Page 1 Sample Paper 01

Sample Paper 01
Class - 12th Exam - 2024 - 25
Economics (030)
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 Type Questions of 1 mark each.
3. This paper contains 4 Short Answer Type Questions of 3 marks each to be answered in 60 to
80 words.
4. This paper contains 6 Short Answer Type Questions of 4 marks each to be answered in 80 to
100 words.
5. This paper contains 4 Long Answer Type Questions of 6 marks each to be answered in 100 to
150 words.

SECTION-A - Macro Economics

1. Read the following statements carefully: Assertion (A) and Reason (R). Choose the correct
option from those given below:
Assertion (A): In the calculation of Gross Domestic Product (GDP) by the expenditure method,
imports are subtracted from the total expenditure to avoid overstating the domestic output.
Reason (R): Imports are goods and services produced abroad and consumed domestically, so
including them in total expenditure would inaccurately increase the measurement of domestic
production.
Choose the correct option from those given below:
(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.

2. “The Reserve Bank of India has announced a reduction in the Statutory Liquidity Ratio
(SLR) by 50 basis points. This policy decision aims to increase liquidity in the banking system
and encourage commercial banks to provide more loans to businesses and consumers, thereby
stimulating economic activity.”
Source: [RBI Monetary Policy Statement, 2023](https://www.rbi.org.in/Scripts/BS_
PressReleaseDisplay.aspx?prid=54000)


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Page 2 Sample Paper 01 CBSE 12th Economics

Which function of the central bank is being exercised through this monetary policy action?
(A) Banker to the Government (B) Custodian of Foreign Exchange Reserves
(C) Controller of Credit (D) Issuer of Currency

3. The sum total of consumption expenditure and investment expenditure in an economy is

referred to as ________ demand, representing the overall demand for goods and services.
Choose the correct option to fill in the blank.
(A) Aggregate (B) Effective
(C) Marginal (D) Total

4. The difference between total revenue receipts and total revenue expenditure is known as the
________ deficit.
Choose the correct option to fill in the blank.
(A) Fiscal (B) Revenue
(C) Primary (D) Budgetary

5. From the given diagrams, identify the correct option that indicates the ‘Demand Curve’ passing
through the origin drawn at a particular slope.

(A) (i) (B) (ii)

(C) (iii) (D) (iv)

6. In the calculation of national income using the income method, the sum of wages, rent, interest,
and profit is termed as ______.
Choose the correct option to fill in the blank.
(A) Net Domestic Product at Market Price (B) Gross National Product at Market Price
(C) National Income at Factor Cost (D) Personal Income

7. Read the following statements carefully:

Statement 1: Money serves as a medium of exchange, a unit of account, a store of value, and a
standard of deferred payment, facilitating transactions and economic activities in an economy
.


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Page 3 Sample Paper 01

Statement 2: The supply of money in an economy includes all financial assets, such as stocks
and bonds, because they can be easily converted into cash and thus considered part of the
money supply.
In light of the given statements, choose the correct option from the following:
(A) Statement 1 is false and Statement 2 is true.
(B) Both Statements 1 and 2 are true.
(C) Statement 1 is true and Statement 2 is false.
(D) Both Statements 1 and 2 are false.

8. In Keynesian economics, the investment multiplier quantifies the ratio of the change in
equilibrium income to the initial change in investment spending. The value of the multiplier is
inversely related to the Marginal Propensity to _______ in the economy.
Choose the correct option to fill in the blank.
(A) Consume (B) Tax
(C) Invest (D) Save

9. Read the following statements carefully:

Statement 1: Fiscal deficit is the excess of total expenditure over total receipts excluding
borrowings, indicating the total borrowing requirements of the government for that fiscal year.
Statement 2: A high fiscal deficit may lead to inflationary pressures in the economy if it is
financed by printing new money rather than borrowing from the market.
In light of the given statements, choose the correct option from the following:
(A) Both Statements 1 and 2 are true.
(B) Statement 1 is false and Statement 2 is true.
(C) Statement 1 is true and Statement 2 is false.
(D) Both Statements 1 and 2 are false.

