SSC CGL Mock – Paper III Finance & Economics Mock Test 02 – Part B · Economics & Governance

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SSC CGL Mock – Paper III Finance & Economics Mock Test 02 – 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.  
Section 3 of the CAG's (Duties, Powers and Conditions of Service) Act fixes the CAG's salary as equal to that of

Correct Answer: B [a Judge of the Supreme Court]

Explanation:

DPC Act s. 3: the CAG's salary equals that of a Supreme Court judge.

2.  
Statement-basedConsider the statements:
I. The accounts of a State are kept in the form that its Governor prescribes on the advice of the State Finance Secretary.
II. The CAG's reports on the accounts of a State are submitted to the Governor, who causes them to be laid before the State Legislature.
Which of the statements is/are correct?

Correct Answer: B [Only II]

Explanation:

Art. 150: the form of accounts of the Union and the States is prescribed by the President on the CAG's advice, so I is wrong; Art.

3.  
The 22-member Public Accounts Committee, which scrutinises the CAG's audit reports, draws its members as

Correct Answer: A [15 from the Lok Sabha and 7 from the Rajya Sabha]

Explanation:

PAC has 22 members: 15 Lok Sabha + 7 Rajya Sabha (the Estimates Committee has 30, all from the Lok Sabha).

4.  
The President constitutes, every fifth year or earlier, a body to recommend how the net proceeds of shareable taxes are divided between the Union and the States. This body rests on

Correct Answer: D [Article 280]

Explanation:

Art. 280: Finance Commission, constituted within two years of the Constitution and then every fifth year or earlier.

5.  
The Fourteenth Finance Commission (chair Y. V. Reddy) fixed the States' share in the divisible pool for 2015-20 at

Correct Answer: B [42%]

Explanation:

14th FC (Y. V. Reddy): 42% for 2015-20; the 15th FC (N.

6.  
The Finance Commission (Miscellaneous Provisions) Act, 1951 requires that the Chairman be a person having experience in

Correct Answer: C [public affairs]

Explanation:

s. 3: Chairman – experience in public affairs; members – HC judge, Government finances and accounts, financial administration, economics.

7.  
The terms 'micro' and 'macro' economics are credited to the Norwegian economist

Correct Answer: C [Ragnar Frisch]

Explanation:

Ragnar Frisch (1933) coined micro and macro economics.

8.  
CalculationA consumer has ₹ 240 to spend on X (₹ 8 each) and Y (₹ 6 each). The absolute slope of the budget line (Y on the vertical axis) and the most X he can buy are

Correct Answer: D [4/3 and 30 units]

Explanation:

Slope = Px/Py = 8/6 = 4/3; X-intercept = 240/8 = 30.

9.  
CalculationMarginal utility (in ₹) of successive kilograms of grapes to a buyer is 50, 42, 34, 26, 18. If grapes cost ₹ 30 per kg, he buys

Correct Answer: A [3 kg]

Explanation:

He buys while MU ≥ price: 50, 42, 34 ≥ 30 but 26 < 30, so 3 kg.

10.  
Gossen's second law – a consumer gains most when the marginal utility per rupee is equal across goods – is better known as the law of

Correct Answer: B [equi-marginal utility]

Explanation:

Gossen's first law = DMU; second law = equi-marginal utility.

11.  
CalculationFor a brand of biscuits, a price increase from ₹ 15 to ₹ 18 a packet cuts the quantity bought from 260 to 220 packets. Using averages of the two prices and the two quantities (arc method), price elasticity is

Correct Answer: B [11/12]

Explanation:

[40/(260 + 220)] ÷ [3/(15 + 18)] = (1/12) ÷ (1/11) = 11/12.

12.  
CalculationDemand is Q = 150 − 3P. Point elasticity of demand at P = ₹ 20 is

Correct Answer: A [2/3]

Explanation:

Q = 90; e = b × P/Q = 3 × 20/90 = 2/3 (or P/(Pmax − P) = 20/30).

13.  
A cheap inferior staple whose quantity demanded rises when its price rises is named after

Correct Answer: D [Sir Robert Giffen]

Explanation:

Giffen good – Sir Robert Giffen; Veblen good – Thorstein Veblen (conspicuous consumption).

