Plot No.-8 Sector-23, Rohini, Delhi-110085.

Session: 2022-2023

Mock Exam: Half Yearly Examination

Class: XII

Subject: Economics

Duration 3 hours Date: _/_/2022

Max Marks: 80

GENERAL INSTRUCTIONS:

1. All the questions in both the sections are compulsory. However internal choices have been provided. You
have to attempt only one of the choices in such questions.

2. Marks for questions are indicated against each question.

3. Question number 1 - 10 and 18 - 27 are very short-answer questions carrying 1 mark each. They are required
to be answered in one word or one sentence each.

4. Question number 11 - 12 and 28 - 29 are short-answer questions caring 3 marks each. Answers to them
should not normally exceed 60-80 words each.

5. Question number 13 - 15 and 30 - 32 are also short-answer questions carrying 4 marks each. Answers to them
should not normally exceed 80-100 words each.

6. Question number 16 - 17 and 33 - 34 are long answer questions carrying 6 marks each. Answers to them
should not normally exceed 100-150 words each.

7. Answer should be brief and to the point and the above word limit be adhered to as far as possible.

Q. No. Section A: Introductory Macro Economics 40 Marks

Q-1) Suppose initial deposit with bank is ₹50,000 and Legal Reserve ratio is 20%. How much (1)
total money will be created in the economy?

Q-2) According to Keynesian Theory of employment, Ex-ante savings and Ex-post savings are (1)
always equal. State True/False with reason.

Q-3) When the central bank buys the government bonds in the open market, it will__________ (1)

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 the money supply in the economy.

Q-4) Suppose you are a member of the “Advisory Committee to the Finance Minister of India”. (1)
The finance minister is concerned about the rising Revenue Deficit in the budget.
Suggest any one measure to control the rising Revenue Deficit of the government.
OR
Which of the following statement is true?
a) Loan from IMF is a Revenue Receipt.
b) Higher Revenue Deficit necessarily leads to higher Fiscal Deficit.
c) Borrowings by a government represents the situation of Fiscal deficit.
d) Revenue deficit is the excess of capital receipts over revenue expenditure.

Q-5) If MPC=1, change in National Income is exactly equal to change in Investment. State (1)
True/False with reason.

Q-6) “Government of India has committed more than $3 billion to debt-ridden Sri Lanka in loans.” (1)
Under which head of the government budget will this item be recorded?

Q-7) Choose the correct pair from the following: (1)

Column I Column II
A. Revenue budget (i)It is an account of assets and liabilities of the government.
B. Capital budget (ii)It shows the current receipts and expenditure of the government
C. Deficit Budget (iii)It is a budget in which expenditure exceeds the revenue of the
government
D. Balanced Budget (iv) It is a budget in which Capital receipts exceeds are equal to capital
expenditure.
a. A-(i)
b. B-(ii)
c. C-(iii)
d. D-(iv)

Q-8) Read the following statements – Assertion (A) and Reason (R). (Choose one of the correct (1)

alternatives given below)

Assertion(A): Equitable distribution of income is a way to social justice.

Reason(R): Monetary policy uses the instruments of taxes and subsidy to establish equitable
Distribution.

a. Both (A) and (R) are true and (R) is the correct explanation of (A).
b. Both (A) and (R) are true and (R) are true and (R) is not the correct explanation of
(A).
c. (A) is true but (R) is false.

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 d. (A) is false but (R) is true.
Q-9) An increase in investment by ₹800 crores lead to increase in national income by ₹2000 (1)
crores. Calculate the marginal propensity to save.

Q-10) Explain the monetary measure indicated in the following line (1)
‘Instead of 80%, now 90% of the security amount will be given as loan’.

Q-11) If the saving function for an economy is given as S = -500 +0.2Y and investment (3)
expenditure is ₹ 100 crores, then determine:
i) Level of income when saving will become zero.
ii) Level of income when saving is equal to investment.