10. Based on the given diagram:

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Page 4 Sample Paper 01 CBSE 12th Economics

The trade under the current account during April-January 2023-24 reflects a ________ of
USD _____ billion compared to April-January 2022-23.
(Choose the correct option to fill up the blank)
(A) surplus, 1.22
(B) surplus, 70.42
(C) deficit, 1.22
(D) deficit, 70.42

11. Calculate Net National Product at Market Price from the following data
Items ` (in crores)
Net factor income from abroad (–) 5
Private final consumption expenditure 100
Personal tax 20
Gross national disposable income 170
Government final consumption expenditure 20
Corporation tax 15
Gross domestic capital formation 30
Personal disposable income 70
Net exports (–) 10
Savings of private corporate sector 5
Net national disposable income 145


O
Explain how the government can use its budgetary policy in reducing the inequality of income
in the country.

12. Explain how the allocation of resources can be influenced in the government budget through
taxes, expenditure and subsidies.

13. Elaborate the `Banker’s bank and supervisor’ function performed by the Reserve Bank of India.

14. How is Real Gross Domestic Product (GDP) different from Nominal Gross Domestic Product
(GDP)? Explain using a numerical example.


O
Interpret the given picture on account of GDP and Welfare.

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Page 5 Sample Paper 01

15. Read the following text carefully :

The ‘AD = AS’ approach explains income determination in an economy. National income
is in equilibrium when aggregate demand (AD) equals aggregate supply (AS). Graphically,
equilibrium occurs at the point where the AD curve intersects the 45° line, indicating equality
between AD and AS. At this point, the equilibrium income is OQ. If AD exceeds AS, it
results in a reduction of inventories for producers. To restore the balance, producers increase
production, which raises AS until it equals AD again.

What happens when AD exceeds AS in the theory of income determination, and how is
equilibrium restored?

16. Read the following text carefully :

Externalities are the unintended effects of an economic activity on third parties, which are not
reflected in the market price. Negative externalities, such as pollution caused by industries
like oil refineries, harm societal welfare by affecting health and the environment. Additionally,
the value-added approach measures the contribution of firms to the economy. For instance,
the value-added by Firm A is calculated as 165 crores, while Firm B adds 390 crores to the
economy. These calculations consider sales, stock changes, and inter-firm purchases.
On the basis of the given text and common understanding answer the following questions
(a) What is a negative externality? How does it impact welfare?
(b) How is the value-added by Firm A calculated? What is its value?
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Page 6 Sample Paper 01 CBSE 12th Economics

17. Why is AD curve also called C + I curve? What are its components? Explain.


O
Show graphically the derivation of savings function from consumption function.

SECTION-B - Indian Economic Development

18. In context of the given image, identify the correct option:

(A) A - India; B - China; C - Pakistan

(B) A - Pakistan; B - India; C - China
(C) A - China; B - India; C - Pakistan
(D) A - India; B - Pakistan; C - China

19. Read the following statements carefully:

Statement 1: The Five Year Plans aimed to achieve rapid industrialization and self-sufficiency
in India.
Statement 2: The Agricultural Policy during 1950-1990 focused solely on traditional farming
methods without introducing modern techniques.
In light of the given statements, choose the correct option 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.
(D) Both Statements 1 and 2 are false.

20. Read the following statements carefully: Assertion (A) and Reason (R). Choose the correct
option from those given below:
Assertion (A): Liberalisation policies led to a significant increase in Foreign Direct Investment
(FDI) in India.
Reason (R): Liberalisation reduced barriers to foreign investment, making India an attractive
destination for global capital.


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Page 7 Sample Paper 01

Options:
(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.

