PB23ECO02

KENDRIYA VIDYALAYA SANGATHAN, ERNAKULAM REGION

कें द्रीय विद्यालय संगठन, एनााकुलम संभाग
PRE BOARD EXAMINATION 2023-24
ECONOMICS (030) CLASS XII
TIME: 3 HOURS M.M. – 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 4 Short Answer Questions of 3 marks each to be answered in 60 to 80 words.
4. This paper contains 6 Short Answer Questions of 4 marks each to be answered in 80 to 100 words.
5. This paper contains 4 Long Answer Questions of 6 marks each to be answered in 100 to 150 words.

SECTION A – MACRO ECONOMICS

1 Read the following statements carefully: 1
Statement I: Money supply (M1) in India does not include “ demand deposits” with commercial
banks
Statement II: Money supply (M1) refers to, assets available with the Commercial Banks during a
period of time.
In the light of the given statements, 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
2 The ratio of total deposits that a commercial bank has to keep with Reserve Bank of India is 1
called : ( Choose the correct alternative)
(a) Statutory Liquidity Ratio (b) Deposit Ratio
(c) Cash Reserve Ratio (d) Legal Reserve Ratio
OR
Repo rate is the rate at which:
(a) Commercial banks can purchase government securities from the central bank
(b) Commercial banks can takes loans from the Central bank
(c ) Commercial Bans can keep their deposits with the Central bank
(d) Short term loans are given by the commercial bank
3 Increase in Real Gross Domestic Product (GDP) implies --------------- in the economy. 1
(a) increase in the level of income (b) increase in the general price level
(c ) increase in flow of goods and services (d) decrease in aggregate demand
4 “Considering the depreciation of Indian currency (₹) in the international market, the Reserve 1
Bank of India (RBI) has decided to purchase Indian currency (₹) in the open market”.
This represents ----------- exchange system
(a) fixed (b) flexible (c) managed floating (d) manipulated
5 Suppose an economy experiences an increase in consumer confidence, leading to a surge in 1
consumer spending on goods and services. At the same time, the government implements an
infrastructure development plan, boosting public investments. How will these factors impact the
equilibrium in the economy's AD and AS?
(a) AD will increase, and AS will decrease, resulting in inflationary pressures.
(b) AD will decrease, and AS will increase, causing deflationary pressures.
(c) AD will remain unchanged, and AS will decrease, leading to stagflation.
(d) AD will increase, and AS will increase, promoting economic growth with stable prices.
6 Identify the missing column: 1
Balance of Payment

Autonomouus Items

? ? Accomodating Items

(a) Balance of Trade and Balance of invisible items

(b) Balance of Trade and Balance on current account
(c) Balance on Current account and Balance on capital account
(d) BOP Deficit and BOP surplus

7 As an economic analyst studying the investment patterns in an economy, you observe a consistent 1
correlation between changes in the economy's income level and the corresponding changes in
investment. Which type of investment is most likely to be represented in such a scenario?
(a) Fixed investment (b) Induced investment
(c) Independent investment (d) Autonomous investment

8 What is the level of consumer spending (C) in the country when the disposable income (Y) is Rs. 1
1,200, given that the consumption function is represented as C = 0.75Y + 100? The consumption
function consists of an autonomous consumption (a) of Rs. 100 and a marginal propensity to
consume (b) of 0.75.
(a) 400 (b) 600 (c) 1,000 (d) 1,200
9 Dissaving means: 1
(a) the same thing as disinvesting.
(b) that households are spending more than their current incomes.
(c) that saving and investment are equal.
(d) that disposable income is less than zero.

10 Other things remaining the same, when in a country the market price of foreign currency rises, 1
national income is likely ;
(a) to rise (b) to fall (c) to rise or to fall (d) to remain unaffected

11 Explain the concept of Double Counting in the context of calculating National Income and 3
provide three practical ways to avoid it.

12 What will be the effect of foreign investments in India on exchange rate? Explain. 3
OR
Mention three sources of demand for foreign exchange.

13 In an economy the total consumption expenditure of households is Rs. 1,500 crore, and the total 4
disposable income is Rs. 2,000 crore. Additionally, there is a government tax policy change that
reduces the disposable income by 10% of the original value. However, this change does not affect
the consumption expenditure. Calculate the new Average Propensity to Consume after the tax
policy change.

