Time : 45 Minutes Max.

Marks 200
General Instructions :
There are total 50 Multiple choice questions.
1. Each question carries Five marks.
2. Student can attpemt any 40 questions.
3. There will be negative Mark of one per incorrect attempt.

1. Which of the following is not an economic activity and not included in national income?
(a) Medical services rendered by a dispensary (b) A housewife doing household work
(c) A lawyer doing his practice (d) A maid working full time with a family
2. The most important problem of estimating national income is :
(a) Unorganised market (b) Double counting
(c) Income inequalities (d) Increasing population
3. According to value added method of measuring national income, which of following items will be
excluded :
(a) Sale proceeds of second hand goods (b) Brokerage earned by selling second hand goods
(c) Imputed rent of owner occupied housed (d) Production for self-consumption
4. If Marginal Propensity to Save (MPS) is 0.25 and initial change in investment is ` 250 crores, then the
final change in income would be :
(a) ` 1,000 crores (b) ` 1,200 crores (c) ` 500 crores (d) ` 3,500 crores
5. In which of the following type of unemployment, is the marginal productivity of the worker zero?
(a) Structural Unemployment (b) Involuntary Unemployment
(c) Seasonal Unemployment (d) Disguised Unemployment
6. Supply of labour corresponding to different wage rates is referred as :
(a) Labour supply (b) Labour force (c) Participation rate (d) Work force
7. The formula to calculate labour force participation ratio is :
(a) Workforce/Total population × 100
(b) Labour force/Total working age population
(c) Workforce+ number of people who are willing to work but are unemployed
(d) Workforce/Labour force × 100
8. Low-income countries do not invest in which of the given infrastructural services?
(a) Transport (b) Irrigation (c) Power (d) Telecommunication
9. Which of the following is not a function of primary health care?
(a) Spreading education concerning prevailing health problems

Premier CUET Hand Book for Economics By Naveen Sadhu and Amit Mahrotra 1
 (b) Promoting food supply and proper nutrition
(c) Conducting research
(d) Providing essential drugs
10. Which of the following serve as a driving force of production activity in the economy?
(a) Population (b) Literacy
(c) None of these (d) Economic Infrastructure
11. Montreal accord is related to :
(a) To prevent ozone depletion (b) To prevent the rising temperature of the earth
(c) To prevent biodiversity loss (d) None of the above
12. Banning the use of chlorofluorocarbon compounds and other chlorine and bromine compounds is called:
(a) Chipko movement (b) Apiko movement (c) Montreal protocol (d) None of the above
13. The suggested measure to achieving sustainable development is :
(a) Development of human resources.
(b) Rapid industrial development.
(c) Rate of extraction on non-renewable resources should not exceed the rate of generation of renewable
substitutes.
(d) Technological progress.
14. Which of the following countries initiated its process of Economic Reforms in the year 1991?
(a) Pakistan (b) India (c) Russia (d) China
15. A campaign in China in 1958 where people were encouraged to set up industries in their backyard was
named as :
(a) Great leap forward (b) Great proletarian cultural revolution
(c) Anti- rightist movement (d) Four pests damping
16. In which of the following areas, Pakistan has an edge over Indian?
(a) Export of software after economic reforms
(b) Number of Ph.d‘s produced in science and engineering every year
(c) Reducing the proportion of population below poverty line
(d) All the above
17. Which of the following statement is correct?
(a) Net indirect taxes cannot be negative.
(b) Nominal GDP is always higher than real GDP.
(c) Purchase of car by a consumer is a part of gross domestic capital formation.
(d) Goods produced for self consumption will be included in national income.
18. Identify the correct sequence of alternatives given in Column-II by matching them with respective
terms in Column-I.

Column-I Column-II
A. Instrument of monetary policy (i) Inflationary gap
B. Instrument of fiscal policy (ii) Open market operation
C. The gap by which AD exceeds AS at full employment (iii) Deflationary gap
D. The gap by which AD falls short of AS at full employment (iv) Public spending

2 By Naveen Sadhu and Amit Mahrotra Premier CUET Hand Book for Economics
 Choose the correct alternative :
(a) A–(iv), B–(ii), C–(iii), D–(i) (b) A–(ii), B–(iv), C–(i), D–(iii)
(c) A–(ii), B–(i), C–(iv), D–(iii) (d) A–(iii), B–(i), C–(iv), D–(ii)
19. Read the following statement carefully and choose the correct alternative from the following :
Statement–1 : To increase aggregate demand Central Bank starts purchasing securities from the open
market.
Statement–2 : To maintain aggregate demand, RBI use only qualitative methods.
Alternatives :
(a) Both the statements are true (b) Both the statements are false
(c) Statement-1 is true and Statement-2 is false (d) Statement-2 is true and Statement-1 is false
20. Which of the following statement is incorrect?
(a) Tertiary sector is the main source of employment for majority of workers in India.
(b) Seasonal unemployment is different from open unemployment.
(c) Informal sector includes all those private enterprises which hire less than 10 workers.
(d) Education system in India is not job-oriented.
21. When more persons are working in a job than actually required, it is known as ___________.
(a) Disguised unemployment (b) Seasonal unemployment
(c) Educated unemployment (d) Open unemployment
22. Identify the correct sequence of alternatives given in Column-II by matching them with respective
terms in Column-I.

