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Sample
Papers
Economics
CBSE Class 12 (Term I )
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As per CBSE Sample Paper
Issued On 02 Sep, 2021...
Sample
Papers
Economics
CBSE Class 12 (Term I )
Author
Pratima Jain Roy
ARIHANT PRAKASHAN (School Division Series)

ARIHANT PRAKASHAN (School Division Series)
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Contents
þ One Day Revision 3-12
þ The Qualifiers 15-36
þ CBSE Question Bank 39-40
þ Latest CBSE Sample Paper 43-58
Sample Paper 1 61-74
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Video Solutions of CBSE Sample Papers

Chapterwise Important MCQs
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Syllabus
Economics CBSE Class 12 (Term I )
Term MCQ Based Question Paper

Units Marks Periods
Theory - Marks Duration: Minutes
Part A Introductory Macroeconomics

. Money and Banking
. Government Budget and the Economy
. Balance of Payments
Sub Total
Part B Indian Economic Development

Development Experience - and
Economic Reforms since :
Indian Economy on the eve of Independence
Indian Economy -
Liberalisation, Privatisation and
Globalisation : An Appraisal
Current challenges facing Indian Economy
Poverty
Human Capital Formation
Rural development
Sub Total
Total
Project Work Part : Marks
Students would prepare only ONE project in the entire academic session, which
is divided into terms i.e. Term I and Term II.
Part A Introductory Macroeconomics
Unit Money and Banking
Money - meaning and supply of money - Currency held by the public and net demand
deposits held by commercial banks.
Money creation by the commercial banking system.
Central bank and its functions example of the Reserve Bank of India : Bank of issue,
Govt. Bank, Banker s Bank, Control of Credit.
Unit Government Budget and the Economy
Government budget - meaning, objectives and components.
Classification of receipts - revenue receipts and capital receipts; classification of
expenditure revenue expenditure and capital expenditure.
Measures of government deficit - revenue deficit, fiscal deficit, primary deficit
their meaning.
Unit Balance of Payments
Balance of payments account - meaning and components;
Foreign exchange rate - meaning of fixed and flexible rates and managed floating.
Part B Indian Economic Development

Unit Development Experience - and Economic Reforms since
A brief introduction of the state of Indian economy on the eve of independence.
Indian economic system and common goals of Five Year Plans.
Main features, problems and policies of agriculture institutional aspects and new
agricultural strategy , industry IPR ; SSI role importance and foreign trade.
Economic Reforms since :
Features and appraisals of liberalisation, globalisation and privatisation LPG policy ;
Concepts of demonetization and GST
Unit Current challenges facing Indian Economy
Poverty- absolute and relative; Main programmes for poverty alleviation:
A critical assessment;
Human Capital Formation: How people become resource; Role of human capital
in economic development;
Rural development: Key issues - credit and marketing - role of cooperatives;
agricultural diversification;
MCQs Preparation Tips
Focus on Theory Learn to Identify Wrong Answers

MCQs can be formed from any part or The simplest trick is, observe the options
line of the chapter. So, strong command first and take out the least possible one
on theory will increase your chances to and repeat the process until you reach
solve objective questions correctly and the correct option.
quickly.
Analyze your Performance
Practice of Solving MCQs During the practice of MCQs you can
Cracking an MCQ-based examination identify your weak & strong topics/
requires you to be familiar with the chapter by analyzing incorrect answers,
question format, so continuous practice in this way you will get an awareness
will make you more efficient in solving about your weaker topics.
MCQs.
Practice through Sample Papers
Speed & Accuracy Solving more & more papers will make
In MCQ-based examination, you need you more efficient and smarter for
both speed and accuracy, if your exams. Solve lots of Sample Papers
accuracy is good but speed is slow then given in a good Sample Papers book.
you might attempt less questions
resulting in low score.
Attempting MCQs in Exams
1. Read the paper from beginning to by step solution is not required in

end & attempt those questions first in MCQ type questions, it is a waste
which you are confident. Now move of time, you will not get extra marks
on to those questions which requires for this.
thinking and in last attempt those
4. Most of the time, you need not to
questions for which you need more
solve the MCQ completely to get the
attention.
correct option. You can start thinking
2. Read instructions of objective in reverse order and choose the best
questions carefully and find out what fit option.
is being asked, a bit carelessness can
5. As there is no negative marking for
lead you to incorrect answer.
incorrect answers, so don't leave any
3. Tick/Write down the correct option question unanswered. Use your
only while filling the OMR sheet. Step guess if you have not exact idea
about the correct answer.
CBSE Sample Paper Economics Class XII (Term I) 3
ONE DAY
REVISION
Revise All the Concepts in a Day
Just Before the Examination...
n Money and Banking

1. Barter System refers to that system by which one Here, C = Currency held by the public,
commodity is exchanged for another without use of DD = Demand Deposits with bank,
money. Barter economy is termed as C-C OD= Other Deposits with the RBI
economy.
*Not in Syllabus
2. Drawbacks of Barter System
6. Bank is an institution which receives funds from the
(i) Lack of double coincidence of wants public and gives loans and advances to those who
(ii) Lack of divisibility need them.
(iii) Lack of store of value 7. Commercial Banks are the financial institutions
(iv) Lack of common measure of value that accept deposits from the public and lend out
(v) Lack of standard for deferred payments this money (loan) to consumers and investors with
3. Money Anything that is generally accepted as a an objective to earn profits.
means of exchange and that at the same time, acts 8. Money Creation by Commercial Bank Money
as a measure and as a store of value is money. creation means the creation of bank deposits or
4. Forms of Money increase in bank deposits.
(i) Fiat Money is backed by the order or the Money creation by the commercial bank is
authority of the government. determined by the amount of the initial fresh
deposits and the Legal Reserve Ratio (LRR).
(ii) Fiduciary Money Its acceptance is not
compulsory but is based on mutual trust, such Money Creation = Initial Deposit ´ 1/LRR
as cheques, bills of exchange, etc.
9. Money Multiplier may be defined as the ratio of
(iii) Full-bodied money whose value as commodity the stock of money to the stock of high powered
equals its value as money. money in an economy.
(iv) Credit money refers to bank deposits with
Money Multiplier = M/H
banks which is withdrawable through a cheque.
Here, M = Stock of money
ONE DAY REVISION
5. Money Supply means total amount of money

available in an economy. RBI publishes figures for H = Stock of high powered money
four alternatives measures of money supply, which 10. Central Bank is an apex body that controls,
are given below regulates, directs and operates the entire banking
and monetary system of a country. Reserve Bank of
(i) M1 =C + DD + OD
India (RBI) is the central bank of our country.
*(ii) M2 =M1 + Post Office Savings Bank Deposit
11. Functions of Central Bank
*(iii) M3 =M1 + Net Time Deposits of Commercial
Bank (i) Issue of currency
*(iv) M4 =M3 + Total Deposits with Post Office (ii) Credit control
Savings Organisations (excluding NSC) (iii) Banker to the government
4 CBSE Sample Paper Economics Class XII (Term I)
(iv) Banker to the banks 14. Legal Reserve Ratio (LRR) refers to that legal
(v) Lender of last resort minimum fraction of deposits which the banks keep in
(vi) Custodian of foreign exchange reserves cash (or securities) with themselves (or with RBI).
12. Cash Reserve Ratio (CRR) refers to the LRR = CRR + SLR
minimum percent age of a bank's total deposits 15. Repo Rate The rate at which the Central Bank offers
required to be kept with the Central Bank. loans to other commercial banks against security
13. Statutory Liquidity Ratio (SLR) Every bank is pledged for the loan.
required to maintain a fixed percentage of its 16. Reverse Repo Rate The interest rate at which
assets in the form of cash or other liquid assets, commercial banks can deposit their surplus funds
called statutory liquidity ratio. SLR is kept with the with Central Bank, or in other words, it is the rate at
bank itself. which Central Bank borrows from commercial banks.
n Government Budget and Economy

1. Government Budget is a statement of the which takes into consideration changes in
estimates of the government receipts and capital.
government expenditure during the financial year 7. Revenue Receipts Receipts which do not create a
which runs from 1st April to 31st March. liability for the government or do not lead to
2. Objectives of Government Budget reduction in assets, are known as revenue receipts.
(i) Redistribution of income and wealth These receipts can be classified as
(ii) Reallocation of resources (i) Tax Revenue consists of the proceeds of taxes
(iii) Economic growth and stability and other duties levied by the Central
Government. It can be further classified as
(iv) Proper allocation of resources
(a) Direct Tax Revenue is a tax levied on
(v) Generation of employment
income of individual and firms and its final
(vi) Management of public enterprises burden cannot be shifted onto others, e.g.
3. Public Goods The goods which cannot be income tax, wealth tax and corporation tax.
provided through the market mechanism and (b) Indirect Tax Revenue is a tax levied on
hence, must be provided by the government are goods and services and its final burden can
called public goods. be shifted on to others, e.g. GST,
e.g. roads, public parks, street lighting, etc. These entertainment tax, etc.
goods are non-rivalrous and non-excludable. (ii) Non-tax Revenue consists of interest receipts
4. Private Goods The goods which can be provided on account of loans by the Central Government,
through market mechanism, i.e., transaction dividends and profits on investments made by
between individual consumers and producers are the government, fees and other receipts for
termed as private goods. services rendered by the government.
e.g. food items, clothes, shoes, etc. 8. Capital Receipts The receipts of government
which create liability or reduce financial assets are
5. Types of Budget There are three types of budget
called capital receipts.
which are as follows
(i) Balanced Budget is the budget in which 9. Revenue Expenditure is the expenditure incurred
estimated revenues are equal to estimated for purposes other than the creation of physical or
expenditures. financial assets of the Central Government. e.g.
salaries, pensions, interest payments, etc.
(ii) Surplus Budget is the budget in which
ONE DAY REVISION
estimated revenues are more than estimated 10. Capital Expenditure is the expenditure of the
expenditures. government which result in creation of physical or
financial assets or reduction in financial liabilities.
(iii) Deficit Budget is the budget in which estimated
revenues are less than estimated expenditures. 11. Plan Revenue Expenditure relates to central plans
and central assistance for State and Union Territory
6. Components of Budget There are two
Plans. e.g. expenditure on health, education, law
components of budget
and order.
(i) Revenue Budget shows the current receipts of
the government and the expenditure that can be 12. Non-plan Revenue Expenditure covers a vast
met from these receipts. range of general, economic and social services of
the government. e.g. expenditure on providing relief
(ii) Capital Budget is an account of the assets as
to earthquake victims.
well as the liabilities of the Central Government,
13. Plan Capital Expenditure is related to the central Revenue Deficit = Revenue Expenditure
assistance for State and Union Territory plans. – Revenue Receipts
14. Non-plan Capital Expenditure covers various 17. Fiscal Deficit is the difference between the
general, social and economic services provided by government's total expenditures and total receipts
the government. excluding borrowings.
15. Budget Deficit When government spends more
Fiscal Deficit = Total Budget Expenditure –
than it collects by way of revenue, it incurs a budget
(Revenue Receipts + Non-debt Creating Capital
deficit. It refers to a situation when budget
Receipts) or Fiscal Deficit = Borrowings
expenditures of the government are greater than
the government receipts. 18. Primary Deficit is equal to fiscal deficit reduced by
16. Revenue Deficit is defined as the excess of interest payments.
government's revenue expenditures over revenue Primary Deficit = Fiscal Deficit - Interest Payments
receipts.
n Foreign Exchange Rate

1. Foreign Exchange means the reserve of foreign 9. Functions of Foreign Exchange Market
currency. e.g. currency of US and UK are the (i) Transfer function
foreign exchanges for India. (ii) Credit function
2. Foreign Exchange Rate means the rate at which (iii) Hedging function
one currency is exchanged for the other.
10. Overvaluation of Currency is a situation in which
3. Fixed Exchange Rate Under this system, the exchange rate of a currency exceeds what the
exchange rate is determined by the Central Bank of open market is willing to pay.
a country and the changes can be made by the
Central Bank only. 11. Undervaluation of Currency is a situation in which
the value of currency is lower than what is expected
4. Flexible Exchange Rate Under this system,
in the exchange market.
exchange rate is determined by the demand for
and supply of different currencies in the foreign 12. Depreciation of Domestic Currency The rise in
exchange market. In a free market, exchange rate is exchange rate implies depreciation in domestic
determined by this method. currency, i.e., fall in the value of domestic currency.
Effects of depreciation of currency are
5. Managed Floating is a system that allows
adjustments in exchange rates according to the set (i) Encourages exports from a country.
of rules and regulation which are officially declared (ii) Discourages imports from rest of the world.
by the Central Bank of the country. 13. Appreciation of Domestic Currency The fall in
6. Spot Exchange Rate The rate of exchange which exchange rate implies appreciation of domestic
happens to prevail in the market at the time when currency, i.e., rise in the value of domestic
transactions are incurred, is called spot exchange currency. Effects of appreciation of currency are
or current exchange rate. (i) Rise in imports
7. Forward Exchange Rate The rate of exchange at (ii) Rate of inflation will be higher
which future transactions are to be done at the rate
14. Devaluation is fall in the value of domestic
decided to day, is known as forward rate.
currency in relation to foreign currency as planned
8. Foreign Exchange Market is the market in which by the Central Bank.
national currencies are traded for one another.
ONE DAY REVISION
n
Balance of Payments
1. Balance of Payments (BoP) is a systematic record 3. Current Account records transactions relating to
of all economic transactions between the residents exchange of goods and services and unilateral
of a country and the rest of the world in a given transfers.
period of time, usually one year. 4. Components of Current Account
2. Economic Transactions in BoP (i) Export and import of visible items
(i) Visible items (ii) Invisible items
(ii) Invisible items (iii) Unilateral transfer
(iii) Capital transfer
5. Capital Account records transactions representing (ii) Unfavourable balance of trade

foreign financial assets and liabilities. (Exports < Imports)
6. Components of Capital Account (iii) Equilibrium in balance of trade (Exports = Imports)
(i) Private capital 9. Autonomous Items refers to those international
(ii) Banking capital economic transactions in the current and capital
(iii) Official capital account that are undertaken for profit.
The main autonomous items are
(iv) Gold and foreign capital
(i) Autonomous exports and imports of goods
7. Balance of Trade (BoT) means the difference
(ii) Autonomous exports and imports of services
between exports and imports of visible material
(iii) Autonomous unilateral transaction
goods. It includes exports and imports of visible
material goods. (iv) Autonomous capital transaction
10. Accommodating Items refer to all transactions
BoT = Vx -Vm
that occur because of disequilibrium activity in the
Where, Vx = Value of goods exported BoP, such as government financing. The main
Vm = Value of goods imported accommodating items are
8. Types of Balance of Trade (BoT) (i) Borrowings from IMF or other international
financial institutions.
(i) Favourable balance of trade
(Exports > Imports) (ii) Foreign exchange reserves.
n Indian Economy on the Eve of Independence

