SSC CGL Mock – Paper III Finance & Economics Mock Test 01 – Part B · Economics & Governance

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SSC CGL Mock – Paper III Finance & Economics Mock Test 01 – Part B · Economics & Governance – 60 questions, subject: Full Mock Tests. Every question has the correct answer with a one-line explanation; tap "Show Answer". Free practice for TNPSC, UPSC, SSC, Bank and RRB exams – Shanmugam IAS Academy, Coimbatore.

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1.  
The administrative expenses of the office of the Comptroller and Auditor General, including the salaries of its staff, are

Correct Answer: C [charged on the Consolidated Fund of India]

Explanation:

Art. 148(6): the office expenses of the CAG are charged on the Consolidated Fund of India, so they are not voted.

2.  
According to the Act of 1971 on the CAG's duties, powers and conditions of service, the CAG holds office for

Correct Answer: D [6 years or till the age of 65, whichever is earlier]

Explanation:

DPC Act s. 4: term of 6 years or age 65, whichever is earlier; resignation is addressed to the President.

3.  
In which Schedule of the Constitution is the form of oath or affirmation of the CAG laid down?

Correct Answer: A [Third Schedule]

Explanation:

Art. 148(2): the CAG takes the oath in the form set out in the Third Schedule.

4.  
Besides its Chairman, the Finance Commission constituted by the President has

Correct Answer: B [4 other members]

Explanation:

Art. 280(1): a Chairman and four other members.

5.  
India's first Finance Commission, constituted in 1951 soon after the Constitution came into force, had as its Chairman

Correct Answer: D [K. C. Neogy]

Explanation:

1st FC: K. C. Neogy (1951); 14th: Y.

6.  
Every recommendation of the Finance Commission, with an explanatory memorandum of the action taken on it, is laid before each House of Parliament by

Correct Answer: B [the President]

Explanation:

Art. 281: the President causes every recommendation and the memorandum to be laid.

7.  
The 'scarcity' definition of economics – a relationship between ends and scarce means having alternative uses – was given by Lionel Robbins in

Correct Answer: C [An Essay on the Nature and Significance of Economic Science (1932)]

Explanation:

Robbins (1932): scarcity definition; Marshall (1890) welfare; Smith (1776) wealth; Keynes (1936) General Theory.

8.  
CalculationA consumer's total utility from 1 to 5 cups of tea is 15, 27, 36, 42, 45 utils. The marginal utility of the 4th cup is

Correct Answer: A [6]

Explanation:

MU₄ = TU₄ − TU₃ = 42 − 36 = 6 utils.

9.  
CalculationAn economy's production possibilities are: butter 0, 1, 2, 3, 4 units with guns 40, 38, 33, 25, 14 units. The opportunity cost of producing the 3rd unit of butter is

Correct Answer: B [8]

Explanation:

Guns given up from 2 to 3 units of butter = 33 − 25 = 8; MOC rises (2, 5, 8, 11), so the PPC is concave.

10.  
The statement 'The government ought to raise minimum wages' belongs to

Correct Answer: D [normative economics]

Explanation:

Positive economics describes what is; normative economics says what ought to be.

11.  
CalculationA stationery shop raises the price of its notebook from ₹ 20 to ₹ 25 and its weekly sales drop from 400 to 340. Taking initial values as the base (percentage method), the price elasticity of demand is

Correct Answer: A [0.6]

Explanation:

%ΔQ = 60/400 = 15%; %ΔP = 5/20 = 25%; e = 15/25 = 0.6 (inelastic).

12.  
CalculationIn a local vegetable market the demand function is Qd = 200 − 4P and the supply function is Qs = 6P − 50. The price at which the market clears is

Correct Answer: C [₹ 25]

Explanation:

P* = (200 + 50)/(4 + 6) = 25; Q* = 100.

13.  
A 10% rise in the price of tea raises the demand for coffee by 4%. The cross elasticity and the relation between the goods are

Correct Answer: B [+0.4; substitutes]

Explanation:

Exy = 4/10 = +0.4; a positive cross elasticity means substitutes (complements −).

