SSC CGL Mock – Paper III Finance & Economics Mock Test 04 – Part B · Economics & Governance

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SSC CGL Mock – Paper III Finance & Economics Mock Test 04 – 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.  
In the tribal areas covered by the Sixth Schedule (paragraph 7), the form in which District and Regional Council accounts are kept is prescribed by

Correct Answer: A [the CAG, with the President's approval]

Explanation:

Sixth Schedule para 7: the CAG prescribes the form of the accounts with the President's approval and audits them.

2.  
Under Section 14 of the CAG's DPC Act, a body is audited by the CAG if its grants or loans from the Consolidated Fund in a year are at least ₹ 25 lakh and not less than what share of its expenditure?

Correct Answer: A [75%]

Explanation:

Section 14: ₹ 25 lakh and 75% of expenditure (raised from ₹ 5 lakh in 1984).

3.  
In a Government company, Section 143(6) of the Companies Act, 2013 empowers the CAG to

Correct Answer: B [conduct a supplementary audit of the company's financial statements]

Explanation:

s. 139(5): the CAG appoints the auditor of a Government company; s.

4.  
How long after the Tenth Finance Commission was the Eleventh constituted?

Correct Answer: C [six years]

Explanation:

The 11th FC came six years after the 10th; the 14th came five years two months after the 13th.

5.  
For its 'demographic performance' criterion (award 2026–31), the Sixteenth Finance Commission measures the inverse of a State's population growth over the period

Correct Answer: D [1971–2011]

Explanation:

16th FC report: inverse population growth 1971–2011 replaces the inverse total fertility rate used earlier; the Commission uses the 2011 population (as on 20-10-2026, 16th FC Report Vol.

6.  
Stamp duties and duties of excise on medicinal and toilet preparations are levied by the Union but collected and kept by the States under

Correct Answer: C [Article 268]

Explanation:

Art. 268: levied by the Union, collected and appropriated by the States; Art.

7.  
Why does a typical production possibility curve bow outward, i.e. stay concave to the origin?

Correct Answer: A [the marginal opportunity cost (MOC) rises as more of one good is produced]

Explanation:

Rising MOC makes the PPC concave; constant MOC would make it a straight line.

8.  
CalculationIncome ₹ 300, Px = ₹ 10, Py = ₹ 5. If income doubles and the price of X doubles (Py unchanged), the new intercepts of the budget line are

Correct Answer: D [X = 30, Y = 120]

Explanation:

New X-intercept = 600/20 = 30 (unchanged); Y-intercept = 600/5 = 120 (doubled).

9.  
The definition of economics that adds choice over time – and hence growth – to scarcity is associated with

Correct Answer: B [Paul Samuelson]

Explanation:

Samuelson's definition stresses choice over time (growth).

10.  
CalculationThe marginal utilities of successive units of a good are 24, 20, 15, 9, 2, −3 utils. Total utility at its peak is

Correct Answer: D [70 utils]

Explanation:

TU rises while MU > 0: 24 + 20 + 15 + 9 + 2 = 70 at 5 units; the 6th unit (MU −3) lowers it.

11.  
CalculationOn the straight-line demand curve Q = 240 − 4P, price elasticity equals 1 at a price of

Correct Answer: C [₹ 30]

Explanation:

Pmax = 240/4 = 60; e = P/(Pmax − P) = 1 at P = 30.

12.  
CalculationQd = 300 − 5P and Qs = 3P − 20. After a tax of ₹ 8 per unit on sellers, the price the sellers keep is

Correct Answer: A [₹ 35]

Explanation:

Before: P = 40. Buyers' price rises by 8 × 3/8 = 3 to 43; sellers keep 43 − 8 = 35.

13.  
CalculationA 12% cut in the price of a soap raises the quantity sold by 18%. Total expenditure on the soap changes by

Correct Answer: B [+3.84%]

Explanation:

New outlay = 0.88 × 1.18 = 1.0384 of the old → +3.84% (e = 18/12 = 1.5, elastic).

14.  
The proposition 'supply creates its own demand' is associated with

Correct Answer: D [J. B. Say]

Explanation:

Say's law (J. B. Say): supply creates its own demand.

