SET – 2

H$moS> Z§.
Series : BVM/1
Code No. 58/1/2
 .    -  -
   
Roll No.
Candidates must write the Code on
the title page of the answer-book.

       -    15  

 -            -  -   
       -  24   
         ,      
  -     15        -     10.15 
   10.15   10.30     -        
-      
 Please check that this question paper contains 15 printed pages.
 Code number given on the right hand side of the question paper should be written on the
title page of the answer-book by the candidate.
 Please check that this question paper contains 24 questions.
 Please write down the Serial Number of the question before attempting it.
 15 minute time has been allotted to read this question paper. The question paper will be
distributed at 10.15 a.m. From 10.15 a.m. to 10.30 a.m., the students will read the
question paper only and will not write any answer on the answer-book during this period.


ECONOMICS

  : 3    : 80

Time allowed : 3 hours Maximum Marks : 80

58/1/2 1 P.T.O.
  :
(i)        
(ii)           
(iii)   1 – 4  13 – 16    ,    1    
         
(iv)   5 – 6  17 – 18   ,    3      
 60       
(v)   7 – 9  19 – 21    ,    4     
  70       
(vi)   10 – 12  22 – 24    ,    6     
  100       
(vii)                  
 

General Instructions :
(i) All questions in both the sections are compulsory.
(ii) Marks for questions are indicated against each question.
(iii) Question Nos. 1 – 4 and 13 – 16 are very short-answer questions carrying
1 mark each. They are required to be answered in one sentence each.
(iv) Question Nos. 5 – 6 and 17 – 18 are short-answer questions carrying 3 marks each.
Answers to them should normally not exceed 60 words each.
(v) Question Nos. 7 – 9 and 19 – 21 are also short-answer questions carrying
4 marks each. Answers to them should normally not exceed 70 words each.
(vi) Question Nos. 10 – 12 and 22 – 24 are long-answer questions carrying 6 marks
each. Answers to them should normally not exceed 100 words each.
(vii) Answers should be brief and to the point and the above word limits should be
adhered to as far as possible.

58/1/2 2
  –  ( )
SECTION – A (Micro Economics)

1.   X          ,     ________ 
(    ) 1



  X              ,  
  ________  (    )
If the market supply of a commodity X changes due to improvement in technology,
the market supply curve will ________. (Fill up the blank)

OR

If the market supply of a commodity X changes due to rise in price of a factor input,
the market supply curve will ________. (Fill up the blank)

2. -  ,    ________   (    ) 1

() ‘S’   

()  ‘S’   

() ‘U’   

()  ‘U’   

The average product curve in the input-output plane, will be __________. (Choose
the correct alternative)

(a) an ‘S’ shaped curve

(b) an inverse ‘S’ shaped curve

(c) a ‘U’ shaped curve

(d) an inverse ‘U’ shaped curve

58/1/2 3 P.T.O.
3.     ________ (    ) 1

() X-       

() Y-       

()  ,        

()  ,        

               ? (   
)
() MCN = TFCn – TFCN – 1

() MCN = ACN – ACN – 1

() MCN = AVCN – AVCn – 1

() MCN = TCn – TCN – 1

Average fixed cost curve ________. (Choose the correct alternative)

(a) is a straight line parallel to X-axis.
(b) is straight line parallel to Y-axis.
(c) falls, as more units are produced
(d) rises, as more units are produced
OR
Which of the following formula is correct for calculating marginal cost ?
(Choose the correct alternative)
(a) MCN = TFCn – TFCN – 1

(b) MCN = ACN – ACN – 1

(c) MCN = AVCN – AVCn – 1

(d) MCN = TCn – TCN – 1

58/1/2 4
4.    ,      A   B    ________   
(    ) 1

()       

()     
()  X      Y    
()  Y      X    
In the given figure, the movement on the production possibility curve from point A to
point B shows ________. (Choose the correct alternative)

(a) Growth of all the resources in the economy.

(b) Underutilisation of resources.

(c) Production of more units of Good X and less units of Good Y.

(d) Production of more units of Good Y and less units of Good X.

58/1/2 5 P.T.O.
5.              
    3
(i) “        23      77  
 ,        ”  – The Economic Times
(ii) “           ” – The Economic
Times
Identify and discuss the nature of the following newspaper reports in terms of
positive or normative economic analysis :
(i) “India jumped 23 points in the World Bank’s ease of doing business index to
77th place, highest in 2 years.” – The Economic Times
(ii) “Government should further liberalise the business rules.” – The Economic
Times

6.  X   Y       X      ,   Y  
           3

        ,    ,  X     
       
Good X and Good Y are substitute goods. If price of Good X increases, discuss
briefly its likely impact on the demand for Good Y.
OR
If the income of a consumer increases, discuss briefly its likely impact on the demand
for an inferior good, Good X.

7.          4

 ( ) 0 1 2 3 4

  (` ) 200 ..... ..... ..... 490

   (` ) 0 ..... 180 ..... .....

   (` ) – 100 ..... 80 .....

Complete the following cost schedule :

Quantity (in Units) 0 1 2 3 4
Total cost (in `) 200 ..... ..... ..... 490
Total variable cost (in `) 0 ..... 180 ..... .....
Average variable cost (in `) – 100 ..... 80 .....
58/1/2 6
8.    , OP      OP1      

()     ,         
 
()            (1, 3)

         X         
Qd = 1700 – 2P
Qs = 1300 + 3P
 X  
    
      
In the given diagram, OP is the market determined price and OP1 is the price fixed by
the government.

