CA Foundation Business Economics MTP January 2026: Question Paper and Solutions

How to Prepare for CA Foundation Business Economics

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Question directory and available solutions

200 indexed questions. Open a question to read its full statement and available answer.

1. What is the similarity between the Subprime Crisis and Greece Crisis?
2. In explaining the level of unemployment, Keynes emphasized, -
3. An increase in marginal propensity to consume will:
4. Which is the main objective of a tax?
5. The value of which work is added in the calculation of GDP?
6. The objective of the fiscal policy of the government should be:
7. Quantitative restrictions refer to limits set by countries to curb:
8. Theory of Mercantilism propagates:
9. The quantity of dollars supplied will decrease if:
10. EVA digital assistance Robot of HDFC Bank is:
11. Gross investment refers to:
12. Which one of the following is NOT a function of Finance Commission in India?
13. Who is the chairman of the 16th Central Finance commission, Government of India?
14. Differentiated Products is a characteristic of:
15. Under which market form, the demand curve is steeper as compared to monopolistic competition?
16. Which of the following cost curves is rectangular hyperbola?
17. ______ cost refers to actual payment made by the entrepreneur to the providers of factor services.
18. AVC can fall even when MC is rising, provided:
19. Which of the following is not an essential condition of 'Pure Competition'?
20. Broad money refers to:
21. Price discrimination will be profitable only if the elasticity of demand in different markets in which the total market has been divided is:
22. Markets fail because:
23. Business cycle emerge in ______.
24. The Reverse repo rate is:
25. Which of the following does not enter into the calculation of national income?
26. Which of the following is an implication of the imposition of price ceiling below the equilibrium price?
27. Which market sells both homogeneous as well as differentiated goods?
28. Government of India recently launched 'Make in India' programme. What will be its impact on Aggregate Demand of India?
29. Which one of the following is the best example of agreement between oligopolists?
30. TRIPs stand for:
31. The 'substitution effect' takes place due to change in:
32. Successful business firms spend considerable time, energy and efforts in analyzing the ______ for their products.
33. By way of an optimal choice, a consumer tends to :
34. The economist's concept of demand is ______ as desire or need or choice or preference or order.
35. The demand for labour in response to the wage rate is ______ whereas the demand for same labour in response to the price of electronic goods where…
36. Assertion (A): In the short run, a producer operates in only II stage of Law of Diminishing Returns Where average product of variable factor is…
37. Which of the following groups of goods have inelastic demand?
38. If the price of a commodity raised by 12% and Ed is (-) 0.63, the expenditure made on the commodity by a consumer will ______.
39. A consumer's preferences are monotonic if and only if between two bundles, the consumer prefers the bundle which has ______.
40. During lockdown due to COVID-19, a consumer finds the vegetable vendors selling vegetables in the street have raised the prices of vegetables than…
41. Money cost is considered by:
42. More expansion of foreign direct investment can boost ______.
43. Which of the following is NOT a criterion for determining distribution of Central taxes among states for 2021-26 period:
44. Which of the followings is not an element of good public expenditure management?
45. Computers and Computer software are ______.
46. If the amounts of two commodities purchased both increase or decrease when the price of one change, the cross elasticity of demand between them is:
47. Which aspect of taxation involves normative economics?
48. According to British economist J. M. Keynes ______ was the main cause of massive decline in income and employment during Great Depression of 1930.
49. When real income rather than money income is kept constant in drawing a consumer's demand curve for a commodity, the demand curve is negatively…
50. Which one of the following is not an Internal economies of scale?
51. A mathematical relationship showing the maximum output that can be produced by each, and every combination of inputs is called ______.
52. In economics, generally the classification of the markets is made on the basis of:
53. Peak is the ______ stage of expansion.
54. Repercussions of business cycles get ______ felt on nearly all economic variables.
55. In order to influence spending on the goods and services in the short run, ______ is directed at directly influencing interest rate.
56. Consider the following statements and select the correct answer from the given options. Assertion (A): In the short run under perfect competition,…
57. Which of the following is correct regarding long run cost? 1. It is least cost of producing each level of output 2. LAC curve is envelope of SAC…
58. The elasticity of supply at any point on a given supply curve passing through the origin point making angle of 35 degree with X-axis is ______.