15.  
CalculationDemand rises from Qd = 200 − 5P to Qd = 230 − 5P while supply rises from Qs = 5P − 40 to Qs = 5P − 20. The new equilibrium quantity is

Correct Answer: A [105 units]

Explanation:

Before: P = 24, Q = 80. After: 230 − 5P = 5P − 20 → P = 25, Q = 105.

16.  
CalculationWhen the price of a product goes up from ₹ 50 to ₹ 60, producers increase the quantity offered from 300 to 390 units. Taking initial values as the base, the price elasticity of supply is

Correct Answer: B [1.5]

Explanation:

%ΔQs = 90/300 = 30%; %ΔP = 10/50 = 20%; es = 1.5.

17.  
CalculationA competitive firm has TFC ₹ 90; TVC for 1 to 5 units is ₹ 50, 88, 117, 160, 225. The market price is ₹ 55. Its best short-run decision is to produce

Correct Answer: C [4 units, with a loss of ₹ 30]

Explanation:

Profit = 55Q − TC: −85, −68, −42, −30, −40 for Q = 1–5; best is 4 units (loss ₹ 30 < TFC ₹ 90, so the firm stays open).

18.  
CalculationA firm's TVC = Q³ − 12Q² + 60Q. Average variable cost is lowest at an output of

Correct Answer: D [6 units]

Explanation:

AVC = Q² − 12Q + 60 is lowest at Q = 12/2 = 6 (AVC = 24); MC reaches its minimum earlier (Q = 12/3 = 4).

19.  
CalculationAt the current price of ₹ 50, price elasticity of demand for a firm's product is 2. Its marginal revenue is

Correct Answer: C [₹ 25]

Explanation:

MR = AR(1 − 1/e) = 50 × (1 − 1/2) = 25.

20.  
The production function named after Charles Cobb and Paul Douglas was put forward in

Correct Answer: A [1928]

Explanation:

Cobb–Douglas (1928); the exponent sum gives returns to scale.

21.  
CalculationOutput with 1 to 7 workers is 15, 34, 54, 68, 75, 75, 70 units. Taking Stage III as the stage in which the marginal product is negative, Stage III begins with the

Correct Answer: B [7th worker]

Explanation:

MP = 15, 19, 20, 14, 7, 0, −5; MP turns negative with the 7th worker (TP peaks where MP = 0, at the 6th).

22.  
CalculationA monopolist with constant MC of ₹ 30 practises third-degree price discrimination. In a market where the price elasticity is 1.5, it charges

Correct Answer: A [₹ 90]

Explanation:

P = MC/(1 − 1/e) = 30/(1 − 2/3) = 90 (in the e = 3 market it would be 45).

23.  
In 'The Economics of Welfare' (1920), A. C. Pigou classified price discrimination into

Correct Answer: B [three degrees]

Explanation:

A. C. Pigou, The Economics of Welfare (1920).

24.  
Marshall likened the joint role of demand and supply in fixing price to

Correct Answer: D [the two blades of a pair of scissors]

Explanation:

Marshall's scissors analogy; he also divided time into market, short, long and secular periods.

25.  
CalculationA monopolist faces P = 120 − 2Q; its average and marginal cost are constant at ₹ 24. Its maximum profit is

Correct Answer: C [₹ 1,152]

Explanation:

MR = 120 − 4Q = 24 → Q = 24, P = 72; profit = (72 − 24) × 24 = 1152.

26.  
CalculationBetween two years, an economy's GDP at current prices goes up from ₹ 200 lakh crore to ₹ 231 lakh crore, and its GDP deflator from 100 to 105. The growth of GDP at constant prices is

Correct Answer: C [10%]

Explanation:

Real GDP: 200 → 231/105 × 100 = 220; growth = 10%.

27.  
Which of these is NOT included in India's domestic territory for national-income purposes?

Correct Answer: A [foreign embassies located in India]

Explanation:

Domestic territory includes Indian embassies, resident-operated ships, aircraft, fishing vessels and oil rigs; foreign embassies in India are excluded.

28.  
CalculationNational income of a State is ₹ 24,000 crore and its population is 1.6 crore. Per capita income is

Correct Answer: B [₹ 15,000]

Explanation:

Per capita income = 24,000 crore ÷ 1.6 crore = ₹ 15,000.

29.  
In moving from GVA at factor cost to GVA at basic prices, which of these is a 'production tax' (not a product tax)?

