CUET UG Economics Booster Test 2 - Evolution of Macroeconomic Thought and Public Policy -

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CUET UG Economics Booster Test 2 - Evolution of Macroeconomic Thought and Public Policy

⏱️ 30 Minutes

❓ 20 Questions

📌 Answers are locked once submitted — results and explanations appear at the end.

CUET UG Economics Booster Test 2 - Evolution of Macroeconomic Thought and Public Policy

1 / 20

QUESTION 1 OF 20

Match the Following

List 1	List 2
1. Microeconomics	a. Aggregate output
2. Macroeconomics	b. Entire economy
3. Individual agents	c. Single individual/firm
4. Macro variables	d. Individual markets

Answer Review

1 Match the Following

List 1	List 2
1. Microeconomics	a. Aggregate output
2. Macroeconomics	b. Entire economy
3. Individual agents	c. Single individual/firm
4. Macro variables	d. Individual markets

A (1)-b, (2)-d, (3)-c, (4)-a

B (1)-a, (2)-b, (3)-c, (4)-d

C (1)-d, (2)-b, (3)-c, (4)-a

D (1)-c, (2)-a, (3)-b, (4)-d

💡 Short Explanation

�� Microeconomics studies individual markets. �� Macroeconomics studies the economy as a whole. �� Macro variables are aggregate measures.

✅ Correct Answer Explanation

1 → d : Microeconomics examines individual markets, consumers and firms. 2 → b : Macroeconomics studies the economy as a whole. 3 → c : Individual agents include single consumers, households and firms. 4 → a : Macro variables include aggregate output, aggregate income and aggregate employment. Therefore, Option C is the correct answer.

❓ Why Other Options Are Incorrect

�� Option A → Microeconomics and macroeconomics are incorrectly matched.
�� Option B → Aggregate output is incorrectly matched with microeconomics.
�� Option D → Individual agents and macro variables are incorrectly paired.

🎯 Strategy

Used

Option Grouping

Application:

Match each economic concept with its appropriate description.

Final Logic:

Micro → Individual Markets, Macro → Economy, Agents → Individual Units, Variables → Aggregates.

🧠 Memory Trick

Micro → Market, Macro → Economy

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Microeconomics and Macroeconomics

2 Arrange the logical sequence of simplifying macroeconomic analysis.
1. Observe that prices and output move together.
2. Look at the entire economy.
3. Focus on a single representative commodity.
4. Analyze general aggregate levels.

A (2), (1), (3), (4)

B (1), (2), (4), (3)

C (3), (4), (1), (2)

D (4), (3), (2), (1)

💡 Short Explanation

�� Macroeconomics begins with the economy as a whole. �� Aggregate movements justify simplification. �� Representative goods simplify analysis.

✅ Correct Answer Explanation

Macroeconomic analysis first considers the economy as a whole (2). Economists then observe that prices, output and employment tend to move together across different goods (1). This justifies using a single representative commodity (3), allowing economists to analyse aggregate variables more conveniently (4). Therefore, the correct sequence is 2 → 1 → 3 → 4.

❓ Why Other Options Are Incorrect

�� Option B → Begins with observation before defining the scope of analysis.
�� Option C → Uses the representative commodity before establishing the reason for simplification.
�� Option D → Reverses the logical analytical process.

🎯 Strategy

Used

Contextual/Tonal Matching

Application:

Arrange the steps according to the logical development of macroeconomic simplification.

Final Logic:

Whole Economy → Common Movement → Representative Good → Aggregate Analysis.

🧠 Memory Trick

Whole → Together → One Good → Aggregate

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Representative Commodity and Aggregate Analysis

3 Assertion (A): Macroeconomics entirely ignores the effects of taxation and budget policies in markets.
Reason (R): Macroeconomics has to study policies aimed at modifying demand and supply to follow choices made by society outside the markets.

A Both A and R are false.

B A is true, but R is false.

C Both A and R are true, and R is the correct explanation of A.

D A is false, but R is true.

💡 Short Explanation

�� Macroeconomics studies fiscal and monetary policies. �� Taxation influences aggregate demand. �� Government policies modify market outcomes.

✅ Correct Answer Explanation

The Assertion is false because macroeconomics explicitly studies the effects of taxation, government expenditure and budgetary policies on the economy. The Reason is true because macroeconomics examines policies that modify demand and supply to achieve social objectives such as employment, welfare and economic stability. Therefore, Option D is the correct answer.