59. Management of the firm ______ control over macro-economic factors.
60. Which of the following is a lagging economic indicator?
61. Which of the following is implication of fiscal deficit?
62. India's foreign exchange reserves has jumped high. The reason may be:
63. Which of the following is the primary objective of economic planning in India?
64. The programme of economic reforms in India was started on ______.
65. Impure Public goods are:
66. REER (Real Effective Exchange Rate) is:
67. Brownfield investment refers to:
68. FDI in India is encouraged through all EXCEPT:
69. Which initiative focuses on sustainable lifestyle choices?
70. Which policy ended the License Raj?
71. Which organisation launched India Policy Insights (IPI)?
72. Which of these is NOT a public sector monopoly anymore?
73. Non-tariff measures that affect product quality and standards are called:
74. GDP deflator is used to measure:
75. The income received but not earned is part of:
76. Mixed income of self-employed includes:
77. Moral hazard refers to:
78. Which exchange rate regime is adopted by highest no of IMF members
79. The 'U' shape of the short-run average cost curve is due to:
80. Which of the following costs is not considered while calculating accounting cost?
81. A trough in the business cycle indicates:
82. In the four-sector model, which of the following is not a leakage from the circular flow?
83. When income increases and APC decreases, it indicates that:
84. The formula for the investment multiplier (k) is:
85. Subsidy on goods with positive externalities leads to:
86. What is a liquidity trap?
87. Which one is not true about merit goods?
88. Which theory introduced the idea of interest rate influencing money demand?
89. Speculative demand becomes perfectly elastic when:
90. Which tool is used to absorb liquidity by RBI?
91. The Monetary Policy Committee sets:
92. CPI inflation target under current framework is:
93. A dealer sells only two brands of Motorcycle- Royal and Hero. It was observed that when the price of royal rises by 10% the demand for Hero…
94. Which of the following Statements is correct concerning the relationship among the firm's Cost Function:
95. When violation of law of demand occurs:
96. Given TC = 2000 + 15Q – 6Q 2 + Q 3 , how much is TFC at Q = 2000
97. The market demand curve for a perfectly competitive industry is: Qd = 12 – 2P and the market supply curve is: Qs = 3 + P. The market will be in…
98. In economics, we are concerned with:
99. Which is the leading Country in respect of inflow of FDI to India?
100. The elasticity of supply at any point on a given supply curve passing through the origin point making angle of 35 degree with X-axis is ______.
101. The Book "The Wealth of Nations "is written by:
102. The Nature of Business Economics:
103. Rational Decision making requires that:
104. What are the Internal causes of Business Cycle ?
105. Hawtrey trade cycle is a _________.
106. A Relative Price is:
107. In case of Substitute Product:
108. A rise in price will _________.
109. Law of Production does not include _________.
110. Which of the following statements is correct concerning the relationship among the firm's Cost Function:
111. In the Cobb Douglas function the change in Output due to increase in one additional unit of an input is called?
112. The condition for Pure Competition to be fulfilled are _________.
113. The opportunity cost of a good is:
114. Which is not the Characteristics of Monopolistic Competition:
115. The Concept of Price rigidity in Sweezy's Model is related to which market form:
116. Which of the following Statement is incorrect?
117. The Relationship between AR, MR and Price Elasticity _________.
118. The Price elasticity for Monopolistic Firm is:
119. When a small change in price leads to a large change in demand the demand is:
120. The relationship between price and quantity supplied in law of supply is:
121. Certain Benefit an Industry gets when it expands its scale of production is known as:
122. The Shape of TR Curve of the Monopolist is:
123. The Distinction between Selling Cost and Production cost was made by:
124. For Luxuries goods the Income Elasticity is:
125. Long Run Average Cost (LAC) is:
126. Under Perfect Competition the Supply Curve is derived from:
127. The Consumer is in equilibrium when:
128. When average cost is equal to average revenue of a firm, it gets _________.
129. The producer's demand for a factor of production is governed by the _________ of that factor.
130. The Slope of Isoquant is:
131. When the Output increases from 20 to 30 units and TR increases from ₹400 to ₹ 500 then MR is:
132. Negative Return sets in at the stage when:
133. The Problem what to produce relates to:
134. Average revenue curve is more elastic under monopolistic competition than monopoly due to:
135. The Government offer minimum assured price to the farmers to purchase their output is called:
136. What affects supply elasticity the most?
137. Economic indicator of contraction and expansionary phase by measuring real GDP is:
138. The restaurant industry has a market structure that comes closest to:
139. If an input is owned and used by a firm, then its _________.
140. If the inflation rate starts to increase, a central bank most likely will:
141. In a simple model with no government or foreign sector, the change in unplanned inventory at equilibrium is:
142. Positive economics means:
143. A nation's gross domestic product (GDP):
144. GDP data are criticized as being inaccurate measures of economic welfare because:
145. What is the primary purpose of a government budget?
146. The concern regarding changing health consciousness of consumers highlights which limitation of economic theory in real-world decision making?