Correct Answer: D [stamp duty]

Explanation:

Production taxes: land revenue, stamp duty, professional tax; product taxes: GST, excise, customs.

30.  
CalculationAn open economy with government is in equilibrium. Saving ₹ 120, taxes ₹ 80, imports ₹ 60, investment ₹ 100 and government spending ₹ 90 (₹ crore). Exports must be

Correct Answer: C [₹ 70 crore]

Explanation:

S + T + M = I + G + X → X = 260 − 190 = 70.

31.  
CalculationIn a region, the multidimensional poverty headcount ratio is 0.3 and the average intensity of deprivation among the poor is 0.45. Its MPI value is

Correct Answer: A [0.135]

Explanation:

MPI = H × A = 0.3 × 0.45 = 0.135.

32.  
CalculationA country's population grows at 1.75% a year. By the rule of 70, its population doubles in about

Correct Answer: B [40 years]

Explanation:

Doubling time ≈ 70 ÷ 1.75 = 40 years.

33.  
CalculationA country's health, education and income indices are 0.675, 0.4 and 0.8. Its HDI (computed as the UNDP does since 2010) is

Correct Answer: D [0.6]

Explanation:

HDI = geometric mean = ∛(0.675 × 0.4 × 0.8) = ∛0.216 = 0.6 (the arithmetic mean 0.625 is the old method).

34.  
The Alagh Task Force (1979) based the poverty line on a daily calorie norm of

Correct Answer: A [2400 kcal in rural areas and 2100 kcal in urban areas]

Explanation:

Alagh task force 1979: 2400 kcal rural, 2100 kcal urban.

35.  
People who move in and out of poverty regularly (the 'churning poor') are classed as the

Correct Answer: D [transient poor]

Explanation:

Chronic (always or usually poor), transient (churning, occasionally poor) and non-poor.

36.  
Match the followingPair each Five-Year Plan with the focus or slogan linked to it:
P. 1st Plan Q. 5th Plan R. 8th Plan S. 11th Plan
1. Human development 2. Faster and more inclusive growth 3. Agriculture (Harrod–Domar model) 4. Garibi Hatao

Correct Answer: C [P-3, Q-4, R-1, S-2]

Explanation:

1st – agriculture (Harrod–Domar); 5th – Garibi Hatao; 8th – human development; 11th – faster and more inclusive growth.

37.  
The formula used from the Fourth Plan (1969) to distribute central plan assistance among States was the

Correct Answer: B [Gadgil formula]

Explanation:

Gadgil formula (1969), later the Gadgil–Mukherjee formula.

38.  
The Industrial Policy Resolution of 1956 reserved for the State the industries listed in Schedule A, which numbered

Correct Answer: B [17]

Explanation:

IPR 1956: Schedule A 17 industries, Schedule B 12.

39.  
A 'Government company' is one in which Central and/or State Governments hold at least

Correct Answer: C [51% of the paid-up capital]

Explanation:

Government company: at least 51% of paid-up capital held by governments.

40.  
CalculationCurrency with the public ₹ 300, demand deposits of banks ₹ 250, other deposits with RBI ₹ 10, savings deposits with post-office savings banks ₹ 40 and net time deposits of banks ₹ 900 (₹ thousand crore). Broad money M3 is

Correct Answer: A [₹ 1,460 thousand crore]

Explanation:

M1 = 300 + 250 + 10 = 560; M3 = M1 + net time deposits = 1,460 (post-office savings go into M2).

41.  
CalculationA fictional economy's central bank reports (in ₹ thousand crore): notes and coins held by the public and banks 400, balances that commercial banks keep with it 120, and its other deposits 8. The economy's high-powered money (M0) is

Correct Answer: D [₹ 528 thousand crore]

Explanation:

Answer: ₹ 528 thousand crore. M0 = 400 + 120 + 8 = 528.

42.  
The Basel Committee on Banking Supervision, which framed Basel III after the 2008 crisis, is hosted by the

Correct Answer: A [BIS (Bank for International Settlements), Basel]

Explanation:

Basel Committee at the BIS, Basel; Basel III followed the 2008 crisis.

43.  
Payments banks, which accept deposits but cannot lend, grew out of the recommendations of the

Correct Answer: D [Nachiket Mor Committee]

Explanation:

Payments banks cannot lend (Nachiket Mor Committee); small finance banks can.