❓ Why Other Options Are Incorrect

�� Option A → Incorrect because the Reason is true.
�� Option B → Incorrect because the Assertion is false.
�� Option C → Incorrect because the Assertion is false.

🎯 Strategy

Used

Extreme Word Filter

Application:

Notice the absolute word "entirely," which contradicts the NCERT concept.

Final Logic:

Macroeconomics studies taxation and budgetary policies.

🧠 Memory Trick

Macro = Policy Study

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Fiscal Policy and Government Intervention

4 Why might individual microeconomic decisions need to be modified by state welfare policies?

A Because micro decisions always result in perfect equality.

B Because markets may fail to produce equilibrium or achieve social goals like health and education.

C Because firms voluntarily sacrifice profits to build public infrastructure.

D Because the classical tradition strictly mandates it.

💡 Short Explanation

�� Markets do not always achieve social objectives. �� Government intervention corrects market failures. �� Welfare policies improve public well-being.

✅ Correct Answer Explanation

Individual market decisions are primarily driven by self-interest and profit motives. However, markets may fail to achieve important social objectives such as universal education, primary health care, employment and equitable development. In such cases, the government intervenes through welfare policies and public expenditure to promote overall social welfare. Therefore, Option B is the correct answer.

❓ Why Other Options Are Incorrect

�� Option A → Markets do not automatically produce perfect equality.
�� Option C → Firms generally pursue profit rather than voluntarily providing public infrastructure.
�� Option D → The classical school favoured limited government intervention rather than mandating welfare policies.

🎯 Strategy

Used

Elimination

Application:

Identify the option that reflects the purpose of government intervention in a market economy.

Final Logic:

Market Failure → Welfare Policy.

🧠 Memory Trick

Market Fails → Government Acts

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Market Failure and Welfare Policies

5 Identify the correct statement regarding the role of the State in the economy.

A It only exists to maximize corporate shareholder wealth.

B It frames laws, enforces justice, and undertakes production and public infrastructure.

C It operates purely on the principle of individual self-interest.

D It strictly avoids imposing taxes on the public.

💡 Short Explanation

�� The State performs administrative and economic functions. �� It provides public goods and infrastructure. �� It promotes social welfare through policy intervention.

✅ Correct Answer Explanation

The State is responsible for maintaining law and order, enforcing justice, imposing taxes, providing public infrastructure and undertaking activities that promote social welfare and economic development. These responsibilities extend far beyond the objectives of private firms. Therefore, Option B is the correct answer.

❓ Why Other Options Are Incorrect

�� Option A → Maximizing shareholder wealth is the objective of private companies, not the State.
�� Option C → The State acts for public welfare rather than individual self-interest.
�� Option D → Taxation is one of the major functions of the government.

🎯 Strategy

Used

Elimination

Application:

Identify the option that correctly reflects the multiple responsibilities of the government.

Final Logic:

State = Law + Infrastructure + Welfare.

🧠 Memory Trick

State Builds Society

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Functions of the State

6 Unlike a private firm, an institution like the Securities and Exchange Board of India (SEBI) is primarily motivated by:

A Public goals defined by law or the Constitution

B Maximising profit for its founders

C Ensuring microeconomic self-interest is met

D Competing with the government for resources

💡 Short Explanation

�� SEBI is a statutory body. �� It works for public interest. �� Its objectives are defined by law.

✅ Correct Answer Explanation

SEBI is a statutory institution established to regulate the securities market and protect investors. Unlike private firms that pursue profits, SEBI performs functions assigned by law to promote fair, transparent and efficient financial markets in the public interest. Therefore, Option A is the correct answer.

❓ Why Other Options Are Incorrect

�� Option B → SEBI is not established to earn profits.
�� Option C → Its objective is broader than promoting individual self-interest.
�� Option D → SEBI functions as a statutory body under the legal framework rather than competing with the government.

🎯 Strategy

Used

Elimination

Application:

Differentiate between statutory institutions and private business firms.

Final Logic:

SEBI = Public Goal, Not Private Profit.

🧠 Memory Trick

SEBI = Public Trust

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Statutory Macroeconomic Institutions

7 Macroeconomic decision-makers try to direct the deployment of economic resources for the ________ of the country and its people as a whole.

A Destruction

B Monopolization

C Welfare

D Privatization

💡 Short Explanation

�� Governments pursue social welfare. �� Resources are allocated for public benefit. �� Welfare is a major macroeconomic objective.

