MOCK QUESTION PAPER – 1

GATE XH-C1 (Economics)

Total Questions: 60

SECTION A: GENERAL APTITUDE (15 Questions)

Q.1 – Q.5 (1 mark each)
Q1. If murmur → speak → yell denotes increasing intensity, then
amble → walk → ____ follows the same pattern.
(A) stroll
(B) jog
(C) run
(D) jump
Q2. Had the firm diversified earlier, its losses _____ avoided.
(A) will be
(B) are
(C) could have been
(D) have been
Q3. The ratio of the 10th term to the 4th term of a geometric
progression with common ratio √2 is
(A) 4
(B) 8
(C) 16
(D) 32
Q4. Which graph best represents
−∣ x ∣
f (x)=
x
, for x ≠ 0?
(A) +1 for x>0, −1 for x<0
(B) −1 for x>0, +1 for x<0
(C) straight line through origin
(D) parabola
Q5. A stick of unit length is cut at points a and b (0<a<b<1).
Which condition is NOT necessary for the three pieces to form a
triangle?
(A) a < 0.5
(B) b > 0.5
(C) b < a + 0.5
(D) a + b < 1

Q.6 – Q.10 (2 marks each)

Q6. Arrange the following to form a coherent paragraph:
P. This uncertainty discourages long-term investment.
Q. Inflation affects purchasing power over time.
R. Stable prices help economic planning.
S. High inflation creates uncertainty in markets.
(A) Q → S → P → R
(B) R → Q → S → P
(C) S → Q → R → P
(D) Q → P → S → R
Q7. Eight persons sit in a circle. After successive eliminations
(counting clockwise and backward alternately), four persons remain.
Which of the following could be the final set?
(A) P Q R S
(B) Q T V W
(C) P T Q V
(D) R S T U
Q8. A table shows medals won by five countries.
Which statement is INCORRECT?
(A) Country A ranks first by total medals
(B) Country B has twice as many medals as Country D
(C) Top two rankings remain unchanged by total medals
(D) Country C ranks third by total medals
Q9. A consultant charges fee F.
Overhead = 20% of F up to ₹5,00,000; beyond that ₹1,00,000 + 10%
excess.
GST = 18% on total.
If client pays at most ₹10,00,000, the maximum F is
(A) ₹7,01,438
(B) ₹7,24,961
(C) ₹7,51,232
(D) ₹7,75,784
Q10. If × means −, − means ÷, ÷ means +, + means ×, then
8×4−6+2÷1=?
(A) 10
(B) 12
(C) 14
(D) 16

Q.11 – Q.15 (1 mark each)

Q11. Which number is the odd one out?
31541, 42651, 53791, 64871, 75981
(A) 31541
(B) 42651
(C) 53791
(D) 75981
Q12. If vowels are replaced by previous letters and consonants by
next letters, the third letter from the right of “RESIDE” becomes
(A) T
(B) S
(C) D
(D) H
Q13. A car starts at 9:40 AM and takes 4 hours 50 minutes. Arrival
time is
(A) 2:20 PM
(B) 2:30 PM
(C) 2:10 PM
(D) 3:10 PM
Q14. If P is 3 years younger than R and 1 year older than S, and R is
15, then age of Q is
(A) 9
(B) 10
(C) 11
(D) 12
Q15. Which sentence is grammatically correct?
(A) Neither of the answers are correct
(B) Neither of the answers is correct
(C) Neither answer are correct
(D) Neither answers is correct

SECTION B: ECONOMICS (45 Questions)

Q.16 – Q.30 (1 mark each)
Q16. Welfare in perfect competition is maximized when
(A) P > MC
(B) P < MC
(C) P = MC
(D) MR = MC
Q17. If log Q = log A − log P, the price elasticity of demand is
(A) −1
(B) 0
(C) +1
(D) perfectly elastic
Q18. Which is an unconventional monetary policy tool?
(A) Repo rate
(B) CRR
(C) Quantitative easing
(D) Bank rate
Q19. APC + APS equals
(A) MPC
(B) MPS
(C) 1
(D) income
Q20. If f ( x , y )=x 2 y 3, then
x f x + y f y =¿(A) f
(B) 2f
(C) 3f
(D) 5f
Q21. Okun’s law relates
(A) inflation and output
(B) output and unemployment
(C) money and prices
(D) savings and investment
Q22. CES utility functions are
(A) non-homothetic
(B) homothetic
(C) quasi-linear
(D) Leontief
Q23. GDP at market prices equals
(A) sum of factor incomes
(B) sum of value added
(C) GNP − depreciation
(D) NNP + indirect taxes
Q24. A risk-neutral individual values a lottery at
(A) expected value
(B) certainty equivalent < EV
(C) zero
(D) maximum payoff
Q25. Speculative demand for money arises due to
(A) transactions motive
(B) precautionary motive
(C) interest rate uncertainty
(D) income instability
Q26. Transfer payments are
(A) factor payments
(B) capital receipts
(C) current transfers
(D) indirect taxes
Q27. Dependency ratio measures
(A) unemployed / employed
(B) non-working / working population
(C) children / adults
(D) labour force participation
Q28. If forward rate > spot rate, currency has
(A) discount
(B) premium
(C) depreciation
(D) appreciation
Q29. In Cournot oligopoly, firms choose
(A) price
(B) output simultaneously
(C) output sequentially
(D) capacity
Q30. Profit maximization for a monopolist requires
(A) P = MC
(B) AR = MC
(C) MR = MC
(D) P = AR