14 State and discuss the components of Aggregate Demand in a two sector economy. 4
OR
Define full employment in an economy. Discuss the situation when aggregate demand is more
than aggregate supply at full employment income level.
15 “As per announcement made by the Governor of the Reserve Bank of India (RBI) on May 4, 4
2022, it has been decided to increase the Cash Reserve Ratio (CRR) by 50 basis points from 4%
to 4.5%” analyse the impact of this step of RBI on total credit creation in the economy.
16 3
(A) On the basis of the given information, calculate the value of: 2
(i) Revenue deficit
(ii) Primary deficit

S.No. Particulars Amount

(₹in crore)
(i) Tax revenue 47
(ii) Capital receipts 34
(iii) Non-tax revenue 10
(iv) Borrowings 32
(v) Revenue expenditure 80
(vi) Interest payments 20 1

(B) State any two features of public goods.

OR
3
(A)State whether the following statements are true or false. Support your answer with reason.
(a) Taxation is an effective tool to reduce the inequalities of income
(b) Revenue deficit increases when government fails to recover loans forwarded to different
Nations.

(B) As a concerned citizen, you are attending a town hall meeting where government officials are 3
discussing the key objectives of the government in your country. During the meeting, they
highlight three main objectives that guide their policies and decisions.
Explain these three objectives of a government in a real-life context.

17 (a) State the meaning of “Domestic Income”. 1

(b) What is the meaning of “Mixed Income of the Self Employed”. 1
(c) From the following data, Net Value Added at factor cost (NVA fc) is equal to the sum of
factor income:

Sl. No Particulars ₹. In crores 4

(i) Consumption of fixed capital 90
(ii) Imports of raw material 120
(iii) Change in stock 240
(iv) Goods and Services Tax 60
(v) Domestic Sales 2160
(vi) Distributed profits 180
(vii) Retained earnings 120
(viii) Purchase of raw material 840
(ix) Exports 240
(x) Rent and Royalty 90
(xi) Compensation of employees 720
(xii) Interest 540
 SECTION B - INDIAN ECONOMIC DEVELOPMENT
18 Which of the following is not the feature of economic policies pursued under economic planning 1
of India till 1991?
(a) Import substitution (b) Self – reliance
(c) Unrestricted flow of foreign capital (d) Land reforms

19 From the following statements regarding Goods and Services Tax (GST), identify the incorrect 1
statement:
(a) It ensures uniformity of tax rates across all states.
(b) It ensures better tax compliance and tax collection
(c) All types of direct and indirect taxes have been subsumed by it.
(d) It is imposed on the supply of goods and services
OR
Read the given statement carefully and choose the correct alternative:

Statement I : Demonetisation was an initiative taken by the Government of India to curb black
Money.
Statement II: Deemonetisation has led people to shift from cash payments to electronic payments

Alternatives:
(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

20 Vocal to local initiative of the Governemnt of India is a boon for the MSMEs segment as it : 1
(a) reduces dependence on other countries for import
(b) Boost entrepreneurship in the country
(c) Save foreign exchange
(d) Uses superior technology

Alternatives;
(a) (a) and (b) (b) (a) , (b) and (c) (c ) (a) , (b) and (d) (d) (a) , (b), (c ) and (d)

21 The Government of India enacted the “Right to Education” as a fundamental right for all children 1
in the age group of ------------ years.

(a) 6 – 14 (b) 6 – 12 (c) 5 – 13 (d) 5 - 14

22 “If India has to make real progress, she has to develop its rural areas”. 1
Which of the following is incorrect reason for the above mentioned statements?
(a) Approximately one third population of rural India still lives in abject poverty
(b) More than 50 % of India’s population depends on agriculture for their livelihood
(c ) Growth rate in the Indian agriculture Sector has been quite lower than of other sector
(d) Majority of rural people have access to the basic necessities of life
23 Which of the following is not used as a 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

24 Ms..Ranjitha has started a new business venture, she intends to spend a huge amount towards 1
“on-the-job training” of her workers before putting them to work. It exhibits the right step in the
direction of Human Capital Formation.
Spot which of the following does not directly contributes to the process of Human Capital
Formation by Ms..Ranjitha
(a) adds skills and expertise (b) improves efficiency
(c ) ensures gender equity (d) increases output productivity
25 Study the following picture and answer the given questions; 1

