Jh Venkateshwar International School

Sector-18, Dwarka, New Delhi-75

PRE-BOARD – 1 EXAMINATION (2022-23)
ECONOMICS – XII
(SET- B)
Time: 3 Hours Max. 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

Q1. Read the following Assertion and Reason and choose the correct alternative: (1)
Assertion (A): If aggregate demand is more than aggregate supply at any given level of
income, it is not equilibrium level of income.

Reason (R): Equilibrium level of income is the situation where investment is equal to
savings.
Q2. Ms. Amrita, an economics teacher was discussing the following concepts with the
students. "Make in India programme will cause rise in in the balance of payment situation
of the country." Complete the blanks in the statement with appropriate alternatives. (1)
This will lead to increase in ________of foreign exchange and ______ in balance of
payments.
a) Supply, degradation b) Demand, improvement
c) Supply, improvement d) Demand, degradation.

Q3. Supply of money refers to: (1)

(a) currency held by the public
(b) currency held by Reserve Bank of India
(c) currency held by the public and demand deposits with the commercial banks
(d) currency held by Reserve Bank of India and demand deposits with commercial banks

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Q4. Two friends Rohit and Siddhant were discussing the exchange rate systems. 'Under this
system, the exchange rates are determined by the market forces of demand and supply.
However, deliberate efforts are made by the competent authority to keep the exchange
rates within a specific range'. (1)
The above-mentioned statement was given by Rohit, identify the type of exchange rate
system was he talking about?
(a) Fixed Exchange Rate (b) Floating Exchange Rate
(c) Managed Floating Exchange Rate (d) Managed Fixed Exchange Rate
OR
Read the following statement -Assertion (A) and Reason (R). Choose one of the correct
alternatives given below:
Assertion (A) - Depreciation of currency increases the volume of imports and reduces the
volume of exports.
Reason (R) - In case of depreciation of domestic currency, a country has to pay more
units of domestic currency to obtain one unit of foreign currency.

(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.

Q5. Read the following figure carefully and choose the correct pair of alternatives: (1)

(a) Output, Production

(b) Value added, Production
(c) Output, disposition
(d) Wealth, Development

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Q6. Match the following and choose the correct alternative: (1)
column 1 Column 2
i) = 1,<1,>1
a) APS negative
b) APC ii) 0-1

c) MPC i) 1-b
d) MPS iv) Y<C

(a) a-iv,b-i,C-ii,D-iii (b) a-i, b-ii, c-iii, d-iv

(c) a-ii,b-ili,c-iv,d-I (d) a-iii,b-iv,c-i,d-ii

OR
If an increase of ` 10000 in investment in an economy results in an increase in income of
` 40000, what will be MPS?
(a) 0.4 (b) 4
(c) 0.25 (d) 0.30

Q7. Which of the following statement is not correct? (1)

(a) Monetary policy is also called credit policy.
(b) Margin requirements influence the flow of credit to specific areas of economic activities.
(c) Increase in CRR reduces money supply in the economy.
(d) Higher the cash reserve ratio, greater will be the amount of credit creation.
Q8. According to the table, what will be the value of balance of trade? (1)
Transaction (fig. in crores)
(i) Total export of merchandise 1,000

ii) Total import of merchandise 1,200

iii) Total export of invisibles 200
(iv) Total import of invisibles 100

(a) Surplus of 100 crores (b) Surplus of 200 crores

(c) Deficit of 100 crores (d) Deficit of 200 crores

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Q9. If investment falls to zero, national income does not fall to zero because of: (1)
(a) Autonomous consumption (b) Autonomous investment
(c) Induced investment (d) Multiplier
Q10. How are both APC and APS associated with National Income? (1)
(a) both APC and APS fall with increase in National Income
(b) both APC and APS rise with increase in National Income
(c) APC falls APS rises with increase in National Income
(d) APC rises APS falls with increase in National Income
OR
_____________ is a situation in which a worker is not willing to work at the current wage
rate. Choose the correct alternative.
(a) Involuntary unemployment
(b) Voluntary unemployment
(c) Frictional unemployment
(d) Structural unemployment
Q11. Compute Sales from the following data: (3)
Items ` in lakhs
Subsidies 200
Opening stock 100
Closing stock 600
Intermediate consumption 3000
Consumption of fixed capital 700
Profits 750
NVA FC 2000
Exports 100

Q12. "Rupee falls 22 paise to record low of 79.48 against US dollar"- The Hindustan Times. (3)
Explain the impact of the given situation on imports and balance of trade position of the
Indian economy.
OR
Explain the determination of exchange rate in a free market. Use diagram to explain the
same.

