Subject: Economics
Class XII
Time Allowed: 3 hours
Max. Marks: 80
Section – A
Q1. Which of the following can be used to correct inflationary gap under monetary policy’?
a. Increase in taxation
b. Cut in government expenditure
c. Reduce availability of credit
d. Raise the level of employment
Q2. Identify the correct formula of calculating operating surplus.
a. Compensation of employees + Rent + Interest + Profit
b. Rent + interest + Profit
c. Compensation of employees +Mixed income of self-employed
d. Rent + Interest + Profit + Mixed income of self employed
Q3. When Autonomous consumption is 75, MPC =0.65 and Y = 1500, consumption will be:
a) 900
b) 975
c) 1050
d) 800
Q4. National Income is the sum of factor incomes accruing to
a) Nationals
b) Residents
c) Economic territory
d) Both residents and non-residents
Q5. If the marginal propensity to consume is greater than marginal propensity to save, the value of multiplier wil1 be:
a) Greater than 2
b) equal to 1
c) Less than 2
d) equal to 2
Q6. Write ‘True’ or ‘False’ with a reason.
Financial help given to flood victims is included in the national income of India.
Q7. Suppose in an economy, the initial deposits of rupees 200 crores lead to the creation of total deposits worth rupees 1,600 crores. Under the given situation the value of legal reserve requirements will be __________
Q8. Read the following statements carefully and choose the correct alternative from the following:
Statement 1: Increase in Reserve Repo Rate helps to correct the excess demand.
Statement 2: The credit creating power of commercial banks can be increased by raising the reverse repo rate.
Alternatives:
a) Both the statements are true.
B) Statement 1 is true and statement 2 is false
c) Both the statements are false
d) Statement 2 is true and statement 1 is false
09. From the set of statements given in Column I and Column I, choose the correct pair of statements:
| Column I | Column II |
| Quantitative instrument | Margin requirements |
| Decrease in govt. spending | Part of fiscal policy |
| Qualitative instrument | Legal reserve requirements |
| Increase in taxes | Part of monetary policy |
Q10. Explain the treatment assigned to the following while estimating National Income. Give reasons
a) Expenditure on maintenance of a building
b) Profits earned by an Indian Bank from its branches abroad
c) Expenditure by government in providing five education
Q11. In an economy, the consumption function is C=900 + 0.6, where C is consumption expenditure and Y is income. Calculate the equilibrium level of income and saving when investment expenditure is rupees 7000.
Q12. Explain how the central bank plays the role of ‘controller of credit’ in an economy.
Q13. Answer the following questions:
a) If C 100+ 0.75 Y, write the saving function.
b) Give the meaning of deflationary gap.
(c) What is the relationship between average propensity to consume and average propensity to save?
(d) Mention the situation in which gross domestic capital formation is equal to gross domestic fixed capital formation.
Q14. Read the following information carefully and answer the questions on the basis of the same:
Can the GDP of a country be taken as an Index of the welfare of the people of that country? If a person has more income, he or she can buy more goods and services and his or her material well-being improves. So, it may seem reasonable to treat his or her income level as his or her level of well-being. GDP is the sum total of value of goods and services created within the geographical boundary of a country in a particular year. It gets distributed among the people as incomes (except for retained earnings). So we may be tempted to treat higher level of GDP of a country as an index of greater well-being of the people of that country (to account for price changes, we may take the value of real GDP instead of nominal GDP).
14.1 Environmental pollution related to production activity is an example of __________
a) Positive externality
b) Negative externality
c) Zero externality
d) both positive and negative externality
14.2 ___________ is considered as a better index of welfare of the people.
a) Actual GDP
b) Real GDP
c) Nominal GDP
d) Potential GDP
14.3 With a rise in real national income, welfare of the people:
a) rises
b) either (a) or (b)
c) falls
d) remains unchanged
14.4 Read the following statements carefully and choose the correct alternative among those given below:
Statement 1: GDP as an index of welfare loses significance if the distribution of income turns unequal.
Statement 2: GDP fails to account for the impact of externalities on social welfare.
Alternatives:
a) Both statements are true
b) Statement 1 is true and statement 2 is false
c) Both the statements are false
d) Statement 2 is true and statement 1 is false
Q15. Given consumption curve derive the saving curve and state the steps taken in the process of derivation. Use diagram.
Q16. Assuming that ‘increase’ in investment is Rs. 900 crores and marginal propensity to consume is 0.6, explain the working of multiplier.
