CA Foundation Business Economics MTP September 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. The meaning of the word “economic” is most closely associated with the word:
2. Which aspect of taxation involves normative economics?
3. When the price of a substitute for commodity X falls, the demand for X :
4. If the quantity of commodities demanded remains unchanged as their price changes, the coefficient of price elasticity of demand is :
5. If the amount of a commodity purchase remains unchanged when the price of another commodity changes, the cross elasticity of demand between them is:
6. A consumer who is below the personal budget line (rather than on it):
7. If the MRTS LK equals 2, then the MP K /MP L is :
8. When the law of diminishing returns begins to operate, the TVC curve begins to :
9. Which of the following industries most closely approximates the perfectly competitive model?
10. In the short run, the monopolist:
11. Which form of monopoly regulation is most advantageous for the consumer?
12. When the industry is in long-run equilibrium, the monopolistic competitor will produce at the lowest point on its LAC curve:
13. Which of the following is not within the Scope of Business Economics?
14. Capital is a:
15. Choice is created by the:
16. The industrialization and economic development of the USA Great Britain and other Western European Countries here have taken place under the…
17. If regardless of changes in its price, the quantity demanded of a good remains unchanged, then the demand curve for the good will be:
18. When the numerical value of cross elasticity between two goods is very high, it means:
19. Total utility is maximum when:
20. Trade is not possible if countries operate under_
21. In case of composition of international trade_ play major role.
22. Ricardian theory assumes perfect mobility of labour
23. Which of the following refers to the situation that arises when consumers view products produced in an industry as similar, but not perfect…
24. A government's restriction on the quantity of imports of a country is known as:
25. Which of the following agencies is responsible for formulating the fiscal policy in India?
26. Who among the following was a strong advocate of free markets and minimal governmental activity?
27. During depression, it is advisable to:
28. Which of the following options is true?
29. Which one of the following is included in circular flow?
30. When planned savings are more than planned investment, firms will then_
31. In an economy MPC is 0.75. If investment is increased by ₹500 crore, calculate the total increase in income
32. What can be the minimum value of investment multiplier?
33. Which of the following is true of an imperfect market structure?
34. How does the government intervene in the supply and demand of demerit goods?
35. What was the main objective of the Fiscal Responsibility and Budget Management Act of 2003?
36. All of the following are variables that can be manipulated to affect fiscal policy except:
37. If real exchange rate is high, it might lead to :
38. Which of the following statements is false?
39. Sanitary regulations come under:
40. SLR should be maintained in:
41. Which of the following statements is false regarding FPI?
42. Which of the following steps should be taken by the central bank if there is excessive rise in the foreign exchange rate?
43. One major feature of the reforms was:
44. If foreign investment increases significantly, the most likely effect is:
45. The term “economic liberalization” mainly refers to:
46. Which of the following assumptions is commonly used in classical trade theory?
47. Protectionism refers to:
48. If advertising expenditure increases demand by 8% when advertising rises by 4%, the advertisement elasticity is :
49. Which of these is a drawback of socialist economies?
50. When managers use economic theory to decide between alternative production techniques, they are using business economics as:
51. For a discriminating monopolist, price discrimination depends mainly on:
52. Which type of industry is typically most sensitive to business cycle fluctuations?
53. Interest rate hikes aimed at controlling inflation are most likely to be used during which phase of the business cycle :