Q-12) “Currency is created by central bank, yet we say that commercial banks create money. (3)
Explain.
How this money creation by commercial banks likely to affect the national income?
OR
How can Reserve Bank of India use the instrument of Bank rate to control money supply in
the economy?

Q-13) Identify the following statements as True/False with reasons. (4)

a) When the value of average propensity to save is negative, the value of marginal
propensity to save will also be negative.
b) When marginal propensity to consume is greater than marginal propensity to save, the
value of investment multiplier is greater than 5.
c) If aggregate demand exceeds aggregate supply, the income rises
d) Inflationary gaps exists when aggregate demand is greater than aggregate supply.

Q-14) a) Why is RBI known as the lender of last resort (4)

b) Explain RBI’s function as a currency authority.
OR
Attempt the following two parts:
a) Explain the concepts of (i) Currency and coins with public; (ii) Demand deposits held by
commercial banks.
b) State the difference between high powered money and Money supply.

Q-15) Explain how the equilibrium level of income in an economy is determined when aggregate (4)
demand is equal to the total output using diagram.

Q-16) ‘The lockdown to control the virus led to the closure of all manufacturing units and services (4+2=6)
that did not cater to essential items. The distress of economy was thus magnified as the
circle of low demand, production cuts and rising unemployment.
a) Identify the problem that the economy is facing and explain it with the help of a diagram?
b) State the fiscal policy measures that need to be taken (in a two sector economy) to correct
the situation indicated in the report.

Q-17) a) India aims to raise health spending to 2.5% of GDP, says Health Minister Harsh Vardhan. (3+3=6)

Union Health Minister Harsh Vardhan on Sunday reiterated the Narendra Modi
government’s commitment to increase the expenditure on public health to 2.5% of India’s

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 gross domestic product by 2025.

“The union government is committed to increasing the public healthcare spending as a

percentage of GDP from the existing 1.15% to 2.5% by 2025”, he said in the third episode
of ‘Sunday Samvaad’, a weekly interaction he has been holding with his social media
followers every Sunday for the last three weeks. Harsh Vardhan noted that the committed
lead in the share means an actual rise of 3 .45% from the current expenditure.”

Identify which objective of government budget is highlighted in the above para and explain
the same.

b) From the following data about a government budget, find

i) Fiscal deficit and ii) Primary Deficit.

S. No. Items (₹ in crore)

(i) Revenue Expenditure 25000
(ii) Recovery of loan from Sri Lanka 40000
(iii) Profits earned by government from BHEL 4000
(iv) Revenue Receipts 20000
(v) Capital expenditure 60000
(vi) Borrowings from IMF 10000
(vii) Interest payable on accumulated debts 25% of Revenue deficit

Section B : Indian Economic development 40 Marks

Q-18) The industry given in the picture was incorporated in the year _____ by ________. (1)

a. 1932, Cyrus Mistry

b. 1907, Jehangir Ratanji Dadabhoy Tata
c. 1906, JRD Tata
d. 1921, Ratan Tata

Q-19) Planning commission in India is now being replaced by ________ 1)

a. National Institute of Transformation Ayog
b. National Institution for transforming India
c. New Institute for Transformation of India
d. National Indian Transforming Institute

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Q-20) Identify the person in the picture and state the contribution made by him to the Indian (1)
economy.

Q-21) State any one feature of Goods and Service tax introduced in India. (1)

Q-22) In small scale industry, investment limit is __________. (1)

OR
The maximum size of cultivated land holding that an individual can own is known as _____.

Q-23) Read the following statement: Assertion (A) and Reason (R). Choose one of the correct (1)
alternatives given below:
Assertion (A): Credit provisions by SHGs are known as Macro credit programmes.
Reason (R): These loans are offered without any security and at a moderate rate of interest.
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.

Q-24) Human ___________ is an end result. (Capital / development) (1)

Q-25) Identify the correct sequence of alternatives given in Column II by matching them with (1)
respective items in Column I.