1. Economy of a country includes all production, (i) Decay of handicraft industry
distribution or economic activities that relate with (ii) Slow growth of modern industry
people and determines the standard of living.
6. State of Foreign Trade India has been an
2. Indian Economy on the Eve of Independence On important trading nation, since ancient times. But
the eve of independence, Indian economy was in a when the restrictive policies of commodity
very bad condition due to the exploitative policies of production, trade and tariff were imposed by the
British colonial rule. colonial government, it adversely affected the
3. India’s National and Per Capita Income under structure, composition and volume of India's
Colonial Rule There were no efforts from the part of foreign trade. Following were the reasons behind
the colonial government to measure the national and the poor growth of foreign trade
per capita income of India. Some individual attempts (i) Exporter of primary products and importer of
were made to measure such incomes but produced finished goods.
conflicting and inconsistent results. (ii) Britain’s monopoly control over foreign trade.
The contributions of VKRV Rao and Dadabhai Naoroji 7. State of Occupational Structure During the
are considered very significant in this context. colonial period, the occupational structure of India
4. State of Agriculture Sector Agriculture was the main exhibited backwardness. The agricultural sector
source of livelihood for most of the people of India, accounted for the largest share of the workforce
and about 75% of the country's population lived which remained at a high of 70-75% of the
mostly in villages and derived livelihood directly or workforce and the manufacturing and service
indirectly from agriculture. Indian agriculture at the sectors accounted for only 10 and 15-20%,
time of independence was marked with the following respectively.
features 8. State of Infrastructure Infrastructure comprises
ONE DAY REVISION
(i) Low level of productivity of such industries which help in the growth of
(ii) High degree of vulnerability other industries. Under the colonial period, basic
5. State of Industrial Sector Britishers followed a infrastructure such as railways, ports, water, air
policy of systematic de-industrialisation by creating transport, post and telegraphs were developed.
circumstances conducive to the decay of handicraft 9. Demographic Condition Various details about
industry and not taking any steps to promote modern the population of British India were first collected
industry and reduced India to a mere exporter of raw through a census in 1881. Before 1921, India was
material and importer of finished goods. The in the first stage of demographic transition. The
following points bring forward the state of the second stage began after 1921.
industrial sector at the eve of independence
n Indian Economy (1950-1990)

1. Economic System is defined as an arrangement (v) Small holdings
by which the central problems of an economy are (vi) Lack of organised marketing system
solved. The three basic central problems of an
7. Agricultural Reforms (Land Reforms) During the
economic system are
planning period, the following institutional reforms
(i) Choice of goods to be produced were initiated in the agricultural sector
(ii) Choice of technology of production (i) Abolition of intermediaries
(iii) Distribution of goods and services (ii) Regulation of rent
2. Types of Economic Systems (iii) Land ceiling
(i) Socialist Economy is an economic system in (iv) Consolidation of land holdings
which all economic decisions are taken by the (v) Cooperative farming
government. In this system, the government
decides what goods are to be produced in 8. Green Revolution means a sudden increase in
accordance with the needs of society, how crop production achieved through deliberate and
goods are to be produced and how they should conscious efforts of an authorised body. It was
be distributed. In Cuba and China, most of the initiated as a part of new agricultural strategy.
economic activities are governed by the Green revolution in India is marked by two distinct
socialistic principles. phases
(ii) Capitalist Economy depends upon the market (i) First Phase Mid 60s-Mid 70s.
forces of demand and supply. In this type of (ii) Second Phase Mid 70s-Mid 80s.
economy, only those consumer goods will be 9. Achievements of Green Revolution
produced that have good demand in the market (i) A sudden increase in crop-productivity.
and yield profit to the producers.
(ii) Substantial increase in acres under cultivation.
Capitalist economy is also called laissez faire or
(iii) Shift from subsistence farming to commercial
free market economy.
farming.
It exists in North America, Japan, Australia,
10. Failures of Green Revolution
Western Europe, etc.
(i) Confined to food crops
(iii) Mixed Economy is an economic system in
which public sector and private sector exist side (ii) Limited coverage
by side. In this economy, the market will provide (iii) Inequality among farmers
whatever goods and services it can produce (iv) Undesirable social effects
well and the government will provide essential 11. Problems Faced by Industrial Sector at the Time
goods and services which the market fails to of Independence
provide. India follows this economic system.
(i) Underutilisation of capacity
3. Economic Planning is a process by which a (ii) Absence of world class infrastructure
central authority of a country defines a set of goals
(iii) High cost of industrial economy
to be achieved within a specified period, sets out a
plan to achieve those goals, keeping in view the (iv) Inadequate employment generation
country's resources. (v) Sectoral and regional imbalance
4. Five Year Plans In India, planning was launched as (vi) Poor performance of public sector
a five yearly exercise, therefore it came to be 12. Industrial Policy Resolution, 1956 Following
popularly known as ‘Five Year Plans’. features of the IPR, 1956 are
5. Common Goals of Five Year Plans All the Five (i) Industries were classified into three schedule
ONE DAY REVISION
Year Plans were formulated keeping the below depending upon role of state
objectives in mind (a) Schedule-A 17 industries were listed in
(i) Growth (ii) Modernisation schedule-A whose future development
(iii) Self-reliance (iv) Equity would be the responsibility of state.
6. Problems Faced by Agriculture Sector at the (b) Schedule-B 12 industries were included in
Time of Independence schedule-B. Also, private sector could
supplement the efforts of the public sector,
(i) Low productivity
with the state taking sole responsibility for
(ii) Disguised unemployment starting new units.
(iii) Subsistence farming (c) Schedule-C Other residual industries were
(iv) Traditional methods of farming left open to private sector.
(ii) More stress was given on the role of cottage 15. Role of Small Scale Industry (SSI) in an
and small-scale industries. Economy
(iii) Industries in the private sector could be (i) Generate employment opportunities
established only through a licence from the (ii) Favourable employment capital ratio
government. (iii) Self-employment
(iv) Industrial concessions were offered to private (iv) Promotes exports
companies for establishing industry in the
(v) Promotes handicraft industry
backward regions of the country like tax rebate,
concessional rates for power supply, etc. (vi) Fulfil the needs of medium and large industries
13. Small Scale Industry (SSI) is defined with (vii) Investment output ratio at par with large
reference to the maximum investment allowed in industries
the assets of a unit. This limit has changed over a 16. Problems Faced by Foreign Trade at the Time of
period of time. Presently, a small scale industry is Independence
defined as one whose investment in plant and (i) Volume of foreign trade
machinery does not exceed ` 5 crore. (ii) Composition of foreign trade
14. Characteristics of Small Scale Industry (SSI) (iii) Direction of foreign trade
(i) Labour intensive 17. Inward Looking Trade Policy Upto 1991,
(ii) Less capital requirements Government followed an inward looking trade
(iii) SSIs show locational flexibility policy which aimed at
(i) Export promotion (ii) Import substitution
n Liberalisation, Privatisation and Globalisation

1. Economic Crisis In 1991, India met with an 4. Liberalisation is defined as the loosening of
economic crisis relating to its external debt. The government regulations in a country to allow for
government was unable to make repayments on its private sector companies to operate business
borrowings from abroad, foreign exchange transactions with fewer restrictions.
reserves were not sufficient to repay the debts, the 5. Economic Reforms under Liberalisation Reforms
prices of essential goods were rising and the under liberalisation were introduced in the following
imports were growing at a very high rate. sectors
2. Factors responsible for Economic reforms (i) Industrial Sector Reforms The following steps
(i) Fall in foreign exchange reserve were taken to deregulate the industrial sector
(ii) Adverse balance of payments (a) Abolition of industrial licensing
(iii) Mounting fiscal deficit (b) Contraction of public sector
(iv) Rise in prices (c) De-reservation of production areas
(v) Failure of public enterprises (d) Expansion of production capacity
(vi) Gulf crisis. (e) Freedom to import capital goods
3. Emergence of New Economic Policy (NEP) The (ii) Financial Sector Reforms Financial sector
measures adopted in the New Economic Policy can includes
be broadly classified into two groups (a) Banking and non-banking institutions
(i) Stablisation Measures are short-term (b) Stock exchange market
measures which were intended to correct some (c) Foreign exchange market
weakness that has developed in the Balance of
ONE DAY REVISION
In this sector, as a part of the reform process,

Payments and to bring inflation under control.
the role of RBI was reduced as a facilitator. The
(ii) Structural Reforms are long term measures, commercial banks were given freedom to
aimed at improving the efficiency of the decide their interest rates. Private bankers were
economy and increasing its international allowed to operate in this sector and Foreign
competiveness by removing the rigidities in Institutional Investors (FIls) were encouraged to
various segments of the Indian economy. The invest in India.
various structural reforms are categorised as
(iii) Tax Reforms/Fiscal Reforms Tax reforms are
(a) Liberalisation concerned with the reforms in government's
(b) Privatisation taxation and public expenditure policies which
(c) Globalisation are collectively known as its fiscal policy. The
fiscal reforms simplified the tax structure and
lowered the rates of taxation. This reduced 10. World Trade Organisation (WTO) was founded in
tax-evasion and increased government's 1995 as the successor organisation to the General
revenues. Agreement on Trade and Tariff (GATT). It was
(iv) Foreign Exchange Reforms/External Sector expected to establish a rule based on trading
Reforms External sector reforms include regime in which nations cannot place arbitrary
reforms relating to foreign exchange and restrictions on trade. Its purpose was mainly to
foreign trade. The following reforms were expand production and trade in order to have
initiated in this sector optimum utilisation of world resources and promote
(a) Devaluation of Rupee India rupee was globalisation.
devalued against foreign currencies. The WTO agreements cover trade in goods as well
(b) Other Measures Import quotas were as services to facilitate international trade through
abolished, policy of import licensing was removal of tariff as well as non-tariff barriers and
almost scrapped, import duty was reduced provide better market access to all countries.
and export duty was completely withdrawn. 11. Demonetisation refers to the withdrawal of existing
6. Privatisation refers to giving greater role to private currency and introducing new currency in its place.
sector, thereby reducing the role of public sector. India faced its first demonetisation in 1946, the
Government companies (public companies) are second one in 1978 and the third one in 2016 when
converted into private companies in two ways PM Narendra Modi banned ` 500 and ` 1,000 notes
with immediate effect. Some of the objectives of
(i) By withdrawal of the government from
demonetisation are as follows
ownership and management of the public
sector companies. (i) It is done to curb black money.
(ii) By the method of disinvestment. (ii) It is undertaken to control inflation.
7. Globalisation means integration of the economy (iii) It is undertaken to stop flow of funds to illegal
of the country with the world economy. activity.
Globalisation encourages foreign trade and private (iv) It aims at making a cashless society.
and institutional foreign investment. 12. Goods and Services Tax (GST) is a value added
8. Benefits of LPG Policies tax levied on most goods and services sold for
(i) Increase in foreign investment domestic consumption. It is paid by the consumers,
but is remitted to the government by the businesses
(ii) Increase in foreign exchange reserves
selling the goods and services.
(iii) A check of inflation
According to Article 366 (12A), GST means "any tax
(iv) Increase in domestic product on supply of goods or services or both except taxes
(v) Increase in exports on supply of alcoholic liquor for human
(vi) Consumer sovereignty consumption." Some of the important objectives of
9. Failures of LPG Policies levying this tax are as follows
(i) Neglect of agriculture (i) To bring uniformity in tax rates and automated
compliances.
(ii) Uneven growth in industrial sector
(ii) To ensure availability of input tax credit.
(ii) Less employment opportunities
(iii) To harmonise tax base, laws and administration
(iv) Failure of disinvestment policies
procedures across the country.
(v) Failure of fiscal policies
(iv) To simplify the tax regime.
(vi) Concentration of growth process
n
Poverty
ONE DAY REVISION
1. Meaning of Poverty It refers to the state of (ii) Relative Poverty This means that even
deprivation in which a person is unable to fulfill his though a person is able to fulfill all his basic
basic needs like food, clothes, housing, etc. needs, he is poor in comparison to another
2. Concepts of Poverty person. This concept is prevalent in developed
countries.
(i) Absolute Poverty A person is said to be
absolutely poor, if he is not able to achieve a 3. Categorisation of Poor
minimum level of consumption. (i) Chronic Poor They are of two types
This concept is prevalent in less-developed (a) Always Poor People who do not usually
countries where a minimum standard of have sufficient money to fulfill their basic
consumption is fixed.
needs are always poor and remain below resulted in a very low growth in per capita
poverty line. income.
(b) Usually Poor People who sometimes have (ii) Specific Poverty Alleviation Programmes As
little more money but usually are unable to an alternative to economic growth oriented
fulfill their basic needs are considered as approach, policy-makers thought that income
usually poor. e.g. casual workers and and employment for the poor could be raised
landless workers. through specific poverty alleviation
(ii) Transient Poor They are of two types programmes.
(a) Churning Poor They regularly move in and Following programmes were initiated in this
out of poverty. e.g. small farmers, seasonal regard
workers, etc. (a) Food for Work Programme
(b) Occasionally Poor They are rich most of (b) Rural Employment Generation Programme
the time but may sometimes have a patch of (c) Prime Minister Rojgar Yojana
bad luck. e.g. people who gamble. (d) Swarna Jayanti Shahaji Rojgar Yojana
(iii) Non-Poor or Never Poor They are those (e) Swarna Jayanti Gram Swarojgar Yojana
people who live above the poverty line. They are (f) National Rural Livelihood Mission
non-poor. e.g. doctors, lawyers, professionals,
(g) National Food for Work Programme
etc.
(h) Sampoorna Grameen Rojgar Yojana
(iv) Urban Poor These poor people reside in cities
(i) Mahatma Gandhi National Rural
and towns and generally comprise of people
Employment Guarantee Act
who have migrated from the rural areas in
(iii) Providing Minimum Basic Amenities This
search of employment opportunities.
approach aims at the provision of foodgrains at
(v) Rural Poor These poor people reside in subsidised rates, education, health, water
villages and generally comprise landless supply, etc to the people so that their living
agricultural labourers, farmers with small land standard could be improved.
holdings, etc.
The various schemes under this approach are
4. Causes of Poverty as follows
(i) Rapidly rising population (a) Public Distribution System
(ii) Unemployment (b) Integrated Child Development Scheme
(iii) Inequalities of wealth and income
(c) Mid-day Meal Scheme
(iv) Indebtness
(d) Pradhan Mantri Gramodya Yojana
(v) Lack of infrastructure
(e) Valmiki Ambedkar Awaas Yojana
(vi) Lack of supply and inflationary pressures
(vii) Colonial exploitation (f) Pradhan Mantri Gram Sadak Yojana
(viii) Social factors (g) National Social Assistance Programme
(ix) Low rate of capital formation 6. Critical Assessment of Poverty Alleviation,
(x) Globalisation Policies and Programmes
(i) The benefits from direct poverty alleviation
5. Policies and Programmes towards Poverty
programmes have been appropriated by the
Alleviation The government’s approach to poverty
non-poor.
reduction comprise of three dimensions which are
discussed below (ii) The amount of resources allocated for these
programmes is not adequate.
(i) Economic Growth Oriented Approach It is
based on the expectation that the effects of (iii) These programmes depend on corrupt
ONE DAY REVISION
economic growth (rapid increase in Gross government and bank officials for their
Domestic Product–(GDP) and per capita implementation.
income) would spread to all sections of (iv) These programmes have failed to address the
society and will trickle down to the poor vast majority of people who are living just above
section also. But population growth has proverty line.
n Human Capital Formation in India

