DAYAPURAM RESIDENTIAL SCHOOL

FIRST MODEL EXAMINATION 2021-22

ECONOMICS
Class XII MARKS: 40

TIME: 90 Mnts

GENERAL INSTRUCTIONS:

1. There are a total 60 questions in this paper out of which 50 questions are to be attempted.

2. This paper is divided into three Sections:

a. Section A – Contains 24 questions. Attempt any 20 questions.

b. Section B – Contains 24 questions. Attempt any 20 questions.

c. Section C – Contains 12 questions. Attempt any 10 questions.

3. All questions carry equal marks. (0.8 x 50= 40)

4. There is no negative marking.

SECTION A
(20 questions out of 24 questions are to be attempted)
1. Central Bank is a
(a) Regional bank
(b) Apex bank
(c)Commercial bank
(d )Rural bank
2. What is the period of a fiscal year?
(a) 1 April to 31 March
(b) 1 January to 31 December
(c) 1 March to 28 February
(d) None of these
3. The price of one currency in terms of another is known as _________
(a) Foreign exchange rate
(b Trade rate
(c) Interest rate
(d) Balance of Payment

4.  Indian economy on the eve of independence is characterized as 

 (a) Stagnant economy
(b) Backward economy  
(c) Colonial economy
(d) All of the above
5. Read the following statements: Assertion (A) and Reason (R). Choose one of the
correct alternative. 
Assertion (A): On the eve of independence Indian economy was Stagnant economy. 
Reason (R): Largest section of Indian population depended on agricultural sector for sustenance.

(a)Both Assertion (A) and Reason (R) are true and Reason (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
6. What was the principal source of occupation during the British rule?
a. Agriculture
b. Mining
c. Manufacturing
d. Trade and Commerce
7. In which of the following type of economy are resources owned privately and the main
objective behind economic activities is profit-making?
(a) Capitalist
(b) Socialist
(c) Mixed
(d) Global
8. Who is the originator of Green Revolution in India
(a) Shri Jawahar Lal Nehru
(b) Shri M.S.Swaminathan
(c) DR.Manmohan Singh
(d) None of these
9. Before 1921, India was in the first stage of......................The second stage began after 1921.
However, neither the total population of India nor the rate of population growth at this stage
was very high. (Fill up the blank with correct answer)
(a) Low literacy
(b) Demographic transition
(c ) Death Rate
(d) Mortality rate

10. Self-employment program include

(a) Prime Minister Rozgar Yojana
 (b) Samporna Grameen Rozgar Yojana
(c) Swarna Jayanti Sahahari Rozgar Yojana
(d) All of these
11. Which of the following is under unorganized sector
(a) Gramin Bank
(b)Cooperative Bank
(c) Money lenders and traders
(d)Land Development
12. Poor are the one who regularly move in and out of the poverty.
(a) Chronic poor
(b) Churning poor
(c) Occasionally poor
(d) None of these
13. What is the meaning of social medicine?
(a) Spread of health literacy
(b) Ensuring medicine to society
(c) Opening medicine shops in society
(d) All the above
14. One of the most urgent reasons for rural-urban migration in India is
a) Unemployment
b) Lack of education facilities
c) Lack of medical facilities
d) None of these
15. Read the following Assertion (A) and Reason (R) and choose the correct alternatives given
below
Assertion (A): The facilities for the formation of human capital have remained adequate.
Reason (R): The resources allocated to human capital formation have been much less
than the resources required.
(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
16. What kind of tax is GST?
a) Direct tax
b) Indirect tax
c) Depend on good and services
d) None of the above.
17. Which of the following was not the reason to adopt new economic policy?
a) Shortage of foreign exchange reserve.
b) High inflationary pressure
c) Debt burden on government
d) Sustained growth in agriculture.
18. Privatization done by selling a part of government equity stake is known as :
a) Disinvestment
b) Strategic sales
c) Investment
d) None of the above
19. One drawback of barter exchange is
(a) Lack of double coincidence of wants
(b) Lack of coincidence of wants
(c) Lack of trust
(d) Lack of goods
20. Read the following statements - Assertion (A) and Reason (R).
Choose one of the correct alternatives given below:
Assertion (A): The monetary policy is a policy formulated by the central bank.
Reason (R): The policy involves measures taken to regulate the supply of money, availability, and
cost of credit in the economy. Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A)
 (b) Both Assertion (A) and Reason (R) are true and 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.
21. The fiscal deficit is the difference between the government’s total expenditure and its total receipts
excluding ______
(a) Interest
(b) Taxes
(c) Spending
(d) Borrowings
22. How many types of revenue receipts are there?
(a) 2
(b) 3
(c) 4
(d) 6
23. Trade of visible items between the countries is known as ________
(a) Balance of Payment
(b) Balance of Trade
(c) Deficit Balance
(d) All of these
24. Which of the following are the components of balance of payments?