21. Human capital formation in India primarily depends on investments in ______ and ______
sectors, which are essential for enhancing workforce productivity and economic growth.
Choose the correct option to fill up the blank.
(A) manufacturing; agriculture (B) transportation; infrastructure
(C) defense; technology (D) education; health

22. Which of the following are key issues in rural credit and marketing systems in India?
Which of the following is/are correct ?
(i) Limited access to credit (ii) Poor market infrastructure
(iii) High interest rates (iv) Lack of cooperative societies
Option :
(A) (i), (ii), and (iii) (B) (ii) and (iv)
(C) (i) and (iv) (D) (i), (ii), (iii), and (iv)

23. Which of the following are characteristics of the informal sector in India?
Which of the following is correct ?
(A) High job security and benefits
(B) Formal employment contracts
(C) Regular working hours
(D) Lack of job security and limited social benefits

24. Identify which of the following statements correctly describe sustainable development.
Which of the following is correct ?
(A) Prioritizing economic growth over environmental concerns
(B) Ignoring social aspects in development
(C) Balancing economic, social, and environmental goals
(D) Depleting natural resources for immediate benefits

25. In comparison with China, India has _________ in terms of economic growth rates.
Which of the following is correct ?
(A) Higher (B) Similar
(C) Lower (D) Unrelated

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Page 8 Sample Paper 01 CBSE 12th Economics

26. “During the colonial period, India’s agricultural sector was plagued by low productivity
and stagnation, primarily due to outdated farming techniques, lack of modern inputs, and
exploitative land revenue systems like the Zamindari system imposed by the British. Despite
the majority of the population being dependent on agriculture, the sector failed to generate
sufficient surplus for investment in other areas of the economy.”
Identify the primary cause of low agricultural productivity in India during the British colonial
era.
(A) Absence of irrigation facilities
(B) Exploitative land revenue systems and lack of technological advancement
(C) Shortage of agricultural labor
(D) Excessive focus on industrialization

27. Which of the following was NOT a primary focus of India’s Five Year Plans between 1950 and
1990?
Which of the following is correct ?
(A) Enhancing agricultural productivity
(B) Promoting industrialization
(C) Reducing poverty and unemployment
(D) Expanding military capabilities

28. How are small scale industries distinguished from large scale industries?


O
What were the drawbacks of the licensing policy followed by the government before 1991?

29. It is believed by some of the economists that ‘once the technology is found profitable and is
widely adopted, subsidies should be phased out’. Accept/Refute the above statement.

30. Interpret the given picture on account of current environmental challenges.

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Page 9 Sample Paper 01

31. What role can the government play in human capital formation in India?


O
How is agricultural diversification helpful for farmers? Explain.

32. Elucidate the role played by the industrial sector in India.

33. Read the following text carefully and answer the given questions on the basis of the same and
common understanding:
The term ‘sustainable development’ was used by the Brundtland Commission (1987) which coined
what has become the most often-quoted definition of sustainable development “development that
meets the needs of the present without compromising the ability of future generations to meet
their own needs.” Sustainable development does not focus solely on environmental issues. The
United Nations 2005 World Summit Outcome Document refers to the four ‘interdependent and
mutually reinforcing pillars’ of sustainable development as including: economic development,
social development and environmental protection. The fourth pillar is indigenous people and
culture. Proponents of Sustainable Development argue that it provides a context in which
overall sustainability is improved where cutting edge Green development is unattainable. For
example, a cutting edge treatment plant with extremely high maintenance costs may not be
sustainable in regions of the world with fewer financial resources. Sustainability requires that
human activity only use nature’s resources at a rate, which they can be replenished naturally.
Inherently, the concept of sustainable development is intertwined with the concept of carrying
capacity.
(a) What is sustainable development? Does sustainable development solely focus on
environment? Why?
(b) Explain any two strategies for sustainable development in India.

34. Compare the traditional approach with the recent approach towards environment.


O
Study the following chart showing the workers in formal and informal sectors and analyse the
trend of the two variables from 2011-12.

EN

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