CDS Questions on Economics and Indian Economy

Topicwise CDS Questions

Ancient Indian History British Rule & Freedom Movement Carbon and its Allotropes Defence G.K. & Current Affairs Economics & Indian Economy Mahatma Gandhi & Related Events Govt Programmes & Policies Harappan Civilisation Fundamental Rights and Duties Indian Judiciary and Courts of India Panchayati Raj Preamble to Indian Constitution Indian Constitution Lakes of India & the World Light, Lenses and Mirrors Outer Space and Planets Rivers of India and the World Soils, Crops, Agriculture Sound Writs in Indian Constitution

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CDS 2021-I

1. Which one of the following statements is not correct?

  1. Real GDP is calculated by valuing outputs of different years at common prices.
  2. Potential GDP is the real GDP that the economy would produce if its resources were fully employed.
  3. Nominal GDP is calculated by valuing outputs of different years at constant prices.
  4. Real GDP per capita is the ratio of real GDP divided by population.

2. The mismatch in the regional or occupational pattern of job vacancies and the pattern of worker availability results in

  1. Structural unemployment
  2. Disguised unemployment
  3. Altered unemployment
  4. Cyclical unemployment

3. The situation in an economy which is growing slowly along with rapid inflation (rising price level) is called

  1. Stagnation
  2. Deflation
  3. Stagflation
  4. Recession

4. The increase in private investment spending induced by the increase in Government spending is known as

  1. Crowding in
  2. Deficity financing
  3. Crowding out
  4. Pumping out

5. The asset or assets that a borrower pledges in order to guarantee repayment of loan is called as

  1. Cheque
  2. Collateral
  3. Guarantee card
  4. Bond

6. The percentage by which the money the borrower pays back exceeds the money that was borrowed is called as

  1. Bank rate
  2. Nominal interest rate
  3. Real interest rate
  4. Terms of credit

7. Which of the following is not a function of money?

  1. Acts as an intermediate in the exchange process
  2. Acts as a store of value
  3. Used as the unit of account
  4. Used for regulating consumption

8. The situation where the equilibrium level of real GDP falls short of potential GDP is known as

  1. Recessionary gap
  2. Inflationary gap
  3. Demand-side inflation
  4. Supply-side inflation

9. The excess of total expenditure of Government over its total receipts, excluding borrowings is known as

  1. Primary deficit
  2. Fiscal deficit
  3. Current deficit
  4. Capital deficit

10. Exchange rates state the value of one currency in terms of other currencies. Which one of the following statements with respect to the exchange rate of currency is correct?

  1. Floating exchange rates are rates in which the Governments interfere by buying or selling their currencies.
  2. Fixed exchange rates are rates set by Government decisions and maintained by Government actions.
  3. Under the Bretton Woods System, the exchange rates are floated in terms of rise or fall in price of gold.
  4. Under the classical gold standard, the exchange rates are fixed in terms of price of dollar.

CDS 2021-II

11. Which one of the following may lead to movement along the demand curve of a commodity?

  1. Change in its price
  2. Change in price of the other commodites
  3. Change in income of the consumer
  4. Change in tastes and preferences of consumers

12. Which one of the following is the opportunity cost of a chosen activity?

  1. Out of pocket cost
  2. Out of pocket plus cost incurred by the Government
  3. Value of all opportunities forgone
  4. Value of next best alternative that is given up

13. Which one of the following is true of a pure voluntary exchange between two parties A and B?

  1. A can exploit B or vice versa
  2. Both gain; it is a win-win situation
  3. If A makes profit, it must be at the cost of B
  4. Both can lose

14. Match List I with List II and selec the correct answer using the code given below the lists:

List I
(Curve)		List II
(Indication)
A. Lorenz curve1. Inflation and employment
B. Phillips curve2. Tax rates and tax revenue
C. Engel curve3. Inequality in distribution of income or wealth
D. Laffer curve4. Income and proportion of expenditure on food

Code:

  1. A - 3; B - 4; C - 1; D - 2
  2. A - 2; B - 1; C - 4; D - 3
  3. A - 3; B - 1; C - 4; D - 2
  4. A - 2; B - 4; C - 1; D - 3

15. Which one of the following is a typical example of monopolistic competition?

  1. Retail vegetable markets
  2. Market for soaps
  3. Indian Railways
  4. Labour market for software engineers

CDS 2022-I

16. Which one of the following would be considered as Foreign Direct Investment?

  1. A foreign company buying shares in stock exchanges in India
  2. A foreign country pension fund investing in Indian stock markets
  3. A foreign merchant banker buying shares from Indian stock markets
  4. A foreigh entity setting up an educationa institution in India

17. Which one of the following does not influence quantity demanded for a good?

  1. Good's own price
  2. Price of a complementary good
  3. Price of a substitute good
  4. Prices of inputs into production of the good

18. Which of the following factors signify monopolistic competition?

  1. Differentiated products
  2. Large number of buyers and sellers
  3. Barriers to entry
  4. Homogeneous products

Select the correct answer using the code given below.

