CUET 2026 Economics Mock Test 2

Questions in this Economics paper

Preview all 10 questions below. Attempt the test to check your answers, see your score and review the solution for each question.

1. If the price elasticity of demand for a commodity is -2, and the seller reduces the price of the commodity by 10%, then the percentage change in total revenue will be:

   • AIncrease by 10%
   • BIncrease by 20%
   • CIncrease by 10% approximately
   • DDecrease by 10%

2. Which of the following situations represents a contraction in demand and not a decrease in demand?

   • AIncome of consumers decreases and demand falls
   • BPrice of the commodity rises and quantity demanded falls
   • CPrice of substitute commodity falls
   • DConsumer preference shifts away from the commodity

3. Suppose Marginal Propensity to Consume (MPC) is 0.75. The value of the investment multiplier will be:

   • A2
   • B3
   • C4
   • D5

4. In an economy, Autonomous Consumption is 100 crore and the Marginal Propensity to Consume (MPC) is 0.75. If investment increases by 80 crore, then the increase in equilibrium income will be:

   • A240 crore
   • B300 crore
   • C320 crore
   • D400 crore

5. A consumer spends his entire income on goods X and Y. The price of X is ₹20 per unit and the price of Y is ₹10 per unit. If his income is ₹400, which of the following combinations lies on his budget line?

   • AX = 5, Y = 25
   • BX = 10, Y = 20
   • CX = 15, Y = 5
   • DX = 8, Y = 18

6. The Reserve Bank of India purchases government securities worth ₹5,000 crore from the open market. Assuming Cash Reserve Ratio remains unchanged, the immediate effect of this operation will be:

   • AReduction in money supply and liquidity
   • BIncrease in liquidity and money supply
   • CIncrease in CRR
   • DReduction in bank deposits

7. The following information relates to an economy (in crore): Private Final Consumption Expenditure = 8,000; Government Final Consumption Expenditure = 2,000; Gross Domestic Capital Formation = 3,000; Net Exports = -500. Calculate the GDP at Market Price using the Expenditure Method.

   • A12,000 crore
   • B12,500 crore
   • C13,000 crore
   • D13,500 crore

8. In a perfectly competitive market, a firm's Total Revenue and Total Cost functions are: TR = 120Q and TC = 200 + 40Q + Q². The profit-maximizing output level is:

   • A20 units
   • B30 units
   • C40 units
   • D50 units

9. The price elasticity of demand for a commodity is -1.5. If its price increases by 10%, then the approximate percentage change in quantity demanded will be:

   • ADecrease by 5%
   • BDecrease by 10%
   • CDecrease by 15%
   • DIncrease by 15%

10. Read the following statements carefully: I. Every increase in investment necessarily increases Aggregate Demand. II. Ex-ante savings are always equal to Ex-post savings. III. Ex-ante investment and Ex-ante savings may differ. IV. Equilibrium income is determined at the point where Aggregate Demand equals Aggregate Supply. Choose the correct answer.

    • AI, II and III only
    • BII, III and IV only
    • CI, III and IV only
    • DI, II, III and IV