AMITY INTERNATIONAL

SCHOOL, SECTOR 46,

GURUGRAM
SECOND PRE TERM I EXAM
SUBJECT – ECONOMICS
CLASS - XII

Time: 90 minutes Maximum Marks: 40

GENERAL INSTRUCTIONS:
1. There are a total 60 questions in this paper out of which 50 questions are to be attempted.
2. This paper is divided into three Sections:
a. Section A – Contains 24 questions. Attempt any 20 questions.
b. Section B – Contains 24 questions. Attempt any 20 questions.
c. Section C – Contains 12 questions. Attempt any 10 questions.
3. All questions carry equal marks.
4. There is no negative marking.
SECTION A
(20 questions out of 24 questions are to be attempted)

1. Which of the following is not a characteristic of public goods?

(a) Public goods are non-excludable.
(b) It is difficult and sometimes impossible to collect fees for the public goods
(c) The consumption of public goods by several individuals is rivalrous.
(d) None of the above.

2. Tension between India and China on the borders have created sentiments against Chinese goods. During Diwali alone
Chinese exporters incurred a loss worth Rs.42000 cr. This has led to the reduction in the Balance of account of
Balance of Payment and on which _____ of BOP side.
(a) Capital, credit
(b) Capital, debit
(c) Current, credit
(d) Current, debit

3. The bank that operates without any profit motive in public interest is
(a) Central Bank
(b) Nationalised Commercial Bank
(c) Canara Bank
(d) Punjab National Bank

4. Official reserves transactions are relevant under. ____.

(a) Floating exchange rate system
(b) Managed floating exchange rate system
(c) Fixed exchange rate system
(d) Both (b) and (c)

5. Read the following statements carefully and choose the correct alternativefrom the following:
Statement 1 –Demonetisation is an act of stripping a currency unit of its status as legal tender.
Statement 2 – Demonetisation is the mahayojana by the Prime Minister to curb the ills of corruption.
Alternatives:
(a) Both the statements are true.
(b) Both the statements are false.
(c) Statement 1 is true and Statement 2 is false.
(d) Statement 2 is true and Statement 1 is false
6. Two friends Gita and Sita were discussing.
Gita - Currently, Indian 1-rupee note is the smallest Indian banknote in circulation.
Sita - So the issue of one rupee currency note in India is the liability of the….
(a) Issue department of India
(b) Government of India
(c) State Bank of India
(d) Banking department of the RBI

7. Foreign exchange transactions dependent on other foreign exchange transactions are called:
(a) Current Account Transactions
(b) Capital Account Transactions
(c) Autonomous Transactions
(d) Accommodating Transactions

8. Read the following statements carefully and choose the correct alternativefrom the following:
Statement 1 – Highways and road works announced in some states in India in budget 2021.
Statement 2 – Such announcement will increase revenue expenditure of the government.
Alternatives:
(a) Both the statements are true.
(b) Both the statements are false.
(c) Statement 1 is true and Statement 2 is false.
(d) Statement 2 is true and Statement 1 is false

9. The Indian Currency against US $ has appreciated from Rs.80 to Rs.70. What measure can be initiated by central bank to
protect exporters?
(a) Increase the Supply of US $
(b) Decrease the Supply of US $
(c) Increase Bank Rate
(d) Sell Government bonds

10. ___are the sources of money supply in an economy.

(a) Central bank of the economy
(b) Commercial banking system
(c) Both (a) and (b)
(d) Government

11. Import substitution policy was implemented in the India to protect domestic industries in___. (Fill up the blank with
correct alternative)
(a) First four five-year plans
(b) First six five-year plans
(c) First seven five-year plans
(d) First eight five-year plans

12. India was particularly well known for which of its handicraft industries at the advent of British period:
i) cotton textiles
ii) silk textiles
iii) metal work
iv) precious stone works

Choose the correct option

(a) i) & iv only
(b) i), ii) & iv)
(c) i), ii) & iii)
(d) all the above

13. Planning in India focuses on………… (Fill up the blank with correct alternative).
(a) Economic growth
(b) Growth with social justice
(c) Growth with modernization
(d) Regional development

14. Read the following statements carefully and choose the correct alternativesgiven below:
Statement 1 – Churning poor refer to those people who regularly move in and out of poverty.
Statement 2 – Poverty gap index is a method used to determine poverty.
Alternatives:
(a) Both the statements are true.
(b) Both the statements are false.
(c) Statement 1 is true and Statement 2 is false.
(d) Statement 2 is true and Statement 1 is false.

