Vivek International School, Baddi

Sub: Economic
Class XII
Time: 3:00 Hrs 2023-24 Marks:
80
Set -b

Instructions;
All the questions in both the sections are compulsory. Marks for questions are indicated
against each question.
Question number; 1-10 and 18-27 are very short-answer questions carrying one marks
Question number; 11-12 and 28-29 are short-answer questions carrying three marks
each. Answer to them should not exceed 60-80 words each.
Question number; 13-15 and 30-32 are also short-answer questions carrying four marks
each. Answer to them should not exceed 80-100 words each.
Question number; 16-17 and 33-34 are long-answer questions carrying six marks each.
Answer to them should not exceed 100-150 words each.
Answer should be brief and to the point and the above word limit be adhered to as far
as possible
Each carrying one marks.

1. Which of the following explains the difference between microeconomics and

macroeconomics?
(A) microeconomics studies the impact of government taxes on the national unemployment
rate
(B) macroeconomics studies the impact of government regulation and taxes on the price of
individual commodities and services while microeconomics does not
(C) use different sets of tools and ideas
(D) microeconomics studies the decisions of individuals and firms and
macroeconomics studies the entire economy

2. Macroeconomic issues include:

(A) the impact of government regulation on markets
(B) total employment nationwide
(C) studying what factors affect the price and quantity of automobiles
(D) studying the regulation of wages and production costs in the software industry

3 Which of the following given institutions founded the “Mobile Payment Forum of
India”?
(A) IIT Bombay
(B) IIT Delhi
(C) IIT Chennai
(D) IIM Ahmedabad
4. Keynesian economics is primarily focused on
(A) national income
(B) company balance
(C) resource allocation
(D) All of the above
Or
Assertion: NFIA can be negative.
Reason: Factor income from abroad can be less than factor income to abroad.
(a) Both (A) and (R) are correct and (R) is the correct reason of (A).
(b) Both (A) and (R) are correct but (R) is not the correct reason of (A).
(c) (A) is correct but (R) is wrong.
(d) (A) is wrong but (R) is correct.
5. Assertion: Real flow measures flow of factor service.
Reason: Factor services are provided by the factors of production.
(a) Both (A) and (R) are correct and (R) is the correct reason of (A).
(b) Both (A) and (R) are correct but (R) is not the correct reason of (A).
(c) (A) is correct but (R) is wrong.
(d) (A) is wrong but (R) is correct.
6. Read the following statement
Assertion (A)- RBI is known as issuing authority.
Reason (R )- It has the monopoly power of issuing Currency.
a) Both assertion and reason are true. Reason is not the correct explanation of assertion
b) Both assertion and reason are true. Reason is the correct explanation of assertion
c) Reason is true but assertion is not
d) None of the above

7. Keeping other factors constant, if the Public consumes Rs 50,000 amount less and
Government spends Rs 50,000 amount more

1. Savings are unchanged

2. Increase in saving

3. Decrease in saving

4. Saving is finished

8. Match the following

 Column A Column B

A. 1/LRR 1. Creation of demand deposit with the help of initial deposit

B. Margin requirement 2. Currency+Demand deposit+Other deposit

3. Difference between value of security and loan granted against

C. Credit creation
it

D. Money supply 4. Money Multiplier

a) A-4,B-3,C-2,D-1 b) A-3,B-4,C-1,D-2 c) A-4,B-3,C-1,D-2

d) A-2,B-1,C-4,D-3
9. Assertion (A): Quantitative tools include persuasion by the central bank in order to
make commercial banks discourage or encourage lending.

Reason (R): Quantitative tools control the extent of the money supply by changing the
Cash Reserve Ratio (CRR) or Statutory Liquidity Ratio (SLR) or Bank Rate or Repo
Rate or Reverse Repo Rate, or through Open market operations (OMO).

Alternatives:-

a) Both Assertions (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

10. Assertion (A): An increase in Legal Reserve Deposit Ratio increases the credit
creation power of the commercial banks (banking system).

Reason (R): credit creation = Primary deposits × 1/Legal Reserve Ratio.

Alternatives:-
a) Both Assertions (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

11. Give reason and identify whether the following are final expenditures or
intermediate expenditure.

(i) Expenditure on maintenance of an office building.

(ii) Expenditure on improvement of machine in a factory.

