PARWATI PREMA JAGATI SARASWATI VIHAR, NAINITAL

SAMPLE PAPER IInd (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) : Profit earned by a branch of an Indian Bank in Canada is included in national income of India.

Reason (R) : Profit earned by a branch of Indian Bank abroad is a part of net factor income from abroad.

(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. ‘Import of machinery’ is recorded in the ………………. Account and ‘Borrowing from abroad’ is recorded in the
……………….. account. (1)

(a) Current, Capital (b) Capital, Current

(c) Capital, Capital (d) Current, Current

Ans - (a) Current, Capital

Q3. …………….. refers to the minimum percentage of net demand and time liabilities to be kept by the commercial
banks with the central bank. (1)

(a) Cash Reserve Ratio (b) Statutory Liquidity Ratio

(c) Bank Rate (d) Reverse Repo Rate

Ans - (a) Cash Reserve Ratio

Q4. Read the following statements carefully: (1)

Assertion (A) : Balance of trade includes only merchandise transactions.

Reason (R) : Unfavorable balance of trade can be met out of favorable balance of payments.

(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).
 Imports 400

Income 300

Transfers 200

Current account balance 1200

(a) Rs. 1200 Lakh (b) Rs. 300 Lakh (c) Rs. 850 Lakh (d) Rs. 700 Lakh

Ans - Balance of non-factor services=Current account balance – Trade balance (Export – Import) – Balance on income
– Balance on transfers

= 1200 – (800 – 400) – 300 -200

= 1200 – 400 – 300 -200

= 300 Lakh

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

Assertion (A) : Full employment never implies a situation of zero involuntary unemployment.

Reason (R) : There always exists some degree of unemployment, called natural unemployment in the situation
of full employment.

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).

Q10. Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given
below. (1)

Assertion (A) : Money received from the sale of second-hand cars will be considered while estimating national
income.

Reason (R) : There value is already included and it does not contribute to the current flow of goods and
services.

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 - (d) Assertion (A) is False but Reason (R) is true

Q11. Calculate intermediate consumption from the following data: (3)

Items Rs. (In Lakh)

 The Hindustan Times - September 1st, 2020

Ans – Fiscal Measures – (1) Decrease in taxes (2) Increase in Govt. Expenditure

Monetary Measure – (1) Decrease in CRR (2) Purchase of security

OR

“Indian rupee plunged to all time low of Rs. 82.42 (on 15th October, 2022) against the US Dollar”. In the light of
the above report, discuss the impact of the situation on Indian importers.

Q16. Answer the following questions.

(a) Explain how externalities are a limitation of taking gross domestic product as an index of welfare. (3)

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

Q17. Answer the following questions

(a) Explain briefly, the circular flow of income in a two sector economy with the help of a suitable diagram.
(3)

(b) Explain the concept of deflationary gap and the role of open market operations in reducing it. (3)

OR

Calculate ‘Gross National Product at Factor Cost’ from the following data by Income method and
Expenditure Method. (6)

Particulars (Rs. In Crore)

(i) Private final consumption expenditure 1000

(ii) Net domestic capital formation 200

(iii) Profits 400

(iv) Compensation of employees 800

(v) Rent 250

(vi) Government final consumption expenditure 500

(vii) Consumption of fixed capital 60

(viii) Interest 150

(ix) Net current transfers form rest of the world (-) 80

(x) Net factor income from abroad (-) 10

(xi) Net exports (-) 20

(xii) Net indirect taxes 80

Ans – Income Method

GNP fc = (iv) + (v) + (viii) + (iii) + (vii) + (x)
GNP fc = 800 + 250 + 150 + 400 + 60 + (-10)
GNP fc = 1650 Crore.

Expenditure Method
GNP fc = (i) + (vi) + (ii) + (xi) + (vii) + (x) – (xii)
GNP fc = 1000 + 500 + 200 + (-20) + 60 + (-10) – 80
GNP fc = 1650 Crore
 (a) i (b) ii (c) iii (d) iv

Ans - (b) ii

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

Assertion (A) : Many firms provide on-the-job training to their workers.

Reason (R) : Expenditure on information is necessary to make decisions regarding investments inhuman capital
as well as for efficient utilization of the acquired human capital stock.

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 - (b) Both Assertion (A) and Reason (R) are true and Reason (R) is not 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) : Dual pricing policy was initiated in the reforms process of China.

Reason (R) : In order to attract foreign investors, special economic zones were set up.

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 - (b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

Q25. Central Pollution Control Board was set up in: (1)

(a) 1972 (b) 1982 (c) 1986 (d) 1974

Ans – (d) 1974

OR

Sustainable development emphasizes the need for:

(a) Increase in per capital income

(b) Industrial development

(c) Rational use of natural resources and protection of environment

(d) Balance growth

Ans - (c) Rational use of natural resources and protection of environment

Q26. Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given
below. (1)
 (a) State the objective of industrial policy of 1956 in your views. (3)

(b) “Green Revolution in India has only favored the rich farmers.” Do you agree? Justify the statement. Give
valid reasons in support of your answers. (3)

OR

(a) What were the two fold motives behind the systematic de-industrialization effected by the British in pre-
independent India? (3)

(b) Were there any positive contributions made by the British rule in India? Discuss (3)

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

Since ages, farmer in India have taken resources to debt. In the earlier times the same was from informal
sources. Since independence with the efforts of the government, formal sector has actively come into picture.
Farmers borrow not only to meet their investment needs but also to satisfy their personal needs. Uncertainty of
income caused by factors likes crop failure caused by irregular rainfall, reduction in ground water table,
locust/other pest attack etc. These reasons push them into the clutches of the private money lenders, who
charge exorbitant rates of interest which add to their miseries.

Various governments of India, at different times for different times for different reasons, introduced debt
relief/waiver schemes. These schemes are used by governments as a quick means to extricate farmers from
their indebtedness, helping to restore their capacity to invest and produce, in short to lessen the miseries of the
farmers across India. The cost and benefits of such debt relief schemes are, however, a widely debated topic
among economists.

Since economists argue that such schemes are extremely beneficial to the poor and marginalized farmers while
others argue that these schemes add to the fiscal burden of the government, others believe that these schemes
may develop the expectation of repeated bailouts among farmers while may spoil the credit culture among
farmers.

(a) What do you mean by institutional credit? Give three advantages of institutional credit. (3)

(b) What were the reasons for the predominant position of money lenders in providing rural credit in the past?
(3)

Dr. Dinesh Singh Nayal

PGT – Economics
P.P.J. Saraswati Vihar Nainital
Contact No – 7351004253, 9897160034
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