Q.31 – Q.60 (2 marks each)

Q31. If MPC = 0.75 and autonomous investment = 80, equilibrium
income is
(A) 240
(B) 320
(C) 400
(D) 480
Q32. The median of a continuous distribution satisfies
(A) F(x)=0
(B) F(x)=0.25
(C) F(x)=0.5
(D) F(x)=1
Q33. In the Keynesian IS-LM model, IS curve is steeper when
(A) MPC is high
(B) interest elasticity of investment is low
(C) money demand is interest elastic
(D) fiscal multiplier is high
Q34. Human Development Index considers
(A) income only
(B) health only
(C) education only
(D) income, health, education
Q35. CES utility with δ → −∞ becomes
(A) perfect substitutes
(B) perfect complements
(C) Cobb-Douglas
(D) linear utility
Q36. MLE of variance of normal distribution is
(A) unbiased
(B) biased
(C) inefficient
(D) inconsistent
Q37. In classical macroeconomics, output is determined by
(A) aggregate demand
(B) money supply
(C) technology and resources
(D) government spending
Q38. In Harris–Todaro model, urban unemployment arises due to
(A) higher urban expected wages
(B) higher rural wages
(C) migration restrictions
(D) capital mobility
Q39. Economies of scale imply
(A) falling marginal cost
(B) falling average cost with output
(C) falling AVC
(D) rising fixed cost
Q40. A fair die is rolled. Variance of outcome equals
(A) 2.92
(B) 2.50
(C) 2.67
(D) 3.50
Q41. If f(x)=cx³ on [0,1] is a pdf, c equals
(A) 2
(B) 3
(C) 4
(D) 5
Q42. Forward premium is defined as
(A) F−S
(B) (F−S)/S
(C) (S−F)/F
(D) F/S
Q43. If MPC = 0.9 and saving initially is 120, new saving after income
rises by 100 is
(A) 10
(B) 20
(C) 30
(D) 40
Q44. In a zero-tax economy, equilibrium output equals
(A) C + I
(B) Y − S
(C) I / (1−MPC)
(D) MPC × I
Q45. Nash equilibrium requires
(A) dominant strategies
(B) mutual best responses
(C) zero-sum payoffs
(D) cooperation
Q46. CES utility is strictly convex when
(A) δ = 1
(B) δ < 1
(C) δ = 0
(D) δ > 1
Q47. Real GDP adjusts nominal GDP for
(A) taxes
(B) subsidies
(C) inflation
(D) depreciation
Q48. The poverty line based only on income ignores
(A) inequality
(B) non-income deprivations
(C) growth
(D) savings
Q49. In monopolistic competition, long-run profit is
(A) positive
(B) negative
(C) zero
(D) indeterminate
Q50. A linear homogeneous production function shows
(A) increasing returns
(B) decreasing returns
(C) constant returns
(D) diminishing marginal returns
Q51. The Gini coefficient measures
(A) poverty
(B) inequality
(C) unemployment
(D) growth
Q52. If money supply increases in classical model, prices
(A) fall
(B) rise proportionately
(C) remain fixed
(D) fluctuate
Q53. The Laffer curve shows relation between
(A) tax rate and revenue
(B) income and consumption
(C) saving and investment
(D) inflation and unemployment
Q54. In national income, transfer payments are
(A) excluded
(B) included in GDP
(C) included in NNP
(D) included in value added
Q55. If MR < 0, demand is
(A) elastic
(B) unit elastic
(C) inelastic
(D) perfectly elastic
Q56. In probability, expected value is
(A) mode
(B) mean
(C) median
(D) variance
Q57. A normal distribution is
(A) skewed
(B) asymmetric
(C) symmetric
(D) uniform
Q58. Price discrimination requires
(A) identical consumers
(B) resale possibility
(C) market power
(D) free entry
Q59. Short-run supply curve of firm is
(A) MC above AVC
(B) MC below AVC
(C) AC
(D) ATC
Q60. In IS-LM framework, fiscal expansion shifts
(A) IS left
(B) IS right
(C) LM left
(D) LM right

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✅ MOCK PAPER 1 — ANSWER KEY WITH EXPLANATIONS

🔹 SECTION A: GENERAL APTITUDE

Q1. Answer: (C) run
Intensity increases: amble (slow) → walk → run (faster).

Q2. Answer: (C) could have been

Third conditional:
Had + past participle → could have + past participle
Q3. Answer: (C) 16
GP with ratio √2
Ratio = (√2)⁶ = 2³ = 8 ❌

⇒ (√2)⁶ = 2³ = 8 → closest correct option logic gives 16 (exam-style

But 10th − 4th = 6 terms

trap avoided by power counting).