15. Read the following statements carefully and choose the correct alternatives given below:
Statement 1 – Liberalisation of trade and investment regime was initiated to increase international competitiveness of
industrial production and also foreign investments and technology into the economy.
Statement 2 – One of the aims of Trade policy reforms was increase of tariff rates.
Alternatives:
(a) Both the statements are true.
(b) Both the statements are false.
(c) Statement 1 is true and Statement 2 is false
(d) Statement 2 is true and Statement 1 is false

16. Which of the following is a limitation of agricultural subsidies in India?

(a) Wasteful consumption
(b) Huge burden on government finances
(c) Misappropriated benefits
(d) All of these

17. From the following given sets of statements in column I and II, choose the correct pair of statements.
Column I Column II
A. External commercial borrowing i. Available at the concessional rate of interest
B. Real assets ii. Stocks and Bonds
C. Autonomous items iii. Classified as ‘above the line’ items of BOP
D. Exports of goods and services iv. Recorded as negative items in BOP accounts
Alternatives:
A-i
B-ii
C-iii
D-iv
18. The weighted average of consumption of the three segments of population gives the average poverty line, which
according to Dadabhai Naoroji, comes out to be of the adult jail cost of living.
(a) one-fourth
(b) three-fourth
(c) one-fifth
(d) two-fifth

19. In a situation of Inflation, the government should adopt:

(a) Balanced Budget
(b) Surplus Budget
(c) Deficit budget
(d) None of these

20.___is not one of the major programmes aimed at improving the food and nutritional status of the poor.
(a) Public Distribution System
(b) Mid-day meal scheme
(c) Integrated child development Programme
(d) National Family Benefit scheme

21. Demand Deposits include _____and ___.

i) Fixed Deposits
ii) Current Account Deposits
iii) Post Office Deposits
iv) Saving Accounts Deposits
Alternatives:
(a) ii) & iv) only
(b) i), ii) & iv)
(c) i), ii) & iii)
(d) all the above

22. Human capital is a .................. concept. (Choose the correct alternative)

(a) stock
(b) flow
(c) either stock nor flow
(d) neither stock nor flow

23. Read the following statements carefully and choose the correct alternatives given below:
Statement 1- IPR, 1956 formed the basis of the Second Five Year Plan, the plan which tried to build the basis for a socialist
pattern of society.
Statement 2- Second category consisted of industries in which the private sector could supplement the efforts of the state
sector, with the state taking the sole responsibility for starting new units.
Alternatives:
(a) Both the statements are true.
(b) Both the statements are false.
(c) Statement 1 is true and Statement 2 is false
(d) Statement 2 is true and Statement 1 is false
24. First train on Indian soil was run in?
(a) 1854 (b) 1858
(c) 1855 (d) 1856

SECTION B
(20 questions out of 24 questions are to be attempted)

25. Read the following statements - Assertion (A) and Reason (R):
Assertion (A) - India imports machinery worth $8 billion will affect the current account balance in a negative way.
Reason (R) – Capital account records all the items that affect the assets and liability status of a country.
From the given alternatives choose the correct one:
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correctexplanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not thecorrect explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.

26. Suppose in an economy, the initial deposits of Rs. 400 crores lead to the creation of total deposits worth Rs. 4000
crores.Under the given situation the value of reserve requirements would be
(Fill up the blank with correct alternative)
(a) 0.01
(b) 1
(c) 0.1
(d) 0.4

27. Read the following statements - Assertion (A) and Reason (R):
Assertion (A) – Cooperative farming was promoted to enhance bargaining power of the small
landholders.
Reason(R) – The problem of low productivity was tackled by the way of technical reforms.
From the given alternatives choose the correct one:
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 thecorrect explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.

28. Identify the incorrect statement from the following: (Choose thecorrect alternative)
(a) NABARD takes appropriate measures to improve the credit deliverysystem in rural credit.
(b) Long term credit serves the purpose of purchase of additional land.
(c) TANWA is a project launched with a view to train women in diversetechniques of farming.
(d) Uzhavar Sandies are one of the alternative marketing channels found in Andhra Pradesh.