  1. 1 and 2 only
  2. 1, 2 and 3 only
  3. 3 and 4 only
  4. 2 and 4 only

19. Which one of the following is an example of a ‘natural monopoly’?

  1. Indian Airlines
  2. Delhi Jal Board
  3. Delhi Transport Corporation
  4. Steel Authority of India

20. What is meant by price discrimination?

  1. Increase in price of a commodity over time
  2. A situation where the same product is sold to different consumers for different prices
  3. Subsidization of a product by the Government to sell it at a lower price
  4. General decrease in price of a commodity over time

21. Which one of the following does not form part of Immanuel Kant’s theory of ‘perpetual peace’?

  1. Republican Constitutionalism
  2. Federal contract among States to abolish war
  3. World Government
  4. Transformation of individual consciousness

22. What is meant by ‘Public Good’?

  1. A commodity produced by the Government
  2. A commodity whose benefits are indivisibly spread among the entire community
  3. A Government scheme that benefits the poor households
  4. Any commodity that is very popular among general public

23. In view of the fact that kerosene is an inferior good in India, what is/are its implication(s)?

  1. As households get richer, they consume less kerosene.
  2. Over time there is a decline in quality of kerosene.
  3. Government needs to stop subsidies on kerosene.

Select the correct answer using the code given below.

  1. 1 only
  2. 1 and 2 only
  3. 2 and 3 only
  4. 1, 2 and 3

CDS 2022-II

24. Consider the following statements bout the Micro, Small and Medium Enterprises (MSMEs):

  1. The MSMEs comprise a dynamic sector of the Indian economy providing large employment opportunities.
  2. MSMEs require low capital cost and help industrialization of backward regions.
  3. MSMEs contribute enormously to socio-economic development.

Select the correct answer using the code given below.

  1. None
  2. 1
  3. 2
  4. 3

25. Consider the following statements regarding e-RUPI prepaid digital vouchers:

  1. The maximum amount of e-RUPI is rupees one lakh.
  2. Beneficiaries can receive e-RUPI without having a bank account.
  3. To receive e-RUPI on mobile phones, beneficiaries need a smart phone with internet connection.

Which of the statements given above is/are correct?

  1. 1 and 2
  2. 3 only
  3. 1 and 3
  4. 2 only

26. Which one of the following is considered as an agency function of commercial banks in India?

  1. Acceptance of deposits
  2. Investment of surplus funds
  3. Acceptance of income tax payments
  4. Providing overdraft facilities

27. Which one of the following forms of money supply is considered as the most widely used in the Indian monetary system?

  1. M1
  2. M2
  3. M3
  4. M4

28. Which one of the following assists a country through 'Extended Fund Facility', often talked about in news?

  1. International Fund for Agricultural Development
  2. International Monetary Fund
  3. International Bank for Reconstruction and Development
  4. United Nations Development Programme

29. Which one of the following central features is not associated with Capitalist Economy?

  1. There is generalised commodity production - it has market value.
  2. Productive wealth is held predominantly in private hands.
  3. Economic life is organised according to market principles.
  4. Economic organisation is based on planning, a supposedly rational process of resource allocation.

30. Among the following countries, where did the idea of 'Social Market Economy' emerge in 1950s?

  1. Germany
  2. France
  3. United States of America
  4. United Kingdom

31. Who among the following Indian thinkers first spoke of food-for-work programmes to counteract the effects of famines?

  1. Kautilya
  2. Aryabhatta
  3. Chandragomin
  4. Prabhakara

CDS 2023-I

32. Which one of the following situations can lead to inflation?

  1. Rapid growth of aggregate demand outweighing supply
  2. Sluggish growth of aggregate demand
  3. Reduction in the money supply
  4. Higher levels of unemployment

33. Which one of the following policies help to raise interest rate unambiguously and thereby lead to appreciation of currency?