12. What are Macroeconomics and Microeconomics? What is the association between the
two?.

Or Given CRR = 4% and SLR = 16%, the value of money multiplier is:- ans. 5

13. Providing the reason, explain whether the following will be included in the domestic
product of India.

 Interest received by an Indian resident from its abroad firms

 Payment of salaries to its staff by an embassy located in New Delhi

14 Find Net Value added at market price :

(i) Output sold (units) 800
Price per unit of output
(ii) 20
(Rs.)
(iii) Excise (Rs.) 1600
(iv) Import duty (Rs.) 400
(v) Net change in stock (Rs.) (–) 500
(vi) Depriciation (Rs.) 1000
(vii)Intermediate cost (Rs.) 8000
15. “In a hypothetical economy, Mr. Neeraj has deposited ₹100 in the bank. If it is
assumed that there is no other currency circulation in the economy, then the total
money supply in the economy will be ________________ ans. 100
Suppose in an economy, the initial deposits of ₹ 400 crores lead to the creation of total
deposits worth ₹ 4000 crores.
Under the given situation the value of reserve requirements would be________
ans. 0.1

Or ‘Reserve Ratio and Credit Creation are inversely related.’ Do you agree with the
given statement? Justify your answer with a suitable numerical example.

16 Based on the passage below, answer the following questions.

India’s balance of payments position improved dramatically in 2013-14 particularly in the
last three quarters. this moved in large part to measure taken by the government and the
Reserve Bank of India (RBI) and eat some part to the overall macro-economic slowdown that
fed into the external sector. current account deficit (CAD) declined sharply from a record
high of U.S. dollar 88.2 billion (4.7% of GDP) in 2012 -1/3 to U.S. dollars 32.4 billion (1.7%
of GDP) in 2013 -14. After staying at perilously unsustainable levels off well over 4.0
percentage of GDP in 2011 -12 and 2012 -13, the improvement in BOP position is a welcome
relief, and there is need to sustain the position going forward. This is because even as CAD
came down, net capital flows moderated sharply from U.S. dollars 92.0 billion in 2012 -13 do
U.S. dollar 47.9 billion in 2013-14, that two after a special swap window of
The RBI under the nonresident Indian (NRI) scheme / overseas borrowings of banks alone
yielded U.S. dollar 3 4.0 billion. This led to some increase in the level of external debt, but it
has remained at the manageable levels. the large depreciation of the rupee during the course
of the year, note with standing sizable accretion to reserve in 2013 – 14, could partly be
attributed to frictional forces and partly to the role of expectations in the forex market. the
rupiah has stabilized the recently, reflecting an overall sense of confidence in the forex
market as in the other financial markets of a change for better economic
prospects there is a need to nurture and build upon this optimism through creation of an
enabling environment for investment inflows so as to sustain the external position in an as yet
uncertain global milieu. --------- The Hindu, archives
1 External debt is recorded at:
1. a) credit, capital account
2. b) debit, capital account
3. c) credit, current account
4. d) debit, current account
2 Money sent by NRI to their families in India included in:
1. a) credit, capital account
2. b) debit, capital account
3. c) credit, current account
4. d) debit, current account
3 Which of the following is not a component of BOP?
1. a) current account
2. b) revenue account
3. c) capital account
4. d) official reserves
4 Positive balance of net capital flow shows:
1. a) outward flow of foreign exchange
2. b) inward flow of foreign exchange
3. c) decrease in the level of external debt
4. d) decrease in future claims
5. Dear money policy of central bank, which is used to keep the growth steady and in-
line with other economic factors, refers to
1. a) Tighten the money supply in the economy
2. b) Ease the money supply in the economy
3. c) Allow commercial banks to work under less strict environment
4. d) Both (b) and (c)
6. Which of the following steps should be taken by the central bank if there is an
excessive rise in the foreign exchange rate?
(a) Supply foreign exchange from its stock
(b) Demand more of other foreign exchange
(c) Not intervene in the market as the exchange rate is determined by the market forces
(d) Help central government to stabilize the foreign exchange rate.

Q17. Estimate the following with the help of given data:

(i) GDPMP ,
(ii) Net Value Added at factor cost; and (iii) prove that it is equal to the income
generated.

