PARWATI PREMA JAGATI SARASWATI VIHAR, NAINITAL

SAMPLE PAPER Ist (2022-23) M.M. – 80

CLASS – XII SUBJECT – ECONOMICS (030) TIME – 3:00 hrs.
GENERAL INSTRUCTIONS:-
(1) This questions paper contains two sections:
Section A – Macro Economics
Section B – Indian Economic Development
(2) This paper contains 20 Multiple Choice Questions type questions of 1 mark each.
(3) This paper contains 4 Short Answer Questions type questions of 3 marks each to be answered in 60 to
80 words.
(4) This paper contains 6 Short Answer Questions type questions of 4 marks each to be answered in 80 to
100 words.
(5) This paper contains 4 Long Answer Questions type questions of 6 Marks each to be answered in 100 to
150 words.
………………………………………………………………………………………………………………………………………………………………………..

PART A – MACRO ECONOMICS

Q1. Read the following statements carefully: (1)

Assertion (A) : Higher the MPC higher would be the multiplier effect.

Reason (R) : The multiplier effect is the magnified increase in equilibrium GDP that occurs when any component
of aggregate expenditures changes. Therefore when MPC increases, the value of multiplier increases as well.

(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

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

Q2. Balance of trade is (1)

(a) Difference between export and import of goods

(b) Sum total of export and import of goods

(c) Difference between export and import of services

(d) Sum total of export and import of services

Ans - (a) Difference between export and import of goods

Q3. Banks create credit……………………… (1)

(a) Out of nothing

(b) On the basis of their securities

(c) On the basis of their total assets

*(d) On the basis of their cash deposits.

Ans - (d) On the basis of their cash deposits.

Q4. Read the following statements carefully: (1)

Assertion (A) : If a foreign company establishes a factory in India, it will be recorded in capital account.
Ans - (a) It reduces the borrowing and money supply

Q8. If the budgetary deficit of the government is Rs. 25,000 crores and the borrowings and other liabilities are Rs.
7,000 crores, how much will the fiscal deficit? (1)

(a) Rs. 25,000 Crores (b) Rs. 32,000 Crores

(c) Rs. 18,000 Crores (d) Rs. 7,000 Crores

Ans - (b) Rs. 32,000 Crores

OR

The following information is given for an imaginary country and find the current account balance from the
following data:

ITEMS (RS. In Crore)

Exports 250

Imports 300

Non-factor services 200

Unilateral transfers 150

Income 100

(a) Rs. 750 Crores (b) Rs. 450 Crores

(c) Rs. 850 Crores (d) Rs. 700 Crores

Ans- (b) Rs. 450 Crores

Trade Balance = Export - Imports

= 250 – 300

= (-) 50 Crore

Invisible Balance = Balance of non factor services + Balance on income + Balance on unilateral transfers

= 200 + 100 + 150

= Rs. 450 Crore.

Q9. Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given
below. (1)

Assertion (A) : Higher the MPC, higher would be the multiplier effect.

Reason (R) : The multiplier effect is the magnified increase in equilibrium GDP that occurs when any component
of aggregate expenditure changes.

Therefore when MPC increases, the value of multiplier increases as well

(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

Ans - (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
 800 + 100 + 0.7(800) + I

700 = 560 + I

I = 700 – 560

Investment Expenditure = 140

Q14. ‘All financial institutions are not banking institutions, but all banking institutions are financial institutions.’
Defend or refute the statement with valid reasons. (4)

Q15. Read the following news report and answer Questions on the basis of the same: (4)

The Reserve Bank of India, cut Repo Rate to 4.4%, the lowest in at least 15 years. Also, it reduced the Cash
Reserve Ratio (CRR) maintained by the banks for the first time in over seven years. CRR for all banks was cut by
100 basis points to release 1.37 lakh crores across the banking system. RBI governor Dr. Shaktikanta Das
predicted a big global recession and said India will not be immune. It all depends how India responds to the
situation. Aggregate demand may weaken and ease core inflation.

The Economic Times ; March 27th, 2020

(15.1) Cut in Repo rate by RBI is likely to …………………. (Increase/decrease) the demand for goods and services in the
economy. (Choose the correct alternative)

Ans - Increase

(15.2) Decrease in Cash Reserve Ratio will lead to ……………………. (Choose the correct alternative)

(a) Fall in aggregate demand (b) No change in aggregate demand

(c) Rise in aggregate demand (d) Fall in general price level

Ans - (c) Rise in aggregate demand

(15.3) The difference by which actual Aggregate Demand exceeds the Aggregate Demand, required to establish full
employment equilibrium is known as ……………………… (Inflationary gap/deflationary gap)

Ans - Inflation

(15.4) The impact of ‘Excess Demand’ under Keynesian theory of income and employment, in an economy are:

(a) Decrease in income, output, employment and general price level

(b) Decrease in nominal income, but no change in real output

(c) Increase in income, output, employment and general price level

(d) No change in output/employment but increase in general price level.