1. External loan and investment

2. Foreign institutional investment
3. Issuing of external bonds
4. Export and imports of goods and services
Select the correct answer using the codes given below

(a) 1, 2, and 3 only

(b) 2, 3, and 4 only

(c) 1, 4, and 5 only

(d) 1, 2, 3, 4

SECTION B

(20 questions out of 24 questions are to be attempted)

25. Who is the official ‘Lender of the Last Resort’ in India?

(a) PNB
(b) RBI

(c) SBI

(d) CBI

26. When government spends more than it collects by way of revenue, it incurs ______

(a) Budget surplus

(b) Budget deficit

(c) Capital expenditure

(d) Revenue expenditure

27. Read the following Statements-Assertion (A) and Reason (R), and select the correct alternative in
each cases.

Assertion (A): Trade deficit is always a great cause of worry for an economy

Reason (R): Trade deficit is a lesser cause of worry if it reflects a rise in investment which will build the
capital stock and increase the future output in an economy.

(a) Both Assertion (A) and Reason (R) are true and Reason. (R) is the correct explanation of Assertion
(A).

(b) Both Assertion (A) and Reason (R) are true but Reason (RI is riot the correct explanation of Assertion
(A)

(c) Assertion (A) is true but Reason (R) false.

(d) Assertion (A) is false but Reason (R) is true.

28. When was India's first official census undertaken?

(a) 1853

(b) 1881

(c) 1901

(d) 1921
29. The main objective of zamindaris during the land settlement system was to

(a) Improve the economic conditions of the cultivators

(b) Improve the crop yield by making significant contributions in technology and fertilizers uses

(c) Collection of rent with no interest in the economic condition of the cultivators

(d) Cooperating with colonial government to improve the condition of agriculture.

30. By the time India won its independence the impact of the two century long British colonial rule was
already showing on all aspects of the Indian economy. The agricultural sector was already saddled with
surplus labor an extremely low productivity. The industrial sector was crying for or modernization
diversification, capacity building and increased public investment. Foreign trade was oriented to feed the
industrial revolution in Britain.

Mark the reason which is not true for stagnation in agriculture during British rule:

(a). Land settlement system

(b). Industrialization

(c). Lack of technology

(d). Commercialization of agriculture

31. Which of the following steps promoted the growth of the economy as a whole by stimulating the
development of industrial and tertiary sectors?
(A) Independence
(B) Planning
(C) Colonial rule
(D) Green revolution

32. Which of the given statements explain the major hurdles faced by the land reform and the land ceiling
legislation?

(i) Big landlords registered their land in the name of close relatives, thus escaping from the

land ceiling legislation.

(ii) There have been cases in which tenants were evicted and landlords claimed to the actual

tillers.

(iii) Landlords used loopholes in the legislation to their comparative advantage to own large
areas of land.

(a)Only (i), & (iii)

(b)Only (ii), & (iii),

(c) Only (i), & (ii)

(d) All (i), (ii) & (iii)

33. Read the following statements: Assertion (A) and Reason (R). Choose one of the correct

alternative.

Assertion

(A): The policy of import substitution focuses on saving foreign exchange.

Reason

(R): Import substitution policy requires that we domestically produce such goods which we

are importing from rest of the world.

Alternatives:

(a)Both Assertion (A) and Reason (R) are true and Reason (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

34. Assertion: Poverty alleviation program failed to deliver the desired result.

Reason: The in charge of the program favor the rich and educated person in a state of poor person,

corruption, self-interest and in charge of their ill motivated efforts lead to wastage of resources

rather than uses of the resources.

