DIRECTORATE OF EDUCATION, GNCT OF DELHI

PRACTICE PAPER - 1
CLASS XII
ECONOMICS (030)
TERM - (2023–24)

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 of 1 mark each.
3. This paper contains four Short Questions of 3 marks each to be answered in 60 to 80 words.
4. This paper contains six Short Questions of 4 marks each to be answered in 80 to 100 words.
5. This paper contains four Long Questions of 6 marks each to be answered in 100 to 150 words.

Q.NO. SECTION A – MACRO ECONOMICS MARKS

1 Read the following statements carefully:

Statement 1: At break-even point, consumption is equal to investment.
Statement 2: Consumption is a positive function of income.
In light of the given statements, choose the correct alternative from the following:
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.
1
d) Both Statements 1 and 2 are false.
2 Which of the following is true, if GDP > GNP?
a) Depreciation < 0
b) NFIA > 0
c) Net Indirect Tax < 0
d) NFIA < 0 1
3 The value of can be negative.
(Choose the correct alternative to fill up the blank)
a) Marginal Propensity to Consume
b) Average Propensity to Consume
c) Marginal Propensity to Save
d) Average Propensity to Save 1
4 As per the Reserve Bank of India (RBI) press report, dated 22nd June, 2022:
"Net foreign portfolio investments recorded an outflow of US$ 15.2 billion mai nl y f r om
the equity market."
The above transaction will be recorded in the account on side of
Balance of payments account of India.
(Choose the correct alternative to fill up the blanks)
a) current, credit
b) current, debit
c) capital, debit
d) capital, credit 1
1
5 “Barter system posed a problem of double coincidence of wants which increased manifold in
large economies.”
On the basis of the given statement, identify the function performed by money:
a) Medium of exchange
b) Store of Value
c) Unit of account
d) Means of standard of deferred payments 1

6 If in an economy, commercial banks are able to lend ₹ 80 out of every ₹ 100 of the demand
deposits with them, then which of the following is true, given that RR = Reserve Ratio, CM =
Credit Multiplier?
Alternatives: -
a) R R = 2 0 % , C M = 2 0
b) R R = 8 0 % , C M = 2 0
c) R R = 2 0 % , C M = 5
d) RR = 8 0 % , C M = 5 1

7 Which of the following is not a component of aggregate demand?

a) Consumption
b) Investment
c) Saving
1
d) Exports
8 Identify the correct reason(s) that may affect the supply for foreign exchange in an economy.
I. Imports of visibles
II. Exports of invisibles
III. Remittances by residents working abroad
IV. Purchase of assets abroad
Alternatives: -
a) I and II
b) II and III
c) III and IV
d) I and IV 1
9 Suppose for a given economy: -
(i) APS = 0.35
(ii) Y = 1200, then what will be the level of consumption? (Choose the correct alternative)
Alternatives: -
a) 420
b) 780
c) 750
d) 550 1
10 Current account surplus indicates that: - (Choose the correct alternative)
Alternatives: -
a) Imports exceed exports
b) Borrowings are greater than investments
c) Balance of trade is in surplus
1
d) Exports exceed imports
2
11 ‘Balance of Trade and Balance of current account are one and the same.’
Do you agree with the given statement? Give valid reason(s) in support of your answer. 3

12 (A) On the basis of the given data, estimate the value of Domestic Income:

S. No. Items Amount (₹ in crore)

i Depreciation 50
ii Domestic sales 500
iii Change in stock (-)50 3
iv Exports 30
v Single use producer goods 200
vi Net Indirect Taxes 20

OR
(B) State the meanings of the following:
3
(i) Depreciation (ii) Final goods (iii) National income

13 For a hypothetical economy which is in equilibrium, calculate marginal propensity to save

from the following data: -
I. National Income = 2500
II. Autonomous Investment = 500
4
III. Autonomous Consumption = 250
14 (A) "In an economy, ex-ante saving is more than ex-ante investment." Elaborate the
4
possible impact of the same, on the level of output, income and employment.
OR
(B) “With an objective to reduce inflation, Reserve Bank of India may try to
demotivate the commercial banks from borrowing from it.”
Discuss the rationale behind the step taken by the Reserve Bank of India. 4
15 Elaborate the ‘Government’s Bank’ function performed by the Reserve Bank of India. 4