1. Human and Physical Capital 5. Human Capital and Human Development Human
Human Capital refers to the stock of skill, ability, development is the broader term than human
expertise, education and knowledge in a nation at a capital. Human capital considers education and
point of time. health as a means to increase labour productivity.
Physical Capital refers to the inputs which are Human development is based on the idea that
required for further production such as machine, education and health are integral to human
tools and implements, factory buildings, etc. well-being because when people have the ability to
2. Human Capital Formation It is the process of read and write and the ability to lead a long and
acquiring and increasing the number of people who healthy life, they will be able to make other choices
have the skills, education and experience which are they value.
critical for the economic and political development 6. Problems of Human Capital Formation in India
of a country. Following are the problems of human capital
3. How Do People Become Resources formation in India
(i) Expenditure on education (i) Rising population
(ii) Expenditure on health (ii) Brain drain
(iii) On-the-job training (iii) Inefficient manpower planning
(iv) Migration (iv) Long-term process
(v) Expenditure on information (v) High poverty levels
4. Role of Human Capital in Economic 7. Human Development Index The Human
Development Development Index (HDI) is a composite statistic
Human capital leads to economic development by of life expectancy, education and income indices.
(i) Stimulating innovations and inventions in the It was created by economist Mahbub UI Haq,
country. followed by economist Amartya Sen in 1990, and
published by the United Nations Development
(ii) Enabling human resources to understand
Programme. India has 130 th position in the World
change in scientific advancements so that they
Human Development Index.
are able to adapt themselves to new
technologies.
n
Rural Development in India
1. Rural Development is a comprehensive term (ii) Development of human resources including
which essentially focuses on action for the literacy, education and skill development.
development of areas that are lagging behind in the (iii) Development of human resources like health.
overall development of the village economy. It is a (iv) Honest implementation of land reforms.
process whereby the standard of living of rural
(v) Infrastructure development like electricity,
people, especially poor people rises continuously.
irrigation, credit, marketing, transport facilities
2. Objectives of Rural Development etc.
(i) Increasing the productivity of the agricultural (vi) Special measures for alleviation of poverty and
sector so that the income of the farmers bringing about significant improvement in the
increase. living conditions of weaker sections of the
(ii) Generating alternative means of livelihood in the population.
rural areas so that dependency on agriculture
ONE DAY REVISION
4. Rural Credit is the lifeline of the farming activity. It

sector is reduced. means providing credit for the farming community.
(iii) Promoting education and health facilities in the Farmers need credit because of the reasons stated
rural areas so that human development is also below
achieved. (i) Most farmers in India are small and marginal
3. Key Areas in Rural Development Some of the landholders who practice subsistence farming.
areas which are challenging and need fresh They have no surplus for further production.
initiatives for development in rural India are as (ii) The gestation period between sowing and
follows harvesting is quite high. So, farmers have to
(i) Development of the productive resources of borrow to fulfil their various needs during this
each locality. period.
5. Types of Rural Credit (ii) Due to lack of knowledge about the prices
(i) Long-term Credit is required to acquire prevailing in the markets, farmers are often
permanent assets like tractors, land, costly forced to sell their produce at low prices.
equipments, tube-wells, etc. These loans are for (iii) Farmers did not have proper storage facilities to
a period of 5 to 20 years. keep back their produce for selling later at
(ii) Medium-term Credit is required for purchasing better price. Approximately, 10% of goods
machinery, constructing fences and digging produced in farms are wasted due to lack of
wells. Such loans generally stretch over a storage.
period of 12 months to 5 years. 9. Measures by Government to Improve
(iii) Short-term Credit is required for buying seeds, Agricultural Marketing
tools, manure and fertilisers, etc. These loans (i) Regulation of markets
are for a period of 6 to 12 months. (ii) Improvement in physical infrastructure
6. Sources of Rural Credit (iii) Cooperative marketing
(i) Non-institutional Sources of Rural Credit The (iv) Supporting policies
major non-institutional sources of rural credit (v) Maintenance of buffer stocks of wheat and rice
are moneylenders, friends, relatives, landlords,
shopkeepers and commission agents. 10. Diversification of Crops implies a shift from single
cropping system to multiple-cropping system. In
(ii) Institutional Sources of Rural Credit The
India, where subsistence farming is still dominant, it
major institutional sources of rural credit are as
may also mean a shift from subsistence farming to
follows
commercial farming. Significance of diversification
(a) National Bank for Agriculture and Rural of crops is as follows
Development (NABARD)
(i) Minimise the risk occurring due to failure of
(b) Self Help Groups (SHGs) monsoon.
(c) Regional Rural Banks (RRBs) (ii) Minimise the market risk arising due to price
(d) Commercial Banks fluctuations.
(e) Cooperative Credit Societies 11. Segments of Non-farm Activities Non-farm
7. Agricultural Marketing is the process that involves economy have several segments in it; some
functions of assembling, storage, processing, possess healthy growth while others are in
packaging, transportation, grading and distribution subsistence, low productivity propositions. The
of agricultural commodities throughout the country. growth sectors include agro-processing industries,
8. Need of Agricultural Marketing originates due to food processing industries, leather industry,
the problems faced by farmers which are given tourism, etc. Various segments of non-farm
below activities are enumerated below
(i) Farmers while selling their produce to traders (i) Animal husbandry (ii) Fisheries
suffered from faulty weighing and manipulation (iii) Horticulture
of accounts. (iv) Other alternate livelihood options
ONE DAY REVISION
THE
QUALIFIERS
Chapterwise Set of MCQs to Check Preparation
Level of Each Chapter
1. Money and Banking

1. The process of credit/money creation in an economy is affected by
(a) initial deposits amount (b) LRR
(c) bank rate (d) Both (a) and (b)
2. Assertion (A) Currency held by public is a monetary liability of central bank.

Reason (R) Central bank controls credit, whereas commercial banks create credit with
the currency held by public.
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
3. Commercial banks maintain ........... for liquidity and to honour the demand of cash
withdrawals by their customers.
(a) SLR (b) margin requirements
(c) CRR (d) repo
4. Which of the following statements is incorrect?

(a) Present currency can work as money as it is a legal tender.
(b) Coins held by the public are limited legal tender.
(c) Central bank prints currency in India.
(d) Central bank do not deal with general public.
5. Functions performed by Central Bank related to government do not include which of

the following?
THE QUALIFIERS
(a) RBI manages public debt

(b) RBI also sells treasury bills
(c) RBI make advances which are repayable within 90 days
(d) RBI comes to rescue the other banks in times of financial crises
6. Supply of money is ............ concept.

(a) stock (b) flow
(c) income (d) All of these
7. Assertion (A) Paper money is becoming more popular these days.

Reason (R) It is generally acceptable and convenient to carry.
Alternatives
Assertion (A)
of Assertion (A)
8. Sum total of Currency held by public (C), Demand Deposits in Bank (DD) and Other
Deposits with RBI (OD) are together known as.......... .
(a) M1 (b) M2
(c) M3 (d) M4
9. For the two statements given below, choose the correct option
Statement I Anything that is generally accepted as a means of exchange is termed as
money.
Statement II Money multiplier means the creation of bank deposits or increase in bank
deposits.
Alternatives
(a) Statement I is correct and Statement II is incorrect.
(b) Statement II is correct and Statement I is incorrect.
(c) Both the statements are correct.
(d) Both the statements are incorrect.
10. Choose the correct pair from the below.

Column I Column II
A. SLR (i) Fixed by the commercial bank
B. Primary deposits (ii) Derivative Deposits
C. Commercial bank (iii) Advisor to the government
D. Central bank (iv) Provides ‘clearing house’ facility
Codes
(a) A-(i) (b) B-(ii)
(c) C-(iii) (d) D-(iv)
11. The money backed by order or authority of the government and do not have intrinsic
value like gold and silver coins are called........ .
(a) legal tender money (b) credit money
THE QUALIFIERS
(c) high powered money (d) fiduciary money
12. High powered money is equal to

(a) Money supplied by the RBI only
(b) Total supply of money in the economy
(c) Notes and coins held by the people
(d) Money (notes and coins) held by the public, vault cash of the commercial banks as well
as cash reserves of the commercial banks with the RBI
13. Credit creation in commercial banks is determined by

(a) Cash reserve ratio (b) Statutory liquidity ratio
(c) Initial deposits (d) All of these
14. What will be the total amount of money created in the system if legal reserve ratio is
20% and primary deposits are ` 2,000?
(a) ` 2,000 (b) ` 4,000
(c) ` 6,000 (d) ` 10,000
15. The Reserve Bank pays agency bank charges to the banks for undertaking the
goverment business on its behalf. The reserve Bank has well defined obligations and
provide several services to the the governments.
With reference to the above said statement, which of the following options is correct?
(a) Central bank works as an agent to the government
(b) The Central bank is an apex bank
(c) Central bank act as a lender of last resort for commercial banks
(d) All of the above
Answers
1. (d) 2. (b) 3. (a) 4. (c) 5. (d) For Detailed Solutions
6. (a) 7. (a) 8. (a) 9. (a) 10. (d) Scan the code
11. (a) 12. (d) 13. (d) 14. (d) 15. (d)
2. Government Budget and Economy

1. Following are the impacts of government budget on the economy excluding
(a) brings better allocation of resources
(b) implement government welfare programmes
(c) brings aggregate fiscal indiscipline level
(d) better access of public goods
2. The government starts selling its securities to private sector. What is this process
called?
(a) Open market operation (b) Disinvestment
(c) Monetary expansion (d) All of these
3. In India ………… type of taxes are generally of no or little significance due to their
very low revenue yield to government.
(a) paper taxes (b) specific taxes
THE QUALIFIERS
(c) regressive taxes (d) indirect taxes
4. Recently the union government introduced Ujjawala Yojna, which provides free LPG
connection to the women in rural area. Which of the following objective of government
budget is fulfilled in this case?
(a) Reducing inequality of income and wealth
(b) Reallocation of resources
(c) Economic growth
(d) None of the above
5. Goods and Service Tax (GST) is an example of ............ under government receipts.
(a) indirect tax (b) direct tax (c) non-tax revenue (d) income tax
6. Assertion (A) Public goods are non-rivalrous.
Reason (R) The benefits of such goods can be enjoyed by all and are not restricted to
any one person.
Alternatives
Assertion (A)
of Assertion (A)
7. Assertion (A) Revenue budget of government represents non-debt creating incomes.
Reason (R) Government budget is majorly comprised of receipts and expenditures on
various accounts.
Alternatives
Assertion (A)
of Assertion (A)
8. From the following, which is not an implication of fiscal deficit?
(a) It determines total borrowing requirements to the government
(b) It increase liability of the government (c) It increase foreign dependence
(d) Repayment of loan together with interest further decreases the fiscal deficit
9. An expenditure which is of recurring or non-recurring in nature, and which is based
on five year economic plan is called............. .
(a) revenue expenditure (b) capital expenditure
(c) plan expenditure (d) non-plan expenditure
10. For the two statements given below, choose the correct option.
Statement I Balanced budget is one in which estimated revenues are more than
estimated expenditures.
Statement II Revenue receipts neither creates a liability for the government nor leads
to reduction in assets.
Alternatives
(c) Both the statements are correct. (d) Both the statements are incorrect.
THE QUALIFIERS
11. Match the following.

Column I Column II
A. Surplus budget (i) Total expenditure < Total receipt
B. Deficit budget (ii) Increasing GDP
C. Economic growth (iii) PSUs
D. Management of public enterprise (iv) Total expenditure > Total receipt
Codes
A B C D A B C D
(a) (i) (ii) (iii) (iv) (b) (i) (iv) (ii) (iii)
(c) (ii) (iii) (iv) (i) (d) (iii) (iv) (i) (ii)
12. If fiscal deficit is ` 1,100 crore and interest payment is ` 400 crore, then primary deficit
will be ……… .
(a) ` 400 crore (b) ` 1,100 crore
(c) ` 1,500 crore (d) ` 700 crore
13. The expenditure incurred for smooth functioning of government departments and for
day-to-day expenses of the government is called .......... .
(a) capital expenditure (b) non-plan expenditure
(c) revenue expenditure (d) All of these
14. ‘‘India’s fiscal deficit is expected to touch 7 per cent of GDP in 2020-21 fiscal as against
budget estimate of 3.5 per cent with the revenue collections being hit amid disruptions
in economic activities due to locledown’’—The Economic Times
As per the given statement, in 2020-21, fiscal deficit is expected to be …… of GDP
(a) 3.4 (b) 3.5
(c) 30.5 (d) 7
15. Which of the following budget is more suitable for developing economies like India?
(a) Deficit budget (b) Balanced budget
(c) Surplus budget (d) None of these
Answers
For Detailed Solutions
1. (c) 2. (b) 3. (a) 4. (a) 5. (a)
Scan the code
6. (a) 7. (b) 8. (d) 9. (c) 10. (b)
11. (b) 12. (d) 13. (c) 14. (d) 15. (a)
3. Foreign Exchange Rate

1. ............ is the price of one currency in terms of another currency.
(a) Fixed exchange rate (b) Real exchange rate
(c) Real effective exchange rate (d) Foreign exchange rate
2. Assertion (A) Depreciation of domestic currency leads to rise in exports.

Reason (R) Depreciation of domestic currency makes domestic currency relatively
cheaper, which leads to increase in exports.
THE QUALIFIERS
Alternatives
Assertion (A)
of Assertion (A)
3. Under depreciation of a foreign currency in terms of domestic currency, who will be

benefited?
(a) Importers (b) Exporters
(c) Both (a) and (b) (d) Neither (a) nor (b)
4. Decrease in the value of a domestic currency in terms of a foreign currency. It is known as

(a) depreciation of a domestic currency (b) devaluation of a domestic currency
(c) revaluation of a domestic currency (d) appreciation of a domestic currency
Statement I Overvaluation is a situation in which the exchange rate of a currency
exceeds what the open market is willing to pay.
Statement II Appreciation is fall in the value of domestic currency in relation to
foreign currency as planned by the Central Bank.
Alternatives
6. What will be the most likely impact on the national income when in a country, the
price of foreign currency rises, keeping other things unchanged?
(a) Likely to rise (b) Likely to fall
(c) Likely to rise and fall both (d) Not affected
7. Assertion (A) Managed floating exchange rate system is a combination of fixed and
flexible exchange rate systems.
Reason (R) In managed floating exchange rate system, central bank decides the limit of
the exchange rate and within the limit; exchange rate is decided by market forces of
demand and supply of foreign exchange.
Alternatives
Assertion (A)
of Assertion (A)
8. In a foreign exchange market, equilibrium exchange rate is determined by ……… in

India.
(a) RBI (b) government
(c) demand and supply (d) IMF
THE QUALIFIERS
9. Indian government initiated many schemes to attract foreign investment. In relation to

the above said statement, which of the following statement is correct?
(a) It leads to rightward shift in supply curve of foreign exchange
(b) It leads to leftward shift in supply curve foreign exchange
(c) It leads to rightward shift in demand curve of foreign exchange
(d) It leads to leftward shift in demand curve of foreign exchange
10. The introduction of GST and demonetisation also accounts for the depreciation of
Indian rupee by disrupting the domestic supply chains which is derived from the
increasing domestic demands. Introduction of GST leads to which of the following?
(a) Increase in export from India
(b) Increase in import to India
(c) No change in export/import
(d) Both (a) and (b)
11. Increase in the value of domestic commodities in terms of foreign currency is known as
(a) Revaluation (b) Devaluation
(c) Appreciation (d) Either (a) or (c)
12. Let foreign exchange rate between Indian Rupee and US dollar is ` 72/1$ and it
changes to ` 78/1$. Which of the following is the reason of depreciation of Indian
currency?
(a) Increase in demand of US dollar and decrease in supply of US dollar
(b) Increase in both demand and supply of US dollar
(c) Increase in supply of US dollar and decrease in demand of US dollar
(d) Decrease in both demand and supply of US dollar
13. Demand and supply of a foreign exchange in a country are affected by

(a) price level
(b) Foreign Exchange Management Act (FEMA)
(c) intervention of monetary authority
(d) All of these
14. Due to appreciation of domestic currency, supply curve of foreign exchange will
(a) Rise (b) Fall
(c) Remain constant (d) Either (a) or (b)
15. Choose the incorrect pair.