147. If the firm uses last ten years' data to forecast demand, the major economic risk involved is:
148. In a socialist economy, the central planning authority is responsible for:
149. Conspicuous goods are demanded more because of:
150. The 'bandwagon effect' in consumer behaviour leads to:
151. Which of the following is an assumption of the Law of Diminishing Marginal Utility?
152. Consumer surplus can be graphically represented as:
153. If the cost increase is temporary, supply in the long run is most likely to:
154. Land is considered a unique factor of production because:
155. Decreasing returns to scale eventually occur primarily because of:
156. The efficient scale of production is the level of output at which:
157. Normal price is determined in the:
158. Which market structure is characterised by extreme product differentiation?
159. In simultaneous opposite shifts of demand and supply, equilibrium quantity:
160. Match the Pairs Column A Column B 1. Market price above equilibrium (a) Buyers bid up prices as they compete for limited supply 2. Market price…
161. Which event typically marks the start of recovery?
162. The IT bubble burst illustrates failure of:
163. According to the business cycle theory, which statement best explains the relationship between leading indicators and economic forecasting?
164. The trough phase of a business cycle is characterized by:
165. In a three-sector economy, if C = 80 + 0.70Yd, I = 150, G = 200, T = 100 (lump sum), what is the equilibrium national income?
166. The Net Divisible Pool (NDP) consists of:
167. Which fiscal function is being overemphasized in this scenario?
168. Which situation best illustrates adverse selection?
169. Which of the following expenditures is not subject to voting by Parliament?
170. Which of the following best represents discretionary fiscal policy?
171. Automatic stabilisers operate:
172. In Fisher's equation of exchange, if technological innovation reduces transaction frequency without affecting real output, the immediate…
173. Which of the following situations best explains why speculative demand for money becomes perfectly elastic in a liquidity trap?
174. Which variable is explicitly absent from the Cambridge money demand function but central to Keynes' speculative demand?
175. Which statement correctly explains why high-powered money is called the base of the money supply?
176. Credit multiplier differs from money multiplier mainly because credit multiplier assumes:
177. If the central bank injects liquidity through open market purchases but banks choose to hold all additional reserves as excess reserves, the money…
178. Under the Monetary Policy Framework Agreement, RBI is deemed to have failed if inflation:
179. Which of the following assumptions, if violated, most seriously undermines the practical applicability of Ricardo's theory of comparative advantage?
180. Which trade policy instrument results in price distortion without generating government revenue, while simultaneously creating economic rent for…
181. A tariff-rate quota (TRQ) combines:
182. A country experiences a persistent current account deficit along with a surplus in the capital account. This situation necessarily implies:
183. An increase in the Real Effective Exchange Rate (REER), holding nominal exchange rate constant, necessarily implies that:
184. Under a managed floating exchange rate regime, central bank intervention is most effective when it primarily influences:
185. Foreign Portfolio Investment (FPI) is more likely than FDI to trigger a financial crisis in the host country because FPI:
186. Which situation best illustrates crowding-out caused by FDI in a developing economy?
187. Which of the following describes the unique "unconventional experience" of India's post-reform growth trajectory?
188. The "Hindu growth rate," referring to the modest 3.5% average annual GDP growth, occurred during which period?
189. In the context of 1991 reforms, the "Stabilisation Measures" were primarily intended to address which two issues?
190. Which committee's recommendations led to the reduction of reserve requirements (SLR and CRR) in the early 1990s?
191. Which specific NITI Aayog initiative is aimed at reducing India's oil import bill and converting coal reserves into cleaner fuel?
192. The Policy of "Broad banding" introduced in 1985 allowed firms to:
193. According to New Trade Theory, a country may export a good even without comparative advantage due to:
194. Which of the following situations best demonstrates a market failure due to asymmetric information?
195. Which of the following factors does NOT directly affect the demand for money?
196. Which of the following is NOT a typical tool of monetary policy used by a central bank?
197. Which of the following is a primary objective of India's Five-Year Plans?
198. The current account deficit (CAD) in India refers to the excess of:
199. Which of the following is a major issue associated with the fiscal deficit in India?
200. Which of the following is the correct sequence of stages in the budget-making process?