✅ Correct Answer Explanation

Macroeconomic decision-makers such as the government and statutory bodies allocate resources to improve the welfare of the country and its people. Their objective is to promote economic development, employment, education, health and social well-being rather than private gain. Therefore, Option C is the correct answer.

❓ Why Other Options Are Incorrect

�� Option A → Destruction is contrary to the purpose of public policy.
�� Option B → Monopolization is not a public welfare objective.
�� Option D → Privatization is a policy instrument, not the general objective described in the statement.

🎯 Strategy

Used

Elimination

Application:

Identify the broad objective pursued by macroeconomic policymakers.

Final Logic:

Resource Allocation → Public Welfare.

🧠 Memory Trick

Macro = Welfare

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Welfare Objectives of Macroeconomic Decision Makers

8 In a developing nation,
Social Objectives ≈ (Reduction in Unemployment) + (Improvement in ________) + (Good Administration).

A Private Profit

B Demand Deficiency

C Access to Education and Primary Healthcare

D Interest Rates

💡 Short Explanation

�� Development includes social welfare. �� Education and healthcare improve human capital. �� Governments pursue inclusive growth.

✅ Correct Answer Explanation

In developing countries, macroeconomic policy aims not only to reduce unemployment but also to improve access to education, primary healthcare and other essential public services. These objectives contribute to human development and overall social welfare. Therefore, Option C is the correct answer.

❓ Why Other Options Are Incorrect

�� Option A → Private profit is the objective of firms, not social policy.
�� Option B → Demand deficiency is an economic problem rather than a social objective.
�� Option D → Interest rates are policy instruments, not social welfare goals.

🎯 Strategy

Used

Elimination

Application:

Identify the component that logically completes the social objectives equation.

Final Logic:

Development = Jobs + Education + Health + Good Governance.

🧠 Memory Trick

Jobs + Health + Education

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Social Objectives and Welfare Policies

9 If a government builds a highway because private markets did not provide one, this is an example of addressing:

A Pure capitalist profit motives

B Classical full employment theories

C Microeconomic consumer choices

D Public needs outside the market mechanism

💡 Short Explanation

�� Markets may fail to provide certain public goods. �� Governments intervene to satisfy public needs. �� Infrastructure promotes economic development.

✅ Correct Answer Explanation

Highways are examples of public infrastructure that private markets may underprovide because they require huge investments and generate widespread social benefits that cannot always be recovered through market prices. Therefore, the government intervenes to provide such public goods, addressing needs that lie outside the normal market mechanism. Hence, Option D is the correct answer.

❓ Why Other Options Are Incorrect

�� Option A → The purpose is public welfare, not private profit.
�� Option B → Full employment theory is unrelated to the construction of public infrastructure.
�� Option C → Individual consumer choices do not explain government provision of highways.

🎯 Strategy

Used

Elimination

Application:

Identify the option representing government intervention to satisfy public welfare.

Final Logic:

Market Failure → Public Infrastructure → Government Action.

🧠 Memory Trick

Roads = Public Good

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Government Intervention and Public Goods

10 Which of the following is considered a national priority that overrides pure market forces?

A Providing sufficiently for the defence of the country

B Increasing the price of luxury cars

C Maximizing the wages of corporate managers

D Speculating on foreign currency

💡 Short Explanation

�� National defence is a public responsibility. �� Defence cannot be left entirely to markets. �� Governments allocate resources for national security.

✅ Correct Answer Explanation

National defence is a fundamental responsibility of the State because it is a public good that benefits the entire country. Since private markets do not efficiently provide defence services, governments allocate resources to ensure national security regardless of market incentives. Therefore, Option A is the correct answer.

❓ Why Other Options Are Incorrect

�� Option B → Pricing luxury goods is a market activity rather than a national priority.
�� Option C → Corporate wages are determined by firms and labour markets.
�� Option D → Foreign currency speculation is a private financial activity, not a public objective.

🎯 Strategy

Used

Elimination

Application:

Identify the activity that serves the entire nation rather than private interests.

Final Logic:

Defence = National Welfare.

🧠 Memory Trick

Nation First = Defence

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Public Goals of the State

11 The book "An Enquiry into the Nature and Cause of the Wealth of Nations" is often cited as an advocacy for a ________ economy.

A Command

B Free market

C Centrally planned

D Mixed

💡 Short Explanation

�� Adam Smith supported market-based allocation. �� Self-interest guides economic decisions. �� Competitive markets promote efficiency.