(a) Both assertion and reason are true but the reason is the correct explanation of assertion.
(b) Both assertion and reason are true but reason is not the correct explanation of assertion

(c) Assertion is true but reason is false

(d) Assertion is false but reason is true

35. Match the column from the following statement given in column I and column ii choose the correct
pair of the statement.

Column I Column II

A. people who are always poor 1. relative poverty

B. compare the income with the minimum 2.churning poor

consumption requirement

C. Compare the income of different people for 3. chronic poor

identifying poverty

D. People who regularly move in and out the 4. absolute poverty

poverty line

Options

A B C D

(a) 3 4 1 2

(b) 2 3 4 1

(c) 1 3 2 4

(d) 1 2 3 4

36. Which organization collect data on poverty in India.

(a) Planning commission

(b) NSSO

(c) CSO

(d) None of these

37. Which of the following is a source of human capital formation?

(a) Expenditure on transportation

(b) Expenditure on infrastructure

(c) Expenditure on Education

(d) All of these

38. Read the following statements Assertion(A) and Reason (R) and choose the correct
alternatives given below:

Assertion (A): Spread of education is necessary to control the population growth rate.

Reason (R): Human Capital Formation decreases quality of life.

(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

39. From the following statements given in column I and Column II, choose the correct pair of
statements:

COLUMN I COLUMN II

A. MIGRATION 1. PHYSICAL CAPITAL

B. KNOWLEDGE RESOURCE 2. GETTING INFORMATION REGARDING

JOBS

C. EMPLOYMENT EXCHANGE 3. LABOUR

D. PROPERTY 4. WORKING IN ANOTHER CITY.

A B C D

(a) 1 2 3 4
 (b) 2 4 1 3

(c) 2 1 4 3

(d) 4 3 2 1

40. Read the given passage and answer question

As Goods & Services Tax completes four years of its implementation, the words of our former
Finance Minister, Arun Jaitley, in the Parliament’s Central Hall on the midnight of 30 June 2017 still
reverberates afresh in our ears “The goods and service tax may be a destination tax, but for India it will
begin an altogether new journey...”. Indeed, for India, a completely new journey commenced on July 1,
2017 with goods and services tax, being touted as one of the biggest economic reforms of independent
India, which set sail in the country after a decade of deliberations. The voyage of four years has been a
roller-coaster ride for all stakeholders with equitable share of hits, misses and expectations. Besides
removing the cascading effect of taxation, one of the biggest hits in the journey of GST has been the
pursuit towards achieving an automated indirect tax ecosystem. From electronic compliances, generation
of e-invoices to tracking movement of goods through e-waybill, everything is sought to be run online. E-
invoicing system is not only aimed at weeding out the rampant menace of fake invoicing, but would also
usher the taxpayers into a fully automated compliance regime wherein the computation of tax liabilities
and matching of input tax credit would become very simple. This is no mean feat and not many countries
in the world have attempted or been able to achieve the implementation of such a large scale and complex
digital tax transformation project.

Goods and Services Tax Act, 2016, which came into effect from July 2017, is expected to:
(Choose the correct alternative)

(a) generate additional revenue for the government.

(b) reduce tax evasion.

(c) create ‘one nation, one tax and one market’

(d) All of the above

41. Read the following statements Assertion(A) and Reason (R) and choose the correct
alternatives given below:

Assertion (A): Privatization of the PSU’s by selling of part of the equity of PSU’s to the public is
known as disinvestment.

Reason (R): The purpose was to improve financial discipline, modernization and

improved performance the PSU’s.

Alternatives:

(a) Both the statements are true and reason (R) the correct explanation of assertion (A)
 (b) Both the statements 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.

42. Each nation has its own currency when monetary transactions are conducted within the national
borders, payments are made in the currency of that country for example Indian currency is called rupee.
To be more exact it is called Indian rupee payments within the national borders of India are made in
Indian rupees. Similarly, each other nation has its own currency for example Pakistan currency is called
Pakistani rupees’ currency US dollar Kuwait currency Kuwaiti Dinar UAE currency dirham and so on
payments within the national borders of Pakistan are made in Pakistani rupees’ payment with in the
national border of USA is USA dollars, etc. When transactions are con ducted across National borders
one currency must be converted into another. Conversion rate between two currencies is decided by two
ways first fixed exchange rate second floating or flexible exchange rate.

Who fixed the flexible exchange rate?