44.  
The first inflation target notified in August 2016 under the amended RBI Act was CPI inflation of

Correct Answer: B [4% with a band of 2–6%]

Explanation:

Target 4% CPI, band 2–6%, to 31 March 2021; the same target was notified for 2021–26, and the Government, in consultation with the RBI, has kept it at 4% ± 2% for April 2026 to March 2031 (notified 25-03-2026) (as on 20-10-2026, RBI).

45.  
If the votes in the Monetary Policy Committee are equally divided, the RBI Governor

Correct Answer: C [has a casting vote]

Explanation:

s. 45ZB sets up the six-member MPC chaired by the Governor; under s.

46.  
Statement-basedConsider the statements:
I. Ad hoc treasury bills were discontinued from 1 April 1997.
II. The outcome budget and the gender budget statement were introduced in 2005-06.
Which of the statements is/are correct?

Correct Answer: C [Both I and II]

Explanation:

Answer: Both I and II. Both are correct.

47.  
CalculationRevenue deficit is ₹ 120 crore and fiscal deficit ₹ 300 crore. The share of borrowing used to meet revenue (consumption-type) expenditure is

Correct Answer: C [40%]

Explanation:

Answer: 40%. RD/FD = 120/300 × 100 = 40%.

48.  
Under which arrangement of 1992 did India run a dual exchange rate – part official, part market – before unifying the rate?

Correct Answer: B [LERMS (Liberalised Exchange Rate Management System)]

Explanation:

LERMS March 1992; unified market rate March 1993.

49.  
The railway budget was separated from the general budget in 1924 on the advice of the

Correct Answer: D [Acworth Committee]

Explanation:

Railway budget separated 1924 (Acworth Committee); merged with the Union Budget from 2017.

50.  
CalculationOver a period, a country's export prices rise to an index of 126 and its import prices to 120 (base = 100). Its terms of trade now stand at

Correct Answer: A [105]

Explanation:

ToT = export price index ÷ import price index × 100 = 105.

51.  
The 'effective revenue deficit' was brought into the FRBM framework by the amendment of

Correct Answer: C [2012]

Explanation:

ERD brought into FRBM by the 2012 amendment.

52.  
CalculationA dealer's output liability is CGST ₹ 9,000 and SGST ₹ 9,000. Its credit ledger holds CGST ₹ 12,000 and SGST ₹ 4,000 (no IGST). The tax it must pay in cash is

Correct Answer: B [₹ 5,000]

Explanation:

CGST credit cannot be used for SGST: CGST cash 0 (credit ₹ 3,000 left over); SGST cash ₹ 9,000 − ₹ 4,000 = ₹ 5,000.

53.  
A taxpayer under the GST composition scheme

Correct Answer: A [pays a flat rate on turnover and gets no ITC]

Explanation:

Composition: flat rate on turnover, no ITC, cannot collect tax from buyers.

54.  
The e-way bill for inter-State movement of goods began on

Correct Answer: D [1 April 2018]

Explanation:

Answer: 1 April 2018. E-way bill: 1 April 2018.

55.  
Tax on agricultural income is a State subject under the State List entry

Correct Answer: B [46]

Explanation:

State List 46 agricultural income; Union List 82 other income, 83 customs, 85 corporation tax.

56.  
Dividend Distribution Tax was abolished in the Union Budget

Correct Answer: D [2020-21]

Explanation:

DDT abolished in Budget 2020-21; dividends are taxed in the hands of the recipient.

57.  
The first Aadhaar number was issued on 29 September 2010 at

Correct Answer: A [Nandurbar]

Explanation:

First Aadhaar 29 September 2010, Nandurbar.

58.  
Since September 2015 the DBT Mission has functioned in the

Correct Answer: C [Cabinet Secretariat]

Explanation:

DBT Mission: Planning Commission → Department of Expenditure (July 2013) → Cabinet Secretariat (14-9-2015).

59.  
The DPDP Rules notified in November 2025 give Data Fiduciaries a phased compliance period of

Correct Answer: C [18 months]

Explanation:

DPDP Rules (PIB 14-11-2025): 18-month phased compliance.

60.  
The Digital India programme approved by the Cabinet in August 2014 was built on three vision areas and

Correct Answer: D [9 pillars]

Explanation:

Digital India: 3 vision areas and 9 pillars.

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