  1. Expansionary fiscal and monetary policy
  2. Contractionary fiscal and monetary policy
  3. Contractionary fiscal policy and expansionary monetary policy
  4. Contractionary monetary policy and expansionary fiscal policy

34. The contraction of private investment spending due to deficit spending by the Government is called

  1. crowding out
  2. crowding in
  3. pump priming
  4. dumping

35. Which among the following is/are the objective/objectives of the NITI Aayog?

  1. Imposing policies on the States/UTs
  2. Allocation of funds at National and State levels
  3. Design strategies and long-term policies and programme frameworks

Select the correct answer using the code given below.

  1. 1 and 2 only
  2. 2 and 3 only
  3. 1, 2 and 3
  4. 3 only

36. The computation of poverty in terms of Monthly Per Capita Consumption Expenditure (MPCE) based on the Mixed Reference Period was recommended by the

  1. Lakdawala Committee
  2. Tendulkar Committee
  3. Dandekar Committee
  4. Alagh Committee

37. Which one of the following is a measure that can be used by the Government for combating inflation?

  1. Increasing the non-planned expenditure on defence, police, etc.
  2. Providing more subsidies on exports
  3. Increasing the rate of interest on savings and fixed deposits
  4. Reduction in the cash reserve ratio (CRR)

38. The sustained decrease in the general price level is called as

  1. deflation
  2. stagflation
  3. devaluation
  4. recession

39. Which one of the following indicators is included in the National Multidimensional Poverty Index (MPI)

  1. Years of schooling
  2. Literacy rate
  3. Life expectancy
  4. Per capital income

40. The unemployment that occurs due to changes in the technology or in the demand for particular products is called

  1. frictional unemployment
  2. structural unemployment
  3. cyclical unemployment
  4. disguised unemployment

CDS 2023-II

41. Which of the following action(s) by the Government would lead to contraction of money supply in the economy?

  1. Purchase of Treasury Bills by the central bank from public
  2. Sale of Treasury Bills by the central bank to public
  3. Sale of foreign exchange by the central bank
  4. Purchase of foreign exchange by the central bank

Select the correct answer using the code given below:

  1. 1 and 4 only
  2. 1 and 3 only
  3. 2 and 3 only
  4. 2 only

42. Which of the following are included in the definition of Narrow Money?

  1. Currency with the public
  2. Demand deposits
  3. 'Other' deposits with Reserve Bank of India
  4. Banker's deposits with Reserve Bank of India

Select the correct answer using the code given below:

  1. 1, 2 and 4
  2. 1 and 2 only
  3. 1, 2 and 3
  4. 3 and 4 only

43. Which of the following is/are the effects of devaluation or depreciation of currency?

  1. It leads to increase in imports and decrease in exports.
  2. It leads to increase in exports and decrease in imports.
  3. It leads to increase in domestic inflation.
  4. It leads to decrease in domestic inflation.

Select the correct answer using the code given below:

  1. 1 and 3 only
  2. 1 and 4 only
  3. 2 and 3 only
  4. 3 only

44. Which one of the following taxes is not subsumed under the Goods and Services Tax in India?

  1. Customs Duties
  2. Central Excise Duties
  3. Service Tax
  4. Taxes on Petroleum and Petroleum Products

45. What would be the impact on the economy if people start holding more currency in hand and less in deposits

  1. Money demand will decrease
  2. Money multiplier will decrease
  3. Money multiplier will increase
  4. Money demand will decrease

46. Other things remaining constant, the market supply for a good increases if:

  1. its price increases.
  2. price of its factors of production deceases.
  3. price of other goods decreases.

Select the correct answer using the code given below:

  1. 1 and 2 only
  2. 2 and 3 only
  3. 2 and 3 only
  4. 1, 2 and 3

47. Consider the following statements regarding poverty in India:

  1. While determining poverty line in India, a minimum level of food requirement, clothing, footwear, fuel and light, educational and medical requirements, etc. are determined for subsistenc.
  2. The accepted average calorie requirement in India is 2400 calories per person per day in rural areas and 2100 calories per person per day in urban areas.

Which of the statements given above is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

CDS 2024-I

48. Which of the following indicators is/are used to observe the monetary transmission mechanism in the economy?

  1. Weighted average lending rate
  2. Weighted average domestic term deposit rate
  3. 1-year median MCLR
  4. SDF rate

Select the correct answer using the code given below:

  1. 1 and 2 only
  2. 1, 2 and 3
  3. 3 and 4
  4. 4 only

49. Consider the following statements regarding instruments of monetary policy:

  1. Standing deposit facility (SDF) rate was introduced in April 2022
  2. SDF rate replaced fixed reverse repo rate as the floor of the LAF corridor.

