UGC NET Economics Unit 2 (Macro Economics) Important PYQs

UGC NET Economics Unit 2 covers important macroeconomic concepts that frequently appear in the examination. Questions are commonly asked on inflation, monetary policy, money supply, interest rates, consumption theories, exchange rate systems, national income determination, and contributions of major economists. 

Many candidates find this unit challenging because it combines theoretical concepts with analytical and application-based questions. Practicing Previous Year Questions (PYQs) can help candidates identify recurring themes, strengthen conceptual clarity, and improve accuracy in solving match-the-following, assertion-based, and theory-oriented questions. 

What Does the UGC NET Economics Unit 2 PYQ Session Cover

This UGC NET Economics Unit 2 session focuses on important macroeconomic and monetary economics topics that have been repeatedly asked in previous examinations. Key areas covered include:

• Inflation and its economic costs

• Interest rate theories and monetary policy

• Money supply and equilibrium analysis

• National income determination

• Leakage-injection approach

• Consumption and saving theories

• Exchange rate systems and balance of payments

• Economic growth and development concepts

• Contributions of major economists

• Match-the-following and conceptual PYQs

Important PYQs for UGC NET Economics Unit 2

These important Previous Year Questions cover major Economics Unit 2 topics that are frequently asked in UGC NET examinations.

Q1. Inflation confers no benefits on society, but it imposes several real costs. What among the following are costs of inflation?

(A) Shoeleather costs associated with reduced money holdings
(B) Menu cost associated with more frequent adjustmental prices
(C) Increased variability of relative prices
(D) Unintended changes in tax liabilities due to non-indexations of the tax code
(E) Arbitrary redistribution of wealth associated with debts

Choose the correct answer from the options given below:

(A) (A), (B), (C) only
(B) (C), (D), (E) only
(C) (B), (D), (A) only
(D) (A), (B), (C), (D), (E)

Q2. The ______ effect implies that nominal interest rates tend to be high when inflation is high and low when inflation is low.

(A) Tobin effect
(B) Baumol effect
(C) Fisher effect
(D) Patinkin effect

Q3. The rise in the nominal stock of money causes:

(A) An increase in the equilibrium nominal interest rate and a decrease in equilibrium real income.
(B) A reduction in the equilibrium nominal interest rate and an increase in equilibrium real income.
(C) A reduction in the equilibrium nominal interest rate and a decrease in equilibrium real income.
(D) An increase in the equilibrium nominal interest rate and an increase in equilibrium real income.

Q4. In the leakage-injection approach to income determination, an increase in lump-sum tax ceteris paribus shifts:

(A) Investment plus government spending line upward
(B) Investment plus government spending line downward
(C) The savings plus tax line to the left
(D) Increases the equilibrium level of income

Q5. Match List-I with List-II

Choose the correct answer from the options given below:

(A) (A)-(IV), (B)-(I), (C)-(III), (D)-(II)
(B) (A)-(III), (B)-(IV), (C)-(I), (D)-(II)
(C) (A)-(III), (B)-(II), (C)-(IV), (D)-(I)
(D) (A)-(II), (B)-(IV), (C)-(I), (D)-(III)

Q6. Match List-I with List-II

Choose the correct answer from the options given below:

(A) A-IV, B-I, C-II, D-III
(B) A-I, B-IV, C-II, D-III
(C) A-IV, B-II, C-III, D-I
(D) A-II, B-III, C-IV, D-I

Q7. Under fixed exchange rate system, an increase in domestic interest over foreign interest rate will result in:

(A) An appreciation of domestic currency
(B) A depreciation of domestic currency
(C) An increase in domestic money supply
(D) A decrease in domestic money supply

Q8. According to the Life Cycle Theory of Consumption:

A. Consumption is constant throughout the life span
B. Consumers consume more while earning
C. Saving is constant throughout the life span
D. Retirement consumption is entirely financed through dissaving
E. Consumption keeps increasing with age

Choose the correct answer from the options given below:

(A) C and D only
(B) A and D only
(C) A, B and E only
(D) B, C and D only

Q9. Match List-I with List-II

Choose the correct answer from the options given below:

(A) A-II, B-I, C-III, D-IV
(B) A-II, B-I, C-IV, D-III
(C) A-II, B-III, C-I, D-IV
(D) A-III, B-II, C-IV, D-I

Q10. Match List-I with List-II

Choose the correct answer from the options given below:

(A) A-III, B-IV, C-I, D-II
(B) A-IV, B-III, C-II, D-I
(C) A-III, B-IV, C-II, D-I
(D) A-I, B-IV, C-II, D-III

Preparation Tips for UGC NET Economics Unit 2

Economics Unit 2 contains several conceptual and analytical topics that require both theoretical understanding and regular practice. Candidates can improve their preparation by focusing on the following areas:

• Revise inflation theories, inflation costs, and monetary policy concepts regularly.

• Understand major interest rate theories, including the Fisher Effect and related macroeconomic models.

• Practice money supply and income determination questions using IS-LM and Keynesian frameworks.

• Focus on consumption theories such as the Life Cycle Hypothesis and Permanent Income Hypothesis.

• Learn important economists and their contributions, as match-the-following questions are frequently asked.

• Revise exchange rate systems, balance of payments adjustment mechanisms, and international macroeconomics concepts.

• Prepare important macroeconomic models and policy frameworks related to inflation targeting and rational expectations.

• Solve PYQs regularly to identify recurring concepts and improve conceptual accuracy.

Regular revision and PYQ practice can help candidates strengthen their understanding of Economics Unit 2 and improve their performance in the UGC NET examination.