Column I Column II
A. RBI (i) Manage foreign exchange
B. Gold standard (ii) Gold
C. Flexible exchange rate (iii) Determined by central bank
D. Bretton woods (iv) Gold and dollar
Codes
(a) A-(i) (b) B-(ii)
THE QUALIFIERS
Answers
1. (d) 2. (a) 3. (a) 4. (a) 5. (a) For Detailed Solutions
6. (a) 7. (a) 8. (c) 9. (a) 10. (a) Scan the code
11. (d) 12. (a) 13. (d) 14. (c) 15. (c)
4. Balance of Payments
1. A BoP account of a country is always in balance because it is based on the principle
of................ .
(a) accounts (b) mathematics (c) statistics (d) economics
2. What will be the likely impact of increase in tariff on balance of trade keeping other
things unchanged?
(a) Improve (b) Deteriorate (c) Remain constant (d) None of these
3. Assertion (A) A country always tries to balance the BoP, i.e., balance in current account
equals to balance in capital account.
Reason (R) Balanced BoP indicates stable economic relation with rest of the world.
Alternatives
Assertion (A)
of Assertion (A)
4. How is the state of balance of payments affects, when government is directly involved
in foreign trade?
(a) Balance in BoP improves (b) Balance in BoP deteriorates
(c) Depends upon trade balance (d) None of these
5. Which item(s) is/are excluded in BoT, but included in BoP?

(a) Invisible items (b) Visible items
(c) Income receipts and payments (d) Both (a) and (c)
6. Assertion (A) Accommodating transactions are undertaken to make equilibrium in

BoP account.
Reason (R) Accommodating items are also called above the line items.
Alternatives
Assertion (A)
of Assertion (A)
7. Unilateral transfers are transfers between residents and non-residents which include
……… .
THE QUALIFIERS
(a) interest and profits (b) dividend and royalty

(c) gifts and donations (d) All of these
8. Choose the correct statement from given below.

(a) Balance of trade records the exports and imports of invisible items.
(b) A surplus in BoT can rectify the deficit in BoP.
(c) Accommodating items are only recorded in capital account of BoP.
(d) Import of machinery will be recorded in capital account of BoP.
Statement I Capital account records transactions representing foreign financial assets
and liabilities.
Statement II Balance of trade means the difference between exports and imports of
visible material goods.
Alternatives
10. Which of the following is/are component (s) of capital account of BoP?
(a) Foreign direct investment (b) Borrowing from IMF by the government
(c) Foreign exchange reserve (d) All of these are components of BoP
11. Uni-lateral transfers are included in..........

(a) current account BoP (b) capital account BoP
(c) Both (a) and (b) (d) None of these
12. ……… of BoP refers to the international economic transactions which are made
independent of the state of BoP with a view to earn profits.
(a) Visible items (b) Invisible items
(c) Autonomous items (d) Accommodating items

Column I Column II
A. Accommodating items (i) Visible items
B. BoT (ii) Assets and liability
C. Capital account (iii) Capital and current accounts
D. BoP (iv) Loans from world bank
Codes
A B C D A B C D
(a) (i) (ii) (iii) (iv) (b) (iv) (i) (ii) (iii)
14. Which one of the following items is not included in the ‘invisibles’ on current account
of the BoP of India?
(a) Transportation (b) Insurance
(c) Loans from foreign banks (d) Foreign travel
15. ‘‘GDP growth is slowly turning the corner and a large capital expenditure announced
by the government will support economic activity and investment’’, said RBI governor.
THE QUALIFIERS
Investment from abroad is recorded in which account of BoP?

(a) Current account (b) Capital account (c) BoT account (d) Both (a) and (c)
Answers
1. (a) 2. (a) 3. (a) 4. (d) 5. (d) For Detailed Solutions
6. (c) 7. (c) 8. (c) 9. (c) 10. (d) Scan the code
11. (a) 12. (c) 13. (b) 14. (c) 15. (b)
5. Indian Economy on the Eve of Independence

1. Which of the following are ‘land tenure systems’?
(a) Zamindari system (b) Mahalwari system
(c) Ryotwari system (d) All of these
2. Britishers followed ‘discriminatory tariff policy’, what were the main objectives of the
same?
(a) To have administrative control over India (b) To establish monopoly over foreign trade
(c) To make India industrialised (d) All of these
3. Occupational structure of India was biased towards........... .

(a) agriculture (b) industry
(c) foreign trade (d) None of these
4. Which of the following does not highlight the status of industrial sector during the
colonial period?
(a) Capital goods industries were lacking
(b) British followed equi-proportional tariff policy
(c) Conversion of India as a sprawling market for British finished goods
(d) Indian handicraft industries declined
5. Match the correct pair.
Column I Column II
A. Road (i) Mobilising army
B. Railways (ii) Commercialisation of agriculture
C. Postage and telegraph (iii) Centre of sub-continent
Codes
(a) A-(i) (b) B-(ii)
(c) C-(iii) (d) All of these are correct
6. During British rule productivity of agriculture was low due to ……… .
(a) low level of technology (b) lack of irrigation
(c) low uses of fertilisers (d) All of these
7. Assertion (A) India developed a sound industrial base during the colonial rule.
Reason (R) The industrial sector was crying for modernisation, diversification, capacity
building and increased public investment.
Alternatives
Assertion (A)
THE QUALIFIERS
of Assertion (A)
8. Some states witnessed decline in dependence of workforce on the agricultural sector
during the British period, which were the states?
(a) Tamil Nadu (b) Maharashtra
(c) West Bengal (d) All of these
Statement I On the eve of independence, Indian economy was in a very good condition
due to the supportive policies of British colonial rule.
Statement II Under the colonial period, basic infrastructure such as railways, ports,
water, air transport, post and telegraphs were developed.
Alternatives
10. Assertion (A) The traditional handicrafts industries were ruined under the British rule.
Reason (R) British objective was to turn India as a sprawling market for the finished
goods produced in Britain.
Alternatives
Assertion (A)
of Assertion (A)
11. British government used Indian foreign exchange surplus in which of the following
ways?
(a) Pay for war expenses (b) Pay for the deficit of British Government
(c) Payment of salaries (d) All of these
12. In general, there are three phases in a demographic profile of a country. Which of the
following signifies second stage of the profile?
(a) High birth rate (b) Low death rate
(c) High death rate (d) Both (a) and (b)
13. Which type of industries were lacking during the British rule?
(a) Handicraft (b) Capital goods
(c) Consumer goods (d) None of these
14. In terms of the economy, railways played a major role in integrating markets and
increasing trade. Domestic and international economic trends shape the pace of
railway construction and the demand for the important traffic flows to the ports.
What is/are the motive(s) of introduction of railways by the Britishers in India?
(a) Integration of market (b) Carrying goods and passenger traffic
(c) Connecting to the major ports (d) All of these
15. Opening of Suez canal served as a direct route between which of the following
THE QUALIFIERS
countries?
(a) India and China (b) India and America
(c) India and Sri Lanka (d) None of these
Answers
1. (d) 2. (b) 3. (a) 4. (b) 5. (d) For Detailed Solutions
6. (d) 7. (d) 8. (d) 9. (b) 10. (b) Scan the code
11. (d) 12. (d) 13. (b) 14. (d) 15. (d)
6. Indian Economy (1950-1990)

1. India becomes food sufficient country due to......... .
(a) land reforms (b) abolition of zamindari system
(c) green revolution (d) All of these
2. ........... refers to an arrangement by which central problems of an economy are solved.

(a) Economic system (b) Government policy
(c) Economic policy (d) None of these
3. Our foreign trade policies during the initial phase of reform were............. .
(a) inward oriented (b) outward oriented
(c) aggresive (d) None of these
4. Assertion (A) Economic development encompasses economic growth.

Reason (R) Economic development measures not only a sustained increase in GDP, but
also structural changes in the technical, economic and institutional spheres.
Alternatives
Assertion (A)
of Assertion (A)
5. Which of the following industries were exclusively reserved for public sector in
schedule A of IPR, 1956?
(a) Arms and ammunition (b) Atomic energy
(c) Air craft (d) All of these
6. Which of the following statements are not true about SSI during industrialisation?
(a) SSI were given protection from big industries
(b) Various concessions were given to SSI
(c) Government allowed SSI and large industries to produce any type of goods
7. Assertion (A) It was necessary to bring balanced regional development in context of

Industrial development.
Reason (R) Government provided tax sops and introduced licensing policy in the
Industrial Policy Resolution (IPR), 1956.
Alternatives
Assertion (A)
THE QUALIFIERS
of Assertion (A)
8. Capitalist system pursues the policy of profit maximisation, as this system is based
on.......... .
(a) market mechanism (b) planning agency
(c) government intervention (d) All of these
Statement I Mixed economy is an economic system in which public sector and private
sector exist side by side.
Statement II Green revolution means a sudden increase in crop production achieved
through deliberate and conscious efforts of an authorised body.
Alternatives
10. India opted for mixed economic system during the planning phase after independence.
What is/are the objective(s) of mixed economic system?
(a) Profit maximisation (b) Social welfare
(c) Wealth maximisation (d) Both (a) and (b)
11. Which of the following are false for the policy of green revolution in India?
(a) In the first phase of green revolution it targeted most backward states of the country
(b) Green revolution helped the poor farmers to improve their economic condition in a
greater extent
(c) It was restricted to wheat crop only (d) All of the above
Column I Column II
A. Subsidy (i) Chairman of Planning Commission
B. Prime Minister (ii) Monetary help by the government
C. Quota (iii) Limit on import of goods
Codes
A B C A B C
(a) (i) (ii) (iii) (b) (ii) (i) (iii)
(c) (ii) (iii) (i) (d) (iii) (ii) (i)
13. The Industries Act, 1951, empowered the government to issue licences for
(a) setting up of new industries (b) expansion of existing ones
(c) diversification of products (d) All of these
14. Private sector didn’t took interest in direct participation in the industrial development
due to which of following reason(s)?
(a) Limited market size (b) Lack of demand
(c) Lack of capital (d) All of these
15. The World Bank has recently approved the loan worth $ 750 million to address the
immediate liquidity and credit needs of India’s MSME sector that have been severally
impacted by the covid-19 outbreak. Which of the following committees were set up by
THE QUALIFIERS
first independent government to look after the small scale industries (now MSME)?
(a) Drafting committee of planning commission (b) Karve committee
(c) Mahalanobis committee (d) None of these
Answers
For Detailed Solutions
1. (d) 2. (a) 3. (a) 4. (a) 5. (d)
Scan the code
6. (c) 7. (a) 8. (a) 9. (c) 10. (d)
11. (d) 12. (b) 13. (d) 14. (d) 15. (b)
7. Liberalisation, Privatisation and Globalisation

1. Tax reforms was one of the important reforms under liberalisation policy. Which of the
following are not a tax reforms?
(a) Reduction in the rate of tax (b) Reforms in indirect taxes
(c) Simplified tax payment process (d) Devaluation of rupee
2. The new economic policy can be broadly classified as................ .
(a) stabilisation measures (b) structural reform measures
(c) standardised measures (d) Both (a) and (b)
3. Assertion (A) Every year government fixes a target for disinvestment of Public Sector
Enterprises (PSEs).
Reason (R) Disinvestment is an excellent tool for discarding the loss incurring Public
Sector Enterprises (PSEs).
Alternatives
Assertion (A)
of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false (d) Assertion (A) is false, but Reason (R) is true
4. Liberalisation means removal of entry and growth restrictions on the private sector, it
was implemented with the objective(s) of
(i) Deregulation and reduction of government role
(ii) Business is given in free hand and allowed to run on commercial lines
(iii) Unlock economic potential
Choose from the options below
(a) Both (i) and (ii) (b) Both (ii) and (iii)
(c) Both (i) and (iii) (d) All of these
5. Navaratna policy of the government was adopted as an attempt to............ .
(a) give managerial autonomy (b) improve efficiency of PSU
(c) privatisation (d) Both (a) and (b)
6. Find out the incorrect pair from the following.
Column I Column II
A. Strategic sale (i) Sale of 51% or more equity of the PSUs
B. Minority sale (ii) Sale of 49% or less equity of the PSUs
C. Quota (iii) Trade Promoter
D. Foreign Investment (iv) FDI + FII
Codes
THE QUALIFIERS
(a) A-(i) (b) B-(ii) (c) C-(iii) (d) D-(iv)

7. WTO works facilitating which of the following?
(a) Bilateral trade (b) Multi-lateral trade
(c) Tariffs (d) Both (a) and (b)
8. Liberalisation, privatisation and globalisation are the aims of........... .
(a) economic planning (b) land reforms
(c) economic reforms (d) None of these
9. Assertion (A) As an immediate measure to resolve the financial crisis, India devalued
its currency in 1991.
Reason (R) This allowed India to meet its import bill and resolve the BoP deficit.
Alternatives
Assertion (A)
of Assertion (A)
10. Why privatisation is considered as better policy to improve efficiency of sick PSUs?
(a) Private sector is more efficient (b) Private sector operates for profit
(c) Private sector provide job security (d) Both (a) and (b)
11. Which of the following reforms are included in liberalisation policy?

(a) Industrial sector reforms (b) Financial sector reforms
(c) Tax reforms (d) All of these
Statement I Stabilisation measures are long-term measures, aimed at improving the
efficiency of the economy and increasing its international competiveness by removing
the rigidities in various segments of the Indian economy.
Statement II Globalisation means integration of the economy of the country with the
world economy.
Alternatives
13. The trade policy reforms introduced in 1991 aimed at ……… .

(a) dismantling of quantitative restrictions on imports and exports
(b) reduction of tariff rates
(c) removal of licensing procedures for imports (d) All of the above
14. The reason that has lead India as a major destination for global outsourcing is
(a) restrictions from the government
(b) availability of cheap labour with skill-gap
(c) availability of large number of consumer and capital goods industry
15. FDI was freely allowed upto 51% in the list and higher limits were considered on the merits
of each case. In which of the following sector, upto 100% of the equity/FDI is allowed?
THE QUALIFIERS
(a) Pharma (b) Education

Answers
1. (d) 2. (d) 3. (a) 4. (d) 5. (d) For Detailed Solutions
6. (c) 7. (d) 8. (c) 9. (a) 10. (d) Scan the code
11. (d) 12. (b) 13. (d) 14. (b) 15. (c)
8. Poverty
1. Which of the following is reason for chronic indebtedness among the poor?
(a) Poor work mainly as landless agricultural labourers.
(b) Poor borrow money from lenders who charge high rates of interest.
(c) The poor are highly vulnerable. They are not able to negotiate their legal wages from
employers and are exploited
(d) Poor are landless. Even if some of them possess land, it is only dry or waste land.
2. Assertion (A) Calorie based norm is not adequate to identify the poor.
Reason (R) It groups all the poor together and does not differentiate between the very
poor and the other poor.
Alternatives
Assertion (A)
of Assertion (A)
3. How economists identify the poor?

(a) On the basis of their wealth
(b) On the basis of their annual income
(c) On the basis of their occupation and ownership of assets
(d) On the basis of their savings
4. Which of the following not belongs to poverty alleviation programmes?

(a) Rural Employment Generation Programme (REGP)
(b) Prime Minister’s Rozgar Yojana
(c) Swarna Jayanti Shahari Rozgar Yojana
(d) National Social Assistance Programme
5. Why poor have very limited economic opportunities?