✅ Correct Answer Explanation

Adam Smith's An Enquiry into the Nature and Cause of the Wealth of Nations (1776) is widely regarded as the foundation of classical economics. It advocates a free-market economy in which individuals pursuing their own self-interest, guided by market forces, contribute to overall economic prosperity. Therefore, Option B is the correct answer.

❓ Why Other Options Are Incorrect

�� Option A → A command economy relies on central planning rather than market forces.
�� Option C → Centrally planned economies differ fundamentally from Smith's ideas.
�� Option D → A mixed economy combines market and government intervention and is not the primary system advocated by Adam Smith.

🎯 Strategy

Used

Contextual/Tonal Matching

Application:

Recall the economic system associated with Adam Smith's famous work.

Final Logic:

Adam Smith → Free Market.

🧠 Memory Trick

Smith = Free Market

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Adam Smith and the Free Market Economy

12 Adam Smith argued that if buyers and sellers take decisions following only their own self-interest:

A The State must immediately intervene to prevent chaos.

B Factories will always lie idle.

C Unemployment will necessarily rise to 25%.

D Economists will not need to think of national wealth and welfare separately.

💡 Short Explanation

�� Adam Smith emphasized self-interest. �� Markets coordinate individual decisions. �� Self-interest was believed to promote national welfare.

✅ Correct Answer Explanation

Adam Smith argued that when consumers and producers pursue their own self-interest in competitive markets, the economy naturally moves toward greater national wealth and welfare through the operation of the "invisible hand." Consequently, economists would not need to separately plan for national welfare because market forces would achieve it automatically. Therefore, Option D is the correct answer.

❓ Why Other Options Are Incorrect

�� Option A → Adam Smith generally advocated limited government intervention in competitive markets.
�� Option B → Idle factories contradict Smith's expectation of efficient market functioning.
�� Option C → A 25% unemployment rate refers to the Great Depression, not Adam Smith's theory.

🎯 Strategy

Used

Contextual/Tonal Matching

Application:

Recall Adam Smith's belief regarding self-interest and the invisible hand.

Final Logic:

Self-interest → National Welfare.

🧠 Memory Trick

Self-interest = Invisible Hand

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Adam Smith and the Invisible Hand

13 If the classical belief held true during the 1930s, what would have been the economic situation?

A Output would have fallen by 33%.

B Unemployment would have remained at 25%.

C Factories would have permanently shut down.

D All labourers ready to work would have found employment.

💡 Short Explanation

�� Classical theory assumed full employment. �� Markets were expected to self-correct. �� Persistent unemployment was not expected.

✅ Correct Answer Explanation

According to classical economics, competitive market forces automatically restore equilibrium. Therefore, everyone willing to work at the prevailing wage rate would eventually find employment, and resources would remain fully utilized. Had the classical theory held true during the 1930s, widespread unemployment would not have occurred. Therefore, Option D is the correct answer.

❓ Why Other Options Are Incorrect

�� Option A → A 33% fall in output actually occurred during the Great Depression and contradicted classical theory.
�� Option B → A 25% unemployment rate disproved the classical belief.
�� Option C → Permanent factory closures are inconsistent with the classical assumption of full-capacity production.

🎯 Strategy

Used

Elimination

Application:

Identify the outcome predicted by the classical full-employment doctrine.

Final Logic:

Classical Theory = Full Employment.

🧠 Memory Trick

Classical = Jobs for All

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Classical Theory of Full Employment

14 Assertion (A): The dominant classical thinking was that factories would work at full capacity.
Reason (R): This thinking was proven entirely correct by the Great Depression.

A Both A and R are false.

B A is true, but R is false.

C Both A and R are true, and R is the correct explanation of A.

D A is false, but R is true.

💡 Short Explanation

�� Classical economists believed in full-capacity production. �� The Great Depression disproved this belief. �� Keynes challenged the classical view.

✅ Correct Answer Explanation

The Assertion is true because classical economists believed that competitive markets would ensure full utilization of productive resources, allowing factories to operate at full capacity. The Reason is false because the Great Depression demonstrated the opposite. Many factories remained idle, output declined sharply and unemployment increased significantly, proving that the classical assumption did not always hold in reality. Therefore, Option B is the correct answer.

❓ Why Other Options Are Incorrect

�� Option A → Incorrect because the Assertion is true.
�� Option C → Incorrect because the Reason is false.
�� Option D → Incorrect because the Assertion is true.