(a) Market forces

(b) Government

(c ) Both a and b

(d) None of these

43. What do you mean by credit creation by commercial banks?

(a) It is the process of creation of foreign exchange
(b) It is the process of loan creation
(c) It is the process of total withdrawal creation
(d) It is the process of total deposit creation
44. What is the formula of Credit Creation?
(a) 1/CRR (Initial Deposit)
(b) 1+CRR (Initial Deposit)
(c) 1-CRR (Initial Deposit)
(d) None of Above
45. Direct tax is called direct because it is collected directly from:
(a) The producers on goods produced
(b) The sellers on goods sold
(c) The buyers of goods
(d) The income earners
46. Read the following statements Assertion(A) and Reason (R) and choose the correct alternatives given
below:

Assertion (A): Equitable distribution of income and wealth is a sign of social justice:
Reason (R): Distribution of income and wealth can be improved by imposing taxes on rich and giving
subsidies to the poor.

(a) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion
(A).
 (b) Both assertion (A) and Reason (R) are true and 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.

47. The trade of visible and invisible items is known as _________

(a) Balance of Payments
(b) Balance of Trade
(c) Deficit of interest
(d) Profit
48. Which one is a merit of the fixed exchange rate?
(a) Promotes Foreign Trade
(b) Induces Foreign Capital
(c) Increases Capital Formation
(d) All the above

SECTION C
(10 questions out of 12 questions are to be attempted)

49. Mortality rate is one of the indicators of ......... of an economy.

(a) Occupational structure
(b) unemployment
(c) Demographic profile
(d) Foreign trade
50. Read the following case study and answer the given questions:
Prime Minister Narendra Modi in recent weeks has emphasizes on the idea of an 'Atma Nirbhar Bharat' or
a self-reliant India. However, the government has faced a volley of questions since then, about whether
the aim is to drag India back to import substitution and isolationism. The aim to make India self-reliant
was outlined by the Prime Minister while announcing that his government will help the Indian economy
get back on its feet with ₹ 20 lakh crore economic packages. March towards a self-reliant India should
not be taken as a return to the license-permit raj and inspector raj of the socialist era. "Far from suggesting
a centralized", top-down model directed from the "commanding heights" of the Planning Commission, the
Prime Minister spoke of freeing Indian entrepreneurship and innovation from bureaucratic hurdles. This
is about decentralized localism that pride in local brands, emphasizes resilience and flexibility, and
encourages local capacity-building.
Questions:
Q1. 'Atmanirbhar Bharat' emphasizes the objective of.........
(a). Self-reliance
(b). Isolationism
(c). Flexibility
(d). None of these