14.  
CalculationSupply is Qs = 4P. When price rises from ₹ 10 to ₹ 12, the elasticity of supply (percentage method) is

Correct Answer: C [1]

Explanation:

Q: 40 → 48 (+20%); P: +20%; es = 1 – any straight-line supply through the origin has unit elasticity.

15.  
CalculationDemand Qd = 180 − 3P, supply Qs = 2P − 20. A tax of ₹ 5 per unit is imposed on sellers. Buyers now pay

Correct Answer: D [₹ 42]

Explanation:

Before: P = 40. New supply 2(P − 5) − 20; 180 − 3P = 2P − 30 → P = 42 (buyers bear 5 × 2/5 = ₹ 2).

16.  
CalculationSupply is Qs = 3P − 20. Demand increases from Qd = 100 − 2P to Qd = 130 − 2P. Equilibrium quantity rises by

Correct Answer: B [18 units]

Explanation:

Before: P = 24, Q = 52; after: P = 30, Q = 70; rise = 18 units.

17.  
CalculationTotal product with 1 to 6 workers is 12, 32, 51, 64, 75, 80 units. Average product is at its maximum when the number of workers is

Correct Answer: A [3]

Explanation:

AP = 12, 16, 17, 16, 15, 13.3 – highest (17) at 3 workers; MP peaks earlier, at 2.

18.  
CalculationA shop owner earns revenue of ₹ 9,00,000 with explicit costs of ₹ 6,20,000. She uses her own building (market rent ₹ 60,000), gives up a salary of ₹ 1,20,000 and forgoes interest of ₹ 40,000 on her capital. Her economic profit is

Correct Answer: C [₹ 60,000]

Explanation:

Accounting profit ₹ 2,80,000 − implicit costs ₹ 2,20,000 = ₹ 60,000.

19.  
In the short run a competitive firm stops production (shuts down) when the price falls below its

Correct Answer: A [minimum average variable cost (min AVC)]

Explanation:

Shutdown at min AVC; break-even at min ATC.

20.  
CalculationA firm's TFC is ₹ 100. Marginal costs of the 1st to 5th units are ₹ 30, 25, 22, 28, 40. Average total cost at 5 units is

Correct Answer: C [₹ 49]

Explanation:

TVC = sum of MCs = 145; TC = 245; ATC = 245/5 = 49.

21.  
CalculationFor Q = 5 L0.5 K0.3, doubling both inputs gives

Correct Answer: B [Decreasing returns to scale]

Explanation:

0.5 + 0.3 = 0.8 < 1 → output rises by less than double.

22.  
When Parliament enacted the Competition Act in 2002 to promote competition, which earlier law did it replace?

Correct Answer: D [MRTP Act, 1969]

Explanation:

The Competition Act, 2002 replaced (repealed) the MRTP Act, 1969.

23.  
The kinked demand curve model of oligopoly (1939) is associated with

Correct Answer: C [Paul Sweezy]

Explanation:

Sweezy kinked demand curve 1939; Cournot duopoly 1838.

24.  
CalculationA firm is the only seller of a product. It faces the demand P = 60 − Q and its marginal cost is a constant ₹ 20. To maximise profit it should charge

Correct Answer: D [₹ 40]

Explanation:

MR = 60 − 2Q = 20 → Q = 20; P = 60 − 20 = 40 [= (a + c)/2].

25.  
'The Economics of Imperfect Competition' (1933) is the work of

Correct Answer: A [Joan Robinson]

Explanation:

Joan Robinson (1933); Chamberlin wrote on monopolistic competition.

26.  
CalculationNDP at market prices is ₹ 6,000 crore; indirect taxes are ₹ 800 crore and subsidies ₹ 150 crore. NDP at factor cost is

Correct Answer: B [₹ 5,350 crore]

Explanation:

NIT = 800 − 150 = 650; FC = MP − NIT = 5,350.

27.  
CalculationA cotton grower (who buys no inputs) sells cotton for ₹ 140; a spinner turns it into yarn sold for ₹ 230; a weaver makes cloth from the yarn and sells it to shoppers for ₹ 370. The three together add to GDP

Correct Answer: B [₹ 370]

Explanation:

Value added: 140 + 90 + 140 = 370 = value of the final good.