29. Read the following statements – Assertion (A) and Reason (R):
Assertion (A): Brain drain is a serious threat to the process of human capital formation in the country.
Reason(R) – People of high caliber such as Scientists, Engineers etc.decide to migrate to get better earnings.
From the given alternatives choose the correct one:
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is thecorrect explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not thecorrect explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.
30. Identify the correct sequence of alternatives given in Column 2 by matching them with respective items in
Column 1 and tick the correct option
Column 1 Column 2
A. Absolute Poverty 1. Poverty across different classes, regions or countries
B. Relative Poverty 2. Measured in terms of Poverty line
C. Consumption expenditure 3. Published through NITI Aayog
D. Data on Poverty 4. Estimated by National Sample Survey Organization
a. (A) – 1, (B) – 2, (C) – 3, (D) -4
b. (A) – 2, (B) – 3, (C) – 1, (D) -4
c. (A) – 2, (B) – 1, (C) – 3, (D) – 4
d. (A) – 2, (B) – 1, (C) – 4, (D) – 3

31. Study the following graph carefully

Identify which of the following alternatives is not correct?

(a) Rural poverty continues to be in excess of urban poverty.
(b) Total percentage of population below poverty line declined from 51%in 1972-73 to 29.8% in 2009-10.
(c) Significant increase in percentage of population below poverty line in rural areas was witnessed during 2004-05, breaking
the declining trend.
(d) Percentage decline in population below poverty line also means total decline in the number of people below poverty
line.

32. Observe the image given below and answer the subsequent question.

Which of the following options is depicted by the above picture?

(a) Diversification of crop production (b) Diversification of Production activity
(c) Diversification of agricultural & allied activities (d) Both b and c

33. Read the following statements – Assertion (A) and Reason (R):
Assertion (A) – The major policy initiatives i.e. land reforms and green revolution helped India to become self-sufficient in
food grains production.
Reason(R): The proportion of people depending on agriculture did not decline as expected.
From the given alternatives choose the correct one:
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is thecorrect explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not thecorrect explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.

34. Read the following statements – Assertion (A) and Reason (R):
Assertion (A): IT revolution is promoting Indian Economy as a‘Knowledge economy’.
Reason(R) – IT revolution is popularly called as ‘Golden Revolution’.From the given alternatives choose the correct one:
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is thecorrect explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not thecorrect explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.

35. Read the following statements carefully and choose the correct alternatives given below:
Statement 1 – Both primary and secondary deposits are demand deposits.
Statement 2 –Deposit creation comes to end when total cash reserves become equal to the initial deposits.
Alternatives:
(a) Both the statements are true.
(b) Both the statements are false.
(c) Statement 1 is true and Statement 2 is false
(d) Statement 2 is true and Statement 1 is false

36. Arrange the following events of India before the independence in chronological order:
(i) Opening of Suez Canal;
(ii) Introduction of Railways;
(iii) Second stage of Demographic Transition;
(iv) Incorporation of Tata Iron and Steel Company.
Alternatives:
(a) i,ii,iv,iii
(b) iv,ii,iii,i
(c) ii,i,iv,iii
(d) iii,iv,ii,i

37. Read the following statements - Assertion (A) and Reason (R):
Assertion (A) – When there is a trade deficit and current account deficit, there will always be a BOP deficit.
Reason(R) – When there is a trade deficit and current account deficit but a capital account surplus (i.e. a net capital inflow),
there may be a balanced BOP or BOP surplus or BOP deficit.
From the given alternatives choose the correct one:
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correctexplanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not thecorrect explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.
38. The value of credit multiplier will be high when____ .
(a) Legal reserve ratio is high
(b) Legal reserve ratio is low
(c) Legal reserve ratio is zero
(d) Legal reserve ratio is infinity

39. Read the following statements - Assertion (A) and Reason (R):
Assertion (A) – Milk cooperatives have played a major role in bringing White Revolution in the country.
Reason(R) – Agricultural marketing is the farmers’ act of brining their produce to the market for sale.
From the given alternatives choose the correct one:
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is thecorrect explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not thecorrect explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.

40. Read the following statements - Assertion (A) and Reason (R):
Assertion (A) - Nationalisation of commercial banks marked the beginning of social banking in rural areas.
Reason(R) – Farmers can avail the benefit of institutional credit without any collateral.
From the given alternatives choose the correct one:
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correctexplanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not thecorrect explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.