51. Prior to Independence, farmers, while selling their produce to traders, suffered from faulty weighing
and manipulation of accounts. Farmers who did not have the required information on prices prevailing in
markets were often forced to sell at low prices. They also did not have proper storage facilities to keep
back their produce for selling later at a better price. Measures that were initiated to improve the marketing
aspects.
Agricultural marketing is a process that involves the------------
(a) transportation
(b) packaging
(c) grading
(d) all of these
52. Read the following passage and answer question no 45 to 48.
This paragraph talks about economic inequalities in India that have been driven by the employment
pattern and changes in labor market, which in turn have been affected by the macroeconomic policies and
processes well as forms of social discrimination and exclusion. While many Asian economies have shown
indications of rising inequalities in recent decades, the Indian experience is particularly remarkable in the
way inequalities have intertwined with economic growth process. structural change and the persistence of
the low productivity employment in India are strongly related to following wage shares of national
income and growing wage inequality and the close relationship between formal and informal sectors is
the sharpest exemplar of this. patterns of social discrimination along with gender and caste line have
reinforced tendency to create segmented labor market that offer little incentives for the employers to
focus on productivity improvement.
Women participation in rural areas is found to be higher in rural areas as compared with area
in India due to which the following reason.
(a) Widespread poverty
(b) Male member do not earn sufficient income
(c) Wages level are low in rural areas
(d) all the above
53. Read the following statements Assertion(A) and Reason (R) and choose the correct
alternatives given below:
Assertion (A): Physical capital cannot be separated from its owner.
Reason (R): Physical capital can be separated from its owner.
(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
54. The Apex body which coordinates the functioning of different Financial Institutions
working for the expansion of rural credit
(a) NABARD
(b) self-help groups
(c) regional rural bank.
(d) Commercial bank
55. Read the following case study paragraph carefully and answer the questions on the basis of the same.
The central bank of India i.e. Reserve Bank of India, is the apex institution that control the entire financial
market. It's one of the major functions is to maintain the reserve of foreign exchange. Also, it intervenes
in the foreign exchange market to stabilize the excessive fluctuations in the foreign exchange rate. In
other words, it is the central bank's job to control a country's economy through monetary policy; if the
economy is moving slowly or going backward, there are steps that central bank can take to boost the
economy. These steps, whether they are asset purchases or printing more money, all Involve injecting
more cash into the economy. The simple supply and demand economic projection occur and currency will
devalue. When the opposite occurs, and the economy is growing, the central bank will use various
methods to keep that growth steady and in-line with other economic factors such as wages and prices.
Whatever the central bank does or in fact don't do, will affect the currency of that country. Sometimes, it
is within the central bank’s interest to purposefully effect the value of a currency. For example, if the
economy is heavily reliant on exports and their currency value becomes too high, importers of that
country’s commodities will seek cheaper supply; hence directly effecting the economy.
Which of the following tools are used by the central bank to control the flow of money in domestic
economy?
(a) Fiscal tools
(b) Quantitative monetary tools
(c) Qualitative monetary tools
(d) Both (b) and (c)
56. Read the following case study paragraph carefully and answer the questions on the basis of the same.
The central bank of India i.e. Reserve Bank of India, is the apex institution that control the entire financial
market. It's one of the major functions is to maintain the reserve of foreign exchange. Also, it intervenes
in the foreign exchange market to stabilize the excessive fluctuations in the foreign exchange rate. In
other words, it is the central bank's job to control a country's economy through monetary policy; if the
economy is moving slowly or going backward, there are steps that central bank can take to boost the
economy. These steps, whether they are asset purchases or printing more money, all Involve injecting
more cash into the economy. The simple supply and demand economic projection occur and currency will
devalue. When the opposite occurs, and the economy is growing, the central bank will use various
methods to keep that growth steady and in-line with other economic factors such as wages and prices.
Whatever the central bank does or in fact don't do, will affect the currency of that country. Sometimes, it
is within the central bank’s interest to purposefully effect the value of a currency. For example, if the
economy is heavily reliant on exports and their currency value becomes too high, importers of that
country’s commodities will seek cheaper supply; hence directly effecting the economy.
High powered money is
(a) Currency and coins held by the public
(b) Currency, cash reserves with banks and demand deposits.
(c) Currency held by public and reserves with banks
(d) Currency and demand deposits
57. Read the following statements Assertion(A) and Reason (R) and choose the correct
alternatives given below
 Assertion (A): Pension is a revenue expenditure.
Reason (R): Pension does not lead to any type of asset formation.

 (a) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).
 (b) Both assertion (A) and Reason (R) are true and 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.
58. The amount collected by the government in the form of interest, fees, and dividends is known as __

(a) Tax-revenue receipts

(b) Capital receipts
(c) Non-tax revenue receipts
(d) None of these

59. Which of the following are the components of balance of payments?

1. Financial capital transfer

2. External loan and investment
3. Foreign institutional investment
4. Issuing of external bonds
5. Export and imports of goods and services
Select the correct answer using the codes given below:

(a) 1, 2, and 3 only

(b) 2, 3, and 4 only

(c) 1, 4, and 5 only

(d) 1, 2, 3, 4, and 5

60. Read the following statements Assertion(A) and Reason (R) and choose the correct
alternatives given below
Assertion (A): Under a managed floating exchange rate system, the Government directly controls the
exchange rate

Reason (R): Managed floating exchange rate is decided by market forces (the float part) but remains
within a specific range as decided by central bank (the managed part).

Read the following Statements-Assertion (A) and Reason (R), and select the correct alternative in each
cases.

(a) Both Assertion (A) and Reason (R) are true and Reason. (R) is the correct explanation of Assertion
(A).

(b) Both Assertion (A) and Reason (R) are true but Reason (RI is riot the correct explanation of Assertion
(A)

(c) Assertion (A) is true but Reason (R) false.

(d) Assertion (A) is false but Reason (R) is true.

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