54. One limitation of using GDP as a welfare measure is that it:
55. The main reason GDP may not reflect living standards is its inability to:
56. Expansionary fiscal policy involves:
57. Grants provided by the central government to states fall under which category of public finance?
58. Fiscal policy intended to reduce inflation is:
59. In the simple Keynesian model, stability of equilibrium exists, if:
60. Positive economics means:
61. What is the function of the GDP deflator?
62. If labour continues to be used intensively despite high battery prices, the most logical explanation is:
63. In Cobb-Douglas production function, the constants represent:
64. Normal price is determined in the:
65. The IT bubble burst illustrates failure of:
66. The trough phase of a business cycle is characterized by:
67. Tobin's portfolio approach modifies Keynesian liquidity preference by introducing:
68. A contractionary monetary policy is least effective in influencing output when:
69. If a central bank intervenes in the foreign exchange market to prevent appreciation of domestic currency by purchasing foreign assets, the immediate…
70. Which committee's recommendations led to the reduction of reserve requirements (SLR and CRR) in the early 1990s?
71. According to the India Development Update (2022) by the World Bank, why is India's economy considered more insulated from global spillovers compared…
72. Automatic stabilizers operate:
73. The 25% decline in the stock market, in this scenario it can be classified as:
74. Which market structure is characterized by extreme product differentiation?
75. A manufacturing firm finds that the selling price of its product is below Average Total Cost (ATC) but above Average Variable Cost (AVC) in the…
76. A software company offers student, corporate, and institutional licenses for the same software at different prices. The pricing is based on…
77. A group of five cement manufacturers secretly agree to fix prices and production quotas to maximize their joint profits and discourage new…
78. A pharmaceutical company decides not to establish an additional manufacturing unit because the expected savings from technical specialization would…
79. The effect of increase CRR will be reduced or nullified if:
80. FDI is prohibited in all the following except:
81. Stagflation:
82. The kinked demand curve model of oligopoly assumes that:
83. Which of the following is not a part of fiscal policy?
84. In the long run, normal profits are included in the ____ curve.
85. A firm encounters its "shutdown point” when:
86. The efficient scale of production is the level of output at which:
87. A business economy involves the theory of business economics with:
88. Giffen paradox is an exception of:
89. MC curve in a perfectly competitive industry depicts?
90. OPEC is an example of:
91. Which of the following method is used to estimate the National Income of India?
92. Which statistical yearbook published by the CSO includes the data and analysis on the system of regional accounts in India?
93. The Keynesian theory emphasizes the role of ____ in influencing national Income.
94. Which of the following is a reason why market fails?
95. After the budget is prepared, it is usually sent to:
96. If the autonomous consumption equals ₹2000 and marginal propensity to consume equals 0.8. If disposal income equals ₹10000 then total consumption…
97. Inflation target is set by Govt of India in consultation with RBI once in every ____ year .
98. Which initiatives of NITI Aayog facilitates and improves access to Indian Government data?
99. ____ refers to the way one person's value for a good or service is affected by its value to others.
100. Investments which are reciprocal investment between countries are referred to as ____
101. In the four-sector model, which of the following is not a leakage from the circular flow?
102. If income rises by ₹ 200 and consumption rises by ₹ 150, MPC is:
103. Which one of the following is a transfer payment?
104. Which method of National Income estimation measures value added at each stage?
105. Mixed income of self-employed includes:
106. The Heckscher-Ohlin theory bases trade on:
107. A tariff that combines both value-based and quantity-based charges is called:
108. Sanitary and Phytosanitary (SPS) measures aim to protect:
109. WTO's dispute resolution functions are carried out by:
110. Which of the following is a qualitative instrument of monetary policy?
111. Money Supply (M) is equal to:
112. Which is a consequence of high money multiplier?
113. The Monetary Policy Committee sets:
114. Which initiative focuses on sustainable lifestyle choices?
115. Which program was launched to promote organic farming?
116. Which organisation launched India Policy Insights (IPI)?
117. Which of the following affects real exchange rate directly?
118. What is a liquidity trap?
119. Which economist applied capital asset demand theory to money?
120. Which statement about the Finance Bill is correct?
121. Keynes advocated increased government spending to tackle:
122. One major limitation of fiscal policy is:
123. Free rider problem occurs due to:
124. What implications does resource scarcity have for the satisfaction of wants?
125. Who is the main exponent of Marginal Utility Analysis?
126. Purchasing power of money falls when:
127. _______ is the total volume of the commodity which can be brought into the market for sale at short notice
