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MOCK PAPER 3 (EXPECTED QUESTIONS)

Class 12 - Economics
Time Allowed: 3 hours
Maximum Marks: 80

General Instructions:

1. This question 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.

SECTION A – MACRO ECONOMICS

1. Visible goods are recorded in this part of balance of payments account: [1]

a) Official account b) Current account

c) Govt. account d) Capital account

2. A bank run occurs when a large number of customers of a bank withdraw their deposits simultaneously. This [1]
can cause a bank to become insolvent if they cannot pay back all the depositors.

Which of the following facts about a bank make a bank run possible?
a. Banks hold only about 15 per cent of their deposits as cash. The rest of the deposits are given out as loans.
b. Banks have to pay a specific amount to the person in whose name a cheque has been issued.
c. Banks charge a higher interest rate on loans than what they offer on deposits.
d. Banks pay an amount to account holders as interest on deposits.

a) Option (a) b) Option (d)

c) Option (b) d) Option (c)

3. When planned savings exceed planned investment, the level of income and employment will tend to ________. [1]

a) Remain constant b) Rise

c) Fall d) None of these

4. T.V., radio, washing machine, etc. are examples of: [1]

a) durable consumer goods b) capital goods

c) nondurable consumer goods d) single-use consumer goods

5. If C = ₹500 crore, I = ₹300 crore, find the AD in a two sector economy. [1]

a) ₹1,300 crore b) ₹800 crore

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 c) ₹200 crore d) ₹500 crore
6. In determination of equilibrium level of income by AD-AS approach, AD is represented by: [1]

a) C + I b) C + Y

c) C + S d) S + I
7. Which of the following carries a direct relationship with the rate of growth of an economy? [1]

a) APC b) MPS

c) APS d) MPC
8. Which of the following is not recorded in the Capital Account of Balance of Payments? [1]

a) Gifts, Remittances and Grants b) Government Aid

c) Equity capitals d) Offshore Funds

9. Assertion (A): Currency notes and coins are called legal tenders.
[1]
Reason(R): They cannot be refused by any citizen of the country for settlement of any kind of transaction.

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.

10. Assertion (A): Adjustment in the parity value of a currency was possible but only if allowed by IMF.
[1]
Reason (R): Gold continued to be the ultimate unit of parity between any two currencies.

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.

11. Giving reasons, explain how the following are treated in estimating national income: [3]
i. Wheat is grown by a farmer but used for family consumption.
ii. Earnings of the shareholders from the sale of shares.
iii. Expenditure by the government on providing free education.
12. What is meant by visible and invisible items in the Balance of Payments Account? Give two examples of [3]
invisible items.
13. Explain the role of the following in correcting Excess Demand in an Economy. [4]
1. Bank Rate
2. Open Market Operation
14. What is deficient demand in an economy? What is its impact on output, employment and prices? [4]
15. Explain the lender of last resort function of the Central Bank. [4]
OR
What is money multiplier? What determines the value of this multiplier?
16. Answer the following questions: [6]
(i) State the various precautions of Product Method that should be kept in mind while estimating national
income.
(ii) Why are (a) net exports and (b) net change is stocks included in national income? Explain.
17. Answer questions (i) & (ii) OR questions (iii) & (iv). [6]

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 (i) Explain any one objective of government budget.
(ii) What is a balanced budget? Describe merits and demerits of a balanced budget.
(iii) Give meanings of revenue receipts and capital expenditures with one example for each.
(iv) Explain briefly any two objectives of a government budget.
SECTION B – INDIAN ECONOMIC DEVELOPMENT
18. Disguised unemployment in India is generally found in ________. [1]

a) Transport b) Trade

c) Agriculture d) Industry
19. When was planning initiated in India? [1]

a) In 1956 b) In 1951

c) In 1950 d) In 1952
OR
The starting of land reforms programmes was set up in the right direction but it could not be successful because of

a) inadequate proof of tenancy b) malafide transfers

c) lack of political will d) All of the these

20. Our plan documents not only specify the objectives to be attained in the five years of a plan but also what is to [1]
be achieved over a period of twenty years. This long-term plan is called ________.

a) Five year Plan b) Single use plan

c) Standing plan d) Perspective plan

OR
How did the government promote and protect small-scale industry?
a. The production of a number of products was reserved for the small-scale industry.
b. They were also given concessions such as lower excise duty and bank loans at lower interest rates.
c. The government purchased a large quantity of goods from them.
d. Both (a) and (b).

a) Option (b) b) Option (d)

c) Option (c) d) Option (a)

21. Which of the following is the apex body which coordinates the functioning of different financial institutions [1]
working in rural areas?

a) Commercial Banks b) Self-Help Groups

c) NABARD d) Rural Banks

22. Which of the following industries are reserved for the public sector? [1]

a) Defense equipment b) Atomic energy generation

c) Defense equipment and Atomic energy d) Cement

generation
23. Human Development refers to: [1]

a) Development of the individuals by acquiring b) All of these

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 a good education

c) Consists of skills as used in the process of d) Increase in human population

production
24. Protection from foreign competition enabled the establishment of which particular indigenous industry? [1]

a) Electronics and Telecommunications b) Electronics and Automobiles

c) Electronics and Chemicals d) Electronics and Petrochemicals

25. When extraction is above the rate of regeneration of the resource and the wastage are outside the absorptive [1]
capacity of the environment then environment fails to perform its one of the vital function. What is that
function?

a) It provides aesthetic services b) It supplies resources

c) It sustains life d) It assimilates waste

26. Assertion (A): Britishers destroyed indigenous handicraft market in India.
[1]
Reason (R): India was made market for British manufactured products

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.