14.  
A family's monthly income rises from ₹ 30,000 to ₹ 36,000 and its purchase of rice rises from 20 kg to 21 kg. Rice is, for this family, a

Correct Answer: D [necessity (income elasticity 0.25)]

Explanation:

Ey = (1/20) ÷ (6,000/30,000) = 5% ÷ 20% = 0.25; 0 < Ey < 1 → necessity.

15.  
CalculationWith Qd = 150 − 5P and Qs = 5P − 50, the government fixes a maximum price of ₹ 16. The market then has

Correct Answer: C [a shortage of 40 units]

Explanation:

Equilibrium P* = ₹ 20; at ₹ 16: Qd = 70, Qs = 30; a ceiling below equilibrium creates a shortage of 40.

16.  
CalculationA box of crayons goes up from ₹ 12 to ₹ 15, and the number of boxes bought drops from 450 to 340. Judged by the change in buyers' total outlay, the demand for crayons is

Correct Answer: A [elastic, as total expenditure moves opposite to price]

Explanation:

Outlay falls from ₹ 5,400 to ₹ 5,100 while price rises – opposite directions → elastic.

17.  
CalculationTotal product with 1 to 5 workers on a fixed plot is 8, 20, 30, 36, 38 quintals. The marginal product of the 4th worker is

Correct Answer: B [6 quintals]

Explanation:

MP₄ = TP₄ − TP₃ = 36 − 30 = 6 quintals.

18.  
CalculationA firm's total fixed cost is ₹ 1200 and its average variable cost at 40 units is ₹ 45. Average total cost at 40 units is

Correct Answer: A [₹ 75]

Explanation:

ATC = AFC + AVC = 1200/40 + 45 = 30 + 45 = 75.

19.  
Of the three stages described by the law of variable proportions, the one a rational producer chooses is

Correct Answer: C [Stage II (diminishing returns)]

Explanation:

Stage II is rational; the law operates only in the short run.

20.  
CalculationTotal cost at outputs 0, 1, 2 and 3 is ₹ 500, 560, 610, 670. The marginal cost of the 2nd unit is

Correct Answer: D [₹ 50]

Explanation:

MC₂ = TC₂ − TC₁ = 610 − 560 = 50 (TFC = 500 does not enter MC).

21.  
CalculationA firm's output follows Q = 10 L0.6 K0.4. If it doubles both labour and capital, its returns to scale are

Correct Answer: A [Constant returns to scale]

Explanation:

Cobb–Douglas: 0.6 + 0.4 = 1 → constant returns to scale.

22.  
Whatever the form of market, a profit-maximising firm is in equilibrium where

Correct Answer: B [MR = MC (with MC rising)]

Explanation:

Answer: MR = MC (with MC rising). Firm equilibrium: MR = MC.

23.  
The term 'monopsony' describes a market in which there is

Correct Answer: C [a single buyer]

Explanation:

Monopsony = single buyer; monopoly = single seller; duopoly = two sellers; oligopoly = a few sellers.

24.  
CalculationA firm in perfect competition sells 120 units at the ruling price of ₹ 50. Selling the 121st unit adds to its total revenue

Correct Answer: D [₹ 50]

Explanation:

Price is given, so MR = AR = ₹ 50 for every unit.

25.  
Many sellers offer similar but differentiated products (brands), entry is free, and firms spend on advertising. This market form is

Correct Answer: C [monopolistic competition]

Explanation:

Product differentiation and selling costs mark monopolistic competition; perfect competition has a homogeneous product.

26.  
CalculationGDP at market prices of an economy is ₹ 5,000 crore and consumption of fixed capital is ₹ 400 crore. NDP at market prices is

Correct Answer: A [₹ 4,600 crore]

Explanation:

Net = Gross − depreciation: 5,000 − 400 = 4,600 (₹ crore).

27.  
CalculationGDP is ₹ 8,000 crore. Factor income earned from abroad is ₹ 300 crore and factor income paid abroad is ₹ 450 crore. GNP is

Correct Answer: B [₹ 7,850 crore]

Explanation:

NFIA = 300 − 450 = −150; GNP = GDP + NFIA = 7,850.

28.  
Why is GDP not a perfect index of a country's welfare?

Correct Answer: D [it ignores the distribution of income among the people]

Explanation:

GDP can rise while most of the gain goes to a few; it also leaves out externalities and non-monetary exchanges.