Column I Column II
A. Institutional source of i. TANWA is an example
credit
B. Distress sale ii. A revolutionary rise in Production of
horticulture crops
C. Golden revolution iii. Forced sale of the produce by the farmer
at an unfavorable price
D. Self-help groups iv. Commercial banks
a. A-iv , B-iii, C-ii,D-i
b. A-iii,B-iv,C-i,D-ii
c. A-i,B-ii,C-iii,D-iv
d. A-ii,B-iv,C-i,D-iii

Q-26) UGC controls and guides technical education in the country. State true or false. Give reason (1)
to support your answer.

Q-27) __________ plan of India clearly recognized the importance of human capital in the process (1)
of economic growth.

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Q-28) The traditional handicrafts industries were ruined under the British rule. Do you agree? Give (3)
reasons to support your answer.
OR

“The demographic condition during the British rule exhibited all features of a backward
Indian economy.” Do you agree? Give reasons in support of your answer.

Q-29) The opening up of the economy has led to the rapid increase in Foreign direct investment. (3)
The foreign investment increased from about US $100 million in 1990-91 to US $ 36 billion
in 2015-16.
Do you think the introduction of reforms was advantageous for the Indian economy? Give
reasons to support your answer.

Q-30) Subsidies put a huge burden on the government’s finances but are necessary for poor and (4)
marginal farmers. Comment.

Q-31) How does expenditure on “On-the-job training” and “Information” act as a source of human (4)
capital formation?
OR
How does investment in human capital contribute to growth?

Q-32) _____________ includes various institutions, such as commercial banks, investment banks, (4)
stock exchange operations and foreign exchange market. Identify the sector and state the
various reforms introduced under this sector.

Q-33) Read the following article carefully and answer the following question (2+4= 6)

In 2020, Indian Parliament passed three

laws to reform agriculture marketing
system. The Act on Agri market allows
farmers to sell their produce outside APMC
‘mandis’ to whoever they want. Anyone can
buy their produce even at their farm gates.
Though ‘commission agents’ of the
‘mandis’ and states could lose
'commissions' and 'mandi fees' respectively
(the main reasons for the current protests),
farmers will get better prices through
competition and cost-cutting on
transportation. The law on contract farming
will, on the other hand, allow farmers to
enter into a contract with agri-business firms or large retailers on pre-agreed prices of their
produce. This will help small and marginal farmers as the legislation will transfer the risk of
market unpredictability from the farmer to the sponsor. The third law seeks to remove
commodities like cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of
essential commodities. This provision will attract private sector/foreign direct investment into
the agriculture sector. Further, the central government has enhanced the scope of Transport
and Marketing Assistance (TMA) scheme for specified agriculture products, announced
Ministry of Commerce and Industry on Friday. The revised scheme now includes dairy
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 products under its purview and increase in the rates of assistance.

“Enhanced assistance under the revised scheme is expected to help Indian exporters of
agricultural products to meet rising freight and logistics costs," the ministry said in a
statement.

Dairy products, which were not covered under the earlier scheme, will be eligible for
assistance under the revised scheme. Rates of assistance have been increased, by 50 per cent
for exports by sea and by 100 per cent for exports by air. Moreover, The Government of
India launched various schemes for upliftment of rural villages. One such scheme is Saansad
Adarsh Gram Yojana (SAGY) was launched on 11th October 2014 with the aim to translate
the comprehensive vision of Mahatma Gandhi about an ideal Indian village into reality,
keeping in view the present context. Under SAGY, each Member of Parliament adopts a
Gram Panchayat and guides its holistic progress giving importance for social development at
par with infrastructure. The 'Adarsh Grams' are to become schools of local development
and governance, inspiring other Gram Panchayats.

Source: Times of India Newspaper

a. Information technology plays a very significant role in achieving sustainable

development and food security. Comment.
b. Explain any four measures taken by the government to improve agricultural
marketing.

Q-34) Why were reforms introduced in India? (6)

OR
a) Discuss economic reforms in India considering social justice and welfare.
b) What is Outsourcing? In what ways it has benefitted India?

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