PTS 2025 | Test Code : 211103 |
Q.1) Consider investments in the following 3. There is sale and purchase of labor services
assets: at a price called the wage rate.
1. Brand recognition 4. The State plays a minimal role in
2. Inventory production or economic activities.
3. Intellectual property How many of the above statements are correct
4. Mailing list of clients regarding the features of Capitalist Economy?
How many of the above are considered a) Only one
intangible investments? b) Only two
a) Only one c) Only three
b) Only two d) All four
c) Only three
d) All four Q.5) With reference to Gross Domestic
Product (GDP), which of the following is
Q.2) Which of the following best explains the correct?
term ‘Investment expenditure’: a) Increasing Gross Domestic Product (GDP)
a) it refers to the amount of money spent on of the country implies rise in the welfare of
purchasing financial assets such as stocks people.
and bonds. b) Gross Domestic Product (GDP) gives true
b) it represents the total expense incurred by and complete indication of all the
a firm to acquire new machinery and productive activities that occur in the
equipment for production purposes. economy.
c) it is the employer's expenditure on paying c) Measuring welfare using Gross Domestic
salaries and pensions etc. to the employees. Product (GDP) may led to overestimating or
d) it is the portion of household income saved underestimating of the actual welfare due
and invested in long-term assets like real to impact of externalities.
estate. d) Gross Domestic Product (GDP) calculated
by Product Method and Income Method is
Q.3) Which of the following statements best always different.
explains the Net Factor Income from Abroad?
a) It is the net income earned by the Indians Q.6) With reference to classification of goods,
from various factors of production in consider the following goods:
abroad subtracted by the net taxes paid on 1. Tea leaves purchased for household
the earned income in abroad. consumption.
b) It is the net income earned by the Indians 2. Steel sheet used in automobile
from various factors of production in manufacturing.
abroad in addition to the net retained 3. Machinery and tools used in production of
earnings from abroad. commodities.
c) It is the net income earned by the Indians 4. Raw vegetables purchased by a restaurant.
from various factors of production in How many of the above are classified as final
abroad in addition to the transfer goods?
payments, gifts and donations from abroad. a) Only one
d) It is the net income earned by the Indians b) Only two
from various factors of production in c) Only three
abroad and deducting the net factor d) All four
income earned by the foreigners in India.
Q.4) Consider the following statements:
1. There is private ownership of means of
production.
2. Production takes place for selling the
output in the market based on demand and
supply.
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PTS 2025 | Test Code : 211103 |
Q.7) With reference to the Indian Budget c) All three
system, consider the following statements: d) None
1. The first Budget in India was formally
introduced in 1909. Q.11) Increase in absolute and per capita real
2. The word ‘Budget’ is not mentioned in the GNP do not connote a higher level of
Constitution of India. economic development if
3. The Department of Revenue under the a) industrial output fails to keep pace with
Union Ministry of Finance is responsible for agricultural output.
preparing the Union budget. b) agricultural output fails to keep pace with
How many of the statements given above are industrial output.
correct? c) poverty and unemployment increase.
a) Only one d) imports grow faster than exports.
b) Only two
c) All three Q.12) Consider the following statements:
d) None Statement I: Cash reserve Ratio (CRR) is the
percentage of total deposit that banks keep as
Q.8) With reference to National income reserve with RBI.
accounting, “National Income” is best Statement II: CRR helps to prevent the banks
expressed as- from making excessive profits out of people’s
a) Gross Domestic Product (GDP) at market deposit.
price. Which one of the following is correct in
b) Net National Product (NNP) at factor cost. respect of the above statements?
c) Gross Domestic Product (GDP) at factor a) Both Statement I and Statement II are
cost. correct, and Statement II is the correct
d) Net National Product (NNP) at market explanation for Statement I.
price. b) Both Statement I and Statement II are
correct, and Statement II is not the correct
Q.9) With reference to Indian economy, explanation for Statement I.
consider the following measures: c) Statement I is correct, but Statement II is
1. Increase in the Bank Rate. incorrect
2. Selling of government securities under d) Statement I is incorrect, but Statement II is
Open Market Operation. correct
3. Increasing the reserve ratios of commercial
banks. Q.13) If supply of money in the economy
4. decreasing the reverse repo rate. increases and people purchase government
How many of the above-given measures by bonds with this extra money, it would result
Reserve Bank of India (RBI) can lead to an in:
increase in the money supply in the economy? a) increase in both bond price and rate of
a) Only one interest.
b) Only two b) increase in bond prices and decline in rate
c) Only three of interest.
d) All four c) decline in bond prices and increase in rate
of interest.
Q.10) Consider the following statements about d) decline in both bond prices and rate of
functions of money: interest.
1. It acts as a Medium of exchange.
2. It acts as a unit of accounting.
3. It functions as a store of value.
How many statements given above are
correct?
a) Only one
b) Only two
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PTS 2025 | Test Code : 211103 |
Q.14) Which among the following best Q.17) Consider the following receipts:
describes the term “liquidity trap” in an 1. Income tax on individuals levied by the
economy? government.
a) An economic situation where high bank 2. Borrowing by the government from the
reserves results in a reduced ability of Reserve Bank of India.
banks to make credit availability to the 3. Dividends and profits from public sector
public. enterprises
b) An economic condition where higher 4. Interest received on loans given by the
inflation erodes the purchasing power of government
people's money. 5. Disinvestment proceeds from the sale of
c) An economic scenario where extremely low stake in the public sector units.
interest rates prompt individuals to hold How many of the above receipts are classified
onto cash rather than engage in spending as revenue receipts?
or investment. a) Only two
d) An economic scenario where extensive b) Only three
government borrowing from the domestic c) Only four
market significantly diminishes the d) All five
available money supply within the market.