27. Assertion (A): The policy of land to the tiller is based on the idea that the cultivators will take more interest- [1]
they will have more incentive- in increasing output if they are the owners of the land.

Reason (R): This is because ownership of land enables the tiller to make profit from the increased output.
Tenants do not have the incentive to make improvements on land since it is the landowner who would benefit
more from higher output.

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.

28. Is environmental crisis a recent phenomenon? If so, why? [3]
29. Why do we find hidden (disguised) unemployment in agriculture? Can it be in other sectors also? [3]
OR
The following table shows the population and worker population ratio for India in 1999-2000. Can you estimate the
workforce (urban and total) for India?

Estimates of Population (in Worker Population Estimated Number of Workers (in

Region
crore) Ratio Crore)

Rural 71.88 41.9

71.88
× 41.9 = 30.12
100

Urban 28.52 33.7 ?

Total 100.40 39.5 ?

30. Comment upon occupational distribution between India and Pakistan by understanding the following data. [4]
Sector India Pakistan

2015-17 2018-19 2015-17 2018-19

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 Agriculture 42.7 48 42 42

Industry 23.8 22 3.7 24

Services 33.5 30 54.3 34

31. Answer first two questions (i & ii) OR answer the last question (iii): [4]
(i) What is meant by ‘retaining the golden share’?
(ii) Discuss briefly any two major steps taken by the Government of India on the Financial Sector front under
the Economic Reforms of 1991.
(iii) Write a brief note on trade and investment policy reforms. How did it lead to economic growth?
32. State whether the following statements are true/false, with valid arguments: [4]
(i) There is an upward trend in inequality worldwide with a rise in the average education level.
(ii) Expenditure on health is an important determinant of human capital formation.
33. Answer first 3 questions (i, ii, iii) OR last 2 questions (iv, v): [6]
(i) What is meant by organic farming?
(ii) The livestock in India faces low productivity as compared to other countries. What are the solutions of this
problem?
(iii) Why is rural development important in India?
(iv) To solve the various problems associated with rural credit, enumerate the objectives which should be
followed by the cooperative credit societies.
(v) If farmers who borrowed from cooperative banks could not pay back loan due to crop failure and other
reasons, their loans should be waived off else they might commit suicide. Do you agree? Explain.
34. Read the following text carefully and answer the questions given below: [6]
Trucks carrying goods from China began offloading containers 3 years back to ships at the Pakistani port of
Gwadar, marking the operational opening of the Chinese built-and-financed China-Pakistan Economic Corridor
(CPEC). The scale of the USD 51 billion infrastructure scheme will change Pakistan in ways that offer hope for
easing its internal conflicts and its destabilizing fear of international isolation, experts said in a discussion at the
U.S. Institute of Peace.
India and China: Opposite Directions
But CPEC, for now, offers little prospect of reducing China’s and Pakistan’s immediate tensions with India,
panel members said. India is proposing its own transportation corridors that run in the opposite direction from
those of China’s “One Belt, One Road Initiative,” an overall project intended to link China with Central Asia,
Europe and East Asia. Theoretically, the Indian and Chinese projects could be linked, Zhao said. But mutual
distrust precludes potential cooperation, he said.
“India remains vigilant and cautious, but they do somehow want to participate,” he said.
How to bring in India is the biggest question facing the CPEC project, Nadim said. When Prime Minister Nawaz
Sharif took office in 2013, his primary focus was improving relations with India, not China, Nadim said, adding
that he’s confident India remains a priority.
Sharif and his party recognize that the benefits of CPEC for Pakistan could be enhanced further with a
significant easing of tensions with India, but that is likely further in the future, Nadim said “Realistically, the
government of Pakistan isn’t thinking beyond Balochistan,” he said.
In the most hopeful scenario, CPEC could serve as the gateway for connecting Pakistan to India, Afghanistan,
the Central Asian republics and even Iran, Rafiq said. “But the economic promise of regional integration is
really held hostage by strategic challenges,” he said.

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India’s long-running suspicions about the project were heightened by recent reports the Chinese navy intends to
patrol Gwadar and that it provided an escort for the first ships leaving the port with Chinese cargo, said Sarah
Watson an associate fellow and India specialist at the Center for Strategic and International Studies. More
broadly, China’s deepening involvement with Pakistan makes it more likely to move beyond traditional verbal
support for its ally to military backing in case of a conflict with India, she said.
Questions:
i. Highlight the benefits of China-Pakistan Economic Corridor (CPEC) for Pakistan.
ii. State the economic intention behind China's 'One Belt, One Road Initiative'.

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