(Rs. in Crores)
(i) Increase in the stock of unsold goods 1000
(ii) Sales 10,000
(iii) Net indirect tax 800
(iv) Purchase of raw materials from other firms1650
(v) Purchase of fuel and power 850
(vi) Consumption of fixed capital 500
(vii) Rent 700
(viii)Wages and salaries 3500
(ix) Interest payment 1000
(x) Dividend 1500
(xi) Corporate gain tax 300
(xii) Undistributed profit 200

OR
the Budget Estimate of total spending for 2021-22 is ₹34.83 lakh crore. The Revised
Estimate (RE) for total central spending in 2020-21 is ₹34.5 lakh crore. The Gross Domestic
Product (GDP) deflator — if one takes 14.4% nominal GDP growth projection for 2021-22
given in the budget and 11% real GDP forecast given in the latest Economic Survey —
comes to 3.4%. This means that central spending should have increased to at least ₹35.7 lakh
crore to keep it unchanged in real terms. The fact that it has not happened implies that the
2021-22 budget entails a negative fiscal stimulus to the economy. To be sure, one could argue
that 2020-21 was an abnormal year — and, therefore, the government is justified in rolling
back its welfare spending push, as the economy gets unlocked and vaccination gains
momentum.
Q-1 With the rise in real national income, the economic welfare of the
people__________(rises/falls). (choose the correct alternative)
Q-2 If GDP Deflator = 125, Nominal GDP= ₹15000crs. then Real GDP is equal to
₹___________ (fill up the blank with correct answer)
Q-3 Read the following statements - Assertion (A) and Reason ( R) Assertion (A): Real GDP
is always equal to Nominal GDP. Reason (R): Real GDP is a better measure to make periodic
comparison in the physical output of goods and services over different years. Select the
correct alternative from the following: a) Assertion (A) is true and Reason (R) is false. b)
Assertion (A) is false and Reason (R) is true
Q-4 State the significance of GDP Deflator.
Q-5 Which of the following constitutes the major share in India’s foreign exchange
reserves?
(A) Gold
(B) Foreign Currency Assets
(C) SDR at IMF
(D) Reserve Position at IMF
Q-6 ‘The General Theory of Employment, Interest, and Money is a famous book written by
which among the following?
A) J.M. Keynes
(B) Robert Sahhlas
(C) Wassily Leontief
(D) Paul Krugman

Q18. Prior to the establishment of British rule in India, which of the following was/were True
for the Indian economy : –
a) India had an independent economy and flourishing markets;
b) Livelihood of Indian people was mainly based on agriculture
c) Indian Handicrafts, textile industries and metallic work enjoyed a worldwide market
d) All of the above

Q19. The person who made the most notable attempt to calculate India’s national income
during the British rule in India, on the eve of Indian independence was __________
a) O Hume
b) Dadabhai Naoroji
c) Surendra Nath Bonnerji
d) Mahatma Gandhi

Q20 The year 1853 , was an important year in the history of India . This was due to which of
the following reasons ?
a) Introduction of Road Transport
b) Introduction of Railway
c) Introduction of ships
d) Introduction of Bullock carts.

Q21. With reference to Industrial sector , state the correct combination of statements.
British wanted to reduce India to a mere supplier of raw materials
India was a market for British finished goods.
Improvement was the basis of Indian Economy due to the improvement of Industries
a) 1 only
b) 1 and 2 only
c) All of the above
d) 3 only

Q22. . Read the following statement given below and choose the correct alternative
Statement 1- Capital goods industry means industries which can produce Machine tools
which are, in turn ,used for producing articles for current consumption
Statement 2- There was very significant area of operations for public sector in industrial
sector during British rule
a) Both are correct
b) Both are incorrect
c) Statement 1 is correct and statement 2 is incorrect
d) Statement 1 is incorrect and statement 2 is correct
Q23. Read the following statement given below and choose the correct alternative
Assertion ( A)- Economic planning means coordination and utilisation of available resources
in an economy
Reason ( R)- Economic planning is undertaken by the private sector in an economy
a) Both assertion and reason are true. Reason is the correct explanation of assertion
b) Both assertion and reason are true. Reason is not the correct explanation of assertion
c) Assertion is true but reason is not
d) Reason is true but assertion is not
Q24. A system of political and social relations between two countries of which one is the
ruler and the other is its colony is referred to as _________.
a) Statesman ship
b) Narcism
c) Both A and B
d) Colonialism
Q25. The contribution made by each sector of the economy into GDP is called_______.( Fill
in the blank with correct option)
a) Real GDP
b) Structural GDP
c) Structural composition
d) Real composition
26. Read the following statement given below and choose the correct alternative
Assertion(A)- Land reforms refers to the change in the ownership of landholdings
Reason (R )- Equity in agricultural sector called for land reforms in 1950
a) Both assertion and reason are true. Reason is the correct explanation of assertion
b) Both assertion and reason are true. Reason is not the correct explanation of assertion
c) Assertion is true but reason is not
d) Reason is true but assertion is not

OR The items in the two columns can be correctly matched as follows.

