Top Questions for CMAT 2023 on Economics [Download PDF]
Download CMAT Economics questions with solutions PDF by Cracku. Practice CMAT solved Economics Questions paper tests, which are the practice question to have a firm grasp on the Economics topic in the CMAT exam. Top 20 very Important Economics Questions for CMAT based on the questions asked in previous exam papers. Click on the link below to download the Economics Questions for CMAT PDF with detailed solutions.
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Question 1: What is Showrooming?
a) An individual browses the sites of e-retailers for products and then ends up purchasing the product from some brick and mortar store.
b) An individual visiting a brick and mortar store to have a look and feel of the product and then ordering the same product through some e-retailers.
c) An individual visiting a big box retailer to have a look and feel of the product and then purchasing the same product from nearby kirana (Mom and Pop) store.
d) An e-retailer using the kirana (Mom and Pop) stores to keep its stock of goods and meets the orders in the nearby localities.
e) None of the above
1) Answer (B)
Solution:
Showrooming is the process in which an individual visits a showroom to know how a product looks and feels before buying it online at a discount. Therefore, option B is the right answer.
Question 2: Indian Government is planning to introduce GAAR. What is the purpose of GAAR?
a) Increase rural Income
b) Increase agriculture income
c) Regulatory authority for managingagriculture resources
d) Regulate foreign investment in agriculture
e) Curtail tax avoidance
2) Answer (E)
Solution:
GAAR stands for General anti-avoidance rule. The rule was established under chapter X-A of Income tax act, 1961. The rule was enacted to curtail tax avoidance. Therefore, option E is the right answer.
Question 3: Which of the following was not the reason for the recent slide of Indian Rupee?
a) Huge trade Deficit
b) Low Growth and High Inflation
c) Low Capital Inflow
d) Burgeoning current account deficit
e) High employment rate
3) Answer (E)
Solution:
The 2012 slide in Indian rupee was caused due to a huge trade deficit, low growth and high inflation, low capital inflows and increasing current account deficit. High employment rate was not one of the reasons for the slide of rupee in 2012. Therefore, option E is the right answer.
Question 4: Which of the following are millennium development goals?
a) Poverty eradication, reducing child mortality, reducing trade barriers, combating AIDS
b) Poverty Reduction, environment sustainability, universal primary education, equal employment
c) Reduce unemployment, promote diversity,combating malaria, improving maternal health
d) Globalization, reduction in poverty, combating AIDS, universal primary education
e) Poverty eradication, improving maternal health, universal primary education, combating AIDS
4) Answer (E)
Solution:
The UN set 8 development goals in 2000 to be accomplished by 2015. These goals are known as the millennium goals.
The goals are as follows:
1. Eradicate extreme poverty and hunger.
2. Achieve universal primary education.
3. Promote gender equality
4. Reduce child mortality
5. Improve maternal health
6. Combat HIV and Malaria
7. Ensure environmental sustainability
8. Develop global partnerships for development
Only option E captures these points. Therefore, option E is the right answer.
Millennium development goals were replaced by sustainable development goals in 2015.
Question 5: CPI and WPI as acronyms refer to
a) Political Parties
b) Purchasing capacity indices
c) Price Indices
d) Poverty indices
e) Unemployment indices
5) Answer (C)
Solution:
CPI and WPI are price indices used to keep track of inflation.
CPI is the abbreviation of Consumer Price index. It calculates the average price paid by the consumer to the shopkeepers.
WPI is the abbreviation of Wholesale price index. It calculates the price paid by the manufactures and wholesalers in the market.
Therefore, option C is the right answer.
Question 6: The cost price of an article is x. It is marked up by 120%. It is sold at Rs 8800 after giving 20% discount. What is the value (in Rs) of x?
a) 7680
b) 6000
c) 6680
d) 5000
6) Answer (D)
Solution:
$\frac{100-20}{100} \times \frac{100+120}{100} \times (x) = 8800$
$\frac{80}{100} \times \frac{220}{100} \times (x) = 8800$
$ x = 8800/(1.76) = 5000$
So the answer is option D.
Question 7: The demand for an inferior good decreases with ________ in the consumer’s income.
a) increase
b) decrease
c) constant
d) double
7) Answer (A)
Solution:
Increase is the correct word because when people’s income increases, they start looking for superior goods and hence demand for inferior goods decreases.
Demand of inferior goods depends on the income of the consumer.
Lets understand with an example.
When money is constricted, travelling by bus becomes more acceptable, but when money is abundant, more rapid and luxury transport is preferred.
Question 8: If price of an article decreases from Rs 800 to Rs 700, quantity demanded increases from Q1 units to 70 units. If point elasticity of demand is -1.333 find Q1?
a) 80 units
b) 90 units
c) 60 units
d) 50 units
8) Answer (C)
Solution:
Point price elasticity of demand = (Change in quantity / Change in price)
-1.33 = $\frac{(70 – Q1) / Q1}{(-100 / 800)}$
560 – 8Q1= 1.33Q1
560 = 9.33Q1
Q1 = 60.02
Hence, option C is the correct answer.
Question 9: Which of the following will cause an increase in demand for a good?
a) an increase in income if the good is an inferior goods
b) a decrease in the price of the goods
c) a decrease in income if the good is a normal goods
d) an increase in the price of its substitute goods
9) Answer (D)
Solution:
Increasing the price of its substitute goods will increase the demand for a good.
Lets understand with an example,
If there is increase in the price of petrol and than the demand for the electric vehicle will automatically increase
=> Hence, Option D is correct.
Question 10: If India exports more than it imports, which of the following is likely to happen?
a) INR is likely to appreciate against other currencies
b) The supply of INR is likely to exceed the demand in the foreign exchange market, ceteris paribus
c) INR would be under pressure to depreciate against other currencies
d) Both B and C are correct
10) Answer (A)
Solution:
The appreciation of currency of a country depends on the following factors :
- Net Inflow/Outflow of Money: The overall inflow and outflow of the money affect the value of a country’s currency. The more the inflow the better the value, the more the outflow the worst the value.
- Income Levels: When the incomes of the citizens increase, they tend to spend more that increases the demand for imported goods increasing the demand for foreign currencies contributing to an overall weakening of the local currency.
- Overseas Market: A country that has a trade surplus results in currency appreciation and the country that lacks or has lesser trade surplus tends to have a weaker value of its currency.
When a country exports more than it imports, high funds flow into the country and directly impact economic growth, consumer spending and domestic demand and value of domestic currency will increase.
Hence, Option A is correct.
Question 11: Negative inflation is also called:
a) Disinflation
b) Deflation
c) Both
d) None of the above
11) Answer (B)
Solution:
Negative inflation is also called deflation.
Deflation is when consumer and asset prices decrease over time, and purchasing power increases. Essentially, you can buy more goods or services tomorrow with the same amount of money you have today.
Hence, option B is the correct answer.
Question 12: India recently started “Maitree Express” to which of the following destinations ?
a) Islamabad
b) Karachi
c) Dhaka
d) Kathmandu
e) None of these
12) Answer (C)
Solution:
COMPUTER KNOWLEDGE / MARKETING APTITUDE
Question 13: Many times we hear about SEZ in newspapers /magazines. What is the full form of SEZ ?
a) Small Economic Zone
b) Social Economic Zone
c) Special Enforcement Zone
d) Service & Economic Zone
e) Special Economic Zone
13) Answer (E)
Solution:
SEZ stands for Special Economic Zone
SEZ refers to an area in a country that is subject to different economic regulations than other regions within the same country.
Hence, Option E is correct.