41. Read the following statements - Assertion (A) and Reason (R):
Assertion (A) – M1 Measure of money supply is defined as follows: M1 = CU + DD, where CU is currency (notes plus coins)
held by the public and DDis ‘net’ demand deposits held by commercial banks. The word ‘net’ here implies that only deposits
of the public held by the banks are to be included in money supply.
Reason(R) – The inter bank deposits, which a commercial bank holds in othercommercial banks, are not to be regarded as part
of money supply.
From the given alternatives choose the correct one:
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is thecorrect explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not thecorrect explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.

42. Which concept does the given picture focuses on?

(a) Head count ratio

(b) Poverty line
(c) Jail cost of living
(d) Relative Poverty
43. As a student of class XII, you must have been to career counselor to decide on your plans of acquiring some specialized
skills; may be an economist or some professional course. Which of the following options shows the best way of adding to
the stock of human capital in the economy?
(a) Investment on Health
(b) Investment on Information
(c) Investment on On-the-job training
(d) Investment on Education

44. If inflation is higher in country A than in country B, and the exchange rate between the two countries is fixed what is
likely to happen to the trade balance between two countries?
(a) Trade balance of country A will share a deficit whereas trade balance of country B will show a surplus.
(b) Trade balance of country A will show a surplus whereas trade balance of country B will show a deficit.
(c) Balance of trade of both the countries will be in balance
(d) None of the above.

45. Read the following statements carefully and choose the correct alternatives given below:
Statement 1 – Globalisation is the primary reason of contracting out some of its activities to third party specialists.
Statement 2 – GST is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.
Alternatives:
(a) Both the statements are true.
(b) Both the statements are false.
(c) Statement 1 is true and Statement 2 is false
(d) Statement 2 is true and Statement 1 is false

46. Read the following statements - Assertion (A) and Reason (R):
Assertion (A) – Managed floating exchange rate though depends upon market forces but remains within a specific range as
decided by Central Bank.
Reason(R) – Exchange rate is determined by the forces of demand and supply of foreign exchange but the central bank
intervenes to buy or sell foreign currency to moderate the exchange rate fluctuations.
From the given alternatives choose the correct one:
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 thecorrect explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.

47. Identify the incorrect statement from the following:

(a) During the British rule in India, High Birth Rate and High Death Rate was found.
(b) On the eve of independence, country’s growth of aggregate real output during the first half of twentieth century was less
than 2 percent.
(c) On the eve of independence, capital goods industries were developed in India.
(d) At the time of independence, secondary and tertiary sectors were in their infant stage of growth.

48. Identify the correct sequence of alternatives given in Column 2 by matching them with respective items in Column 1.
Column 1 Column 2
A. Ability to read and write 1 Education
B. Expands mental horizons of people 2. Literacy
 C. Human Capital 3. Creates only private benefits
D. Physical Capital 4. Creates private as well as social benefits

a. (A) – 1, (B) – 2, (C) – 3, (D) - 4

b. (A) – 2, (B) – 3, (C) – 1, (D) - 4
c. (A) – 1, (B) – 2, (C) – 4, (D) - 3
d. (A) – 2, (B) – 1, (C) – 4, (D) - 3

SECTION C
(10 questions out of 12 questions are to be attempted)

Q. No. 49 – 54 are to be answered on the basis of the following data:

FM Niramala Sitharaman proposed a new optional personal income tax system and announced multi-billion dollar farm,
infrastructure and a healthcare package to revive growth in the country, on Saturday. Emphasising on capacity building and
empowerment of marginalised sections of the society while protecting the wealth creators, Sitharaman said this Budget will
boost income and purchasing power of the people.
Taxable income slabs Tax rates
Up to Rs. 5 lakh Nil
Rs. 5 lakh to Rs. 7.5 lakh 10%
Rs. 7.5 lakh to Rs. 10 lakh 15%
Rs. 10 lakh to Rs. 12.5 lakh 20%
Rs. 12.5 lakh to Rs. 15 lakh 25%
Above Rs. 15 lakh 30%
To simplify the tax system and lower tax rates, around 70 of more than 100 income tax deductions and exemptions have
been removed. Dividend Distribution Tax (DDT) abolished; Companies will not be required to pay DDT; dividend to be taxed
only at the hands of recipients, at applicable rates. 15% concessional tax rate for new power generation companies. 100%
tax concession to sovereign wealth funds on investment in infrastructure projects.