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Q13. Read the following case and answer the questions that follow: (2+2)
New Delhi - The centre eased norms to offer 50% of salary for three months as
unemployment allowance to lakhs of workers who are members of the employee’s state
insurance corporation and lost their jobs due to the coronavirus pandemic. The move
comes as a major relief for industrial workers, who have lost jobs or are on the verge of
losing jobs due to the impact of the pandemic and the lockdown, which had stalled
economic activity. There have been demands from several sections to provide wage relief
to workers his hard by the pandemic.

(a) With reference to the above, how will you treat unemployment allowance in the
estimation of national income? Give one more example of such type of payment.
(b) State any two precautions that must be undertaken while estimating national income by
income method.
Q14. The Reserve Bank of India (RBI) has imposed, by an order dated September 13, 2022, a
monetary penalty of 1.50 lakh (Rupees One lakh and Fifty Thousand only) on a particular
Nagarik Sahakari Bank in Gwalior (M.P) for contravention of non-compliance with the
directions issued by the RBI to Urban Co-operative Banks. A notice was issued to the
bank advising it to show cause as to why penalty should not be imposed on it for non-
compliance with the directions.
After considering the banks' replies and oral submissions made during personal hearing,
RBI concluded that the aforesaid charges of non-compliance with RBI directions were
substantiated and warranted imposition of monetary penalty.
SOURCE: Press release RBI, 19 Sept. 2022.
Discuss briefly the relevant function of the Central Bank indicated in the above
press release. (4)
Q15. "On the basis of an assessment of the current and evolving macroeconomic situation, the
Monetary Policy Committee (MPC) at its meeting decided to increase the policy repo rate
under the liquidity adjustment facility (LAF) by 50 basis points to 5.40 per cent with
immediate effect." SOURCE: The Economic Times August 2022.

Identify the likely cause and the consequences behind this type of action plan of the
Reserve Bank.
OR
In an economy, autonomous investment is 60 and MPC = 0.8. If the economy is at
equilibrium at 400 crores, the value of autonomous consumption is 30 crores. State true/
false with valid argument. (4)

Q16. Discuss the adjustment mechanism in the following situations: (6)

(a) Aggregate demand is greater than Aggregate supply.
(b) Ex- Ante investments are lesser than Ex-ante savings

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Q17. Compute Net exports and Operating Surplus from the following data: (6)
Items ` in Crores
Wages and salaries 2400
National Income 4200
Net Exports ?
Net factor income from abroad 200
Gross domestic capital formation 1100
Mixed income of self employed 400
Private final consumption expenditure 2000
Net indirect taxes 150
Operating surplus ?
Government final consumption 1000
expenditure
Consumption of fixed capital 100
Profits 500
OR
(a) Give two points of difference between Real National Income and Nominal National
Income
(b) How will you treat the following in the estimation of National Income? Give reasons for
the same.
1. Interest on national debt.
2. Interest received by household from commercial bank.
3. Services of owner- occupied houses.
4. Purchase of second -hand machinery from abroad.

SECTION B
INDIAN ECONOMIC DEVELOPMENT
Q18. Which of the following government agencies regulates the education sector in India? (1)
(a) NCERT (b) ICMR (c) UGC (d) both a and c
OR
Choose the correct statement from the following
(a) Human capital and human development are the same thing.
(b) Human capital treats human beings as end.
(c) The state of Kerala has the highest literacy ratio in India.
(d) Physical capital cannot be sold in the market.
Q19. Mao initiated the ‘Great Leap Forward’ in the year --------------------. Choose the correct
alternative. (1)
(a) 1951 (b) 1955 (c) 1958 (d) 1962

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Q20. Arrange the following events of China in chronological order and choose the correct
alternative: (1)
(i) Great Proletarian Cultural Revolution
(ii) Great Leap Forward campaign
(iii) Introduction of Economic Reforms
(iv) First five year plan
Choose the correct alternative:
(a) (ii), (iv), (iii), (i) (b) (iv), (ii), (i), (iii)
(c) (ii), (iv), (i), (iii) (d) (iv), (i), (ii), (iii)
OR
When did China discontinue its one child policy ?
(a) 2013 (b) 2016 (c) 1980 (d) 1990.

Q21. Read the following statement -Assertion (A) and Reason (R). Choose one of the correct
alternatives given below: (1)
Statement 1: Rapid expansion of the banking system had a positive effect on rural farm
and non-farm output, income and employment.
Statement 2: The institutional credit arrangement continues to be inadequate as they
have failed to cover the entire rural farmers of the country.

