CUET 2022 Economics Question Paper with Answers & Solutions

Correct answer: B

National Income and profits are measured over a period of time, so they are flow variables (flow concept), unlike stock variables (e.g., wealth, capital) measured at a point of time.

Correct answer: D

A demand curve with unitary elasticity (e=1) at every point is a rectangular hyperbola, where price multiplied by quantity (total expenditure) remains constant.

Correct answer: B

P.C. Mahalanobis is regarded as the architect of Indian Planning; the Second Five Year Plan was based on his model.

Correct answer: A

HDI dimensions are health (life expectancy/IMR), education, and standard of living (GNI per capita). Women empowerment is not a component of HDI (it relates to GII/GEM, separate indices).

Correct answer: C

Statement (A) is incorrect: circular flow does take place in a closed economy. Statement (D) is incorrect: money flow consists of factor payments from firms to households (not households to firms). (B) and (C) are correct. So incorrect statements are (A) and (D).

Correct answer: A

Money supply is a stock concept (measured at a point of time) - (A) correct. It is the currency with the public plus demand deposits in banks (M1) - (C) correct. Currency held with banks is excluded. So (A) and (C).

Correct answer: D

At equilibrium $Y = C + I = 100 + 0.8Y + 260$. So $Y - 0.8Y = 360$, $0.2Y = 360$, $Y = 1800$ Cr.

Correct answer: C

Nominal GDP 2001 = current quantity × current price = $110 \times 15 = 1650$. Real GDP 2001 = current quantity × base year price = $110 \times 10 = 1100$.

Correct answer: B

Quantitative (general) tools are Bank Rate, CRR, SLR, Repo/Reverse Repo and Open Market Operations. Moral suasion and margin requirement are qualitative tools. So (B), (C) and (D).

Correct answer: A

Planning Commission set up in 1950 (III); First Phase of Green Revolution mid-1960s to 1970 (IV); Karve Committee 1955 (II); First Industrial Policy Resolution 1948 (I). So A-III, B-IV, C-II, D-I.

Correct answer: B

Allocating budget funds for housing of the poor (PM Awas Yojana) reflects the budgetary objective of redistribution of income, improving welfare of the weaker sections.

Correct answer: D

Money multiplier = $1/r = 1/0.10 = 10$. Total deposits created = initial deposit × multiplier = $450 \times 10 = 4500$ Cr.

Correct answer: C

Seeds and fertilizers purchased by a farmer are used up in the process of production within the same year, so they are intermediate goods. The others are final goods for consumption.

Correct answer: B

Monetary base/high-powered money is Currency (III); Assets of a bank = Loans extended by banks (I); Liabilities of a bank = Deposits accepted (IV); Credit control is a function of the Reserve Bank of India (II). So A-III, B-I, C-IV, D-II.

Correct answer: A

NABARD is the apex body that coordinates the activities of all institutions in the rural financing system (NCERT, Indian Economic Development).

Correct answer: D

Infrastructure is classified into economic infrastructure (energy, transport, communication) and social infrastructure (education, health, sanitation).

Correct answer: C

If MPC = MPS and MPC + MPS = 1, then MPC = MPS = 0.5. Multiplier $k = 1/(1-MPC) = 1/(1-0.5) = 1/0.5 = 2$.

Correct answer: C

The RBI (central bank) acts as banker to the government. Accepting public deposits, lending to the public and credit creation are functions of commercial banks, not the RBI.

Correct answer: B

$C = \bar{C} + bY = 100 + 0.75 \times 8000 = 100 + 6000 = 6100$ crores.

Correct answer: D

People's Republic of China established 1949 (A); First Five Year Plan of India 1951 (D); First Five Year Plan of Pakistan 1956 (C); Great Proletarian Cultural Revolution 1966-76 (B); Economic Reforms of Pakistan 1988 (E). Order: A, D, C, B, E.

Correct answer: D

Bank rate, open market operations and lender of last resort are central bank functions. Deficit financing is a fiscal activity of the government (financing the budget deficit), not a central bank function.

Correct answer: D

Tea and coffee used in place of each other are substitutes (C correct). For substitutes, an increase in the price of tea raises demand for coffee (B correct). So (B) and (C).

Correct answer: B

Ex-ante (planned) investment = planned addition to stock = 100 Cr. Ex-post (actual) investment = planned addition minus unplanned sale from existing stock = 100 - 30 = 70 Cr.

Correct answer: D

The basic education cess levied on Union taxes is 2% (with an additional 1% secondary and higher education cess). The education cess as such is 2%.

Correct answer: A

Forest fire and overgrazing (B), excessive use of fertilizers and pesticides (D), and shifting cultivation (E) cause land degradation. Organic farming and planned irrigation do not degrade land. So (B), (D), (E).