28.  
The NSSO and the CSO were merged into the National Statistical Office (NSO) under MoSPI in

Correct Answer: D [2019]

Explanation:

NSSO 1950, CSO 1951, merged into NSO in 2019.

29.  
CalculationConsumption ₹ 600, investment ₹ 200, government purchases ₹ 150, exports ₹ 90 and imports ₹ 110 (₹ crore). GDP at market prices is

Correct Answer: C [₹ 930 crore]

Explanation:

GDPmp = C + I + G + X − M = 930.

30.  
Dadabhai Naoroji's early estimate of India's per-capita income and his drain theory appear in

Correct Answer: A [Poverty and Un-British Rule in India]

Explanation:

Naoroji: Poverty and Un-British Rule in India (1901).

31.  
Using the Tendulkar methodology, the share of India's population below the poverty line in 2011-12 was

Correct Answer: C [21.9%]

Explanation:

Tendulkar 21.9% (lines ₹ 816 rural, ₹ 1,000 urban); Rangarajan 29.5%.

32.  
CalculationA State's population grew from 8,40,000 in 2001 to 9,66,000 in 2011. Its decadal growth rate is

Correct Answer: B [15%]

Explanation:

(9,66,000 − 8,40,000) ÷ 8,40,000 × 100 = 15%.

33.  
In development economics, Ragnar Nurkse is best known for the idea of

Correct Answer: A [the vicious circle of poverty]

Explanation:

Vicious circle of poverty – Ragnar Nurkse.

34.  
CalculationA district with a population of 12,60,000 has an area of 3,500 sq km. Its density of population is

Correct Answer: D [360 per sq km]

Explanation:

Density = 12,60,000 ÷ 3,500 = 360 persons per sq km.

35.  
In a highway built on the HAM pattern, the private developer has to arrange what share of the project cost?

Correct Answer: D [60%]

Explanation:

HAM: government 40% during construction, developer 60%.

36.  
The Statement on Industrial Policy of 24 July 1991 kept compulsory industrial licensing for

Correct Answer: B [18 industries]

Explanation:

Licensing kept for 18 industries; public-sector reservation cut to 8.

37.  
Statement-basedConsider the statements:
I. The Planning Commission was set up by an Act of Parliament in 1950.
II. No Five-Year Plan followed the Twelfth Plan (2012–17).
Which of the statements is/are correct?

Correct Answer: B [Only II]

Explanation:

The Planning Commission was set up by a Cabinet resolution (15 March 1950), not an Act; the 12th Plan (2012–17) was the last Five-Year Plan.

38.  
CalculationAn investment of ₹ 450 crore raises output by ₹ 100 crore. The incremental capital-output ratio (ICOR) is

Correct Answer: A [4.5]

Explanation:

ICOR = investment ÷ increase in output = 450/100 = 4.5.

39.  
In 1991 the Government appointed a Tax Reforms Committee to recommend changes in direct and indirect taxes. Its chairman was

Correct Answer: C [Raja J. Chelliah]

Explanation:

Tax Reforms Committee – Raja J.

40.  
One-rupee notes are issued by the Government of India and are signed by

Correct Answer: C [the Finance Secretary]

Explanation:

Coins and ₹ 1 notes are issued by the Government; the ₹ 1 note bears the Finance Secretary's signature.

41.  
CalculationA deposit of ₹ 50,000 enters a banking system with a 10% reserve ratio and no cash drain. The maximum new loans (credit) created are

Correct Answer: A [₹ 4,50,000]

Explanation:

Total deposits = ₹ 5,00,000; new credit = deposits − initial deposit = ₹ 4,50,000.

42.  
The National Bank for Agriculture and Rural Development (NABARD) was set up on

Correct Answer: D [12 July 1982]

Explanation:

NABARD 12 July 1982; RRBs 2 October 1975.

43.  
Of the major groups in India's Wholesale Price Index, the largest weight goes to

Correct Answer: B [manufactured products]

Explanation:

WPI – Office of the Economic Adviser, DPIIT (goods only); CPI – NSO.

44.  
CalculationA fixed deposit pays 9% a year while inflation is 5.5%. The approximate real rate of interest is

Correct Answer: B [3.5%]

Explanation:

Real ≈ nominal − inflation = 9 − 5.5 = 3.5%.