🎯 Strategy

Used

Extreme Word Filter

Application:

The word "entirely" signals an absolute claim that is contradicted by the historical evidence of the Great Depression.

Final Logic:

Great Depression → Idle Factories → Classical Theory Challenged.

🧠 Memory Trick

Depression = Idle Factories

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Great Depression and Failure of Classical Theory

15 Keynes's approach differed from his predecessors because he:

A Examined the working of the economy in its entirety and sectoral interdependence.

B Focused exclusively on the microeconomic behavior of butchers and bakers.

C Believed markets never fail.

D Argued that long-lasting unemployment is impossible.

💡 Short Explanation

�� Keynes studied the economy as a whole. �� He emphasized sectoral interdependence. �� His theory challenged classical economics.

✅ Correct Answer Explanation

Unlike earlier economists who concentrated mainly on individual markets, Keynes examined the functioning of the entire economy and the interdependence among different sectors such as households, firms and the government. His approach explained problems like prolonged unemployment and inadequate aggregate demand, laying the foundation of modern macroeconomics. Therefore, Option A is the correct answer.

❓ Why Other Options Are Incorrect

�� Option B → This reflects Adam Smith's illustration of microeconomic behaviour rather than Keynes's macroeconomic approach.
�� Option C → Keynes argued that markets can fail and may require government intervention.
�� Option D → Keynes demonstrated that long-lasting unemployment is possible.

🎯 Strategy

Used

Elimination

Application:

Identify the feature that distinguishes Keynesian macroeconomics from the classical approach.

Final Logic:

Keynes = Whole Economy + Sectoral Interdependence.

🧠 Memory Trick

Keynes = Whole Economy

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Keynesian Approach

📄 Passage

"Macroeconomics, as a separate branch of economics, emerged after the British economist John Maynard Keynes published his celebrated book The General Theory of Employment, Interest and Money in 1936. The dominant thinking in economics before Keynes was that all the labourers who are ready to work will find employment and all the factories will be working at their full capacity. This school of thought is known as the classical tradition."

Based on the passage, macroeconomics emerged as a separate branch of study primarily:

A Before the 19th century

B Due to the Physiocrats of France

C After the publication of Keynes's celebrated book in 1936

D Because Adam Smith supported full employment

💡 Short Explanation

�� Keynes published The General Theory in 1936. �� His work established modern macroeconomics. �� It challenged the classical tradition.

✅ Correct Answer Explanation

The passage clearly states that macroeconomics emerged as a separate branch after John Maynard Keynes published The General Theory of Employment, Interest and Money in 1936. His work provided explanations for prolonged unemployment and economic instability that classical economics could not adequately explain. Therefore, Option C is the correct answer.

❓ Why Other Options Are Incorrect

�� Option A → Macroeconomics did not emerge before the 19th century.
�� Option B → The Physiocrats influenced economics but did not establish macroeconomics.
�� Option D → Adam Smith belonged to the classical tradition and did not found macroeconomics.

🎯 Strategy

Used

Contextual/Tonal Matching

Application:

Locate the statement in the passage identifying the origin of macroeconomics.

Final Logic:

1936 → Keynes → Macroeconomics.

🧠 Memory Trick

1936 = Birth of Macro

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Emergence of Macroeconomics

📄 Passage

The classical tradition failed to explain the massive ________ experienced during the Great Depression.

A Output decline and factory idling

B Rise in full employment

C Profit maximization of all firms

D Efficiency of the free market

💡 Short Explanation

�� The Great Depression caused severe economic contraction. �� Factories remained idle. �� Classical theory failed to explain persistent unemployment.

✅ Correct Answer Explanation

The Great Depression witnessed a sharp decline in output, widespread factory idling and massive unemployment. These developments directly contradicted the classical belief that markets would automatically ensure full employment and full-capacity production. Keynes's macroeconomic theory emerged to explain these failures. Therefore, Option A is the correct answer.

❓ Why Other Options Are Incorrect

�� Option B → The Great Depression was characterized by unemployment, not full employment.
�� Option C → Profit maximization was not the major issue highlighted during the Depression.
�� Option D → The crisis exposed the limitations of relying solely on free-market adjustments.

🎯 Strategy

Used

Elimination

Application:

Identify the economic condition that contradicted the assumptions of the classical school.

Final Logic:

Great Depression = Idle Factories + Falling Output.