Which of the statements given above is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

50. Consider the following statements regarding weightage of different articles in Wholesale Price Index (WPI):

  1. Fuel and power have higher weightage in WPI than that of primary articles.
  2. Weightage of manufactured products in WPI is higher than that of fuel and power.

Which of the statements given above is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

51. If India enters into Free Trade Agreements (FTAs) with other nations, then the growth of exports of India would depend upon which of the following?

  1. Extent of tariff reduction vis-a-vis MFN tariffs
  2. Extent of relaxation in terms of rules of origin
  3. Extent of relaxation in sanitary and phytosanitary measures
  4. Level of infrastructure in India
  5. Income in nations with which India enters into FTAs

Select the correct answer using the code given below:

  1. 1, 3 and 4 only
  2. 1, 2 and 4 only
  3. 2, 3 and 5 only
  4. 1, 2, 3, 4, and 5

52. Which of the following statements is/are correct?

  1. GDP deflator captures the average price of an unchanging basket of commodities that constitutes the GDP of the country.
  2. GDP deflator can be used to measure the real GDP of the economy but not the inflation rate.

Select the correct answer using the code given below:

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

53. Which of the following statements is/are correct?

  1. A price index captures the change in the average price of a constant basket of commodities.
  2. If the price index takes values 100, 110 and 121 in three consecutive years respectively, then the inflation rates in the 2nd and 3rd years are 10% and 21% respectively.

Select the correct answer using the code given below:

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

54. Which of the following statements is/are correct?

  1. Most of India's reserves is held in the form of foreign currency.
  2. There is no cost of holding foreign currency as reserves by a nation.

Select the correct answer using the code given below:

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

55. Which of the following statements is NOT correct?

  1. The market mechanism over-produces a good that generates positive externality.
  2. A cap and trade of pollution permits can be used by the government to achieve the social optimum.
  3. The optimal amount of subsidy in the case of an activity that produces a positive externality is the difference between the social benefit and the private benefit at the optimum.
  4. Tragedy of Commons is an example of negative externality.

56. Which of the following statements regarding GST is NOT correct?

  1. Amendment 115 to the Constitution of India kept alcohol for human use and give petroleum products outside the ambit of GST.
  2. Amendment 122 to the Constitution of India kept only alcohol for human use outside the ambit of GST.
  3. Precious metals are taxed at a rate of 1% under GST.
  4. Unworked diamond is taxed at a rate of 0.25%

57. Which of the following statements with regard to the Report of Tendulkar Committee (2009) on poverty estimates is/are correct?

  1. The Committee had used an all-India urban poverty line basket as a reference to derive both rural and urban poverty levels.
  2. The Committee had anchored the poverty line to the official food calorie norms.

Select the correct answer using the code given below:

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

58. Which of the following components of Central Government taxes on petroleum products is/are not shareable with the States?

  1. Basic Excise Duty
  2. Additional Excise Duty
  3. Special Additional Excise Duty

Select the correct answer using the code given below:

  1. 1 and 2 only
  2. 1, 2 and 3
  3. 3 only
  4. 2 and 3 only

59. Level of per capita GDP depends upon which of the following?

  1. Peoportion of population in the working age
  2. Work participation rate
  3. Per worker productivity

Select the correct answer using the code given below:

  1. 3 only
  2. 1 and 3 only
  3. 1 and 2 only
  4. 1, 2 and 3

60. Which of the following are included in M1 definition of money for the Indian economy?

  1. Reserves
  2. Currency
  3. Time deposits
  4. Demand deposits

Select the correct answer using the code given below:

  1. 1 and 3 only
  2. 2 and 3
  3. 2 and 4
  4. 1, 3 and 4

61. Which one of the following statements is NOT correct for National Income Accounting for India?

  1. Imports are subtracted in calculating Gross Domestic Product.
  2. Net factor payments earned from abroad are included in Gross Domestic Product.
  3. Purchase and sale of second-hand goods are not included in Gross Domestic Product.
  4. Inventories are included in Gross Domestic Capital Formation.

62. Under normal downward sloping curve and fully elastic supply curve of a commodity, an exogenous decrease in demand would lead to

  1. increase in equilibrium price and quantity
  2. decrease in equilibrium price and quantity
  3. decrease in equilibrium quantity and no change in price
  4. increase in equilibrium price and no change in quantity

CDS Solved Papers

CDS 2021 - I Solved Paper CDS 2021 - II Solved Paper CDS 2022 - I Solved Paper CDS 2022 - II Solved Paper CDS 2023 - I Solved Paper CDS 2023 - II Solved Paper