128. Production means:
129. Economic Cost is equal to:
130. Even with a lower rate of interest, demand for credit declines during:
131. According to Keynes, fluctuations in economic activity are due to fluctuations in:
132. Which is the primary tool for government to influence aggregate demand according to Keynesian economics?
133. Which of the following analytical tools is commonly used in Business Economics?
134. In the basic economic problems list, “For whom to produce” relates to:
135. Which economic system most emphasizes consumer choice?
136. A product with income elasticity less than one but greater than zero is:
137. Which factor causes a rightward shift of the supply curve?
138. For a discriminating monopolist, price discrimination depends mainly on:
139. If a monopolistic competitive firm earns super-normal profits in the short run, in the long run:
140. Which market form's demand curve is identical to its industry demand?
141. The kinked demand curve in oligopoly explains:
142. Which type of industry is typically most sensitive to business cycle fluctuations?
143. Understanding business cycles helps investors primarily because
144. Which classical trade theory explains international trade purely on differences in labour productivity?
145. Voluntary export restraints are classified as
146. Modes of FDI include:
147. When a government officially lowers its currency value under a fixed regime, it is called:
148. In the Cambridge cash-balance approach, money demand is expressed as:
149. A key objective of monetary policy is to:
150. A tax imposed equal to the external marginal cost of pollution is called a:
151. In the case of a straight-line demand curve meeting the two axes, the price elasticity of demand at y-axis of the line would be equal to:
152. Average fixed cost cannot be:
153. If firm's average cost is falling then marginal curve must be:
154. When two goods are perfect substitutes of each other then:
155. In Perfect Competition Utilization of resources is:
156. Economic Cost means:
157. The cost incurred on the factor of production is known as:
158. The share of concessional debt in total debt external debt of India has:
159. Soap Industry is an Example of:
160. A Purely competitive firm's supply schedule in the short run is determined by:
161. The basic distinction between M1 and M2 is in the:
162. All are features of monopoly except:
163. In the long run the monopolistic competitive firm has:
164. Which of the following concept of budget deficit has become practically redundant in India?
165. If increasing airfare increases revenue and decreasing revenue decreases then the demand for air travel has a price elasticity of:
166. A monopoly who sells in two markets in which demand is not identical will be unable to maximize his profits unless he:
167. Abolition of intermediaries and tenancy reforms are both part of:
168. If the government sets a maximum price below equilibrium price, this will likely cause:
169. Which economic system most emphasizes consumer choice?
170. The assumption of rationality in utility theory means consumers:
171. The difference between AR and MR in monopoly arises due to:
172. Which market form best reflects real-world product differentiation?
173. A liquidity trap in money demand occurs when:
174. Which of the following is not a typical source of market failure?
175. Deficit financing means:
176. Which concept of national income best reflects economic welfare?
177. For substitutes, cross elasticity of demand is-
178. Given TC = 2000 + 15Q – 6Q 2 + Q 3 , how much is TFC at Q = 2000?
179. The difference between fiscal deficit and interest payment is:
180. Which exchange rate regime is adopted by highest no of IMF members?
181. Government of India recently launched ‘Make in India' programme. What will be its impact on Aggregate Demand of India?
182. A consumer's preferences are monotonic if and only if between two bundles, the consumer prefers the bundle which has _______
183. The Finance Bill is discussed and debated in which house of parliament?
184. The concept of "crowding out" refers to:
185. If, in the four-sector model, aggregate consumption and taxes are greater than aggregate income, it indicates that:
186. The base year for computing the Gross Domestic Product (GDP) in India is generally revised after every:
187. Reverse repo operation takes place when:
188. When we study why saving rates are high or low, we are studying:
189. At saturation point of TU curve, the slope of TU curve is _______
190. In the long run, normal profits are included in the curve:
191. Trade is not possible if countries operate under _______
192. When we know that the firms must be producing at the minimum point of the average cost curve and so there will be productive efficiency:
193. Long run production function related to _______
194. Which of the following is not a condition of perfect competition?
195. Peaks and troughs of the business cycle are known collectively as:
196. Government borrowings from foreign governments and institutions:
197. Atal Tinkering lab is an initiative by which of the following institution?
198. Which type of investment is more influenced by government regulations and policies?
199. Which of the following is not a money market instrument?
200. The primary source of money supply in all countries is: