CUET 2023 Economics Question Paper with Answers & Solutions

Correct answer: C

National Income (NNP at FC) includes only factor incomes and final goods produced. Donations, income tax payment, and scholarships are transfer payments (no good/service produced in return) and are excluded. Profits earned by an Indian company from its branch abroad is factor income from abroad (included in National Income via NFIA). Purchase of a TV by a household is final consumption expenditure (included in GDP/NI by expenditure method). Hence (D) and (E) only.

Correct answer: A

The Value Added Method (sum of gross value added across all producing units) is also known as the Product Method or Output Method, since it measures the value of final output produced.

Correct answer: D

Railways were introduced in India in 1853. The first census of British India was conducted in 1881. Tata Iron and Steel Company (TISCO) was incorporated in 1907. The second stage of demographic transition in India began around 1921 (the 'Year of Great Divide'). Chronological order: Railways (1853) -> First census (1881) -> TISCO (1907) -> Second stage of demographic transition (1921), i.e., (D), (C), (B), (A).

Correct answer: B

An import tariff is a tax imposed on imported goods, which directly raises their price in the domestic economy, thereby protecting domestic producers.

Correct answer: B

Logical sequence: (D) ex-ante demand exceeds planned output -> (A) unintended decumulation of inventories -> (C) producers respond by increasing output -> (E) output increase raises employment and income -> (B) process continues till ex-ante AD equals ex-ante AS. So (D), (A), (C), (E), (B).

Correct answer: A

Alternate marketing channels (e.g., Apni Mandi, Rythu Bazars, Uzhavar Sandies) allow farmers to sell their produce directly to consumers, eliminating middlemen and giving farmers better prices. Hence (A) only.

Correct answer: B

Investment in education (and health) transforms human resources into human capital, i.e., a stock of skill and productive knowledge embodied in people. The process of adding to this stock is human capital formation, but the resource itself becomes human capital.

Correct answer: C

Trade deficit = Imports - Exports. So 2000 = 4000 - Exports, hence Exports = 4000 - 2000 = ₹2000 crore.

Correct answer: B

'The General Theory of Employment, Interest and Money' (1936) was written by John Maynard Keynes, the founder of modern macroeconomics.

Correct answer: A

The NCERT text on the WTO notes that some scholars question the usefulness of India being a member of the WTO since a major volume of international trade occurs among the developed nations.

Correct answer: B

Revenue receipts are those that neither create a liability nor reduce assets. Tax revenue (B), interest receipts (C), and dividends/profits (D) are non-debt creating revenue receipts (C and D being non-tax revenue). Government borrowings (A) create a liability and are capital receipts. Hence (B), (C) and (D) only.

Correct answer: C

Flexible exchange rate is determined by market forces and is also called floating exchange rate -> (III). Devaluation is a deliberate lowering of the official rate by the government under a fixed system -> (IV) Government. Fixed exchange rate is a pegged exchange rate -> (II). Depreciation is a fall in currency value due to market forces under a floating regime -> (I) Market forces. Thus (A)-(III), (B)-(IV), (C)-(II), (D)-(I).

Correct answer: D

Human Capital is built through Education and Health -> (II). Physical Capital is associated with Technical Progress -> (I). Human Capital formation is growth enhancing (treats people as means to raise productivity) -> (IV). Human Development focuses on human well being as an end in itself -> (III). Thus (A)-(II), (B)-(I), (C)-(IV), (D)-(III).

Correct answer: C

Trade in goods (export/import of goods, i.e., visible trade) is recorded in the Current Account -> (IV). Foreign Direct Investment is recorded in the Capital Account -> (I). Net sale of services like banking and tourism is invisible trade -> (II). Receipts/payments without providing goods or services are transfer payments -> (III). Thus (A)-(IV), (B)-(I), (C)-(II), (D)-(III).

Correct answer: D

Morbidity refers to the proneness or susceptibility to fall ill (state of being diseased), including from major waterborne diseases.

Correct answer: C

Income Method sums factor incomes -> (IV). Expenditure Method sums final expenditures -> (III). Real GDP is calculated at constant prices -> (II). Nominal GDP is calculated at current prices -> (I). Thus (A)-(IV), (B)-(III), (C)-(II), (D)-(I).

Correct answer: D

When aggregate demand for final goods equals aggregate supply of final goods, the product market is in equilibrium, i.e., it reaches its equilibrium level.

Correct answer: B

Fiscal deficit is the excess of total expenditure over total receipts excluding borrowings; it indicates the total borrowing requirements of the government from all sources.

Correct answer: B

In AD = $\bar{C} + \bar{I} + CY$, $\bar{C}$ is autonomous consumption (the intercept). A rise in $\bar{C}$ shifts the AD curve up, changing aggregate demand (B), and via the multiplier changes the equilibrium level of income (A). It does not change investment $\bar{I}$ or the marginal propensity to consume C. Hence (A) and (B) only.

Correct answer: D

The Swarna Jayanti Shahari Rozgar Yojana (SJSRY) aims at creating self-employment (and wage-employment) opportunities for the urban poor in urban areas.

Correct answer: B

The sources of human capital formation include investment in education, health, on-the-job training, migration, and information. Hence human capital formation.

