UGC NET Economics Unit 3 PYQs

UGC NET Economics Unit 3 focuses on Public Economics, one of the most important and scoring sections of the syllabus. The unit examines the role of government in economic activities, public expenditure, taxation, fiscal policy, public debt, and welfare economics.

Previous Year Questions (PYQs) from Unit 3 test candidates on taxation principles, public goods, market failure, budget deficits, fiscal federalism, social welfare functions, and government intervention in the economy. Practicing PYQs helps candidates identify recurring themes, strengthen conceptual clarity, and improve their exam performance.

UGC NET Economics Unit 3 PYQs with Answers

Below are the UGC NET Economics Unit 3 Previous Years Questions along with their answers:

1. Arrange the following taxes in the sequence in which they were introduced, starting from the earliest to the latest?

(A) Commodities Transaction Tax

(B) Securities Transaction Tax

(C) Banking Cash Transaction Tax

(D) Minimum Alternate Tax

(E) Angel Tax

Choose the correct answer from the options given below:

Options:

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

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

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

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

Answer: (C) (D), (B), (C), (E), (A)

2. Which of the following is the biggest item of grants-in-aid to the states assigned by the Fifteenth Finance Commission?

(A) Disaster risk management grants

(B) Revenue deficit grants

(C) Local bodies grants

(D) Sector specific grants

Answer: (B) Revenue deficit grants

3. Match List - I with List - II.

Choose the correct answer from the options given below :

Options:

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

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

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

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

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

4. Arrange the following norms of the tax revenue devolution formula of the Fifteenth Finance Commission in order of their weightages, starting from the highest.

(A) Income distance

(B) Area

(C) Demographic performance

(D) Forest and Ecology

(E) Tax effort

Choose the correct answer from the options given below :

Options:

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

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

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

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

Correct Answer: (A): (A), (B), (C), (D), (E)

5. Match the List-I with List-II.

Options:

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

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

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

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

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

6. Which of the following properties is satisfied in the case of "fishing in an ocean"?

(A) Non-excludable and non-rival

(B) Non-excludable but rival

(C) Non-rival but excludable

(D) Excludable and rival

Answer: (B) Non-excludable but rival (It represents a Common Pool Resource)

7. Which of the following is not true in case of deadweight loss of taxes?

(A) The deadweight loss of the tax is the extent to which the reduction in welfare exceeds the revenue raised

(B) Deadweight loss is proportional to the square of the tax rate.

(C) Deadweight loss is the tax-induced distortion of commodity taxation.

(D) Deadweight loss of commodity taxation is inversely related to the elasticity of demand.

Answer: (D) Deadweight loss of commodity taxation is inversely related to the elasticity of demand. (Deadweight loss is actually directly proportional to the elasticity of demand).

8. Which of the following are not true with reference to distortions of corporation tax?

A. Encourage short-lived verses long-lived capitals goods.

B. Encourage investment in assets that can be collaterized compared with those that can not.

C. Encourage investment in Industries having lower debt equity ratios.

D. May give rise to leasing and tax-induced mergers.

Choose the correct answer from the options given below :

Options:

(A) A only

(B) A and C only

(C) A, C and D only

(D) B and D only

Answer: (B) A and C only (Corporate tax distortions typically discourage short-lived assets and encourage firms to take on debt over equity due to interest tax deductions, making statements A and C untrue).

9. Which of the following arguments for a consumption based tax is/are correct ?

A. People should be taxed on what they take out of the system, not on what they contribute

B. A consumption based tax can be made progressive

C. A consumption based tax increases dead weight loss

D. Discriminates against consumption later in life

E. Eliminates distortions arising from hybrid tax system, with some saving taxed differently from others

Choose the most appropriate answer from the options given below :

Options:

(A) A, B and C only

(B) A, B and D only

(C) A, B and E only

(D) C, D and E only

Answer: (C) A, B and E only

10. Arrange the revenue expenditure of the Union govt. for major items (in ₹ lakhs crore) for the FY 2023-24 (BE) in ascending order:

A. Salaries (pay and allowances)

B. Pensions

C. Interest Payments

D. Major subsidies

E. Defence services

Choose the correct answer from the options given below:

Options:

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

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

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

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

Answer: (C) E, B, A, D, C