29.  
Which of these is left out while estimating national income?

Correct Answer: B [transfer payments such as old-age pensions]

Explanation:

Transfer payments, second-hand goods, capital gains, lottery and homemaker services are excluded; imputed rent and own-account production are included.

30.  
CalculationNominal GDP is ₹ 240 lakh crore and real GDP (at base-year prices) is ₹ 200 lakh crore. The GDP deflator is

Correct Answer: D [120]

Explanation:

Deflator = nominal/real × 100 = 240/200 × 100 = 120.

31.  
Disguised unemployment refers to

Correct Answer: A [extra workers whose removal does not reduce output]

Explanation:

Disguised unemployment: extra workers whose removal does not reduce output; common in the primary sector.

32.  
CalculationA district has 4,85,000 females and 5,00,000 males. Its sex ratio (as defined in India) is

Correct Answer: C [970]

Explanation:

Sex ratio = females per 1,000 males = 4,85,000/5,00,000 × 1,000 = 970.

33.  
With 2.4% of the world's surface area, India (Census 2011) held roughly what share of the world's population?

Correct Answer: D [17.5%]

Explanation:

Census 2011 literacy rate (age 7+): 74.04% in the provisional figures (31-03-2011; male 82.14, female 65.46), revised to 72.98% in the final figures (male 80.88%, female 64.63%) (as on 20-10-2026, Census of India / MoSPI).

34.  
CalculationOf the 1000 persons aged 15 and above in a village, 800 are in the labour force and 40 of these are unemployed. The unemployment rate is

Correct Answer: B [5%]

Explanation:

UR = unemployed ÷ labour force × 100 = 40/800 × 100 = 5% (not ÷ population).

35.  
Mining is a primary activity in theory, but in India's national-accounts tables it is grouped under

Correct Answer: C [Industry]

Explanation:

Mining is grouped under Industry in the national-accounts tables.

36.  
NITI Aayog was constituted through a Union Cabinet resolution dated

Correct Answer: A [1 January 2015]

Explanation:

NITI Aayog: Cabinet resolution of 1 January 2015.

37.  
The New Economic Policy of 1991 was launched when P. V. Narasimha Rao was Prime Minister and the Finance Minister was

Correct Answer: A [Manmohan Singh]

Explanation:

NEP 1991: PM P. V. Narasimha Rao, FM Manmohan Singh.

38.  
Advance estimates of India's GDP for a financial year are released

Correct Answer: C [before the financial year ends]

Explanation:

Advance estimates come out before the year closes and are revised later as fuller data arrive.

39.  
CalculationAn economy saves 24% of its income and its capital-output ratio is 4. By the Harrod–Domar model, the growth rate is

Correct Answer: B [6%]

Explanation:

Answer: 6%. g = s/v = 24/4 = 6%.

40.  
The two primary functions of money are

Correct Answer: D [medium of exchange and measure of value]

Explanation:

Primary: medium of exchange, measure of value; secondary: store of value, standard of deferred payment.

41.  
CalculationCash of ₹ 40,000 is newly deposited in a bank. Banks must keep 12.5% of deposits as reserves and lend the rest, and all loans come back as deposits. The banking system's deposits can expand to a maximum of

Correct Answer: C [₹ 3,20,000]

Explanation:

Deposit multiplier = 1/r = 8; total deposits = ₹ 40,000 × 8 = ₹ 3,20,000.

42.  
The Reserve Bank first had its central office in Kolkata. It moved permanently to Mumbai in

Correct Answer: D [1937]

Explanation:

RBI began on 1 April 1935 in Kolkata and moved to Mumbai in 1937; nationalised 1 January 1949.

43.  
When coins of the same face value but different intrinsic worth circulate together, people hoard the better coins and spend the worse. This tendency is called

Correct Answer: A [Gresham's law]

Explanation:

Gresham's law (Thomas Gresham).

44.  
In the first wave of bank nationalisation, the Government took over fourteen large commercial banks on

Correct Answer: B [19 July 1969]

Explanation:

14 banks 19 July 1969; 6 banks 15 April 1980.

45.  
CalculationMoney supply is ₹ 500, velocity is 6 and the volume of transactions is 1,500 units. By Fisher's equation MV = PT, the price level is

Correct Answer: C [₹ 2]

Explanation:

Answer: ₹ 2. P = MV/T = 500 × 6/1,500 = 2.