Women in coastal areas take up rearing, breading and harvesting of fishes as an entrepreneurial
activity. Such kind of activities envisaged under -------------- as diversification activity.(Choose
the correct alternative to fill up the blank)
(a) Animal husbandry (b) Fisheries (c) Horticulture (d) Poultry

26 National Bank for Agricultural and Rural Development (NABARD) was set up in 1982 as a /the 1
------------------- body to coordinate the activities of all institutions involved in the rural financing
system.
(a) cooperative (b) apex (c) micro credit (d) private credit

27 In recent years, what major change has been made to the One Child Policy in China? 1
(a) It was replaced with a "Two Child Policy."
(b) The policy was expanded to restrict immigration.
(c) The policy was strengthened to allow no exceptions.
(d) It was abolished and families can have as many children as they wish.

28 Identify and briefly explain three key features of the Indian economy on the eve of independence 3
that contributed to its predominantly stagnant structure.
29 Explain the various factors that led to the rapid growth in economic development in China 3

OR

Give reasons for the slow growth and re-emergence of poverty in Pakistan
30 Discuss briefly the concept of “informalisaion of workforce “ in India 4
31 State and discuss any two obstacles that hinder the mechanism of agricultural marketing 4
OR
Describe any four suggestions to improve agriculture marketing
32 Compare and analyse the following information related to the annual growth of Gross Domestic 4
Product (GDP) of India and China:
Annual Growth of GDP
country 1980-90 2015-17
India 5.7 7.3
China 10.3 6.8

Source: Asian Development Bank, Philippines, World Development Indicator - 2018

33 (A) Green revolution transformed India from a subsistent food grain economy to a food surplus 3
economy.” Justify the statement, giving reasons in support of your answer.

(B) “In order to protect domestic industries, India followed the regime of restrictions on
 imports.” 3
Briefly outline and discuss such steps taken by the government to promote import substitution
policy.

OR

(A) “Modernisation as a planning objective shows a dichotomy with the employment generation”
Justify the statement

(B) Critically examine the concept of Import Substitution as an economic strategy in developing
countries and thoroughly assess its potential three adverse effects on their economies.

34 Read the following passage on the causes of the environmental crisis and answer the questions 6
that follow:

The world is facing an unprecedented environmental crisis characterized by various

interconnected challenges. Several factors have contributed to this alarming situation, threatening
the delicate balance of ecosystems and the well-being of both humans and wildlife. One of the
primary causes of the environmental crisis is the rapid growth of human population. The
increasing demand for resources, food, and energy has led to extensive deforestation, habitat
destruction, and overconsumption of natural resources. Industrialization and modernization have
played a significant role in exacerbating the environmental crisis. The reliance on fossil fuels and
the emission of greenhouse gases have resulted in global warming and climate change, leading to
extreme weather events, rising sea levels, and disruptions in natural cycles. The unchecked
discharge of pollutants and waste from industries has further contaminated air, water, and soil,
endangering human health and biodiversity. Another critical factor contributing to the
environmental crisis is the expansion of agriculture and urbanization. The conversion of forests
and natural habitats into agricultural lands and urban areas has led to the loss of biodiversity and
fragmentation of ecosystems. This has disrupted the natural habitats of numerous species, leading
to the extinction of many plants and animal species. Moreover, human activities such as
irresponsible waste management and improper disposal of plastics have resulted in the
accumulation of plastic waste in oceans and landfills, causing harm to marine life and
contaminating the environment. The excessive use of chemical fertilizers and pesticides in
agriculture has also led to soil degradation, water pollution, and loss of biodiversity. In summary,
the environmental crisis is a complex issue with various interconnected causes. The rapid growth
of human population, industrialization, urbanization, and irresponsible waste management
practices are some of the major contributors to this crisis. Addressing these causes requires a
collective effort from governments, industries, and individuals to adopt sustainable practices and
promote environmental conservation.
On the basis of the given text and common understanding, answer the following question:

A) What are the primary causes of the environmental crisis described in the passage? (2 marks)
B) How has industrialization contributed to the environmental crisis? (2 marks)
C) Explain the impact of agriculture and urbanization on the environment. (2 marks)

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