(a) As they lives in rural area (b) Scarcity of funds
(c) Lack of basic literacy and skills (d) All of these
6. Amartya Sen, noted Nobel Laureate, has developed an index known as ……. .
(a) Poverty Gap Index (b) Sen Index
(c) Squared Poverty Gap (d) Income Disparity Gap Index
7. Assertion (A) Government policies have failed to address the vast majority of
vulnerable people who are living on or just above the poverty line.
Reason (R) High growth alone is not sufficient to reduce poverty. Without the active
THE QUALIFIERS
participation of the poor, successful implementation of any programme is not possible.

Alternatives
Assertion (A)
of Assertion (A)
(c) Assertion (A) is true but, Reason (R) is false
(d) Assertion (A) is false but, Reason (R) is true
8. Why per head availability of land for cultivation has steadily declined?
(a) Rapid growth of population and without alternative sources of employment
(b) Lands and water bodies are getting polluted due to excessive and improper use of
agro-chemicals
(c) Drought has a massive impact on agriculture, land and on the ecosystem also
9. The government’s approach to poverty reduction was of ............ dimensional.

(a) one (b) two
(c) three (d) four
10. Growth oriented approach was not much successful because

(i) of population growth
(ii) of the green revolution exacerbated
(iii) there was unwillingness and inability to redistribute land
(iv) of unequal distribution of land and other assets
(a) Only (i) (b) (i) and (ii)
(c) (i), (ii) and (iii) (d) All of these

Column I Column II
A. Chronic poor (i) Rich most of the time but may sometimes has a patch of bad luck
B. Churning poor (ii) Who have never been poor
C. Occasionally poor (iii) Always poor and usually poor who may sometimes have a little
more money
D. Non-poor (iv) Regularly move in and out of poverty
Codes
A B C D A B C D
(a) (i) (ii) (iii) (iv) (b) (iv) (iii) (ii) (i)
Statement I Poverty gap implies the gap between the rich and the poor.
Statement II The poverty line in 2009-10 for rural areas was fixed at consumption
worth ` 860 per person a month.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect
THE QUALIFIERS
13. In August 2005, the Parliament passed a new act to provide guaranteed wage
employment to every rural household whose adult volunteer is to do unskilled manual
work for a minimum of 100 days in a year. This act is known as ……… .
(a) Mahatma Gandhi National Rural Employment Guarantee Act
(b) Minimum Wages Act
(c) Minimum Wages Guarantee Act
(d) Rural Employment Guarantee Act
14. Transient poor can be further categorised into.......... .

(a) absolute and relative (b) churning and very
(c) absolute and occasionally (d) churning and occasionally
15. India ranked 162 GNI per capita with 1,410 US Dollars in 2011 and is named as lower
middle income country. What is GNI stands for?
(a) Gross National Income (b) Gross Net Income
(c) Grand Net Income (d) None of these
Answers
1. (b) 2. (a) 3. (c) 4. (d) 5. (d) For Detailed Solutions
6. (b) 7. (a) 8. (a) 9. (c) 10. (c) Scan the code
11. (d) 12. (d) 13. (a) 14. (d) 15. (a)
9. Human Capital Formation in India

1. ……… is based on the idea that education and health are integral to human well being.
(a) Capital development (b) Physical education
(c) Human development (d) Economic development
2. Main problems of human capital formation include(s)

(a) rising population (b) high poverty
(c) brain drain (d) All of these
3. Assertion (A) High level of human capital implies not only high earning potential but
also a change in the social and economic outlook.
Reason (R) It transforms the way of thinking and allows an individual to make
well-informed and rational decisions.
Alternatives
Assertion (A)
of Assertion (A)
4. Which one is not the part of human capital?

(a) Doctors
(b) Engineers
THE QUALIFIERS
(c) Unskilled labour

(d) Chartered Accountants
5. Assertion (A) People migrate that can fetch them high earning jobs than what they get
in their native places/countries.
Reason (R) Enhanced earnings in the new place exceed the cost of migration.
Alternatives
Assertion (A)
of Assertion (A)
6. Under human capital formation, expenditure on health includes expenditure for

(a) preventive medicine (b) curative medicine
(c) social medicine (d) All of these
7. Which among the following is not the source of human capital transformation?
(a) Health expenditure which directly increases the supply of labour force
(b) Expenditure on the on-the-job training which increases labour productivity
(c) Expenditure on migration in terms of better employment opportunities
(d) Expenditure on building machines and factories
8. Which five year plan recognised the importance of human capital in India?
(a) Tenth (b) Seventh
(c) Sixth (d) Ninth
Statement I Human capital considers education and health as a means to increase
labour productivity, whereas human development considers that they are necessary for
human well-being.
Statement II Preventive medicine includes medical practices which are designed to
avoid or avert diseases.
Alternatives
10. Under human capital formation, people migrate ……… .

(a) from rural area to urban area (b) from urban area to rural area
(c) from foreign country to home country (d) All of these

Column I Column II
A. Expenditure on education (i) Sanitations and clean drinking water
B. Expenditure on health (ii) Doctors and engineers

THE QUALIFIERS
C. Expenditure on information (iii) Internet and digitisation
D. Expenditure on on-the-job training (iv) Committee assignment and mentoring
Codes
A B C D A B C D
(a) (i) (ii) (iii) (iv) (b) (iv) (iii) (ii) (i)
(c) (ii) (i) (iii) (iv) (d) (iii) (iv) (i) (ii)
12. How human capital formation contributes towards economic growth?

(a) By stimulating innovation and inventions
(b) By enabling human resources to understand changes in scientific advancement
(c) Human capital formation is inversely related with economic growth
(d) Both (a) and (b)
13. Under human capital formation, expenditure on information and technology results in
……… .
(a) e-governance (b) BPO and KPO industry
(c) digital payment system (d) All of these
14. Education, health, nutrition, water and sanitation complement each other, with
investment in any one contributing to better outcomes in the others. As per the given
statement, which of the following is/are not considered as component(s) of human
development?
(a) Nutrition (b) Water
(c) Sanitation (d) All of these
15. Why the role of government is crucial for the human capital formation?
(a) In our country, a large section of population lives below the poverty line
(b) Expenditure on education and health makes short-term impact
(c) Individual consumers have complete information about quality of services and their costs
Answers
1. (c) 2. (d) 3. (a) 4. (c) 5. (a) For Detailed Solutions
6. (d) 7. (d) 8. (b) 9. (c) 10. (a) Scan the code
11. (c) 12. (d) 13. (d) 14. (d) 15. (a)
10. Rural Development in India

1. What percentage of India’s population is dependent on agriculture for their livelihood?
(a) One-fourth (b) One-half
(c) One-third (d) Two-third
2. Which of the following is not a challenge in rural development?

(a) Poverty (b) Illiteracy
(c) Low productivity (d) None of these
THE QUALIFIERS
3. Which of the following is/are the function(s) of agriculture marketing?

(a) Assembling and grading
(b) Storage and transportation
(c) Packaging
4. Assertion (A) Agricultural diversification implies diversification of crop production

and shifting of workforce to other allied activities such as livestock, poultry, etc.
Reason (R) Most of the agricultural employment activities are concentrated in Kharif
season while during Rabi season it becomes difficult to find gainful employment
opportunities due to lack of irrigation facilities.
Alternatives
Assertion (A)
of Assertion (A)
5. Which of the following is not a source of non-institutional rural credit?

(a) Friends
(b) Self-help groups
(c) Relatives
(d) Landlords
6. Assertion (A) It is important to develop proper storage facilities in

rural areas.
Reason (R) Farmers are forced to sell their crops at very low prices to
traders because of the fear of getting it damaged from fire, rodents or pests due to lack
of proper storage.
Alternatives
Assertion (A)
of Assertion (A)
7. Which one is not a government measure to improve agriculture marketing?

(a) Regulation of markets
(b) Cooperative marketing
(c) Development of physical infrastructure
8. Which of the given statement is incorrect regarding the role of NABARD?

(a) It performs all the functions of RBI with regard to agricultural credit
(b) It helps the flow of credit through cooperative banks, regional rural banks, etc
(c) Maintain a research and development fund to promote research in agriculture
(d) Provides support to farm sector only
THE QUALIFIERS
9. Why farmers need rural credit?

(a) To purchase seeds, fertiliser, pesticide and insecticide
(b) To purchase tractors, tube well and animals
(c) To repay previous loans
10. Non-institutional sources are not good sources of rural credit because ……… .
(a) they charge high rate of interest (b) they manipulate accounts
11. Which of the following is/are the key challenge(s) in rural development?
(a) Honest implementation of land reforms (b) Development of productive activities
(c) Improving agricultural marketing (d) All of these

Column I Column II
A. Apni mandi (i) Pune
B. Hadaspar mandi (ii) Tamil Nadu
C. Rythu bazaar (iii) Andhra Pradesh
D. Uzhavar sandies (iv) Punjab
Codes
A B C D A B C D
(a) (i) (ii) (iii) (iv) (b) (iv) (i) (iii) (ii)
13. Economic dimensions encompass providing both capacity and opportunities for the
poor and low-income households in particular, benefit from economic growth. In
context to the given statement, how economic growth contribute in rural development?
(a) Expand market (b) Increase demand
14. ……… is/are the feature(s) of diversification of crop production in agriculture.

(i) Shifting of single cropping system to multi-cropping system.
(ii) Growing cash crops.
(iii) Diversification providing ecological balance.
(a) Only (i) (b) Only (ii)
(c) (ii) and (iii) (d) All of these
Statement I Self-help groups have helped in the empowerment of women.
Statement II Land Development Bank is a major non-institutional source of credit in
India.
Alternatives
THE QUALIFIERS

Answers
1. (d) 2. (d) 3. (d) 4. (a) 5. (b) For Detailed Solutions
6. (a) 7. (d) 8. (d) 9. (d) 10. (c) Scan the code
11. (d) 12. (b) 13. (c) 14. (d) 15. (a)
CBSE
QUESTION BANK
Issued by Central Board of Secondary Education
Case Study 1
Read the following hypothetical text and answer 2. MSME sector suffered to a large extent in
the given questions COVID-19 pandemic situation due ........... .
India’s Micro, Small and Medium Enterprises (Fill up the blank with correct answer)
(MSME) sector is poised for a mega Ans. liquidity crunch or lockdown policy of government,
transformation in 2020, with the launch of an fall in demand etc. (any one)
Alibaba-like e- market place, trendy yet 3. Read the following statements - Assertion
affordable khadi products to appeal to the (A) and Reason (R).
masses and digital data-based credit ratings to Assertion (A) Small scale industries ensure
help entrepreneurs avail loans. a more equitable distribution of national
However, the MSME sector, often considered the income and wealth.
bulwark of the economy as it contributes around Reason (R) The ownership of small scale
29% to the GDP and 48% to the Indian exports. industries is more wide spread than the
There is an urgent need of major reforms and ownership of large scale industries.
policy interventions towards ensuring timely Select the correct alternative from the
availability of low cost credit, improving ease of following
doing business and technological up gradation, to (a) Both Assertion (A) and Reason (R) are true.
take on the formidable challenge of creating (b) Both Assertion (A) and Reason (R) are false.
millions of jobs, ensure equitable distribution of Ans. (a) Both Assertion (A) and Reason (R) are true.
national income and achieving large-scale import 4. State whether the given statement is true or
substitution. false
The World Bank has recently approved loan Small Scale Industries are the largest
worth $750 million to address the immediate employer of the labour force in India.
liquidity and credit needs of India’s MSME sector Ans. False. It requires more capital than labour.
that has been severely impacted by the Covid-19
crisis. This will give a push to the Atmanirbhar Case Study 2
Bharat vision of the government. Read the following hypothetical text and answer
CBSE QUESTION BANK
1. Identify which of the following is not an the given questions

advantage of the MSME sector? (Choose the The performance of Indian economy during the
correct alternative) period of first seven five year plans (1950-1990)
(a) It is suited for the utilisation of local was satisfactory if not very impressive.
resources.
(b) It is helpful in creation of employment On the eve of independence, India was an
opportunities. industrially backward country, but during this
(c) It requires more capital than labour. period of first seven plans our industries became
(d) It ensures equitable distribution of income far more diversified, with the stress being laid on
in the country. the public investments in the industrial sector.
Ans. (c) It requires more capital than labour.
The policy of import substitution led to protection (c) The market was big enough to encourage
of the domestic industries against the foreign private industrialists for investment.
producers but we failed to promote a strong (d) The government wanted to protect the
export surplus. indigenous producers from the foreign
competition.
Although, public sector expanded to a large Ans. (c) The market was big enough to encourage
extent but it could not bring desired level of private industrialists for investment.
improvement in the secondary sector.
2. Inward looking trade strategy aimed at
Excessive government regulations prevented the ............ .
natural trajectory of growth of entrepreneurship (Fill up the blank with correct answer)
as there was no competition, no innovation and no Ans. protecting domestic industries from international
modernisation on the front of the industrial sector. competition, generating employment etc. (anyone)
Many Public Sector Undertakings (PSU’s) 3. State whether the given statement is true or
incurred huge losses due to operational false.
inefficiencies, red-tapism, poor technology and Mechanisation of the Indian agriculture
other similar reasons. was one of the cause of green revolution in
These PSU’s continued to function because it was India.
difficult to close a government undertaking even Ans. True
it is a drain on country’s limited resources.
4. Read the following statements - Assertion
On the agricultural front, due to the measures (A) and Reason (R).
taken under the Green Revolution, India more or
less became self-sufficient in the production of Assertion (A) Many public sector
food grains. So, the needs for reform of economic undertakings incurred huge losses due to
policy was widely felt in the context of changing operational inefficiencies.
global economic scenario to achieve desired Reason (R) Red-tapism was one of the
growth in the country. reasons for continuation of such
1. Which of the following was not a reason enterprises.
for the public sector to play a major role in Select the correct alternative from the
the initial phase of Indian economic following
planning? (Choose the correct alternative.) (a) Both Assertion (A) and Reason (R) are true.
(a) Private entrepreneurs lacked sufficient (b) Both Assertion (A) and Reason (R)
capital for investment. are false.
(b) Government aimed at social welfare. Ans. (a) Both Assertion (A) and Reason (R) are true.
CBSE QUESTION BANK
Latest CBSE
SAMPLE PAPER
Latest Sample Question Paper for Class XII (Term I)
Issued by CBSE on 2 Sept 2021
Economics Class 12 (Term I)

Instructions
1. There is an internal choice provided in each Section.
(a) Section A – Contains 24 questions. Attempt any 20 questions.
(b) Section B – Contains 24 questions. Attempt any 20 questions.
(c) Section C – Contains 12 questions. Attempt any 10 questions.
2. All questions carry equal marks.
3. There is NO negative marking.
Maximum Marks : 40 Time : 90 Minutes
Section A
1. The government can achieve its budget objective of ‘Redistribution of Income’ by
……… . (Fill up the blank with correct alternative)
(a) managing the general price level in the economy to the desired level
(b) increasing the Gross Domestic Products (GDP) of the economy
(c) bringing the production of goods and services under its direct and absolute control
(d) rationalisation of taxes in pro-poor direction
2. Balance of payments of an economy records ……… for a fiscal year.