46.  
CalculationTotal expenditure of a government is ₹ 1,000 crore (revenue expenditure ₹ 820 crore), revenue receipts are ₹ 700 crore and non-debt capital receipts ₹ 50 crore. The fiscal deficit is

Correct Answer: A [₹ 250 crore]

Explanation:

FD = total expenditure − (revenue receipts + non-debt capital receipts) = 1,000 − 750 = 250.

47.  
CalculationRevenue expenditure ₹ 1,640 crore, capital expenditure ₹ 400 crore and revenue receipts ₹ 1,410 crore. The revenue deficit is

Correct Answer: B [₹ 230 crore]

Explanation:

RD = revenue expenditure − revenue receipts = 1,640 − 1,410 = 230; capital spending is not part of it.

48.  
The Union Budget is presented to Parliament as the 'Annual Financial Statement' under

Correct Answer: D [Article 112]

Explanation:

Art. 112 AFS; 113 demands for grants; 110 Money Bill; 266 Consolidated Fund.

49.  
R. K. Shanmukham Chetty has a place in India's fiscal history because he

Correct Answer: B [presented independent India's first budget, on 26 November 1947]

Explanation:

R. K. Shanmukham Chetty, 26 November 1947; James Wilson presented British India's first budget in 1860.

50.  
CalculationMerchandise exports are US$ 420 bn, merchandise imports US$ 560 bn and net invisibles +US$ 110 bn. The current account balance is

Correct Answer: A [−US$ 30 bn]

Explanation:

Trade balance = 420 − 560 = −140; CAB = −140 + 110 = −30.

51.  
The Fiscal Responsibility and Budget Management Act, which set out to eliminate the revenue deficit and bring the fiscal deficit to 3% of GDP, was enacted in

Correct Answer: D [2003]

Explanation:

Answer: 2003. FRBM Act 2003, in force 2004.

52.  
Statement-basedConsider the statements:
I. GST came into force in India on 1 July 2017.
II. Since 22 September 2025, GST has two main slabs, 5% and 18%, plus a 40% special rate.
Which of the statements is/are correct?

Correct Answer: C [Both I and II]

Explanation:

Both are correct: GST Day is 1 July 2017; from 22-09-2025 the 12% and 28% slabs were removed, leaving 5% and 18% plus a 40% special (de-merit) rate (as on 20-10-2026, GST Council / PIB).

53.  
When the person on whom a tax is legally imposed also bears its final burden, so that the impact and the incidence fall on the same person, the tax is

Correct Answer: C [a direct tax]

Explanation:

Direct tax: impact and incidence on the same person; an indirect tax can be shifted.

54.  
Which of these is one of Adam Smith's four canons of taxation?

Correct Answer: B [certainty]

Explanation:

Adam Smith's canons: equality, certainty, convenience, economy (Wealth of Nations, 1776).

55.  
CalculationA trader in Chennai sells goods worth ₹ 20,000 to a buyer in Madurai; GST rate is 18%. The CGST on the invoice is

Correct Answer: C [₹ 1,800]

Explanation:

Intra-State supply: CGST + SGST, each half of 18% → ₹ 20,000 × 9% = ₹ 1,800.

56.  
The constitutional rule that the State cannot levy or collect any tax without the authority of law is found in

Correct Answer: D [Article 265]

Explanation:

Art. 265: no tax without authority of law.

57.  
Digital India, approved by the Union Cabinet in August 2014, was formally launched on

Correct Answer: A [1 July 2015]

Explanation:

Digital India launched 1 July 2015 (approved by the Cabinet on 20 August 2014).

58.  
The National Informatics Centre (NIC), the government's technology partner for e-governance, was set up in

Correct Answer: B [1976]

Explanation:

Answer: 1976. NIC 1976.

59.  
Online services delivered directly by a government to its citizens fall under the e-governance model

Correct Answer: A [G2C]

Explanation:

Answer: G2C. Models: G2C, G2B, G2G, G2E.

60.  
India's first cyber law, giving legal recognition to electronic records and digital signatures, is the Information Technology Act of

Correct Answer: D [2000]

Explanation:

IT Act 2000 – first cyber law; amended 2008.

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