CAT 2025 Slot 1 Question Paper with Solutions – Page 8
All 69 questions of CAT 2025 Slot 1. Tap Show answer, or open the detailed solution (free login). Page 8 of 17.
Refer to the passage above ↑
he primary function of the three-part case for a positive income inequality–economic growth link in the first half of the passage is to show that:
- inequality boosts growth in every period and type of economy, regardless of finance or governance conditions.
- dispersed ownership speeds corporate decision-making and removes free rider problems.
- mature stock markets make wealth concentration unnecessary, yet they might still be harmful to investment.
- inequality can aid short-term growth in settings with high sunk costs, incentive alignment, and concentrated ownership.
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Answer: D. inequality can aid short-term growth in settings with high sunk costs, incentive alignment, and concentrated ownership.
Refer to the passage above ↑
The passage refers to "democratization". Choose the one option below that comes closest to the opposite of this process.
- The coalition imposed term limits and strengthened judicial review in order to further entrench autocratic rule.
- After the emergency decree, the regime shifted toward authoritarianism as suffrage narrowed and opposition parties were deregistered.
- Municipalities adopted participatory budgeting and recall elections which a press release called totalitarianism.
- Corporate donations were capped and parties received public funding which was portrayed as establishing an oligarchy.
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Answer: B. After the emergency decree, the regime shifted toward authoritarianism as suffrage narrowed and opposition parties were deregistered.
Refer to the passage above ↑
According to the incentive or moral hazard argument, which one of the designs below is most consistent with the claim that some inequality can raise growth?
- Pay rewards on verifiable performance for highly productive workers.
- A regime that concentrates stock ownership in relation to corporate governance.
- Wages are determined by tenure rather than output to ensure equity.
- Rents protected by market power that enlarge top incomes without linking pay to results.
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Answer: A. Pay rewards on verifiable performance for highly productive workers.
Refer to the passage above ↑
The primary function of the three-part case for a positive income inequality–economic growth link in the first half of the passage is to show that:
- inequality boosts growth in every period and type of economy, regardless of finance or governance conditions.
- dispersed ownership speeds corporate decision-making and removes free rider problems.
- mature stock markets make wealth concentration unnecessary, yet they might still be harmful to investment.
- inequality can aid short-term growth in settings with high sunk costs, incentive alignment, and concentrated ownership.
Show answerHide answer
Answer: D. inequality can aid short-term growth in settings with high sunk costs, incentive alignment, and concentrated ownership.