Latest CBSE SAMPLE PAPER
(Fill up the blank with correct alternative)

(a) income and expenditure of the government
(b) inflow and outflow of funds of the government
(c) inflow and outflow of foreign exchange to/from the economy
(d) inflow and outflow of loans to/from the rest of the world
3. Identify which of the following bank does not interact directly with the general public?
(a) Bank of India (b) State Bank of India
(c) Central Bank of India (d) Reserve Bank of India
4. Identify which of the following is not an example of ‘invisible item’ under current
account of the balance of payments transactions? (Choose the correct alternative)
(a) Air and sea transport (b) Postal and courier services
(c) Education-related travel (d) Merchandise linked transactions
5. Read the following statements carefully and choose the correct alternative from the
following.
Statement I Demonetisation was the step taken by the government of India in order to
tackle the problems of corruption, black money, terrorism and circulation of fake
currency in the Indian economy.
Statement II Demonetisation has ensured improved tax compliance in India over the
period of time.
Alternatives
(a) Both the statements are true
(b) Both the statements are false
(c) Statement I is true and Statement II is false
(d) Statement II is true and Statement I is false
6. Ms. Sakshi, an economics teacher, was explaining the concept of ‘minimum percentage
of the total deposits to be kept by any commercial bank with the central bank of the
country, as per norms and statute prevailing in the country’.
From the following, choose the correct alternative which specifies towards the concept
explained by her?
(a) Cash Reserve Ratio (b) Repo Rate
(c) Bank Rate (d) Statutory Liquidity Ratio
7. Two friends Mira and Sindhu were discussing the exchange rate systems. ‘Under this
system, the exchange rates are determined by the market forces of demand and supply.
However, deliberate efforts are made by the competent authority to keep the exchange
rates within a specific range’.
The above mentioned statement was given by Sindhu, identify the type of exchange
rate system was she talking about.
(a) Fixed exchange rate (b) Floating exchange rate
(c) Managed floating exchange rate (d) Managed fixed exchange rate
following.
Statement I Public goods are those goods and services that are collectively consumed
by the public.
Statement II Public goods are excludable and rivalrous in nature.
Alternatives
9. Under the balance of payments structure of a nation, the two main categories of
accounts for the classification of the transactions are ……… and ……… .
(i) current account (ii) unilateral transfer account
(iii) capital account (iv) loan account
Identify the correct alternatives from the following.
(a) (i) and (ii) (b) (i) and (iii)
(c) (iii) and (iv) (d) (iv) and (i)
10. Identify which of the following is not a function of the Reserve Bank of India?
(Choose the correct alternative)
(a) To act as the banker to the government of India.
(b) To act as the custodian of the gold reserve of India
(c) To act as the financial advisor to the government of India
(d) To issue coins and one-rupee note
11. Industrial Policy Resolution (IPR) 1956 formed the basis of the ……… Five Year Plan.
(a) First (b) Fourth
(c) Second (d) Third
12. Occupational structure refers to …… . (Fill in the blank with correct alternative)
(a) size of labour force in a country
(b) number of people living in a country
(c) distribution of workforce among different sectors of an economy
(d) nature of different occupations
13. ……… is the portion of agricultural produce which is sold in the market by the
farmers, after meeting their self-consumption requirements.
(Fill in the blank with correct alternative)
(a) Trade surplus (b) Marketable surplus
(c) Producer surplus (d) Consumer surplus
14. Read the following statements carefully and choose the correct alternatives given below.
Statement I Poverty line in India is defined in terms of monetary value of the
minimum nutritional (calorific) requirements of an individual in a day.
Statement II The definition of poverty line in monetary terms has not changed over the
years.
Alternatives
15. Read the following statements carefully and choose the correct alternatives given
below.
Statement I India is often called as the ‘outsourcing hub’ of the world.
Statement II Availability of skilled manpower is one of the prime factors responsible
for the status gained by India at the international platform.
Alternatives
16. Before the advent of green revolution in 1960’s, India was primarily dependent on
……… for the supply of food grains. (Fill in the blank with correct alternative)
(a) United States of America (USA) (b) Britain (United Kingdom)
(c) Mexico (d) Union of Soviet Socialist Republics (USSR)
17. From the following given sets of statements in column I and column II, choose the
correct pair of statements.
Column I Column II
A. Exports of goods and services (i) Excess of exports of goods over the imports
of goods
B. Trade surplus (ii) An element of invisible items
C. Current transfers to rest of the world (iii) Recorded as a positive item in the BoP
account
D. Portfolio investments (iv) Foreign institutional investors
Codes
(a) A-(i) (b) B-(ii)
18. National Bank for Agricultural and Rural Development (NABARD) was set up in 1982
as a/the ……… body to coordinate the activities of all institutions involved in the rural
financing system. (Fill in the blank with correct alternative)
(a) cooperative (b) apex
(c) micro credit (d) private credit
19. The government of India has decided to vaccinate the adult population of India (with
Covaxin/Covishield), without any charge. This would be categorised as ……… . (Fill in
the blank with correct alternative).
(a) revenue nature income (b) capital nature expenditure
(c) revenue nature expenditure (d) capital nature income
20. ……… is not a reason for poverty in India. (Fill in the blank with correct alternative)
(a) Population explosion (b) Rise in per capita GDP
(c) Low capital formation (d) Socio-economic exclusion
21. 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 ……… . (Fill up the blank with correct alternative)
(a) zero (b) ` 100
(c) not defined (d) ` 120

22. ‘Since independence, India has witnessed a considerable fall in the infant mortality rate
in India’.
Identify which of the following may not be one of the reasons for the fall in the infant
mortality rate?
(a) Improvement in health facilities over the years
(b) Improvement in educational standards over the years
(c) Fall in standard of living of the population of the nation over the years
(d) Technological expansion over the years
below.
Statement I Subsidies do not add any burden on the financial health of a nation.
Statement II Complete removal of subsidies may violate the aim of equitable
distribution of income.
Alternatives
24. Prior to India’s independence, the stagnation in the agricultural sector was mainly
caused by ……… . (Fill up the blank with correct alternative)
(a) investment in technology
(b) investment in agriculture facilities
(c) advanced infrastructural facilities
(d) land settlement system
Section B
25. Read the following statements Assertion (A) and Reason (R).
Assertion (A) Acquisition of a domestic (Indian) company by a foreign (Australian)
company will be recorded on the credit side of balance of payment account.
Reason (R) It leads to outflow of foreign exchange from the domestic economy.
From the given alternatives choose the correct one.
Assertion (A).
of Assertion (A).
(c) Assertion (A) is true, but Reason (R) is false.
(d) Assertion (A) is false, but Reason (R) is true.
26. Suppose in an economy, the initial deposits of ` 400 crores lead to the creation of total
deposits worth ` 4,000 crores.
Under the given situation the value of reserve requirements would be ……… .
(a) 0.01
(b) 1
(c) 0.1
(d) 0.4
Assertion (A) Major policy initiatives (land reforms and green revolution) helped India
to become self-sufficient in food grains production.
Reason(R) The proportion of people depending on agriculture did not decline as
expected after the green revolution.
Assertion (A).
(b) Both Assertion (A) and Reason (R) are true but, Reason (R) is not the correct explanation
of Assertion (A).
28. Identify the incorrect statement from the following.

(a) Diversification in agriculture sector provides sustainable livelihood rural population.
(b) Diversification includes - change in cropping pattern, shift of workforce from agriculture
to other allied activities and non-agriculture sector.
(c) Objective of investment in new agricultural avenues (non-farm activities) increases
financial risks for the rural population.
(d) Diversification reduces the proportion of unemployed population in the rural areas to
considerable limits.
Assertion (A) Human capital treats human beings as a means to an end
(increase in productivity).
Reason (R) Human capital formation decreases by way of investments in education
and health.
Alternatives
Assertion (A).
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of
Assertion (A).
30. From the set of statements given in column I (Name of the Scheme) and column II
(Objective of Poverty Alleviation Programme), choose the correct pair of statements.
Column I Column II
(Name of the Schemes) (Objective of Poverty Alleviation Programmes)
A. Mahatma Gandhi National Rural (i) Developing infrastructure and housing
Employment Guarantee Act conditions
B. Poshan Abhiyan (ii) Guaranteed wage employment to rural
(Mid-day Meal Programme) unskilled worker
C. National Social Assistance (iii) Helping specific group-elderly people by
Programme giving them pensions
D. Valmiki Ambedkar Awas Yojana (iv) Improving food and nutritional status of
the poor
Codes
(a) A-(i)
(b) B-(ii)
(c) C-(iii)
(d) D-(iv)
31.
70 66
62 62 63
60 55 55
57
53
49 48 46
50
40 36
34 33
32
29
30
21 20
20 17 15
9 11
10 1973-74
2011-12
0
Karnataka
Pardesh
Pardesh
Maharastra
Madhya
Uttar Pradesh
Bihar
Rajasthan
Guajrat
Andhra
Odisha
Tamil Nadu
West Bengal
Note For the year 1973, includes the present Uttarakhand : Madhya Pradesh includes chhattisgarh and
Bihar includes Jharkhand.
Figure showing population below poverty line in some large states, 1973-2012 (%). On
the basis of the given bar diagram, identify the states which are able to reduce the
poverty level as compared to other states between 1973-2012.
(a) Tamil Nadu, Gujarat, Bihar, Andhra Pradesh
(b) Bihar, Madhya Pradesh, West Bengal and Odisha
(c) Rajasthan, Madhya Pradesh, Bihar and Uttar Pradesh
(d) Andhra Pradesh, Rajasthan, West Bengal and Tamil Nadu
32. Select Indicators of Development in Education and Health Sectors
Particulars 1951 1981 1991 2001 2016-17

Real Per Capita Income (in `) 7.651 12.174 15.748 23.095 77.659
Crude Death Rate (Per 1,000 Population) 25.1 12.5 9.8 8.1 6.3
Infant Mortality Rate 146 110 80 63 33
Life Expectancy at Birth (in Years) Male 37.2 54.1 59.7 63.9 67
Female 36.2 54.7 60.9 66.9 70
Literacy Rate (%) 16.67 43.57 52.21 65.20 76

Source Economic survey for various years, Ministry of Finance National Statistical Office and Ministry
of Statistics and Programme Implementation : Govermment of India.
On the basis of the above mentioned information answer the following question.
The Real Per Capita Income of India (as per the given data) has increased by ………
(approximately) between 1951 and 2016, 2016-17. (Fill up the blank with correct
alternative)
(a) 915% (b) 1015%
(c) 815% (d) 715%
Assertion (A) The goal of equitable distribution of land was fully served by abolition
of intermediaries, in the post-independence India.
Reason (R) Big landlords challenged the land ceiling legislation, delaying the
implementation and subsequently escaping from the legislation.

Assertion (A).
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of
Assertion (A).
below.
Statement I The emergence of Self-Help Groups (SHGs) ensured the reduction in the
fissures of the formal credit system.
Statement II The borrowings from SHGs mainly confined to consumption purposes by
its members.
Alternatives
below.
Statement I The value of money multiplier is determined by the reserve ratio
prevailing in the monetary system.
Statement II The process of credit creation directly relates to the value of reserve ratio.
Alternatives
36. Arrange the following event in the correct chronological order. (Choose the correct
arrangements)
(i) The year of great divide
(ii) Establishment of Tata Iron and Steel Company (TISCO)
(iii) Introduction of railways in India by the British

(iv) Opening of Suez Canal
Codes
(a) (iv), (ii), (i), (iii)
(b) (i), (iv), (iii), (ii)
(c) (ii), (iii), (iv), (i)
(d) (iii), (iv), (ii), (i)
37. Read the following statements Assertion (A) and Reason (R), choose one of the correct
alternatives given below.
Assertion (A) Trade of invisible items between two nations is a part of capital account
of balance of payment.
Reason (R) Transactions that affect the asset-liability status of a country in relation to
the rest of the world are known as capital account transaction.
Assertion (A).
of Assertion (A).
38. Demand deposits include ……… and ……… .

(i) saving account deposits (ii) fixed deposits
(iii) current account deposits (iv) post office savings
Codes
(a) (i) and (ii) (b) (ii) and (iii) (c) (i) and (iii) (d) (i) and (iv)
alternatives given below
Assertion (A) Since the default rates of farm loans have become chronically high due
to multiple reasons, the rural banks are facing a lot of cash crunch.
Reason (R) Due to lack of proper storage facilities a lot of farm produce is wasted.
Alternatives
Assertion (A).
of Assertion (A).
Assertion (A) Since independence, the economic condition of many farmers across
India has improved as they have adopted horticulture as a secondary source of income.
Reason (R) Varying climatic and soil conditions have given India an added advantage
to be the producer of diverse horticultural crops.
Assertion (A).
of Assertion (A).
(c) Assertion (A) is true but, Reason (R) is false.
(d) Assertion (A) is false but, Reason (R) is true.
Assertion (A) Demand deposits are considered as a convenient mode of payment for
execution of even the high value transactions.
Reason (R) Demand deposits are non-withdrawable in nature and cannot be withdrawn
against issue of cheques and other similar instruments of payment.
Assertion (A).
of Assertion (A).
42. Choose the correct alternatives to be filled in given blanks A and B.
Low
Production
B A
Low
Savings
(a) Low level of income and Low level of investment

(b) Low level of investment and Low level of Income
(c) Low mobilisation of savings and Low level of investment
(d) Low level of investment and Low savings
43. Ms Ramanpreet has started a new business venture, she intends to spend a huge
amount towards ‘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 Ramanpreet.
(a) Adds skills and expertise (b) Improves efficiency
(c) Ensures gender equity (d) Increases output productivity
44. Suppose that the Balance of Trade (BoT) of a nation, exhibits a surplus of
` 20,000 crores.
The import of merchandise of the nation is half of the exports of merchandise to the
rest of the world.
The value of exports would be ` …… . crores. (Fill up the blank with correct
alternative)
(a) 30,000 (b) 40,000 (c) 24,000 (d) 35,000
45. Read the following statements carefully and choose the correct alternatives given below.
Statement I Government of India adopted ‘Trickle down approach’ to alleviate poverty
to benefit the last man at the bottom of the pyramid.
Statement II Empirical data over the years have shown that trickle down theory did not yield
desired results in India.
Alternatives
(a) Both the statements are true (b) Both the statements are false
(c) Statement I is true and Statement II is false (d) Statement II is true and Statement I is false
46. Read the following statements Assertion (A) and Reason(R), choose one of the correct
Assertion (A) If the receipts and payments on the current account are equal to each
other, it depicts a situation of current account surplus.
Reason (R) A surplus current account means that the nation is a lender to other countries
and a deficit current account means that the nation is a borrower from other countries.
Assertion (A).
of Assertion (A).
47. Identify the correct statement from the following. (Choose the correct alternative)
(a) Restrictive policies of commodity production, trade and tariff pursued by the colonial
government adversely affected the structure, composition and volume of India’s foreign
trade.
(b) Effective trade policies of commodity production, trade and tariff pursued by the
colonial government favorably affected the structure, composition and volume of India’s
foreign trade.
(c) Liberal policies of commodity production, trade and tariff pursued by the colonial
government adversely affected the structure, composition and volume of India’s foreign
trade.
(d) Restrictive policies of commodity production, trade and tariff pursued by the colonial
government favorably affected the structure, composition and volume of India’s foreign
trade.
48. Match the situations given in column I with their respective implications given in column
II. (Choose the correct alternative)
Column I Column II
A. Migration (i) Reduced in per capita economic growth
B. Low level of academic standards (ii) Imbalance between demand and supply
of human resource
C. Population high growth rate (iii) Brain drain
D. Lack of proper manpower planning (iv) Mismatch between required skill and
academic standards
Codes
A B C D A B C D
(a) (ii) (iii) (iv) (i) (b) (iii) (iv) (i) (ii)
(c) (i) (ii) (iii) (iv) (d) (ii) (iv) (i) (iii)
Section C
Direction (Q.No. 49–54) are to be answered on the basis of the following data.
Particulars 2019-20 Actuals (in ` crores)
1. Revenue Receipts 16,84,059
2. Tax Revenue (Net to Centre) 13,56,902
3. Non-tax Revenue 3,27,157
4. Capital Receipts 10,02,271
Particulars 2019-20 Actuals (in ` crores)

5. Recovery of Loans 18,316
6. Other Receipts 50,304
7. Borrowings and Other Liabilities 9,33,651
8. Total Receipts (1+4) 26,86,330
9. Total Expenditure (10+13) 26,86,330
10. On Revenue Account 23,50,604
Source indiabudget.gov.in
49. The value of recovery of loans has ……… crores between 2019-20 (Actual) and 2020-21
(Budgeted Estimate). (Fill up the blank with correct alternative)
(a) fallen by ` 3,349
(b) risen by ` 3,349
(c) fallen by ` 3,439
(d) risen by ` 3,439
50. The percentage change in the non-tax revenue, between 2019-20 (Actual) and 2020-21
(Budgeted Estimate), taking the 2019-20 as base, would be … . (Fill up the blank with
correct alternative)
(a) 15.02% (b) 16.20%
(c) 17.68% (d) 20.01%
51. Identify which of the following is not an example of tax revenue for the government?
(a) Wealth tax (b) Special assessments
(c) Income tax (d) Corporate tax
52. Identify the correct formula to calculate fiscal deficit.