16 (A) On the basis of the given information, calculate the value of:
(i) Fiscal deficit 3
(ii) Revenue deficit 2

S.No. Items (₹ in crore)

(i) Revenue Receipts 25
(ii) Capital Expenditure 15
(iii) Revenue Expenditure 30
(iv) Non-debt capital receipts 30
(v) Interest Payments 6
(B) Why must public goods be provided by the government? 1
OR
3
 (C) Explain the redistribution of income objective of Government Budget. 3
(D) ‘Under the Ujjwala Scheme, the Government provides free LPG connections to the
economically backward section of the society.’
Identify and discuss the nature of the government expenditure indicated in the given 3
statement.

17 (a) Giving valid reasons, explain how the following would be treated while estimating
national income?
(i) Gifts received from abroad.
3
(ii) Profits earned by a branch of Deutsche bank in India.
(b) (b) "Refrigerator purchased by a household is a capital good." Do you agree with the
(c) given statement? Give valid reasons for your answer. 3

SECTION B – INDIAN ECONOMIC DEVELOPMENT

18 Identify the incorrect statement about economic reforms of 1991: -
a) Rupee was devalued to replenish the foreign exchange reserves
b) License system was abolished for most products except a few.
c) Private firms were brought under government control.
d) Tax rates were reduced. 1
19 Identify which of the following is not an economic group?
a) BRICS
b) SAARC
c) ASEAN
d) NATO 1
20 Which of the following will be included in the major reforms in agricultural sector?
(Choose the correct alternative to fill up the blank)
I. Introduction of High Yielding Varieties (HYV)
II. Land ceiling
III. Use of Organic Fertilizers and Pesticides
IV. Abolishment of zamindari system
Alternatives: -
a) I, II, IV
b) I, II, III
c) II, III, IV
d) I, III, IV 1
21 Study the following picture and answer the given question: -

4
 Rural households take up various activities for stabilization of income. O n e s uch kind of
activity as shown in the picture is known as _____________.
(Choose the correct alternative to fill up the blank)
a) Crop rotation
b) Multiple cropping
c) Horticulture
d) Poultry 1

For visually impaired candidates in lieu of Q21

Rural households take up various activities for stabilization of income. Such kind of activity
where more than one crop are grown on the fields is known as _____________.
(Choose the correct alternative to fill up the blank)
a) Crop rotation
b) Multiple cropping
c) Horticulture
d) Poultry 1
22 Read the following statements: Assertion (A) and Reason (R). Choose the correct alternative
from those given below.
Assertion (A): India could not develop a sound industrial base under the colonial rule.
Reason (R): No modern industrial base was allowed to come up by the British.
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, but 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. 1
23 In China, in order to attract foreign investors, ________________ were set up.
(Choose the correct alternative to fill up the blank)
a) Commune System
b) Great Leap Forward
c) Dual Pricing policy
d) Special Economic Zones 1
24 _________________was set up in 1982 as an apex body to coordinate the activities of all
institutions involved in the rural financing system.
(Choose the correct alternative to fill up the blank)
a) National Bank for Agriculture and Rural Development (NABARD)
b) Regional rural banks (RRBs)
c) Self Help Groups (SHGs)
d) Cooperative societies 1

25 Infant Mortality Rate is categorized as a _______________

(Choose the correct alternative to fill up the blank)
a) Economic indicator
b) Liberty indicator
c) Health indicator
d) Demographic indicator 1
5
26 Read the following statements carefully: -
Statement 1: Disguised unemployment is a feature of urban sector.
Statement 2: Participation rate in urban sector is better than rural sector.
In light of the given statements, choose the correct alternative from the following:
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. 1
d) Both Statements 1 and 2 are false.