45.  
Under RBI's prudential norms, a bad loan is classed as a 'sub-standard asset' while it has been non-performing for a period of up to

Correct Answer: C [12 months]

Explanation:

NPA: overdue for more than 90 days; sub-standard up to 12 months.

46.  
CalculationFiscal deficit is ₹ 5,40,000 crore, of which interest payments are ₹ 3,10,000 crore. The primary deficit is

Correct Answer: D [₹ 2,30,000 crore]

Explanation:

PD = FD − interest = 5,40,000 − 3,10,000 = 2,30,000.

47.  
A member who wants to voice a specific grievance moves a 'token cut', which seeks to reduce a demand for grant by

Correct Answer: A [₹100]

Explanation:

Policy cut ₹1 (disapproval of policy); token cut ₹100; economy cut by a specified amount.

48.  
Article 267 creates the Contingency Fund of India. This fund is held at the disposal of

Correct Answer: A [the President]

Explanation:

Contingency Fund – at the disposal of the President.

49.  
CalculationA government's revenue deficit is ₹ 200 crore. Its revenue spending includes ₹ 75 crore of grants to States for building capital assets. Its effective revenue deficit works out to

Correct Answer: C [₹ 125 crore]

Explanation:

ERD = RD − grants for capital assets = 200 − 75 = 125.

50.  
British India's first budget was presented on 7 April 1860 by

Correct Answer: B [James Wilson]

Explanation:

James Wilson, 7 April 1860; railway budget separated in 1924 (Acworth Committee).

51.  
The rupee moved to a single, market-determined (unified) exchange rate in

Correct Answer: D [March 1993]

Explanation:

LERMS March 1992; unified rate March 1993; current account convertibility August 1994.

52.  
When it was moved in Parliament in 2014, the GST constitutional amendment was numbered as the Constitution

Correct Answer: D [(122nd Amendment) Bill]

Explanation:

Constitution (101st Amendment) Act, 2016; the Bill was the 122nd Amendment Bill (2014).

53.  
CalculationA manufacturer's taxable sales are ₹ 1,50,000 at 18% GST. GST paid on its inputs is ₹ 15,000. Its net GST payable in cash is

Correct Answer: B [₹ 12,000]

Explanation:

Output tax ₹ 27,000 − input tax credit ₹ 15,000 = ₹ 12,000.

54.  
GST Council decisions are taken by weighted voting, the Centre's vote counting for one-third. A proposal passes only with

Correct Answer: C [3/4 of the weighted votes of members present and voting]

Explanation:

Art. 279A: 3/4 weighted votes; Centre's vote 1/3, States' 2/3; quorum one-half.

55.  
Which direct tax was abolished with effect from assessment year 2016-17?

Correct Answer: A [Wealth tax]

Explanation:

Wealth tax abolished from AY 2016-17; gift tax had gone in 1998; STT and corporation tax continue.

56.  
CalculationTax revenue grows by 15% when GDP grows by 10% (including the effect of new tax measures). Tax buoyancy is

Correct Answer: D [1.5]

Explanation:

Buoyancy = %Δ tax ÷ %Δ GDP = 15/10 = 1.5 (buoyancy includes discretionary changes; elasticity excludes them).

57.  
The National e-Governance Plan (NeGP), the forerunner of Digital India, received approval in

Correct Answer: B [2006]

Explanation:

Answer: 2006. NeGP approved 2006.

58.  
Since 14 September 2015, the DBT Mission that oversees Direct Benefit Transfer has been located in

Correct Answer: A [the Cabinet Secretariat]

Explanation:

DBT began 1 January 2013; the Mission moved from the Planning Commission to the Department of Expenditure (July 2013) and to the Cabinet Secretariat (14-9-2015).

59.  
Section 66A of the IT Act was struck down by the Supreme Court in the case of

Correct Answer: C [Shreya Singhal]

Explanation:

Shreya Singhal (24 March 2015) struck down s.

60.  
The citizen-engagement platform for participatory governance launched in 2014 is

Correct Answer: A [MyGov]

Explanation:

MyGov 2014; PRAGATI 2015; GeM 2016.

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