(a) Total Expenditure - Total Receipt ( other than borrowings)
(b) Revenue Expenditure - Revenue Receipt
(c) Capital Expenditure - Capital Receipt
(d) Revenue Expenditure + Capital Expenditure - Revenue Receipt
below.
Statement I Revenue and capital receipts are increasing but borrowings and other
liabilities are reducing.
Statement II Grants and aid for creation of capital assets decreased from 2019 to 2021.
Alternatives
54. The value of primary deficit for the year 2020-21, would be ` ……… crores. (Fill up the
blank with correct alternative).
(a) 88,134 (b) 3,21,581
(c) 96,133 (d) 6,09,219
Direction Q.No. 55-60 are to be answered on the basis of the following data.
India’s post 1990 economic strategy entailed three important breaks with the past.
n
To dismantle the vast network of controls and permits that dominated the economic system.
n
To redefine the role of the state as a facilitator of economic transactions and as a neutral regulator
rather than the primary provider of goods and services.
n
To move away from a regime of import sulbstitution and to integrate fully with the global trading
system.
The 1991 reforms unleashed the energies of Indian entrepreneurs and gave untold choice to the
consumers and changed the face of the Indian economy. The reform agenda constituted a paradigm shift,
and has defined the broad contours of economic policy making for three decades. Liberalisation was
adopted as the guiding principle of governance and all governments since 1991, have broadly stuck to
that path. Today we don’t need a paradigm shift. We need to look at individual sectors and see which one
of these needs, reforms to create a competitive environment and improve efficiency.
The power sector, the financial system, governance structures and even agricultural marketing need
reforms. Today’s reforms also require much more discussion and consensus-building. The central
government needs to work in tandem with state governments and consult different stakeholders
impacted by reform decisions. Timing and sequencing are critically important in the new reforms’
agenda.
Source Excerpts from ‘Like 1991, the 2021 crisis presents an opportunity, by C.Rangarajan, 22nd January, 2021
(livemint.com)
55. According to the given text, ……… was adopted as the guiding principle of
governance and all governments since 1991.
(a) modernisation (b) liberalisation
(c) privatisation (d) globalisation
below.
Statement I 1991 was a landmark moment in India’s post-independence history as that
changed the nature of the economy in fundamental ways.
Statement II India’s economic establishment launched a multipronged reforms agenda
to repair India’s macroeconomic balance sheet and ignite growth.
Alternatives
Assertion (A) India’s pre-1990 economic strategy dismantles the vast network of
controls and permits that dominated the economic system.
Reason (R) The 1991 reforms unleashed the energies of Indian entrepreneurs, gave untold
choice to consumers and changed the face of the Indian economy.
Assertion (A).
(b) Both Assertion (A) and Reason (R) are true , but Reason (R) is not the correct explanation
of Assertion (A).
58. In the light of the given text and common knowledge, identify the incorrect statement.
(a) A severe balance of payments problem triggered an acute economic crisis in 1991.
(b) In 1991, the economic and political leadership launched a multipronged reforms agenda
to repair the macroeconomic situation of the nation.
(c) In post 1991 situation, the state was given the role of primary regulator of the economy.
(d) Post pandemic, individual sectors should be looked closely. Sectors that need reforms
should be identified and corrective action should be taken.
below.
Statement I Timing and sequencing are critically important in the post-economic
reform agenda.
Statement II Post pandemic reforms in India require a paradigm shift.
Alternatives
Assertion (A) The 1991 reforms released the vitalities of Indian businesspersons.
Reason (R) The reform agenda established a paradigm shift and defined the broad
outlines of economic policy making for years to come.
Alternatives
Assertion (A).
of Assertion (A).
ANSWERS
1. (d) 2. (c) 3. (d) 4. (d) 5. (a) 6. (a) 7. (c) 8. (c) 9. (b) 10. (d)
11. (c) 12. (c) 13. (b) 14. (c) 15. (a) 16. (a) 17. (d) 18. (b) 19. (c) 20. (b)
21. (b) 22. (c) 23. (d) 24. (d) 25. (c) 26. (c) 27. (b) 28. (c) 29. (c) 30. (c)
31. (d) 32. (a) 33. (d) 34. (a) 35. (c) 36. (d) 37. (d) 38. (c) 39. (b) 40. (a)
41. (c) 42. (a) 43. (c) 44. (b) 45. (a) 46. (d) 47. (a) 48. (b) 49. (a) 50. (c)
51. (b) 52. (a) 53. (c) 54. (a) 55. (b) 56. (a) 57. (d) 58. (c) 59. (c) 60. (a)
EXPLANATIONS
1. One of the major objectives of government budget 16. Green revolution was researched and developed in
is the redistribution of income by imposing higher the USA, it was later adopted in India by Prof. MS
taxes on higher income group and lower taxes from Swaminathan.
lower income group or giving subsidies to poor. 17. Portfolio investment is the investment made by the
2. Balance of payments is the accounting record of all private individuals in the equity shares of other
international transactions between home country countries, thus also known as foreign institutional
and residents of the rest of the world. investors.
3. RBI is the central bank which is the apex institution 18. NABARD was set up as an apex institution to
of the financial market and thus doesn’t interact regulate and develop the concerns related to the
with the general public. rural areas.
4. Merchandise trade is export and import of goods, 19. The given case is an example of revenue
that is referred to as visible trade or balance of trade. expenditure as it doesn’t lead to increase in assets
5. Demonetisation is the process of removing the or decrease in liabilities of the country.
legal tender status of the existing currency system
20. Growth of GDP is one of the measures to reduce
that can be done by the government with the help
poverty in the country and hence it is not a cause of
of the central bank to fulfill any required objective.
poverty.
6. CRR is the fraction of total deposit that each
commercial bank must reserve with the central bank 21. Money supply at a given point of time is equal to
and they do not get any interest on the same. the currency with public and demand deposits in
the banks.
7. Managed floating exchange rate is the one which
carries the features of both fixed and flexible 22. Fall in standard of living leads to rise in Infant
exchange rate. Determination of exchange rate is mortality rate but the above situation is referring to
based on the market forces of demand and supply fall in infant mortality rate.
while the excessive fluctuation is checked by the 23. The first statement is incorrect as the subsidies are
central bank. the major cause of government financial burden in
8. First statement is correct about public goods while India.
in the second statement public goods are those
24. During the colonial rule, the land revenue system
which are non-excludable and non-rival in nature,
or land tenure systems were one of the major
i.e., once a public good is produced and available
causes of agricultural stagnation of the country.
for consumption, no one can be denied its
consumption. 25. Acquisition of an Indian company by a foreign
9. Current and capital account of BoP are two company leads to inflow of foreign currency in the
components. country and recorded as a credit item in capital
account.
Current account records those items which do not
impact assets and liabilities of the country while 26. Money Created = Initial Deposits ´ Money
capital account records those items which impacts Multiplier.
assets and liabilities. Also, Money Multiplier = 1/LRR.
10. Issue of currency coins and one rupee note is the In the given case, money created is 10 times the
responsibility of the central government. initial deposits so, the multiplier is 10 and thus,
reserve requirement is 0.1 (1/10).
11. IPR was formed in 1956 where as the second five
year plan began from 1956 to 1961. 27. Institutional and technical reforms helped India
12. Occupational structure refers to the distribution of achieve its self-sufficiency in food grain production
workforce among the various sectors of an as we manage to produce more crops than what is
economy. required for the consumption purpose.
13. Marketable surplus is that portion of total output 28. The main objective of diversification in India is to
which is produced for selling in the market. provide a regular source of income for the people
14. First statement is correct however, as per the in rural areas.
second statement, poverty line is revised on an 29. Human resources can be turned into human capital
occasional basis depending upon the change in the when investment is made on education, health,
price level and growth of the economy. training, information and migration. So, human
15. India possesses skilled manpower which reduces capital treats human resources as means.
the labour cost of production. This has attracted 30. National social assistant programme was launched
foreign countries to India and it has become one of to give financial assistance to those who don't have
the favorite outsourcing destinations in the world. as source of living.
31. In the given figure, poverty rate declined faster in 45. In a trickledown effect, few people get the benefits
the mentioned states in fourth option. in the beginning of the programme and eventually
the masses, however in India's case it haven't gave
32. Based upon the data given above, real per capita the desired results.
income increased by about 915% between 1951 to
2016-17. 46. When the receipts and expenditures on current
account are equal , it refers to as a balanced current
33. The goal of equal distribution of land could not account and not a surplus situation.
alone be achieved with the abolition of
intermediaries, land ceiling was also introduced for 47. British government tried all possible ways to
exploit Indian economy. One such policy is
the fulfillment of the given objective.
restrictive policy in which they charged
34. Organisation of SHGs have helped to narrow down discriminatory tariff to restrict trade from India.
the gap between formal and informal lending as
48. Migration is related to brain drain. Low level of
the members can pool savings and lend among
academic standards results in mismatch between
themselves for any purposes.
required skill and academic standards. Population
35. The first statement given is correct while in the high growth rate amounts to reduced per capita
second statement, money multiplier and reserve economic growth. Lack of proper manpower
ratio are inversely related. planning results in imbalance between demand
36. Railways was introduced by British government in and supply of human resource.
1850, Suez canal was opened in 1869, TISCO was 49. As per the data given, receipts of government on
setup in 1907 and 1921 is known as the year of account of recovery of loans decreased by about
great divide. ` 3,349 crores between 2019-20 to 2020-21.
37. Export and import of services, i.e., invisible trade 50. The percentage change in the non-tax revenue
items are recorded in the current account of BoP as between the two period is about 17.68%.
this doesn’t have any impact on the assets or 51. Special assessments are charged for purposes to
liabilities of the country. meet an objective of the government and not
38. Demand deposits are those deposits with the considered as a compulsory payment as tax.
commercial banks which can be withdrawn at any 52. Fiscal deficit is the difference between total
point of time. expenditure and total receipts of the government
These deposits are comprised of saving deposits net of borrowings thus, fiscal deficit is also equal to
and current account deposits. borrowings.
39. High default rates are the major cause of financial 53. The first statement is correct however, as per the
crunch in the rural areas which happens majorly second statement the grants and aids during 2019
because of irregularity in the sources of income of to 2021 actually increased.
the most of the people in rural areas. 54. The value of primary deficit which is the difference
40. Horticulture is a non-farm activity which helps in between fiscal deficit and interest payments were
generating regular income and India's climatic equal to ` 88,134 crores during 2020-21.
conditions have helped in increase in the 55. Liberalisation is the process of making policies
production of these crops. easy or liberal for the operation of the private
41. Demand deposits are considered as the convenient sector in the country.
mode of payment as these deposits can be 56. Year 1991 is marked as a new economic reform in
withdrawn on demand. India, which changed the entire structure and

42. Low level of production in an economy is due to composition of the economy to make it more stable
low level of investment, low investment leads to and recover from the stock faced in past decades.
low income and low demand. This makes a cycle in 57. During 1950 to 1990 India advocated the licensing
the economy. policy on private sector to ensure availability of all
types of goods in the economy for all sections of
43. On the job training enhances the productivity of
the society.
the human capital further however, it has no role to
play in gender equality. 58. Post 1991, leading role of public sector was
reduced and private sector was increasingly
44. BoT = Value of Exports – Value of Imports
allowed to participate in the economic activities.
According to question, import of goods are half of
exports
59. The first statement given is true while the second
statement should be, post pandemic reforms in India
So, if exports = X, then imports = ½ X require more focus on the health infrastructure.
Now, BoT Surplus = 20,000 60. Post 1991, India became an open economy which
So, 20,000 = X – ½ X gave businesses an impetus and allowed them to
½ X = 20,000 trade both internally and externally which helped
in their growth further and made them profitable
\ X = ` 40,000 crores ventures.
SAMPLE PAPER 1
ECONOMICS
A Highly Simulated Practice Questions Paper
for CBSE Class XII (Term I) Examination
Instructions
1. There are a total 60 questions in this paper out of which 50 questions are to be attempted.
3. Each question carry 0.80 marks.
Maximum Marks : 40
Roll No. Time allowed : 90 Mins.
Section A
1. The amount which is printed on the currency notes in India is referred to as its
………… .
(a) denominated value (b) face value
(c) intrinsic value (d) Both (a) and (b)
following.
Statement I Disinvestment leads to transfer of ownership from the public sector to
private sector in a given period of time.
Statement II The process of acquiring rights of public sector enterprises by private
company is known as privatisation.
SAMPLE PAPER 1
Alternatives
3. Choose the correct pair from given below.

Column I Column II
A. Demand deposit with banks (i) Fixed maturity
B. Legal tender (ii) Legal mode of payment
C. Bank money (iii) Currency notes
D. Legal reserve ratio (iv) Cash reserve ratio
Codes
(a) A–(i) (b) B–(ii)
(c) C–(iii) (d) D–(iv)
4. In India, using which of the following modes, one cannot make payments more than
` 1,000 in one transaction at a given point of time?
(a) Currency notes with public (b) Currency coins with public
(c) Debit or credit cards (d) None of these
5. Government budget is ………… estimated statement of receipts and expenditures

prepared by the government.
(a) a monthly (b) a quarterly
(c) a half-yearly (d) an annual
6. As per the recommendations of task force on the projection of minimum needs and
effective consumption demand, the poverty line set for the rural areas was equal to
…………… .
(a) ` 816 (b) ` 828 (c) ` 1,000 (d) ` 1,020
following.
Statement I Indian banking system is based upon the fractional reserve system where a
fixed amount is reserved with the central bank to circulate any amount of currency into
the system.
Statement II Central bank prints currency regularly without considering the economic
condition of the country.
Alternatives
8. India poor health state during colonial rule was attributed to ………… .
(a) lack of public investment in health infrastructure
SAMPLE PAPER 1
(b) occurrence of frequent famines

(c) Both (a) and (b)
following.
Statement I Import of machinery is recorded in the capital account of BoP as it impacts
the assets of the country.
Statement II Purchase of machinery is considered as an asset for the country.
Alternatives
10. ………… form of capital is non-marketable in nature.