Choose the correct alternative:

(a) Statement 1 is true and statement 2 is false
(b) Statement 1 is false and statement 2 is true
(c) Both statements are true.
(d) Both statements are false
Q22. Match the items given under column A with the suitable statements under B and choose
the correct alternative: (1)
Column A Column B
a) India (i) To transform Agrarian economy into
Modern economy.
b) Human Development index (ii) Highest density of population
c) Pakistan (iii) Shows level of growth & development of
a country.
d) Great Leap Forward (iv) fifth most populous country in the world.

Choose the correct alternative:

a) i-a, ii-b, iii-c, iv-d b) i-b, ii-c, iii-d, iv-a
c) i-c, ii-a, iii-b, iv-d d) i-d, ii-a, iii-b, iv-c
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Q23. Read the following statement -Assertion (A) and Reason (R). Choose one of the correct
alternatives given below: (1)
Assertion(A): Human capital treats human beings as means to an end.
Reason (R): Human capital formation decreases by way of investment in education and
health
Choose the correct alternative:
(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.
Q24. Read the following statements carefully and choose the correct alternative: (1)
Statement 1: Special Economic Zones were set up in China to attract domestic investors.
Statement 2: Both India & Pakistan have successfully implemented the SEZ policy.
choose the correct alternative:
(a) Statement 1 is true and statement 2 is false
(b) Statement 1 is false and statement 2 is true
(c) Both statements 1 and 2 are true
(d) Both statements 1 and 2 are false

Q25. Which of the following is not used as strategy for sustainable development? (1)
(a) Use of bio-gas (b) Use of solar power
(c) Use of thermal power (d) Use of hydel power
OR
Which one of the following are effects of global warming? (1)
(i) extinction of species (ii) melting of polar ice
(iii) frequent tropical storms (iv) increase in use of pesticides

Choose the correct alternative:

(a) (i) and (ii) (b) (ii) and (iii)
(c) (i), (ii) and (iii) (d) all of these
Q26. Workers who are on permanent pay roll of the company are categorized as : (1)
(a) Self- employed workers (b) Casual workers
(c) Regular workers (d) None of the above

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Q27. Read the following statement -Assertion (A) and Reason (R). Choose one of the correct
alternatives given below: (1)
Assertion(A) : Diversification towards a new area is necessary not only to reduce the risk
from agriculture sector but also to provide productive sustainable livelihood
options to rural people.

Reason (R) : Rural diversification includes two aspects - to change in cropping pattern to
shift from subsistence farming to commercial farming and the other relates
to a shift of work force from agriculture to other allied activities.
Alternatives:
(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

Q28. Define the term carrying capacity. Write two observations on how carrying capacity of
environment is being challenged in India. (1+2)
Q29. Discuss the following as source of human capital formation: (3)
(a) Expenditure on education
(b) Expenditure on health
OR
How is human capital different from physical capital? Write two observations on the
significance of human capital in GDP growth of a country.
Q30. Analyze the trends and compare them on the basis of sectoral contribution to GDP.(4)

Q31. Explain how adverse balance of payments and poor performance by the public sector led
to the economic reforms in 1991. (4)
OR
"Agriculture sector appears to be adversely affected by the economic reform process."
Explain the given statement.

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Q32. Discuss the trend in employment sector depicted in the table below. What are its
consequences for the economy. (4)

Q33. (a) State and briefly explain any three benefits of organic farming.
(b) Discuss any three challenges faced by agriculture marketing in India. (3+3)
OR
Differentiate between institutional and non institutional sources of credit. Explain the role
of microcredit organizations in meeting the credit requirement of the poor.

Q34. (a) Read the following case and answer the questions that follow: (2+2+2)
India’s growth path grabbed the attention of the world after the introduction of the New
Economic Policy in 1991. Economic reforms included stabilization and structural reforms.
Liberalization led to the breakdown of the “License raj”. Reforms were introduced in
various sectors with the aim of decreasing government intervention. It was done in order to
build a new framework to make markets more competitive. India’s low foreign exchange
reserves was one of the reasons for the introduction of reforms. At present, India enjoys a
leading position in terms of foreign exchange reserves across the world. These reforms
completely transformed the Indian economy. However, today many economists feel the
need for a new set of reforms.
i) The policy of liberalization changed the role of RBI from ‘a regulator to a facilitator’ in
the financial sector. Defend or refute the given statement with valid arguments.
ii) “India is often called as Outsourcing Destination of the world. Discuss the prime
reasons for this name given in India.

(b) How do you evaluate Start-ups in India as a solution to the problem of unemployment?
Write two observations.

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