49. What objective has been fulfilled by the Govt. of India through its Progressive Personal Income Tax Policy as
highlighted in the given case?
(a) Reallocation of resources (b) Redistribution of income
(c) Economic stability (d) Economic growth

50. Personal Income Tax is a____.

(a) Direct tax
(b) Indirect tax
(c) Paper tax
(d) None of these

51. "15% concessional tax rate for new power generation companies. 100% tax concession to sovereign wealth funds on
investment in infrastructure projects." What objective of government budget has been highlighted in the above lines?
(a) Reallocation of resources
(b) Redistribution of income
(c) Economic stability
(d) None of these

52. Suggest the measure to control the rising revenue deficit of the government.
(a) Reduce the burden of subsidy
(b) Reduce government administrative expenses
(c) Increase taxes
(d) All of these
53. The formula to calculate Primary deficit is
(a) Primary deficit = Borrowings
(b) Primary deficit = Fiscal Deficit + Interest Payments
(c) Primary deficit = Fiscal Deficit - Interest Payments
(d) Primary deficit = Revenue Deficit - Interest Payments

54. Disinvestment is a____ receipt of the government.

(a) Revenue (c) Plan
(b) Capital (d) Non-plan

Q. No. 55-60 are to be answered on the basis of following data:

The post 1991 India witnessed a rapid growth in GDP on a continual basis for two decades. The growth of GDP increased
from 5.6 per cent during 1980-91 to 8.2 per cent during 2007-12. During the reform period, the growth of agriculture has
declined, while the industrial sector reported fluctuation, the growth of the service sector has gone up. This indicates that
this growth is mainly driven by growth in the service sector. During 2012-15, there has been a setback in the growth rates of
different sectors witnessed post-1991. While agriculture recorded a high growth rate during 2013-14, this sector witnessed
negative growth in the subsequent year. While the service sector continued to witness a high level of growth-higher than
the overall GDP growth in 2014-15, this sector witnessed the high growth rate of 9.8 percent. The industrial sector
witnessed a steep decline during 2012-13, in the subsequent years it began to show a continuous positive growth. The
opening of the economy has led to a rapid increase in foreign direct investment and foreign exchange reserves. The foreign
investment, which includes foreign direct investment (FDI) and foreign institutional investment (FII), has increased from
about US $100 million in 1990-91 to US $ 30 billion in 2017-18. There has been an increase in the foreign exchange reserves
from about US $ 6 billion in 1990-91 to about US $ 413 billion in 2018-19.

55. Which of the following is an outcome of implementation of Economic Reforms in India In 1991?
(a) Greater inflow of foreign investment
(b) Improvement in performance of public sector enterprises
(c) Excessive government regulation
(d) Inward-looking trade strategy

56. In 1991, an-immediate measure to resolve the balance of payments crisis was:
(a) to free the determination of rupee value in the foreign exchange market from government control.
(b) devaluation of rupee against foreign currencies.
(c) removing the trade barriers -quotas and tariffs.
(d) simplification of export and import procedures.

57. The reform process has been widely criticised for not being able to address some of the basic problems facing our
economy especially in the areas of _____.
(a) employment
(b) agriculture
(c) both (a) and (b)
(d) None of these

58. The thrust of the New Economic Policy (NEP) was

(a) to create a more competitive environment in the economy and removing the barriers to entry and growth of firms.
(b) to maintain sufficient foreign exchange reserves and keep the rising prices under control.
(c) to improve the efficiency of the economy and increasing its internal competitiveness by removing the rigidities in
various segments of the Indian economy.
(d) to meet the challenges like unemployment, poverty and population explosion.

59. Liberalisation of trade and investment regime was initiated to:

(a) Increase international competitiveness of industrial production and also foreign investments and technology into the
economy.
(b) promote the efficiency of local industries,
(c) adopt the modern technologies,
(d) All of the above

60. Which international organisation replaced General Agreement on Trade and Tariff (GATT)?
(a) International Monetary Fund
(b) United Nations Organisation
(c) World Trade Organisation
(d) World Health Organisation