Q17. Estimate the national income by (a) expenditure method and (b) income method from the following data:
| (Items) | (rupees in crore) |
| Private final consumption expenditure | 210 |
| Government final consumption expenditure | 50 |
| Net domestic capital formation | 40 |
| Net exports | 5 |
| Wages and salary | 170 |
| Employers’ contribution to provident fund | 10 |
| Profit | 45 |
| Interest | 20 |
| Indirect taxes | 30 |
| Subsidies | 5 |
| Rent | 10 |
| Net factor income from abroad | 3 |
| Consumption of fixed capital | 25 |
| Royalty | 15 |
Section – B
Indian Economic Development
Q18. Which one of the following organizations regulates the health sector in India?
a) ICMR
b) UGC
c) AICTE
d) NCERT
Q19. Which of the following five-year plans recognized the importance of human capital?
a) Sixth
b) Second
c) Seventh
d) Ninth
Q20. The Architect of Indian Planning was:
a) Jawaharlal Nehru
b) P.C Mahalanobis
c) Sardar Vallabh Bhai Patel
d) B. R. Ambedkar
Q21. In the 20th century, under British Rule, India had an export surplus. Where was this surplus used?
a) To invest in capital goods industries in India
b) To invest in capital goods industries in Britain.
c) To meet the official and war expenses of the British
d) To pay the salaries of Indian government employees
Q22. The WTO was founded as the successor organization to ____________
a) International Monetary Fund (IMF)
b) National Bank for Agriculture and Rural Development (NABARD)
c) General Agreement on Tariffs and Trade (GATT)
d) International Bank for Reconstruction and Development (IBRD)
Q23. Read the following statement carefully. Write ‘True’ or ‘False’ with a reason.
Policy of import substitution is pursued to promote self-sufficiency.
Q24. Who amongst the following has received the greatest investment in human capital formation?
a) A nurse in a clinic who is frequently absent because of her ill health.
b) A 12-year old who helps her mother with construction work
c) A 10th pass girl who works as a store manager in a mall.
d) A computer science graduate who works at a call centre.
Q25. From the set of statement given in Column I and Column II, choose the correct pair of statements:
| Column I | Column II |
| A. Human Capital | i. Skill and expertise acquired by the residents of a country over time. |
| B. ICMR | ii. Enforces rules and regulations regarding technical education in the country |
| C. UGC | iii. Enforces rules and regulations regarding health education in the country. |
| D. On the job training program | iv. Training program prior to employment |
a) A – (i)
b) C – (iii)
c) B – (ii)
d) D – (iv)
Q26. Assertion: With NEP 1991, growth process in India was not inclusive
Reason: There has been limited growth in agriculture and industrial sector of India since Independence.
a) Both Assertion (A) and Reason (R) are true and (R) is the correct explanation of Assertion (A).
b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion(A).
c) Assertion (A) is true but Reason (R) is false.
d) Assertion (A) is false but Reason (R) is true.
Q27. Discuss briefly the rationale behind choosing ‘Growth with Equity’ as a planning objective for the India economy.
Q28. Discuss briefly any two major steps taken by the Government of India on “Financial Sector’ front under the economic reforms of 1991.
Q29. ‘Agriculture sector appears to be adversely affected by the economic reform process’. Explain the given statement.
Q30. Based on the passage below, answer the following questions:
Many stalwarts have, from time to time, made argument for a better education system for India. The British raj had delegitimized the Indian education system. After Macaulay’s Minutes of 1835, the colonial government’s work in education was primarily motivated by self-serving concerns. While Western education was spread among Indians, scientific, technical and moral education was largely ignored. The Indian reformers believed that to keep up with the time, a modern education system was needed. NEP 2020 is an ambitious and futuristic policy that ensures opportunities for children to hold their talents by fixing the lacunae in the education system. The emphasis on skills like analysis, critical, conceptual clarity and co-curricular and vocational subjects will be diversifying their learning. Universal access at all levels of School Education will be guaranteed, and it is proposed that the around two crore children who drop out will be brought back into the education system.
30.1 RTE stands for ___________ and was introduced in __________
30.2 What do you mean by Vocationalisation of Education?
30.3 Name the organization that is engaged in designing text material up to senior secondary level.
30.4 Write any two indicators of educational achievement in a country.
Q31. ‘Education Commission 1964-66 had recommended that at least 6% of GDP must be spent on education’. How far has India been able to achieve the said goal?
Q32. Answer the following questions:
a) Distinguish between bilateral and multilateral trade
b) What is meant by modernization?
c) State any one outcome of implementations of economic reforms in India in 1991.
d) Mention any two components of institutional reforms in Indian agriculture.
Q33. The policy of protection encouraged the growth of domestic industries but at the same time proved to be an impediment’. Justify the statement.
Q34. a) Indicate the volume and direction of foreign trade of India at the time of independence.
b) What were the features of the Industrial policy of 1956?