Ans - (d) No change in output/employment but increase in general price level.

OR

“Recently Indian Rupee (Rs) has depreciated significantly (82.62 on 13th October, 2022). This has lead to distress
for Indian importer.” Defend or refute the given statement with valid reasons.

Q16. Answer both the questions.

(a) “Circular flow of income in a two sector economy is based on the axiom that one’s expenditure is
other’s income.” Do you agree with the given statement? Support your answer with valid reason.
(3)

(b) State and discuss any three precautions to be considered while estimating national income by Income
method. (3)

Q17. Answer the following questions

Q21. Which of the following is a land reform measure?

(a) Use of high yielding variety of seeds (b) Establishment of regulated markets

(c) Price support system (d) Abolition of intermediaries

Ans - (d) Abolition of intermediaries

Q22. Identify the correct sequence of alternative given in Column II by matching them in with respective terms in
Column I

COLUMN – I COLUMN – II

(A) Objective of GST in India (i) To tackle the problem of foreign exchange crisis

(B) Objective of Demonetization in India (ii) To promote competition and bring efficiency

(B) Objective of privatization policy in India (iii) To curb black money

(D) Objective of devaluation of Indian rupee in 1991 (iv) One tax, one nation

(a) i, ii, iii, iv (b) ii, iv, iii, i

(c) iii, ii, iv, i (d) iv, iii, ii, i

Ans - (d) iv, iii, ii, i

Q23. Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given
below. (1)

Assertion (A) : Investment in education is the main source of human capital formation.

Reason (R) : A better educated person has greater skills and knowledge and therefore greater opportunities to
work and earns higher income.

Therefore when MPC increases, the value of multiplier increases as well

(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

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

Q24. Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given
below. (1)

Assertion (A) : The rate of urbanization is high in Pakistan as compared to India.

Reason (R) : India and Pakistan both introduced economic reforms under the pressure of the World Bank and
IMF.

Therefore when MPC increases, the value of multiplier increases as well

(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

 Explain the role of micro credit in meeting credit requirements of the poor.

Q30. Compare and contrast India’s and China’s sector wise contribution towards GDP. What does it indicate? (4)

Sector Value Added (% of GDP)

India China Pakistan

Agriculture 17 9 25

Industry 30 43 21

Service 53 48 54

Total 100 100 100

Q31. Describe small scale industry. Give some reasons why small scale industries should be encouraged in India? (4)

OR

Discuss briefly how institutional reform (land reform) have played significant role in transforming Indian
agriculture.

Q32. Answer the following questions.

(a) Discuss the need for on the job training for a employee. (2)

(b) Distinguish between physical capital and Human capital (2)

Q33. Answer the following questions.

(a) “Economic reforms have restricted the role of Public Sector Units (PSUs) in the country”. Discuss (3)

(b) “Agricultural marketing refers to the farmer’s act to bringing their products to the market for sale”. Is the
statement correct? (3)

OR

(a) The traditional handicraft industries were ruined under the British rule. Do you agree with this view? Give
reasons in support of your answer. (3)

(b) What objectives did the British intend to achieve through their policies of infrastructure development in
India. (3)

Q34. Read the following text carefully and answer the given questions on the basis of the same and common
understanding.

In the first five year plan of India, more emphasis was given on agriculture. During the plan, there was a
favorable monsoon. As a result, the progress of agriculture during the first plan was very much satisfactory.
However, in the second five year plan more emphasis was given on industries rather than on agriculture.
Besides due to the failure of monsoon, agricultural production suffered a set-back. There was scarcity of food
grains and it had to be imported from abroad.

In order to solve the food problem, a programme was launched from the third five year plan. This programme
was known as the Intensive Agriculture District Programme (IADP). In 1960-61, seven districts in India were
covered under this programme. Only those districts were selected which had assured irrigation facilities. The
main thrust of this programme was to apply improved seeds, chemical fertilizer, pesticides etc. in irrigated areas
and to raise productivity of land. Encouraged by the success of this programme, it was extended to cover more
areas.

From the middle of the 1970s, this programme has been used on a wide scale and under its impact agricultural
production, particularly of food grains, has increased rapidly. There were three basic pillars of the new
programme : (1) use of high yielding varieties (HYV) of seeds, (2) extension of minor irrigation projects and (3)
use of chemical fertilizers and insecticides. This new programmes was known as the New Agricultural Strategy
or HYV technology. As a result of the adoption of this new technology, agricultural production and productivity