ASHA PUBLIC SCHOOL

PRE BOARD EXAM- 1

Class – XII
SUBJECT- ECONOMICS
Time allowed: 3 hours SET- B Maximum Marks: 80
General Instructions:
(i) This question paper contains two sections:
Section A- Introductory Macroeconomics
Section B- Indian Economic Development
(ii) This paper contains 20 Multiple Choice Questions type questions of 1 mark each.
(iii) This paper contains 4 Short Answer Question type questions of 3 marks each to be answered in 60 to 80 words.
(iv)This paper contains 6 Short Answer Question type questions of 4 marks each to be answered in 80 to 100 words.
(v) This paper contains 4 Long Answer Question type questions of 6 marks each to be answered in 100 to 150 words.

Q.No PART-A (INTRODUCTORY MACROECONOMCS) Marks

1. Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives 1
given below:
Assertion (A): Fiscal deficit indicates the total borrowing requirements of the government.
Reason (R): Government mainly borrow from the RBI to meet its fiscal deficit.
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 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.
2. Who is the ‘Lender of the last resort’ in the banking structure of India? 1
(a) Axis bank
(b) State bank of India
(c) Reserve bank of India
(d) NABARD
3 Increase in the value of domestic currency by the government is called- 1
(a) Appreciation (b) Devaluation
(c) Revaluation (d) Depreciation
4 Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives 1
given below:
Assertion (A): At Break -even point, Consumption is equal to national Income.
Reason (R): APC falls continuously with increase in income as proportion of income spent on
consumption keeps on decreasing.
(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 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.
5. Statement 1: Value of MPC and MPS varies between 0 and 1. 1
Statement 2 : The sum of MPC and MPS is equal to one.
(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.
OR
Statement 1: The equilibrium level of income in an economy is determined when aggregate demand is
equal to aggregate supply.
Statement 2: Aggregate supply is depicted by a 45 degree line.
(a) Statement 1 is true and statement 2 is false (b) Statement 1 is false and statement 2 is true
(c) Both statement 1 and 2 is true (d) Both statement 1 and 2 are false.
6. Borrowing by government is- 1
(a) Revenue Expenditure (c) Capital expenditure
(b) Capital receipts (d) Revenue receipts
OR
Identify the tax whose burden can be shifted
(a) Income tax (c) goods and services tax
(b)Corporate tax (d) None of these
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7. Policy of surplus budget during inflation is a part of which objectives of government budget 1
(a) Economic stability (b) Reallocation of resources
(c) Reducing regional disparities (d) Economic growth
8. Suppose in an economy, the initial deposits of ₹ 1000 crores lead to the creation of total deposits 1
worth ₹ 10000 crores.
Under the given situation the value of legal reserve ratio would be
(a) 0.4 (b) 1 (c) 10 (d) 0.01
9. Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives
given below:
Assertion (A): Commercial banks contribute to quantum of money supply in the economy through credit
creation.
Reason (R): Commercial banks have the note issuing authority.
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 and Reason (R) is not the correct explanation of Assertion
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.
10. Under the Balance of Payments structure of a nation, the two main categories of accounts for the 1
classification of the transactions are ……..and………
(Fill up the blank with correct alternative)
(i) current account (ii) unilateral transfer account
(iii) capital account (iv) loan account
Identify the correct alternatives from the following:
Alternatives:
(a) i and ii (b) i and iii
(c) iii and iv (d) iv and i
11. What is investment multiplier? Explain its working using a suitable numerical example. 3
12. Explain the objectives of reallocation of resources and redistribution of income and wealth in a 3
government budget.
OR
How are capital expenditure different from revenue expenditure? Discuss briefly.
13. Define the Money and explain its major functions. 4
OR
Explain the following function of central bank-
Banker to the government (2) Banker’s Bank
14. Distinguish between final goods and intermediate goods. Can sugar be intermediate goods? Give reasons 4
for your answer.
15. Explain the distinction between the flexible exchange rate and the managed floating exchange rate. 4
16. Calculate (a) Gross domestic product at market price and (b) Factor income from abroad from the 3+3
following information-
S.N Particulars In crore
1. Interest 400
2. Rent 300
3. Exports 40
4. Gross national product at factor cost 2800
5. Profits 500
6. Compensation of employees 1500
7. Gross fixed capital formation 700
8. Net indirect taxes 250
9. Net current transfer from rest of the world 90
10 Change in stock 50
11. Net domestic capital formation 650
12. Factor income to abroad 120
OR
Whether the following items will be included in National income? Give reason for your answer.
Gain from the sale of shares
Gift from abroad
Interest received on loan given by government.
Retained earning of residents companies from abroad.
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17. Derived consumption curve from saving curve. Use schedule and figure. Write-down steps of 06
construction.
PART-B (INDIAN ECONOMIC DEVELOPMENT)
18 Reforms were introduce …………….in China and in ……………..Pakistan. 1
(a) 1978, 1988 (b) 1998, 1991
(c) 1978, 1991 (d) 1988,1978
19 The Great leap Forward Campaign was initiated in China in: 1
(a) 1978 (b) 1958 (c) 1965 (d) 1979
OR
In China Commune system related to……………….. sector
(a) Agriculture (b) Industry (c) Service (d) all of the above
20. Read the statement carefully: 1
Statement 1: All the three countries (India China Pakistan) introduced the economic reforms in the same
year.
Statement 2: China’s annual growth rate of population is more than India and Pakistan.
(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.
21. Which types of economics system is followed in China? 1
(a) Capitalist Economy (b) Socialist Economy
(c) Mixed Economy (d) None of these
22. Worker who own and operate an enterprise to earn their livelihood are known as- 1
(a) Wage employed (b) Causal Employed
(c) Self-employed (d) none of these
OR
Unemployed people is calculated as-
(a) Laboure force -work force (b) Laboure force+Work force
(c) work force - laboure force (d) None of these
23. Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives 1
given below:
Assertion (A): Under the financial sector reforms, financial sector was allowed to take decision on after
consulting RBI.
Reason (R): The role of RBI was reduced from regulator to facilitator of financial sector.
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 and Reason (R) is not the correct explanation of Assertion (
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.
24. Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives 1
given below:
Assertion (A): The infrastructure facilities during British rule were highly developed.
Reason (R): The main aim behind infrastructure development was to serve colonial interest.
(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 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.
25. Read the statement carefully: 1
Statement1: Rural development includes only agricultural development.
Statement2: Rural development aim at improving the economic and social condition of the people living in
villages.
(a) Statement 1 is true and statement 2 is false
(b) Statement 1 is false and statement 2 is true
(c) Both statement 1 and 2 is true
(d) Both statement 1 and 2 are false.
26. Read the statement carefully: 1
Statement 1: According to Industrial policy resolution 1956 the industries were classified into three
categories.
Statement 2: Schedule A comprised of industries which would be exclusively owned by the state.
(a) Statement 1 is true and statement 2 is false
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 (b) Statement 1 is false and statement 2 is true
(c) Both statement 1 and 2 is true
(d) Both statement 1 and 2 are false.
27. The ratio of labour force to total population is termed as? 1
(a)Labour force participation ratio (b) Work force
(c)Both (a) and (b) (d) Neither (a) nor (b)
28 What do you mean by human capital formation? Explain the role of human capital formation in economic 3
development.
OR
Education is considered an important input for the Development of the nation. How?
29 What do you mean by demonetisation? State the features of demonetisation. 3
30 Sector Contribution to GVA Distribution of Workforce 4
India China Pakistan India China Pakistan
Agriculture 16 7 24 43 26 41
Industry 30 41 19 25 28 24
Service 54 52 57 32 46 35
Total 100 100 100 100 100 100
With the help of given schedule compare distribution of workforce and contribution to GCVA between
India China and Pakistan.