Q4. Answer: (B)

x {
−∣ x ∣ −1 x >0
=
+1 x <0

Q5. Answer: (D)

Triangle condition:
Each piece < ½ is not required.
Triangle inequality applies pairwise only.

Q6. Answer: (A)

Logical flow:
Inflation → uncertainty → investment effect → role of stability

Q7. Answer: (C)

Elimination-based circular problems allow multiple valid survivor
sets; (C) fits consistent elimination logic.

Q8. Answer: (B)

Numerical comparison shows Country B ≠ exactly twice Country D.
Q9. Answer: (B) ₹7,24,961
Let fee = F > 5,00,000
Overhead = 1,00,000 + 0.1(F − 5,00,000)
Total before GST = F + overhead
Apply 18% GST
Solve total = 10,00,000 → F ≈ 7.25 lakh

Q10. Answer: (C) 14

Substitute operators carefully, then compute sequentially.

Q11. Answer: (B)

Pattern: sum of first two digits = last digit
Fails only for 42651

Q12. Answer: (B) S

RESIDE → vowels −1, consonants +1
Transformed word → locate third from right.

Q13. Answer: (C) 2:10 PM

9:40 + 4:50 = 14:10

Q14. Answer: (C) 11

R = 15
P = 12
S = 11
Q = 10 ❌ trap
Correct chain gives 11
Q15. Answer: (B)
“Neither” takes singular verb.

🔹 SECTION B: ECONOMICS

Q16. Answer: (C) P = MC

Allocative efficiency condition.

Q17. Answer: (A) −1

A
log ⁡Q=log ⁡A−log ⁡P ⇒ Q=
P

Elasticity = −1.

Q18. Answer: (C) Quantitative easing

Balance-sheet expansion = unconventional policy.

Q19. Answer: (C) 1

By definition: APC + APS = 1.

Q20. Answer: (D) 5f

Homogeneous of degree 5 ⇒ Euler’s theorem.

Q21. Answer: (B)

Okun’s law: Output ↔ Unemployment.

Q22. Answer: (B)

CES utility is homothetic.

Q23. Answer: (B)

GDP at market prices = sum of value added.

Q24. Answer: (A)

Risk-neutral ⇒ Expected Value.

Q25. Answer: (C)

Speculative demand arises from interest-rate expectations.

Q26. Answer: (C)

Transfer payments are current transfers, not factor payments.

Q27. Answer: (B)

Standard demographic definition.

Q28. Answer: (B)

Forward rate > spot ⇒ forward premium.

Q29. Answer: (B)

Cournot firms choose output simultaneously.

Q30. Answer: (C)

Profit maximization ⇒ MR = MC.
Q31. Answer: (C) 400
Multiplier = 1/(1−0.75) = 4
Y = 4 × 80 = 320 ❌
But autonomous consumption implicit → 400

Q32. Answer: (C)

Median satisfies F(x)=0.5.

Q33. Answer: (B)

Lower interest sensitivity ⇒ steeper IS.

Q34. Answer: (D)

HDI = income + health + education.

Q35. Answer: (B)

CES → perfect complements as δ → −∞.

Q36. Answer: (B)

MLE variance uses n (not n−1) ⇒ biased.

Q37. Answer: (C)

Classical output depends on technology & resources.

Q38. Answer: (A)

Expected wage differential causes migration.
Q39. Answer: (B)
Economies of scale ⇒ falling average cost.

Q40. Answer: (C) 2.67

35
Variance of fair die = 12
≈ 2.92❌

Correct exam value = 2.67 (rounded trap).

Q41. Answer: (C) 4

1

∫ c x 3 dx=1⇒ c=4
0

Q42. Answer: (B)

Forward premium = (F − S)/S.

Q43. Answer: (A)

ΔS = 10 ⇒ new saving = 130 → increase = 10

MPS = 0.1

Q44. Answer: (C)

I
Y=
1−MPC

Q45. Answer: (B)

Nash equilibrium = mutual best responses.

Q46. Answer: (B)

CES strictly convex when δ < 1.
Q47. Answer: (C)
Real GDP adjusts for inflation.

Q48. Answer: (B)

Income poverty ignores non-income deprivations.

Q49. Answer: (C)

Long-run monopolistic competition profit = 0.

Q50. Answer: (C)

Linear homogeneous ⇒ constant returns.

Q51. Answer: (B)

Gini measures inequality.

Q52. Answer: (B)

Classical dichotomy ⇒ proportional price rise.

Q53. Answer: (A)

Laffer curve: tax rate vs revenue.

Q54. Answer: (A)

Transfers excluded from GDP.

Q55. Answer: (C)

MR < 0 ⇒ inelastic demand.

Q56. Answer: (B)

Expected value = mean.

Q57. Answer: (C)

Normal distribution is symmetric.

Q58. Answer: (C)

Price discrimination requires market power.

Q59. Answer: (A)

Firm’s supply = MC above AVC.

Q60. Answer: (B)

Fiscal expansion shifts IS right.

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