(a) Identify if the diagram represents, price ceiling or price flooring.

(b) Discuss the likely behaviour of the market in the given condition.
OR
Suppose the demand and supply equations of a commodity X in a perfectly
competitive market are given by :
Qd = 1700 – 2P
Qs = 1300 + 3P
Calculate the value of equilibrium price and equilibrium quantity of the commodity X.
58/1/2 7 P.T.O.
9.   
     ,         4

    ?             ?
Explain the law of diminishing marginal utility using a hypothetical schedule.
OR
What is a budget line ? Why the budget line is left to right downward sloping ?

10. “   ”     ?          
     6

What is meant by “diminishing returns to a factor” ? Discuss any two reasons for the
operation of diminishing returns to a factor.

11.           6



            

()   

()   

()  
Elaborate three main features of oligopoly form of market.

OR

Distinguish between monopoly and monopolistic competition on the basis of the

following :

(a) Number of sellers

(b) Nature of product

(c) Selling cost

58/1/2 8
12. ()        

()      40%      150     120   
             (2, 4)

(a) Define price elasticity of demand.

(b) If the price of a commodity rises by 40% and its quantity demanded falls from
150 units to 120 units, calculate coefficient of price elasticity of demand for the
commodity.

 –  ( )

SECTION – B (Macro Economics)

13.       ? 1



      ?

What is meant by primary deficit ?

OR

What is meant by fiscal deficit ?

14.           1

Give any two examples of flow concept.

15. ‘’      1

Define the term ‘tax’.

58/1/2 9 P.T.O.
16.       ,    ` 5,000     ` 6,000
     ,   ` 4,000     ` 4,600     
        ________   (    ) 1

() 0.8

() 0.4

() 0.2

() 0.6
Suppose in a hypothetical economy, the income rises from ` 5,000 crores to ` 6,000
crores. As a result, the consumption expenditure rises from ` 4,000 crores to ` 4,600
crores. Marginal propensity to consume in such a case would be ________. (Choose
the correct alternative)
(a) 0.8
(b) 0.4
(c) 0.2
(d) 0.6

17.      3

    (I) = ` 700 

   (MPS) = 0.2 , 
     
()   (k)
()     (Y)
If in an economy :
Change in initial investments (I) = ` 700 crores
Marginal Propensity to Save (MPS) = 0.2
Find the values of the following :
(a) Investment Multiplier (k)
(b) Change in final income (Y)

58/1/2 10
18.                  
            3



“   (GDP)             ”
           

Define the problem of double counting in the computation of national income. State
any two approaches to correct the problem of double counting.

OR

“Gross Domestic Product (GDP) does not give us a clear indication of economic
welfare of a country.” Defend or refute the given statement with valid reason.

19.            4

()          

()  (Ex-Ante)      (Ex-Ante)    

Discuss the working of the adjustment mechanism in the following situations :

(a) Aggregate demand is greater than Aggregate supply.

(b) Ex Ante Investments are lesser than Ex Ante Savings.

20.            ?      4

How are capital expenditure different from Revenue expenditure ? Discuss briefly.

58/1/2 11 P.T.O.
21. -             4

    ‘KT’      ?        
     

State and discuss the components of Aggregate Demand in a two sector economy.
OR
In the given figure, what does the gap ‘KT’ represent ? State any two fiscal measures
to correct the situation.

    

      ?         
       4
For Blind Candidates :
What is meant by deflationary gap ? State any two fiscal measures to correct the
situation of deflationary gap.

58/1/2 12
22. ()    M1         
()    ,             
    (2, 4)


                 
 ,      6

(a) State any two components of M1 measure of money supply.

(b) Elaborate any two instruments of Credit Control, as exercised by the Reserve
Bank of India.
OR
Define Credit Multiplier. What role does it play in determining the credit creation
power of the banking system ? Use a numerical illustration to explain.

23.      , ‘   ’  ‘ ’      6


 . 
( ` )
(i)   50,000
(ii)    1,000
(iii)     ?
(iv)     17,000
(v)  1,000
(vi)     12,500
(vii)    20,000
(viii)     700
(ix)     13,000
(x)   ?
(xi)      500
(xii)   2,000

58/1/2 13 P.T.O.
 Given the following data, find the missing values of ‘Private Final
Consumption Expenditure’ and ‘Operating surplus’.

Amount
S. No. Particulars
(in ` crores)

(i) National Income 50,000

(ii) Net Indirect Taxes 1,000

(iii) Private Final Consumption Expenditure ?

(iv) Gross Domestic Capital Formation 17,000

(v) Profits 1,000

(vi) Government Final Consumption 12,500

Expenditure

(vii) Wages & Salaries 20,000

(viii) Consumption of Fixed Capital 700

(ix) Mixed Income of Self Employed 13,000

(x) Operating Surplus ?

(xi) Net Factor Income from Abroad 500

(xii) Net Exports 2,000

24. () “ ”      “   ”      ?

() “   ($)     (`)       ` 74.48 
”  – The Economic Times
      ,          
    (3, 3)

58/1/2 14
 (a) Define “Trade surplus”. How is it different from “Current account surplus” ?

(b) “Indian Rupee (`) plunged to all time low of ` 74.48 against the US Dollar ($)”.

– The Economic Times

In the light of the above report, discuss the impact of the situation on Indian
Imports.
__________

58/1/2 15 P.T.O.
58/1/2 16