🧠 Memory Trick

Depression = Output Falls

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Great Depression and Failure of Classical Economics

18 According to the text, the Unemployment Rate Equation =
(Number of people not working and looking for jobs) ÷ (________)

A Total population

B Total number of children

C Total number of employed people only

D Total number of people who are working or looking for jobs

💡 Short Explanation

�� The unemployment rate uses the labour force. �� The labour force includes employed and unemployed persons seeking work. �� Children and persons outside the labour force are excluded.

✅ Correct Answer Explanation

The unemployment rate is calculated by dividing the number of unemployed persons actively looking for work by the total labour force. The labour force consists of all people who are either employed or unemployed but actively seeking employment. Therefore, the denominator is the total number of people who are working or looking for jobs. Hence, Option D is the correct answer.

❓ Why Other Options Are Incorrect

�� Option A → The total population includes children and others outside the labour force.
�� Option B → Children are not part of the labour force.
�� Option C → The denominator must include both employed and unemployed persons seeking work.

🎯 Strategy

Used

Dimensional/Unit Analysis

Application:

Identify the correct denominator used in the unemployment rate formula.

Final Logic:

Unemployment Rate = Unemployed ÷ Labour Force.

🧠 Memory Trick

Labour Force = Working + Looking

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Unemployment Rate

19 Which statement correctly explains "demand deficiency" during the Great Depression?

A People were buying too many goods, causing shortages.

B Demand for goods in the market was low, causing factories to lie idle.

C Prices of all goods were rising too fast (inflation).

D There was too much money supply in the economy.

💡 Short Explanation

�� Demand collapsed during the Great Depression. �� Low demand reduced production. �� Idle factories led to unemployment.

✅ Correct Answer Explanation

Demand deficiency refers to a situation where aggregate demand is too low to purchase the goods and services produced in the economy. During the Great Depression, weak demand caused factories to remain idle, production to decline and workers to lose their jobs. Keynes argued that government intervention was necessary to increase aggregate demand. Therefore, Option B is the correct answer.

❓ Why Other Options Are Incorrect

�� Option A → Excess demand causes shortages, not demand deficiency.
�� Option C → Inflation is associated with rising prices, whereas the Great Depression involved declining demand.
�� Option D → The problem highlighted was insufficient demand rather than excessive money supply.

🎯 Strategy

Used

Contextual/Tonal Matching

Application:

Relate the concept of demand deficiency to the economic conditions described during the Great Depression.

Final Logic:

Low Demand → Idle Factories → Unemployment.

🧠 Memory Trick

Low Demand = Low Production

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Demand Deficiency and Great Depression

20 Match the Following

List 1	List 2
1. Emergence of Macroeconomics	a. Great Depression USA
2. Founding father of modern economics	b. Adam Smith
3. 25% Unemployment	c. France
4. Physiocrats	d. J.M. Keynes

A (1)-b, (2)-d, (3)-a, (4)-c

B (1)-d, (2)-b, (3)-c, (4)-a

C (1)-d, (2)-b, (3)-a, (4)-c

D (1)-a, (2)-b, (3)-c, (4)-d

💡 Short Explanation

�� Keynes founded modern macroeconomics. �� Adam Smith is the father of modern economics. �� The Physiocrats originated in France.

✅ Correct Answer Explanation

1 → d : Modern macroeconomics emerged through the work of J.M. Keynes. 2 → b : Adam Smith is widely regarded as the founding father of modern economics. 3 → a : The unemployment rate in the USA reached 25% during the Great Depression. 4 → c : The Physiocrats were a school of economic thought that originated in France. Therefore, Option C is the correct answer.

❓ Why Other Options Are Incorrect

�� Option A → Emergence of macroeconomics is incorrectly matched with Adam Smith.
�� Option B → The 25% unemployment rate is incorrectly matched with France.
�� Option D → Emergence of macroeconomics is incorrectly matched with the Great Depression instead of Keynes.

🎯 Strategy

Used

Option Grouping

Application:

Match each concept with its correct economist, event or place.

Final Logic:

Keynes → Macro, Smith → Modern Economics, 25% → USA, Physiocrats → France.

🧠 Memory Trick

Keynes–Macro | Smith–Modern | 25%–USA | Physiocrats–France

📚 Class XII – Introductory Macroeconomics – Chapter: Introduction – Topic: Emergence of Macroeconomics and History of Economic Thought

CUET UG Economics Booster Test 2 – Evolution of Macroeconomic Thought and Public Policy

CUET UG Economics Booster Test 2 - Evolution of Macroeconomic Thought and Public Policy

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