Correct answer: B

Excess demand arises from rising aggregate demand: tax cuts, higher investment, and higher government spending all raise demand. A fall in propensity to consume reduces aggregate demand, so it does not cause excess demand.

Correct answer: C

Margin requirement, moral suasion and selective credit control are qualitative tools. Reverse repo rate is a quantitative (general) instrument of monetary policy.

Correct answer: A

NSAP provides pension to the elderly (II); MGNREGA is a wage employment programme (IV); PM Rozgar Yojana is a self-employment programme (III); PM Jan Dhan Yojana promotes savings/financial inclusion (I). So A-II, B-IV, C-III, D-I.

Correct answer: D

The Commune system in China (introduced under the Great Leap Forward) involved collective cultivation of land - it relates to the agriculture sector.

Correct answer: B

Deficient demand means aggregate demand is below the full-employment level: actual output falls short of potential output (A) and actual demand is less than expected/required demand (C). So (A) and (C).

Correct answer: C

Revenue deficit = revenue expenditure − revenue receipts. Increasing taxation raises revenue receipts and thus reduces the revenue deficit. The other options increase revenue expenditure and worsen the deficit.

Correct answer: D

The four goals of India's Five Year Plans are growth, modernisation, self-reliance and equity. Subsidies is not a plan goal. So (A), (B), (D), (E).

Correct answer: A

A casual worker is engaged in others' farms/enterprises and gets a daily/periodic wage without job security. Santu, working on Sohan's farm without owning land, is a casual wage labourer. The others are self-employed or regular salaried workers.

Correct answer: C

Under a fixed exchange rate system, a deliberate increase in the value of the domestic currency by the government/central bank is called revaluation. (Appreciation is the market-driven counterpart under a flexible system.)

Correct answer: B

Very high fertility rate - Pakistan (II); One Child Norm - China (III); High density of population - India (IV); Mixed economy - India and Pakistan (I). So A-II, B-III, C-IV, D-I.

Correct answer: B

A consumption function with a positive intercept on the Y-axis means there is autonomous consumption: consumption is positive even when income is zero.

Correct answer: D

Depreciation of the rupee makes imports costlier (imports fall, B) and exports cheaper/more competitive (exports rise, C). So (B) and (C).

Correct answer: B

Household final consumption expenditure on goods and services is part of national income (by expenditure method). Sugar bought by a restaurant and steel bought by a car maker are intermediate goods; employee's social security contribution is a transfer, all excluded.

Correct answer: A

'What to produce and in what quantities' deals with the allocation of resources among goods, quantities and the combination of goods produced. The technique/method of production is the separate problem of 'how to produce', so it is not dealt with here.

Correct answer: B

GDPmp = Value of Output − Intermediate Consumption, where Output = Sales + Change in stock. Firm A: (50+20)−0 = 70. Firm B: (200−30)−100 = 70. Total GDPmp = 70 + 70 = 140 Cr.

Correct answer: C

Alternate fuels such as ethanol and methanol are non-conventional (renewable/cleaner) energy sources, used as alternatives to conventional fossil fuels like crude oil.

Correct answer: D

The passage states the energy policies focus on the country's transition toward cleaner fuels in a sustainable manner - hence promoting sustainable use of cleaner fuels.

Correct answer: C

The passage says India meets 85% of its crude oil requirement through imports, so it meets 100% − 85% = 15% through domestic sources.

Correct answer: B

Methanol is preferred because it can be derived from sources other than food crops (no fuel vs food debate, B) and because coal, a feedstock for methanol, is abundantly available in India (D). So (B) and (D).

Correct answer: B

Low carbon economy - less emission of CO2 (IV); Oil Marketing companies - procure ethanol for Govt. (III); Methanol - derived from biomass, naphtha etc. (I); Ethanol - derived from sugarcane juice and molasses (II). So A-IV, B-III, C-I, D-II.

Correct answer: B

The passage states the budget has been recognized by the business community as a growth and infrastructure-focused budget.

Correct answer: C

Direct taxes are levied directly on income/wealth: Corporate Tax (B) and Capital Gains Tax (C). GST and VAT are indirect taxes. So (B) and (C).

Correct answer: D

Fiscal deficit = Total expenditure − Total receipts (excluding borrowings) = 39,44,909 − 22,83,713 = 16,61,196 crore.

Correct answer: A

Interest Payments - Revenue Expenditure (III); Grants-in-aid received - Revenue Receipts (I); Borrowings and other liabilities - Capital Receipts (IV); Construction of flyover - Capital Expenditure (II). So A-III, B-I, C-IV, D-II.

Correct answer: B

The passage states the highest percentage-wise increase in allocation is seen for the Ministry of Communications, Ministry of Road Transport and Highways, and Ministry of Jal Shakti. Hence statement (B) is true; the others contradict the passage.