IMPORTANT QUESTION AND ANSWERS FOR ECONOMICS

1. Would it be more beneficial for India to continue being a part or leave WTO?
Explain.
2. State one reform each under Foreign exchange Sector and Financial Sector introduced
under NEP 1991. 
3. In an economy the equilibrium level of income is Rs.12, 000 crore. The ratio of MPC:
MPS is 3:1. Calculate the additional investment needed to reach a new equilibrium
level of Rs. 20,000 crores. 
4. If in an economy, the consumption curve and the saving curve are parallel to each
other, what will be the value of investment multiplier? Explain. In the government
budget, the Finance Minister proposed to raise the GST on cigarettes. She also
proposed to increase income tax on individuals earning more than One crore rupee per
annum. Identify and explain the taxes proposed by the Finance Minister. What
possible objectives could the government be considering?
5. “Recently Indians have drifted away from the traditional knowledge and
practices and caused large scale damage to environment.”  Explain how, adopting
traditional practice can be helpful in achieving the objective of Sustainable
Development.
6. Giving reasons, explain whether the following statements are True or False:
The value of MPC can be greater than one 
Excess demand has no effect on country’s output and prices.
7. Explain three points to show how India’s foreign trade was adversely affected by the
British rule.
 British monopoly
Only Britishers were allowed to intervene in the foreign exchange process
 Export of raw materials and import of finished goods
Raw materials were exported from India to Britain where they were converted
to finished products. These finished products are then imported from Britain to
India
 Economic drain
The economic condition of India drain because whatever income they receive,
they spend that in paying the previous loans instead putting it in productive
activities
8. “In a hypothetical economy, planned savings fall short of planned investment leading
to fall in employment and income.” Do you agree with the given statement? Support
your answer with valid explanation. 
9. Briefly explain the policy of Open Market Operations as a credit control measure. 
10. “Agricultural Subsidies: Harmful or Helpful?” Give valid reasons for both. 
11. ‘Central bank issues money while Commercial banks create money’. Comment on
this statement. Also explain its impact on National Income.
12. What is deflationary gap? Show deflationary gap on a well- labelled diagram. State
its impact on output employment and prices. In the determination of social welfare,
what matters is the quantum of output rather than the composition of output.
 Comment with valid reasons.

13. In the determination of social welfare, what matters is the quantum of output rather
than the composition of output. Comment with valid reasons.
14. Giving reasons, explain why the following statements are True:
Organic farming is more economical compared to chemical farming. 
Urban employment is the spill over of rural unemployment. 

15. Bring out three precautions to be taken while estimating National Income by
Expenditure method. 
16. Suggest two measures to improve the role of rural banking in the process of rural
development in India.
17. Bring out two policy instruments initiated by the government to improve
Agricultural marketing
18. Bring out the role of IT in Rural Development.
19. Why did China introduce economic reforms in 1978? State two reasons.
 China didn’t require introduction of economic reforms in 1978 but the
leadership present then thought that there wasn’t much growth and
progress of china under Maoist vision
 The per capita income was same as it was in the 1950s
 The post-reform period established the introduction of infrastructure,
land etc.
 Communes systems were also introduced which provided equal
distribution of food grains among everyone
 Experts say that the reforms were first introduced at lower levels and
then at higher levels,
20. Discuss the concept of “Dual Pricing” in the reform process of China.
dual pricing is selling the goods and services at the price decided by the
government and the rest is sold at market price.
21. Which policy adopted by China resulted in a “premature- baby-bust?”
    Bring out one impact of such a policy on Chinese economy.
22. “India too must be cautious about the extent to which persons in the working age
group translates into persons who are working and producing GDP.”  State two
ways by which India can make that translation?
23. from the statement “state interventions in fixing the exchange rate. “Identify the
type of exchange rate system which China follows? What “raises question about the
sustainability of the level of the economic development in China?
24. Why is government intervention necessary in human capital formation?
25. Why education for women in India is important?