Correct answer: C

Chronological order per NCERT: Dadabhai Naoroji first formulated the 'Jail cost of living' (D); then the Planning Commission formed a study group in 1962 (C); then a Task Force on projection of minimum needs and effective consumption demand in 1979 (A); then expert groups were formed (1989 and later) (B). Thus (D), (C), (A), (B).

Correct answer: B

Trade in services (invisibles) in the current account consists of net non-factor income (services like shipping, banking, tourism) and net factor/investment income (net income from investments abroad). Gifts, remittances and grants are unilateral transfers, not trade in services. Hence (B) and (C) only.

Correct answer: D

Capital account records transactions affecting assets and liabilities (capital flows). An Indian buying a UK company (A) is FDI outflow, and a Swedish citizen buying Reliance shares (B) is foreign investment inflow - both capital account items. Export of pottery (C) is trade in goods (current account), and gifting iPhones to employees (D) is not a cross-border capital transaction. Hence (A) and (B) only.

Correct answer: C

National Income is defined as Net National Product at Factor Cost (NNP at FC), i.e., the sum of factor incomes earned by normal residents.

Correct answer: B

GDP Deflator = Nominal GDP / Real GDP = 5500 / 2200 = 2.5.

Correct answer: A

An increase in the Bank rate makes borrowing costlier, reduces money supply and credit - this is a contractionary (tight) monetary policy. (Bank rate is a monetary, not fiscal, tool.)

Correct answer: D

Sequence of an open market purchase: (C) central bank buys a government bond -> (B) pays for it by giving a cheque -> (D) this increases reserves in the economy -> (A) thereby increasing money supply. Thus (C), (B), (D), (A).

Correct answer: A

The strategy of replacing imports with domestic production is called import substitution (the inward-looking trade strategy adopted by India after independence).

Correct answer: A

Sustainable development requires equity, awareness, use of clean fuels and sustainable practices. Sticking to methods that promote inequality contradicts sustainable development. Hence (A).

Correct answer: C

Revenue receipts are those receipts which neither create a liability nor reduce assets; they are non-redeemable and cannot be reclaimed from the government. Hence Revenue Receipts.

Correct answer: B

Gross Primary Deficit = Gross Fiscal Deficit - Net Interest Liabilities (interest payments). So net interest liabilities are subtracted from fiscal deficit to get primary deficit.

Correct answer: D

Strategies for sustainable development include use of non-conventional/renewable energy like wind and solar, and organic methods like bio-compost. Land degradation is an environmental problem, not a strategy for sustainable development. Hence (D).

Correct answer: C

Money multiplier = 1/CRR = 1/0.20 = 5. (Consistently, Rs 1000 deposit creates Rs 5000 of money: 5000/1000 = 5.)

Correct answer: B

Repo rate is the rate at which the RBI lends money to commercial banks for the short term (against government securities).

Correct answer: A

A parallel upward shift of the AD line means the intercept (autonomous expenditure) has risen while the slope (MPC) is unchanged. An increase in autonomous investment raises autonomous expenditure, shifting AD up in parallel. Hence (A).

Correct answer: D

The Bank Rate is the rate at which the RBI lends to commercial banks (for the long term); by changing it the RBI influences money supply. Hence Bank Rate.

Correct answer: A

NABARD (National Bank for Agriculture and Rural Development), set up in 1982, is the apex body that coordinates the activities of all institutions involved in the rural financing system.

Correct answer: B

Modernisation refers to the adoption of new technology and a change in social outlook (e.g., recognition of women's role). Hence Modernisation.

Correct answer: C

The year 1921 is known as the 'Year of the Great Divide' in Indian demography, since the population started growing steadily after this year (the second stage of demographic transition).

Correct answer: D

An indifference curve is downward sloping and convex to the origin (due to the diminishing marginal rate of substitution). Hence Convex.

Correct answer: B

An indifference curve shows all combinations (bundles) of two goods that give the consumer the same level of satisfaction, i.e., bundles among which the consumer is indifferent. Hence (B).

Correct answer: B

A rational consumer has well-defined, monotonic preferences (prefers more of a good to less) and chooses the bundle that maximises satisfaction. Hence Monotonic preference.

Correct answer: C

Substitute goods can be used in place of one another. Tea and Coffee are substitutes. Pen and ink, car and petrol, shoes and socks are complementary goods (used together).

Correct answer: D

At consumer equilibrium, the budget line is tangent to the indifference curve, so the absolute value of the slope of the indifference curve (the MRS) equals the absolute value of the slope of the budget line (price ratio). They are the same. Hence (D).

Correct answer: C

Per the passage, on 8 September 1983 the Appiko movement started when 'the felling of trees was started in Salkani forest in Sirsi district' and people hugged the trees. Hence (C).

Correct answer: A

The passage states: 'Indiscriminate felling of trees for fuel wood and for industrial use has led to many environmental problems.' Hence Environmental.

Correct answer: D

Both Chipko and Appiko ('to hug') involved people hugging the trees to prevent felling; the passage says 160 men, women and children 'hugged the trees and forced the woodcutters to leave.' Hence (D).

Correct answer: D

The passage notes that after broad-leaved trees were removed, the soil washed away leaving 'bare laterite soil left behind'. Hence Laterite soil.

Correct answer: A

The passage concludes that as a result of indiscriminate felling, 'Diseases and insects earlier unknown are now attacking the crops.' Hence (A).