Match the pair

Column A Column B
A. WTO i. 1995
B. GATT ii. 1991
C. MRTP iii. 1969
D. Economic reforms iv. 1948

(A) (i) – (a); (ii) – (d); (iii) – (C), (iv)-b (B) (A) (i) – (b); (ii) – (a); (iii) – (C), (iv)-d
(C(A) (i) – (a); (ii) – (b); (iii) – (d), (iv)-c (D) (A) (i) – (d); (ii) – (b); (iii) – (C), (iv)-a
Q27. Read the following statement given below and choose the correct alternative
Statement 1- IMF facilitates world trade
Statement 2- WTO was founded as the successor of IMF
a) Both are correct
b) Both are incorrect
c) Statement 1 is correct and statement 2 is incorrect
d) Statement 1 is incorrect and statement 2 is correct
Q28. Enumerate the main reasons for slow growth of population during British rule.
Q29. The downfall of the kings of India lead to the downfall of handicraft industries. Do you
agree?
OR Why was it necessary for a developing country like India to follow self-reliance as a
planning objective?
Q30 Discuss economic reforms in India in the light of social justice and welfare.
Q31 The Industrial Policy Resolution, 1956 categorised industries on the basis of ownership.
State those categories.Q32. What was the aim of the five-year plan?
OR Discuss the issues that the Five Year Plans were unable to address.
Q33. A. Those Public Sector Undertakings which are making profits should be privatised. Do
you agree with this view? Why?
b. Give your views on the reforms introduced in the financial sector under the New Economic
Policy.
Q34 Read the following case study carefully and answer the questions that follow.
New Economic Policy of India was launched in the year 1991 under the leadership of P.V
Narasimha Rao. This policy opened the door of the India Economy for the global
exposure for the first time. In this New Economic Policy P. V. Narasimha Rao
governmentreduced the import duties, opened reserved sector for the private players,
devalued the Indian currency to increase the export. This is also known as the LPG
Model of growth. New Economic Policy refers to economic liberalization or
relaxation in the import tariffs, deregulation of markets or opening the markets for
private and foreign players, and reduction of taxes to expand the economic wings of
the country. Former Prime Minister Manmohan Singh is considered to be the father of
New Economic Policy (NEP) of India. Manmohan Singh introduced the NEP on July
24,1991. Main Objectives of New Economic Policy – 1991, July 24 The main
objectives behind the launching of the New Economic policy (NEP) in 1991 by the
union Finance Minister Dr. Manmohan Singh are stated as follows:
The main objective was to plunge Indian Economy in to the arena of ‘Globalization and to
give it a new thrust on market orientation. The NEP intended to bring down the rate of
inflation.
1 New Economic Policy of India was launched in the year 1991 under the
leadership of .................. (choose the correct alternative))
1. P. V. Narasimha Rao
2. Atal Bihari Bajpayi
3. Sharad Pawar
4. None of these
2 .................................. is also known as the LPG Model of growth. ((choose
the correct alternative)) (New Economic Policy / New Education Policy)
3 State whether the given statement is true or false:
Former Prime Minister Manmohan Singh is considered to be the father of New Economic
Policy (NEP) of India. ((choose the correct alternative))
True / False

Q.b.

The green revolution for the third agricultural revolution is the set of research technology
e-transfer initiatives earring between GNE E and the late 1960 that increased agricultural
production worldwide beginning most markedly in the late 1960 the initiative resulted in
the adoption of new technologies including high yield varieties of CSR rules of cells
especially does wheat and rice it was associated with chemical fertilizers agrochemicals
and controlled water supply and newer methods of cultivation including machine isolation
National bank for agriculture and rural development is and apex development finance
institution fully owned by government of India the bank has been entrusted with Martyrs
concerning policy planning and operations in the field of credit for agriculture and other
economic activities in rural areas in India.
1 Who among the following is known as the father of green revolution
(a) Dr. M S Swaminathan
(b) Dadabhai Naoroji
(c) Vikram Sarabhai
(d) all of these
2 Green revolution is also known as ..................
(a) Golden revolution
(b) milk revolution
(c) Wheat revolution
(d) None of this
3 Which of the following institutions were setup as the apex body in rural areas to
support the small farmers in the adoption of modern farming methods?
(a) RRB
(b) SIDBI
(c) RBI
(d) NABARD
4 Green revolution was the ............... set of agricultural reforms brought in India
(a) First
(b) Second
(c) Third
(d) fourth