Of course. Since the actual KSET Economics paper for November 2, 2025, is not publicly available immediately after the exam and is confidential, I cannot provide the exact paper.
However, based on the established pattern and syllabus of the KSET Economics exam, I can create a highly realistic and representative mock question paper that mirrors the structure, difficulty level, and topics you likely encountered.
Here is a simulated KSET Economics Question Paper based on today’s date.
KARNATAKA STATE ELIGIBILITY TEST (KSET) 2025
Subject: Economics
Paper: II & III
Date: 02nd November, 2025(Simulated Paper)
Time: 2 Hours 30 Minutes
Maximum Marks: 200
Instructions:
· Paper II is compulsory for all candidates.
· Paper III has two parts. Answer Question 16 from Part-A and any four from Part-B (Questions 17 to 21).
· All questions carry equal marks.
PAPER – II
(Answer all the questions)
- Which of the following is NOT a property of a Cobb-Douglas production function?
a) Constant returns to scale
b) Unit elasticity of substitution
c) Output elasticity of inputs is constant
d) Marginal product of an input is independent of other inputs - In the context of National Income accounting, which of these is a transfer payment?
a) Salary of a government employee
b) Pension paid to a retired soldier
c) Interest on national debt
d) Payment to a contractor for building a road - The Gini coefficient is a measure of:
a) Poverty
b) Unemployment
c) Income Inequality
d) Economic Growth - The “Twin Deficit” hypothesis in macroeconomics refers to:
a) Fiscal Deficit and Revenue Deficit
b) Fiscal Deficit and Current Account Deficit
c) Primary Deficit and Revenue Deficit
d) Budget Deficit and Trade Deficit - According to the Solow growth model, in the steady state, the per capita output grows at the rate of:
a) Savings rate
b) Population growth rate
c) Technological progress
d) Depreciation rate - The Laffer Curve illustrates the relationship between:
a) Inflation and Unemployment
b) Tax Rates and Tax Revenue
c) Interest Rates and Investment
d) Income and Consumption - The “Impossible Trinity” in international finance states that a country cannot simultaneously have:
a) Free capital flow, Fixed exchange rate, and Independent monetary policy
b) Free trade, Fixed exchange rate, and Low inflation
c) Fiscal discipline, Current account surplus, and Stable currency
d) High growth, Low inflation, and Low unemployment - The New Economic Policy of 1991 in India did NOT include:
a) Devaluation of Rupee
b) Abolition of Industrial Licensing
c) Nationalization of Banks
d) Reduction in Fiscal Deficit - The Human Development Index (HDI) is a composite index of:
a) Life expectancy, Education, and Per capita income
b) Life expectancy, Literacy, and Poverty ratio
c) Literacy, Infant mortality, and Sanitation
d) Education, Health expenditure, and GDP growth - The “Green Revolution” in India was most successful in the production of:
a) Pulses and Oilseeds
b) Wheat and Rice
c) Cotton and Jute
d) Sugarcane and Tea - The main objective of the FRBM Act was to:
a) Promote foreign direct investment
b) Ensure fiscal discipline for the central government
c) Regulate the stock market
d) Control inflation through monetary policy - In Game Theory, a “Nash Equilibrium” is a situation where:
a) All players cooperate for mutual benefit.
b) No player can benefit by unilaterally changing their strategy.
c) The total payoff to all players is maximized.
d) One player always dominates the others. - The Kuznets hypothesis postulates an inverted U-shaped relationship between:
a) Inflation and Unemployment
b) Economic growth and Environmental degradation
c) Economic development and Income inequality
d) Population growth and Per capita income - Which of the following is a direct tax?
a) Goods and Services Tax (GST)
b) Customs Duty
c) Corporate Income Tax
d) Excise Duty (now subsumed under GST) - The concept of “Moral Hazard” is best described as:
a) A situation where one party has more information than another.
b) The risk that a party has not entered into a contract in good faith.
c) The actions of one party change after a contract is signed, to the detriment of the other party.
d) The tendency for low-quality products to drive high-quality products out of the market.
PAPER – III
PART – A
(Compulsory Question)
- Critically examine the impact of the Goods and Services Tax (GST) on the Indian economy since its implementation. Discuss its successes, challenges, and the way forward for further reforms.
PART – B
(Answer any FOUR of the following questions)
- Explain the Ricardian Theory of Comparative Cost Advantage. How does it differ from the Heckscher-Ohlin theory of international trade? Discuss its relevance in the context of globalization.
- What is market failure? Discuss the various causes of market failure. Explain the role of the government in correcting these failures with suitable examples from the Indian context.
- Compare and contrast the Classical and Keynesian theories of employment. In your opinion, which theory provides a more relevant framework for understanding unemployment in a developing economy like India?
- Discuss the trends and composition of India’s foreign trade since the economic reforms of 1991. Analyze the impact of recent global events (e.g., COVID-19, Russia-Ukraine war) on India’s trade balance.
- What is environmental economics? Explain the concept of “Sustainable Development” and discuss the various policy instruments available to achieve it, with special reference to India’s climate change commitments.
Answer Hints for Objective Questions (Paper-II):
- d) A key property of Cobb-Douglas is that the marginal product of one input depends on the quantity of other inputs.
- b) & c) Pensions and interest on debt are classic examples of transfer payments (no good/service is provided in return).
- c) The Gini coefficient measures the degree of income or wealth inequality in an economy.
- b) The Twin Deficit hypothesis links the government’s fiscal deficit with the nation’s current account deficit.
- c) In the steady state, per capita growth is zero unless exogenous technological progress is included.
- b) The Laffer Curve is a central concept in supply-side economics, showing the relationship between tax rates and government revenue.
- a) A country must choose two out of these three policy goals; all three are impossible to maintain together.
- c) Nationalization of banks happened in 1969 and 1980, not in 1991. The 1991 reforms were about liberalization.
- a) The three dimensions of HDI are a long and healthy life, being knowledgeable, and having a decent standard of living.
- b) The Green Revolution was primarily focused on increasing the yield of wheat and rice.
- b) The Fiscal Responsibility and Budget Management (FRBM) Act was enacted to institutionalize fiscal discipline.
- b) This is the standard definition of a Nash Equilibrium in non-cooperative games.
- c) Simon Kuznets hypothesized that as an economy develops, inequality first increases and then decreases.
- c) Direct taxes are levied directly on individuals and corporations (e.g., Income Tax, Corporate Tax). Indirect taxes are levied on goods and services.
- c) Moral Hazard occurs when an individual or institution takes on more risk because they are protected from the consequences.
Disclaimer: This is a simulated question paper created for practice and illustrative purposes based on the expected KSET pattern and syllabus. It is not the actual question paper from the exam.