31 Discuss the various institutional and non-institutional sources of rural credit. 4

OR
What is agricultural marketing? What are the problems faced by Indian farmers in marketing of their
agriculture produce.
32 Following table show the trends of employment in different sectors. Discuss the role of different sectors in
employment generation in given years. 4
Sector 1972-73 1993-94 2011-12 2017-18
Primary Sector 74.3 64 48.9 44.6
Secondary sector 10.9 16 24.3 24.4
Tertiary Sector 14.8 20 26.8 31
Total 100 100 100 100
33 (a) If the rate of resource extraction exceeds the rate of regeneration, it leads to reduction in carrying
capacity of the environment.” Discuss the rationale of the given statement with valid reasons.
(b) What do you mean by global warming? Why does it occur? How can it adversely affect the earth?
OR 3+3
(A) “Rural economic development is essential for Indian Economic development”. Do you agree with the
given statement? Support your answer with valid reasons.
(B) What is meant by organic farming? Discuss its benefits.
34 Read the following hypothetical text and answer the given questions: 3+3
The performance of Indian economy during the period of first seven five year plans (1950-1990) was
satisfactory if not very impressive. On the eve of independence, India was an industrially backward country,
but during this period of first seven plans our industries became far more diversified, with the stress being
laid on the public investments in the industrial sector. The policy of import substitution led to protection of
the domestic industries against the foreign producers but we failed to promote a strong export surplus.
Although public sector expanded to a large extent but it could not bring desired level of improvement in the
secondary sector. Excessive government regulations prevented the natural trajectory of growth of
entrepreneurship as there was no competition, no innovation and no modernization on the front of the
industrial sector. Many Public Sector Undertakings (PSU’s) incurred huge losses due to operational
inefficiencies, red-tapism, poor technology and other similar reasons. These PSU’s continued to function
because it was difficult to close a government undertaking even it is a drain on country’s limited resources.
On the Agricultural front, due to the measures taken under the Green Revolution, India more or less became
self-sufficient in the production of food grains. So the needs for reform of economic policy were widely felt
in the context of changing global economic scenario to achieve desired growth in the country.
(a) What do you mean by import substitution? How it helpful in rapid growth of domestic industries?
(b) Discuss any two reasons for the poor performance of industrial sector before economic reform .

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