SSC CGL Economics Previous Year Questions – Part (1)
This will be a 6 part series where I will pick the trickiest economics questions asked in CGL 2025. This is the first part with 10 questions.
1. Assertion (A): In macroeconomics, treating a single commodity as
representative of all goods allows simplification of aggregate analysis
Reason (R): This is because all individual goods always behave identically
under inflationary trends
This assertion and reasoning question was asked in Shift 2 of CGL exam on 20 September, 2025. The answer is: Assertion is true but Reason is false.
The “single commodity” or representative good assumption is a standard simplification in macroeconomic modeling. It allows economists to aggregate output, consumption, and investment into a single real variable (like real GDP), making models like the Solow growth model or basic AD-AS frameworks tractable without tracking every individual good.
Individual goods do not always behave identically under inflationary trends. The actual justification for the representative commodity assumption is analytical convenience and tractability, not because goods behave identically.
It is a deliberate simplification, and economists are well aware it abstracts away from real-world heterogeneity in price behavior. Models that do account for this (like multi-sector DSGE models) exist precisely because the single-good assumption has meaningful limitations.
2. Which sectors were largely excluded from industrial licensing after 1991?
This question was asked in Shift 2 of CGL exam on 24 September, 2025. The answer to this question is Alcohol, Cigarettes, Explosives.
Sectors that were excluded from industrial licensing after 1991:
- Defence and strategic industries
- Hazardous chemicals
- Alcoholic beverages
- Tobacco and tobacco products
- Industries reserved for the public sector
- Explosives
3. Assertion (A): The 1991 reforms led to the opening of the Indian economy to
foreign investors.
Reason (R): The government wanted to increase domestic savings rate rapidly.
This question was asked in Shift 1 of CGL on 17 September 2025. The Assertion (A) is correct, but the Reason (R) is incorrect.
The 1991 economic reforms did open the Indian economy to foreign investors. Key measures included:
- Foreign Direct Investment (FDI) was allowed in many sectors with automatic approval up to 51% foreign equity in high-priority industries.
- Foreign Institutional Investors (FIIs) were permitted to invest in Indian capital markets
- FERA (Foreign Exchange Regulation Act) was progressively diluted and later replaced by FEMA (Foreign Exchange Management Act).
- Import licensing was reduced and tariffs were rationalized.
- The rupee was made partially convertible on the current account.
The reason stated is factually incorrect. The primary motivations behind opening the economy to foreign investors were:
1. Balance of Payments (BoP) crisis of 1990–91: India’s foreign exchange reserves had fallen critically low (barely enough for 2 weeks of imports).
2. Fiscal deficit was unsustainably high.
3. Need for foreign capital inflows to stabilize the external sector: the goal was to attract foreign exchange, not boost domestic savings.
4. Pressure from IMF and World Bank as conditions attached to the $1.8 billion IMF loan.
5. Long-run goal of enhancing efficiency and competitiveness through foreign competition.
4. The rolling plan concept was introduced during which Prime Minister’s tenure?
This question was asked in 3rd shift on 23 September 2025 exam. The answer to this question is option (c): Morarji Desai.
The Janata government scrapped the Fifth Five Year Plan (1974–79) prematurely in 1978 and replaced the rigid five-year planning model with Rolling Plans. The idea was that targets and allocations would be revised every year based on actual performance, prices, and resources, making the plan more flexible and realistic.
The concept was operationalized under the guidance of D.T. Lakdawala (then Deputy Chairman of the Planning Commission). When Indira Gandhi returned to power in 1979, she scrapped the Rolling Plans and reinstated the traditional five-year plan model, launching the Sixth Five Year Plan (1980–85).
5. Under which Five Year Plan was the Green Revolution introduced in India?
This question was asked in Shift 3 on 25 September, 2025 of CGL exam. The answer is option (c): Third Plan.
The Green Revolution in India was introduced during the Fourth Five Year Plan (1969–1974). The Green Revolution’s origins and groundwork were laid earlier, during the Third Five Year Plan (1961–1966), and it gained momentum during the Plan Holiday period (1966–1969).
6. What led to regional disparity despite the overall success of the Green
Revolution?
This question was asked in Shift 1 on 21 September, 2025 of CGL exam. The answer is option (c): HYV seed access restricted to well-irrigated regions.
Despite significantly boosting agricultural productivity, the Green Revolution widened regional inequalities in India due to several interconnected factors:
- HYV seeds required controlled and assured water supply.
- Canal and tube well irrigation was concentrated in northwestern India.
- Rain-fed and dryland areas, covering much of peninsular and eastern India, could not adopt the new technology effectively.
- Much of eastern and central India had different soil types and climatic conditions unsuitable for the HYV varieties developed at the time.
7. Which of the following best defines the concept of ‘opportunity cost’?
This question was asked in Shift 1 on 21 September, 2025 of CGL exam. The answer is option (b) The next best alternative foregone.
Opportunity cost is the value of the next best alternative that is sacrificed when a choice is made between competing options. It reflects the real cost of any decision in terms of what must be given up.
It is always about the next best alternative, not just any alternative. It need not always be monetary, it can be time, leisure, or any resource.
8. Assertion (A): Globalization led to increased inequality in India.
Reason (R): Growth was unevenly distributed, benefiting mostly urban elite
and service sectors.
This question was asked in Shift 2 on 18 September, 2025 of CGL exam. The answer is option (a) Both the Assertion (A) and the Reason (R) are correct, and the Reason correctly explains the Assertion.
Globalization, particularly post-1991 liberalization, did contribute to increased inequality in India across multiple dimensions. Income inequality rose & wealth concentration increased significantly. Oxfam reports have consistently highlighted India as one of the most unequal large economies.
The uneven distribution of growth benefits is indeed the primary mechanism through which globalization generated inequality. IT, finance, and professional services concentrated in cities saw explosive growth. Urban workers with English education and technical skills captured high-paying jobs. Real estate and capital asset owners in cities saw massive wealth appreciation.
9. Which of the following best defines Capital Receipts?
This question was asked in Shift 2 on 18 September, 2025 of CGL exam. The answer is option (c) Receipts that create liability or reduce government assets.
Capital Receipts are those government receipts which either: Create a liability for the government i.e., the government has to repay them, OR
Reduce the assets of the government i.e., the government sells something it owns.
Capital receipts are used to finance the fiscal deficit. Heavy reliance on borrowings as capital receipts increases public debt burden. Disinvestment as a capital receipt is preferred as it does not create future liability. Capital receipts are recorded in the Capital Account of the government budget.
10. Statement 1: Income tax and dividends from PSUs are classified as revenue receipts in the government budget.
Statement 2: Disinvestment in PSUs is also a revenue receipt as it brings income
to the government.
This question was asked in Shift 2 on 26 September, 2025 of CGL exam. The answer is option (a) Only Statement 1 is correct.
Statement 1 is correct because income tax and PSU dividends are standard Revenue Receipts. Statement 2 is incorrect because disinvestment is a Capital Receipt because it reduces government assets, regardless of the fact that it generates income.