Column-I Column-II
A. Primary Health Centres (i) Specialised health care
B. Secondary Health Centres (ii) Limited medicines
C. Tertiary Sector (iii) Rural areas
D. Auxiliary Nursing Midwife (iv) ECG facility

Choose the correct alternative :

(a) A–(ii), B–(iv), C–(iii), D–(i) (b) A–(ii), B–(iv), C–(i), D–(iii)
(c) A–(iii), B–(iv), C–(ii), D–(i) (d) A–(iii), B–(ii), C–(i), D–(iv)
23. Which of the following statements is not correct with regards to infrastructure?
(a) Infrastructure contributes to economic development.
(b) Infrastructure provides support services.
(c) All infrastructural facilities have a direct impact on the production of goods and services.
(d) Inadequate infrastructure can have multiple adverse effects on health.
24. The main aim of ‘Great Leap Forward’ (GLF) in China was to ensure rapid increase of ___________.
(a) Agriculture (b) Industries (c) Services (d) Exports
25. Read the following statement carefully and choose the correct alternative from the following :
Statement–1 : Global warming is caused by a rise in the level of Green-house gases.
Statement–2 : An decrease in the temperature of earth’s atmosphere and oceans is termed as Global warming.
Alternatives :
(a) Both the statements are true (b) Both the statements are false
(c) Statement-1 is true and Statement-2 is false (d) Statement-2 is true and Statement-1 is false

Premier CUET Hand Book for Economics By Naveen Sadhu and Amit Mahrotra 3
26. The ratio of total deposits that a commercial bank has to keep with Reserve Bank of India is called:
(a) Statutory Liquidity Ratio (b) Deposit Ratio
(c) Cash Reserve Ratio (d) Legal Reserve Ratio
27. The percentage of demand deposits which the commercial banks are legally required to maintain as
their liquid assets is called :
(a) Statutory Liquidity Ratio (b) Deposit Ratio
(c) Cash Reserve Ratio (d) Legal Reserve Ratio
28. Governments is giving incentives for promoting MSMEs like khadi industries one hand and imposing
high taxes on tobacco products with an objective of.
(a) Reduction of inequalities of income and wealth (b) Reallocation of resources
(c) Economic stability (d) Management of public enterprises.
29. Price of one currency in relation to foreign currency is determined by the forces of demand and supply
is known as :
(a) Equilibrium rate (b) Exchange rate
(c) Fixed exchange rate (d) Flexible exchange rate
30. This service becomes quite expensive and the British finally abandoned was–
(a) Airways sector (b) Defence sector (c) Inland waterways (d) Postal service
31. Licence to expand production under industrial policy was given was given only :
(a) When government is convinced that it can earn huge taxes.
(b) When the industry can earn handsome foreign exchange.
(c) When government was convinced that the economy required a larger quantity of goods.
(d) To reduce the role of public sector.
32. During the reform period–
(a) Agriculture has declined, industrial sector reported fluctuation, and service sector has gone up.
(b) Agriculture has gone up., industrial sector reported fluctuation, and service sector has declined.
(c) Agriculture has declined, industrial sector reported gone up, and service sector reported fluctuation.
(d) Agriculture sector reported fluctuation, industrial sector gone down, and service sector has gone up.
33. The Growth oriented approach to reduce poverty was based on the expectation :
(a) Economic growth and rapid increase in GDP.
(b) Rapid increase in GDP and basic minimum needs.
(c) Economic growth and creating self-employment.
(d) Financial assistance in the form of bank loans to set up small industries.
34. If India wants to become the third largest economy in the world it will need :
(a) Knowledge society based on a robust education system
(b) Investment in Education and infrastructure
(c) Knowledge society based on both health and Education
(d) Investment in Health and Education
35. Institutional sources of credit consist of :
(a) Money lenders, traders, relatives and land owners
(b) Rural co-operative societies, commercial banks and regional rural banks
(c) Central bank
(d) Primary agricultural credit societies

4 By Naveen Sadhu and Amit Mahrotra Premier CUET Hand Book for Economics
36. Identify the correct sequence of alternatives given in Column-II by matching them with respective
terms in Column-I.

