
CUET PG Economics Mock Test- 6 - Question 27
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Which of the following is not a part of India’s national debt?
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 27
The correct option is b.
Life Insurance policies are not considered a part of the national debt.
CUET PG Economics Mock Test- 6 - Question 28
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If byx = 1.6 and bxy = 0.4, then rxy will be
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 28
The correct option is d.
CUET PG Economics Mock Test- 6 - Question 29
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Given below are two statements:
Statement I: The main features of the Industrial Policy - 1991 includes abolition of industrial licensing, diminishing role of public sectors, MRTP limit scraped. conditions on entry of foreign investment and technology liberalized and so on.
Statement II: First Industrial Policy Resolution was issued in 1951. In the light of the above statements, choose the most appropriate answer from the options given below:
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 29
The correct option is c.
Statement I: This statement accurately describes the main features of the Industrial Policy of 1991, which aimed to liberalize the Indian economy.
Therefore, Statement I is correct.
Statement II: However, the statement claiming that the First Industrial Policy Resolution was issued in 1951 is incorrect.
The first Industrial Policy Resolution was actually issued in 1956.
CUET PG Economics Mock Test- 6 - Question 30
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In a frequency distribution, the last cumulative frequency is 500. Q3 (Third Quartile) must lie in
Detailed Solution for CUET PG Economics Mock Test- 6 - Question 30
The correct option is b.
If the cumulative frequency is 500, Q3 which is the 75th percentile must be at the (3n/4) = 3(500)/4) = 375th item.
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