HARMEET COACHING CLASSES

266/ G-1 PRABHU NAGAR IDGAH HILLS

REVISION TEST
Class 12 - Economics
Time Allowed: 3 minutes
Maximum Marks: 80

General Instructions:

Perform all the questions 

Section A
Question No. 1 to 6 are based on the given text. Read the text carefully and answer the questions:
6.0
A disequilibrium in BoP occurs when the sum total of current account balance and capital account balance is not zero;
instead, it is either some positive number or some negative number. In case the sum total of current account balance and
capital account balance is some positive number, it indicates BoP Surplus. On the other hand, if the sum total of the
current account balance and capital.

Autonomous items refer to such BoP transactions which are undertaken with a view to making profits. It is due to these
transactions that there is a BoP deficit/surplus. Accommodating items, on the other hand, refer to such transactions
which are undertaken by the central bank of a country with a view to correcting BoP imbalance and restoring BoP
equilibrium. It is important to note that accommodating items do not cause any movement of goods and services across
the borders.

1. Assertion (A): Autonomous items refer to such BoP transactions which are undertaken with a view to making loss.

Reason (R): When BoP deficit/surplus is estimated, it is with reference to only the autonomous items or autonomous
transactions of BoP.

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

c) A is true but R is false. d) A is false but R is true.

2. In a recent table or data issued by a company, there is no equilibrium in the balance of payments i.e., disequilibrium.
This disequilibrium in the balance of payments leads to:

a) decrease in official reserves with RBI b) none of these

c) both increase and decrease in official d) increase in official reserves with RBI
reserves with RBI
3. Match the following:

Column 1 Column 2

1. Accommodating items i. foreign institutional investment

2. Autonomous items ii. cause of BoP imbalance

3. Portfolio investment iii. meant to restore BoP balance

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 4. Current transfers iv. An element of Invisibles

a) 1 - iii, 2 - ii, 3 - i, 4 - iv b) 1 - iv, 2 - iii, 3 - i, 4 - ii

c) 1 - ii, 2 - iii, 3 - iv, 4 - i d) 1 - ii, 2 - iii, 3 - i, 4 - iv

4. Roni sold machinery to a person in America. Such sale of machinery to abroad be recorded in the balance of payments
account as:

a) as a trade balance in the current account b) as a nontrade balance in the current account
BoP. BoP.

c) as a nontrade balance in the capital account d) as a trade balance in the capital account
BoP. BoP.
5. Statement 1: If an Indian buys a UK Car Company, it enters capital account transactions as a debit item.

Statement 2: The sale of shares of an Indian company to a foreign customer is a credit item.

a) Statement 2 is true and Statement 1 is false. b) Both the statements are false.

c) Both the statements are true. d) Statement 1 is true and Statement 2 is false.
6. Assertion (A): When a nation becomes a borrower from other countries, a situation of fiscal deficit is created.

Reason (R): When the payments are more than the receipts, it creates a deficit current account.

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

c) A is true but R is false. d) A is false but R is true.

Section B
7. Identify flow variable from the following. [1]

a) Money in your wallet, right now b) None of these

c) Distance between Chennai and Delhi d) Money income during 2016-17

Section C
8. What is the relationship between Marginal Propensity to Save and Marginal Propensity to Consume? [2]
9. What is meant by ex-ante investment? [2]
10. Name any two components of Aggregate Demand. [2]
11. What is real national income? [2]
12. Find nominal GDP if real GDP = 240 and price index = 120. [2]
13. Why second hand goods are not included in national income? [2]
14. Name the three methods of measuring national income. [2]
15. Where are ‘borrowings from abroad’ recorded in BOP account and why? [2]
16. When will balance of trade show surplus? [2]
17. Why has rural banking not been able to give adequate credit to farmers? [3]
18. State the challenges of rural development. [3]
19. Explain the meaning of balance of payments deficit. [3]
20. Calculate Marginal Propensity to Consume from the following data about an economy which is in equilibrium.
[4]
National income = 2000

Autonomous consumption expenditure = 200

Investment expenditure = 100

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21. What is ex-Ante consumption? Distinguish between autonomous consumption and induced consumption. [4]
22. The Central Bank takes steps to control rise in the price of foreign exchange. Explain the economic values it [4]
involves as far as the common man is concerned.
23. Argue in favour of the need for different forms of government intervention in the education and health sectors. [4]
24. What are the differences between education and literacy? [4]
25. Using the following data of an imaginary economy, calculate and compare the Real Gross Domestic Product [4]
(GDP) for the given years:

Year 2015-16 2016-17

Nominal GDP Rate 8.4% 9%

GDP deflator 140 125

26. Calculate GNP at FC. [4]

Particulars Ft in crores)I

(i) NDPMP (i)25,000

(ii) Depreciation (ii) 5,000

(iii) subsidies (iii) 30

(iv) Factor income from abroad (iv) 400

(v) Factor income to the rest of the world (v) 600

27. i. Distinguish between autonomous consumption and induced consumption. [6]

ii. From the following data about an economy, calculate its equilibrium level of income:

Autonomous consumption = 400

Marginal Propensity to Consume = 0.5

Investment = Rs 4000
28. Explain three defects of agriculture of marketing. [6]
29. State giving reasons whether the following statements are True or False: [6]
i. Market price is always more than factor cost.
ii. Goods produced for self-consumption will be included in national income.
iii. Gross domestic capital formation is always greater than gross fixed capital formation.
iv. GDP can be greater than GNP.

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