27 From the given column I and corresponding facts given in Column II, choose the incorrect pair
of statements:

Column I Column II
A India (i) Demonetization in 2016
B China (ii) Massive industrialization
C Great leap forward (iii) 1991
D Pakistan (iv) Remittances from middle east

Alternatives: -
a) A - I
b) B - II
c) C - III
d) D - IV 1

28 (A) “The economic policies pursued by the colonial government in India were concerned more
with the protection and promotion of the economic interests of their home country than with the
development of the Indian economy.”
List any three policies of the British government to defend the above statement. 3
OR
(B) “The export surplus did not result in any flow of gold or silver into India.”
Justify the above statement with valid explanation. 3

29 How is human development a broader term as compared to human capital formation? Explain.
3

30 “While looking at various economic policies that Pakistan adopted, you will notice many
similarities with India.”
Justify the given statement with valid arguments in support of your answer. 4

31 (A) State and elaborate whether the following statements are true or false, with valid
arguments:
(i) Diversification of agriculture increases risk for farmers. 2
(ii) Organic farming is better than conventional agriculture. 2
OR
(B) “Informalization of work force is a growing concern in India.” Discuss. 4

6
32

Identify the situation depicted in the given image. Suggest the impact of the indicated
4
situation, on the world.

For visually impaired candidates in lieu of Q32

State any four advantages of using non-conventional sources of energy. 4

33 (A) “Industrial policy resolution 1956 was a milestone towards industrialization of India.”
3
Justify the statement, giving reasons in support of your answer.
(B) “Equity, not equality is necessary for economic development.” Do you agree? Give reasons 3
in support of your answer.

OR
(C) “In the first seven plans, trade was characterized by what is commonly called an inward-
3
looking trade strategy.” In the light of the given statement, discuss the tools used by the
Indian government to protect domestic industries from foreign competition.

(D) “While subsidies encourage farmers to use new technology, they are a huge burden on
government finances.”
Discuss the usefulness of subsidies in the light of this fact.” 3

34 Read the following text carefully: -

The fisheries sector in India stands as a significant component of the economy, not
only driving growth but also serving as a lifeline for a substantial segment of the population.
Recognised as a powerful generator of income and employment, the evolution of Indian
fisheries encompasses environmental, technological, economic, and social factors, reflecting
a dynamic process shaped over centuries.
The sector serves as a robust source of livelihood, employment, and entrepreneurship,
impacting more than 2.8 crore fishermen and fish farmers at the primary level, with
additional employment opportunities along the value chain. India, the world's third largest
fish producing country, commands an 8% share in global fish production. Moreover, on a
global scale, India secures the second position in aquaculture production, solidifying its
standing as a leading shrimp producer and exporter.
In recent years, India's fisheries sector has witnessed a significant infusion of
investments. The commitment to holistic development of this sector is evident through
initiatives such as the Blue Revolution Scheme, Fisheries and Aquaculture Infrastructure
Development Fund (FIDF), Pradhan Mantri Matsya Sampada Yojana, and the Rs 6,000 crore
7
 Sub scheme under PMMSY, announced in the Union Budget 2023-24. The flagship scheme,
Pradhan Mantri Matsya Sampada Yojana (PMMSY), implemented since 2020-21, represents
the highest ever investment in the country's fisheries and aquaculture sector.
This strategic investment is yielding impressive outcomes, with projects worth Rs
14,656 crore approved under PMMSY in the last three years alone. The sector's resilience
and transformative growth are further underscored by the record national fish production,
which has experienced a remarkable 81% increase since 2013-14, touching an all-time high
of 162.48 lakh tones at the end of 2021-22. With provisional figures anticipating the
production to surpass 174 lakh tones in 2022-23, the Indian fisheries sector not only honours
its rich historical legacy but also charts a course of innovation and prosperity in the
contemporary era.

Source: Employment News, 9th -15th Dec, 2023

On the basis of the given text and common understanding, answer the following questions: 2
(i) Why is fisheries sector considered a significant component of the Indian economy?
(ii) Which schemes have been implemented by the Government of India for the 4
upliftment of fisheries? What are its major features?