Column-I Column-II
A. Credit multiplier (i) Decrease CRR
B. Issue of currency (ii) Increase repo rate
C. Excess demand (iii) 1/LRR
D. Deficient demand (iv) Minimum reserve system

Choose the correct alternative :

(a) A–(iii), B–(ii), C–(iv), D–(i) (b) A–(ii), B–(iii), C–(iv), D–(i)
(c) A–(iii), B–(iv), C–(ii), D–(i) (d) A–(i), B–(ii), C–(iii), D–(iv)
37. Read the following statement carefully and choose the correct alternative from the following :
Statement–1 : The Government Budget aims to reduce regional disparities through its taxation and
expenditure policy.
Statement–2 : Government establishes SEZ in the backward regions for promoting economic development.
(a) Both the statements are true (b) Both the statements are false
(c) Statement-1 is true and Statement-2 is false (d) Statement-2 is true and Statement-1 is false
38. __________ refers to a system in which foreign exchange rate is determined by market forces and central
bank influences the exchange rate through intervention :
(a) Flexible Exchange Rate system (b) Managed Floating Rate system
(c) Floating Exchange Rate (d) Fixed Exchange Rate System
39. One of the following statements about Indian economy is not true. Identify the false statement :
(a) Indian agriculture was flourishing before the advent of the British.
(b) India’s foreign trade throughout the colonial period was marked by a large export surplus.
(c) India had a sound industrial base under the British.
(d) British developed the Railway system in India for their own benefit.
40. ____________ implies use of advanced technology.
(a) Modernisation (b) Globalisation (c) Privatisation (d) Planning
41. In Economics, we use the term scarcity to mean :
(a) Absolute scarcity and lack of resources in less developed countries.
(b) Relative scarcity i.e. scarcity in relation to the wants of the society.
(c) Scarcity during times of business failure and natural calamities.
(d) Scarcity caused on account of excessive consumption by the rich.
42. What implications does resource scarcity have for the satisfaction of wants?
(a) Not all wants can be satisfied.
(b) We will never be faced with the need to make choices.
(c) We must develop ways to decrease our individual wants.
(d) The discovery of new natural resources is necessary to increase our ability to satisfy wants.
43. Which of the following does not suggest a macro approach for India?
(a) Determining the GNP of India.
(b) Finding the causes of failure of ABC Ltd.

Premier CUET Hand Book for Economics By Naveen Sadhu and Amit Mahrotra 5
 (c) Identifying the causes of inflation in India.
(d) Analyse the causes of failure of industry in providing large scale employment
44. An increase in the demand for computers, other things remaining same, will :
(a) Increase the number of computers bought.
(b) Decrease the price but increase the number of computers bought.
(c) Increase the price of computers.
(d) Increase the price and number of computers bought.
45. Read the following statement carefully and choose the correct alternative from the following :
Statement 1 : Total Utility Increases as long as marginal utility is positive.
Statement 2 : A consumer is in equilibrium if he earns maximum profit.
Alternatives :
(a) Both the statements are true (b) Both the statements are false
(c) Statement-1 is true and Statement-2 is false (d) Statement-2 is true and Statement-1 is false

Read the following excerpts carefully and answer the questions (Q. No. 46 to 50) on your understanding
of the passage :
Fiscal deficit can prove inflationary if deficit is financed by printing of new currency as it will increase the
money supply and purchasing power in the economy. It will further worsen the situation if new money is
used to finance the current consumption expenditure of the government. However, if the increase in money
supply leads to increased supply of goods and services or new money is used for infrastructural activities
or other capital projects, then fiscal deficit will not prove to be inflationary

46. Fiscal deficit equals :

(a) Primary deficit — Interest payments
(b) Primary deficit + Interest payment
(c) Total budget expenditure – Total budget receipts
(d) None of the above
47. Policies of surplus budget during inflation” is a part of which objective of government budget?
(a) Economic growth (b) Reducing regional disparities
(c) Economic stability (d) Reallocation of resources
48. The monetary policy generally targets to ensure:
(a) Price stability in the economy (b) Employment generation in the country
(c) Stable foreign relations (d) Greater tax collections for the government
49. To reduce credit availability in the economy, the Central Bank may :
(a) Buy securities in the open market (b) Sell securities in the open market
(c) Reduce reserve ratio (d) Reduce repo rate
50. Statement–1 : A large fiscal deficit leads to a higher revenue deficit in future.
Statement–2 : A large fiscal deficit creates a large burden of repayment of loans and interest payments.
Alternatives :
(a) Both the statements are true. (b) Both the statements are false.
(c) Statement 1 is true and Statement 2 is false. (d) Statement 2 is true and Statement 1 is false.

6 By Naveen Sadhu and Amit Mahrotra Premier CUET Hand Book for Economics