Q.18) Consider the following pairs with
Q.15) With reference to the regulation of reference to types of deficits and their
currency in Indian economy, consider the meaning:
following statements: Type of Deficit Meaning
1. Fiat money is a government issued 1. Revenue Excess revenue expenditure
currency that is backed by some physical deficit of the government over
commodity. revenue receipts of the
2. Legal tender is a form of currency that is government.
recognised by law as an acceptable means 2. Fiscal deficit Excess of total expenditure
for settling debts or obligations. incurred by the government
3. In India, the central government has the over total receipts received
authority to declare that certain banknotes by the government
are no longer legal tender. (including borrowings).
How many of the statements given above are 3. Primary Fiscal deficit incurred by the
correct? deficit government of India minus
a) Only one interest payments done by
b) Only two the government on previous
c) All three borrowings.
d) None How many of the above pairs are correct?
a) Only one
Q.16) Consider the following statements: b) Only two
Public goods- c) All three
1. can be produced by either the government, d) None
the private sector or both.
2. are non-excludable.
3. are non-rivalrous.
How many of the statements above are
correct?
a) Only one
b) Only two
c) All three
d) None
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PTS 2025 | Test Code : 211103 |
Q.19) Which one of the following best How many of the statements given above are
describes the concept of ‘Discretionary Fiscal correct?
Policy'? a) Only one
a) Fiscal policy designed to offset fluctuations b) Only two
in a nation's economic activity c) All three
automatically without any need for d) None
legislative action.
b) Government intervenes through changes in Q.23) The term ‘Ricardian Equivalence’, often
taxation and spending to influence the seen in the news, refer to?
economic activity in the country. a) The increase in speculative demand for
c) Measures taken by central bank that focus money during a liquidity trap.
exclusively on controlling the money b) The inverse relationship between inflation
supply to stabilize the economy. and unemployment.
d) Measures taken by the central bank aimed c) Higher borrowings by the government
at reducing government deficits and debt leading to more savings by the private
accumulation over time. households.
d) Gradual increase in tax rates leading to an
Q.20) Consider the following steps: increase in tax revenue in initial phases due
1. Increasing taxes to tax compliance, but later decrease in tax
2. Formulating a deficit budget revenue due to tax avoidance.
3. Reducing government spending
4. Increasing government borrowing Q.24) Consider the following statements.
How many of the above measures should not Statement I: In the flexible exchange rate
be taken by the Government in the short term system, the government does not need to
during a high government deficit scenario? maintain large stocks of foreign exchange
a) Only one reserves.
b) Only two Statement II: In the flexible exchange rate
c) Only three system, the value of the currency is
d) All four determined by market forces of supply and
demand.
Q.21) If you withdraw Rs. 1,00,000 in cash from Which one of the following is correct in
your Demand Deposit Account at your bank, respect of the above statements?
the immediate effect on aggregate money a) Both Statement 1 and Statement II are
supply in the economy will be: correct and Statement-II is the correct
a) to reduce it by Rs. 1,00,000 explanation for Statement I
b) to increase it by Rs. 1,00,000 b) Both Statement I and Statement II are
c) to increase it by more than Rs. 1,00,000 correct and Statement-II is not the correct
d) to leave it unchanged explanation for Statement I
c) Statement I is correct but Statement II is·
Q.22) Consider the following statements about incorrect
the Goods and Services Tax in India: d) Statement I is incorrect but Statement II is
1. It is a destination-based tax, which is levied correct
on every stage of the supply chain, from the
manufacturer to the consumer.
2. The 101st amendment to the Constitution of
India empowered state governments to tax
inter-state transmission of goods and
services.
3. Since its implementation, there has been
drastic reduction in cost of production of
goods compared to pre- GST regime in
India.
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[5]
PTS 2025 | Test Code : 211103 |
Q.46) The concept of ‘Invisible hand’ in relation Q.49) With reference to the Opportunity
to an economy entails which of the following? Costs, consider the following statements:
a) An unobservable market force that helps 1. It is the value of the next best alternative
the demand and supply of goods to reach that is forgone when a decision is made.
equilibrium automatically. 2. It is based on the principle that resources
b) Unregistered firms in a market which are scarce and that every choice has a
destabilise the market equilibrium by their trade-off.
distortive price policies. Which of the statements given above is/are
c) Invisible role of Government in controlling correct?
the production of goods to maintain the a) 1 only
market equilibrium. b) 2 only
d) Distortions in the demand-supply curve in c) Both 1 and 2
a market due to hoarding and black- d) Neither 1 nor 2
marketing of goods.
Q.50) Consider the following:
Q.47) Consider the following statements: 1. There are no changes in the taste and
Statement-I: Elasticity of demand measures preferences of consumers.
how the quantity of a good demanded, 2. The income of consumers remains
responds to the changes in the price of that constant.
good. 3. There are no changes in the price of
Statement-II: The demand for essential goods substitute goods.
is often elastic, whereas the demand for luxury How many of the above are the assumptions
goods is inelastic. that needs to be considered while drawing the
Which one of the following is correct in demand curve?
respect of the above statements? a) Only one
a) Both Statement-I and Statement-II are b) Only two
correct and Statement-II is the correct c) All three
explanation for Statement-I. d) None
b) Both Statement-I and Statement-II are
correct and Statement-II is not the correct
explanation for Statement-I.
c) Statement-I is correct but Statement-II is
incorrect.
d) Statement-I is incorrect but Statement-II is
correct.
Q.48) With reference to Indian Economy,
consider the following indicators:
1. Consumer Price Index (CPI)
2. Wholesale Price Index (WPI).
3. Core Inflation.
4. GDP Deflator.
How many of the above can be used to
measure the changes in food prices?
a) Only one
b) Only two
c) Only three
d) All four
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