(a) Physical (b) Fixed
(c) Human (d) None of these
11. Indian economy showed remarkable resilience to the global financial crisis in 2008 due
to ………… .
(a) proper planning by the government
(b) active participation of central bank
(c) trust of foreign investors on Indian economy
12. Mohan and Rohan are two friends living in a remote place in the outskirts of Jharkhand.
Both of them studies in the same government school where they get free education
under ‘education for all’ programme. Mohan’s father owns a small plot of land which he
cultivates with the help of his family members and able to meet family expenditures,
while Rohan’s father is a landless labourer, who finds it difficult to get work due to stiff
labour market. In your opinion, who is in the state of absolute poverty?
(a) Mohan’s family
(b) Rohan’s family
(c) Both the families
(d) Can’t be predicted from the above information
13. …………… is a non-recurring expenditure of government budget.
(a) Revenue expenditure
(b) Capital expenditure
(c) Planned expenditure
following.
Statement I The ministry of finance, government of India holds the power to print
currency notes in India.
Statement II Central bank in India doesn’t mint the limited tender money.
Alternatives
SAMPLE PAPER 1

15. Tax and non-tax revenues form part of which of the following components of
government budget?
(a) Revenue budget
(b) Capital budget
(d) Neither (a) nor (b)
16. India is generally seen as a country with huge burden of population. High growth rate
of population is one of the major causes of almost all the problems in the country.
However, many international agencies have seen India as a knowledge hub in coming
times. Which of the following reasons can be attributed for the same?
(a) Availability of skilled manpower (b) Quality of education
(c) Public investment in human development (d) All of these
17. ………… is not a source of capital receipts of government budget.

(a) Escheat (b) Disinvestment
(c) Foreign direct investment (d) Both (b) and (c)
18. During January to November 2007, India experienced a rise in overseas investment
amounting to a net $18.8 billion of stocks and bonds. This will be recorded in which
account of balance of payments?
(a) Current account (b) Capital account
19. ………… refers to the ceiling on the volume of imports of any particular commodity.
(a) Tariff (b) Quota
(c) Limit (d) None of these
20. The impact of partition of the country was most seen in which of the following
industries?
(a) Silk (b) Cotton (c) Jute (d) Iron and steel
21. The GST levied on the intra-state supply of goods and services are known as ……… .
(a) Central GST (b) State GST
(c) Integrated GST (d) None of these
following.
Statement I The process of human development must be comprised of morality of
people.
Statement II Human development is a broader aspect which is comprised of human
resources and human capital.
Alternatives
23. Indian government protected the domestic industries from foreign competition during
initial phase of industrialisation by using …………… .
SAMPLE PAPER 1
(a) Tariffs (b) Quotas

24. ………… is given as a benefit of advance payment of tax made by the producer under
the GST regime.
(a) Subsidy (b) Input tax credit
(c) Tax holiday (d) All of these
Section B
25. Assertion (A) The central bank’s ability to create currency in the economy depends
upon the legal reserve ratio.
Reason (R) In normal banking system, banks circulate the money received from the
public in the form of deposits.
Alternatives
Assertion (A)
of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false
following.
Statement I People who always remain above poverty line are known as occasionally poor.
Statement II Landless labourers are the major contributors to the rural poverty.
Alternatives
(c) Both the statements are correct (d) Both the statements are incorrect
27. ………… maintains the record of the reserves of foreign exchange of the country.
(a) Reserve Bank of India (b) Central Government
28. Assertion (A) Government should try to cover its revenue deficit by reducing
unnecessary revenue expenditures.
Reason (R) Financing revenue deficit by borrowings increases the burden of
repayment on future generations.
Alternatives
Assertion (A)
of Assertion (A)
following.
Statement I Opening of Suez Canal adversely impacted Britain’s foreign trade from
SAMPLE PAPER 1
India.
Statement II Railways were the most preferred mode of transportation of cargo
between countries before independence.
Alternatives
30. Match the correct pair from the columns given below.
Column I Column II
A. Fees and fines (i) Direct tax
B. Personal taxes (ii) Capital receipt
C. Disinvestment (iii) Non-tax revenue
Codes
A B C A B C
(a) (ii) (i) (iii) (b) (iii) (i) (ii)
(c) (i) (iii) (ii) (d) (i) (ii) (iii)
31. Assertion (A) Non-tax revenue of the govermment budget is major source of
government during the fiscal year.
Reason (R) Govermment allocates resources from the budget for the management of
the public sector undertakings.
Alternatives
Assertion (A)
of Assertion (A)
(a) Heavy machine made industries faced the major setback during the colonial rule
(b) High infant mortality rate indicates the social backwardness
(c) British government imposed an unified tariff on foreign trade during their rule in India
33. Inflow of investment during 2007 leads to ………… in supply of foreign exchange of
the country.
(a) increase (b) decrease (c) no impact (d) Either (a) or (b)
34. Assertion (A) As per balance of payment identity, the sum of balance on current account,
balance on capital account and official reserve transactions should be equal to zero.
Reason (R) A balanced BoP ensures no movement of foreign exchange between
countries during a given period of time.
Alternatives
Assertion (A)
of Assertion (A)
SAMPLE PAPER 1

35. Choose the incorrect statement from given below.

(a) India’s modern farming technique increased production of wheat and rice
(b) Indian farmers experiences a consistent decrease in the landholdings due the law of
inheritance
(c) Seasonal and disguised unemployment are commonly seen in the industrial sector in India
(d) Abolition of intermediaries were one of the main objectives of economic reforms of 1950s
36. Year 1921 is marked as the year of ‘Great divide’. Before this, India experienced ………
death rate.
(a) high (b) low
(c) constant (d) None of these

Column I Column II
A. Green revolution (i) Use of natural manures
B. Land reform (ii) Institutional changes in the
ownership
C. Planning (iii) Economic system
D. Subsidy (iv) Charged for over use of resources
Codes
(a) A–(i) (b) B–(ii)
(c) C–(iii) (d) D–(iv)
38. Assertion (A) Goods and services tax is a form of direct taxes, burden of which is
unavoidable.
Reason (R) Incidence and impact of taxes lies on different persons for indirect taxes.
Alternatives
Assertion (A)
of Assertion (A)
39. ‘‘Human resource management is an important component of economic development

of the country. Quality of work life is the perception of employees regarding the
relationship between working condition with management. Human resource
management performs various functions, among which training and development of
employees is one of the vital ones’’. In the light of the above said statement, which of
the following is/are the advantage(s) of human resource management?
(a) It minimises the cost
(b) Motivate employees to perform
(c) Enhances productivity
40. Assertion (A) Self-help groups have filled the gap between the formal sector lending
and informal sector lending.
SAMPLE PAPER 1
Reason (R) Agricultural marketing has further intensified the importance of self-help
groups by providing proper marketing channels.
Alternatives
Assertion (A)
of Assertion (A)
41. WTO headquarter is located in …………… .

(a) Washington (b) New York
(c) Geneva (d) Italy
42. Assertion (A) Fixed exchange rate system minimises the fluctuation in the price of
foreign currency.
Reason (R) When price of foreign exchange is controlled by the central bank, it
becomes more stable.
Alternatives
Assertion (A)
of Assertion (A)
43. Which of the following estimates did SD Tendulkar committee use for determining
poverty in the country?
(a) Calories consumption (b) Human development
(c) Monthly per capita expenditure (d) All of these
44. Assertion (A) Investment in education and health creates both private as well as social
benefits.
Reason (R) Government plays an important role in providing education and health in
India
Alternatives
Assertion (A)
of Assertion (A)
45. Mortality rate of a county is an indicator of which of the following?

(a) Growth rate (b) Occupational structure
(c) Demographic profile (d) All of these
following.
Statement I India’s foreign exchange reserve fell to the lowest level during 1990’s.
Statement II During 1950 to 1990, India’s highest export category was gems and
jewellery.
SAMPLE PAPER 1
Alternatives
47. Assertion (A) Private sector was licensed during 1950s to ensure production of goods
for all sections of the society.
Reason (R) Private sector takes less interest in production of goods with huge cost and
long gestation period.
Alternatives
Assertion (A)
of Assertion (A)
48. Observe the pictorial flow chart given below.
Complete the cycle by choosing appropriate components from the options below.
(a) Disadvantage in education and skills, family in poverty
(b) Family in poverty, disadvantage in education and skills
(c) No education, small family size (d) None of the above
Section C
Direction Read the following case study and answer questions 49 to 54 on the basis of the same.
Today’s business world is very vast and challenging. Due to this situation, Indian business
houses are downsizing and outsourcing. In the protected economy, industries and employees
were very safe and supported by the government agencies. Due to excessive protection,
industries become less productive and inefficient. In this scenario, human resource have been
playing dominant role in the industrial field.
After 1991, there were no other option behind excessive protection and when protection has been
gradually decreasing then industries have been started Business Process Outsourcing (BPO). In
outsourcing, work get it done from external agencies or persons. At international level,
outsourcing is one of the convenient businesses because companies can work for 24 hours in the
world. Companies getting excellent services from employees and at the same time employees are
SAMPLE PAPER 1
getting good remuneration from the company. So, both of them i.e., company and employees are
getting win-win situation.
In a case study, it was found that 6% employees are on regular pay roll and 94% employees are
on contractual employees. The turnover is increased from 35% to 65% due to BPO. Production
has increased from 33% to 67% because of BPO. Number of accidents are not got affected due to
outsourcing.
As per employee’s opinion, outsourcing is less convenient but as per employers’ opinion,
outsourcing is more convenient. Due to outsourcing; quality of the products is good, value
addition is good, employers trust is good, employers’ confidence is good but relationship value
and employees trust is average, at the same time employee’s confidence and safety is low.
It was found in this case study that contractor secured 7 marks out of 10 marks, work
performance secured 40 marks out of 50, industrial relation secured 7 marks out of 10,
environment objectives secured 8 marks out of 10, safety aspect secured 3 marks out of 10 and
statutory compliances secured 7 marks out of 10 marks. In total, the sample case study secured
72 marks out of 100 marks and it is a good indication for BPO. In modern cost control era, BPO
has become the basic, ‘MANTRA’ of management.
Source “Business Process Outsourcing – A Case Study” Dr. A M Gurav, Kolhapur.
49. Assertion (A) India has become a outsourcing destination in the whole world with a
wide variety of services being outsourced from India.
Reason (R) The cost of the skilled labour and favourable government policy has led to
inflow of foreign capital in recent times.
Alternatives
Assertion (A)
of Assertion (A)
following.
Statement I Outsourcing leads to deterioration in the quality of goods and services.
Statement II Outsourcing is the fastest mode of increasing production.
Alternatives
51. Which of the following is the most outsourced service from India?
(a) Voice processing (b) Record keeping
(c) Film editing (d) All of these
52. Outsourcing in India has reduced the job security of the workers working in various
………… companies.
(a) national (b) multinational
53. As per the above study, what percent of workers are working as off roll workers?
(a) 6% (b) 35% (c) 65% (d) 94%
54. Choose the most correct statement from given below.

(a) Outsourcing leads to decrease in net cost of production
SAMPLE PAPER 1
(b) Outsourcing increases the market reach of the producers

(c) Outsourcing increases the choice for the customers at lower cost
The Covid-19 pandemic has hit the economy on different fronts over the last eight months, the
foreign exchange reserves have risen by over $100 billion when the lockdown was announced in
March-end. This jump of 22 per cent has come following a sharp decline in imports alongside
strong foreign investment inflows in the second half of the calendar year.
While the forex reserves stood at $469.9 billion in the week ended 20th March, 2020, it has risen by
$102.8 billion since then and to touch $572.7 billion in the week ended 13th November, 2020. RBI
data released on Friday shows that reserves grew by $4.2 billion in the week ended 13th November.
Between April and November, while Foreign Portfolio Investments (FPI) amounted to
` 1,40,295 crore (nearly $19 billion), the net FDI between April and September aggregated to
$22.85 billion. Besides this, a sharp decline in imports of crude oil, electronics and gold due to a
lockdown in many parts of the world between March and May, prevented even normal
drawdown of reserves.
According to data available with the Petroleum Planning and Analysis Cell under the Ministry
of Petroleum and Natural Gas, the net crude oil import declined sharply between April and
September this year to $19.3 billion. It was as high as $83.2 billion for the full year 2019-20.
Source Indian Express, 23rd August, 2021.
55. The rise in foreign exchange reserves during the lockdown will be recorded as
………… side item.
(a) credit (b) debit
(c) Either (a) or (b) (d) Neither (a) nor (b)
56. Which of the following reasons is/are responsible for rise in foreign exchange reserve
during the lockdown?
(a) Fall in import of goods (b) Fall in demand for crude oil
57. How the decline in demand for crude oil due to lockdown affects the supply of foreign
exchange?
(a) Rise (b) Fall (c) No change (d) Either (a) or (b)
58. Assertion (A) Portfolio investments from abroad are recorded as a debit item in the
current account of BoP.
Reason (R) Items which impacts assets and liabilities of a country are recorded as a
capital account item.
Alternatives
Assertion (A)
of Assertion (A)
59. What will be the likely impact for the inflow of foreign investment as mentioned in the
above extract, on the balance of payments account?
(a) Surplus in BoP (b) Deficit in BoP (c) Surplus in BoT (d) Deficit in BoT
SAMPLE PAPER 1
following.
Statement I BoP surplus will be balanced by investment abroad from domestic country
on account of official reserve transactions.
Statement II In operational sense, BoP need not always balance.
Alternatives
OMR SHEET SP 1
Roll No.
Student Name Sub Code.
Instructions
Use black or blue ball point pens and avoid gel & fountain pens for filling the sheets
Darken the bubbles completely. Don’t put a tick mark or a cross mark half-filled or over-filled bubbles will not be read
by the software.
Correct Incorrect Incorrect Incorrect

Do not write anything on the OMR Sheet.
Multiple markings are invalid.
1 a b c d 21 a b c d 41 a b c d
2 a b c d 22 a b c d 42 a b c d
3 a b c d 23 a b c d 43 a b c d
4 a b c d 24 a b c d 44 a b c d
5 a b c d 25 a b c d 45 a b c d
6 a b c d 26 a b c d 46 a b c d
7 a b c d 27 a b c d 47 a b c d
8 a b c d 28 a b c d 48 a b c d
9 a b c d 29 a b c d 49 a b c d
10 a b c d 30 a b c d 50 a b c d
11 a b c d 31 a b c d 51 a b c d
12 a b c d 32 a b c d 52 a b c d
13 a b c d 33 a b c d 53 a b c d
14 a b c d 34 a b c d 54 a b c d
15 a b c d 35 a b c d 55 a b c d
16 a b c d 36 a b c d 56 a b c d
17 a b c d 37 a b c d 57 a b c d
18 a b c d 38 a b c d 58 a b c d
19 a b c d 39 a b c d 59 a b c d
20 a b c d 40 a b c d 60 a b c d
Check Your Performance

Total Questions: Total Correct Questions
Score Percentage = × 100
Total Correct Questions: Total Questions
Less than 60% > Average (Revise the concepts again)

If Your Score is Greater than 60% but less than 75% > Good (Do more practice)
Above 75% > Excellent (Keep it on)
Answers
1. (d) 2. (b) 3. (b) 4. (b) 5. (d) 6. (a) 7. (a) 8. (c) 9. (d) 10. (c)
11. (c) 12. (b) 13. (b) 14. (b) 15. (a) 16. (d) 17. (a) 18. (b) 19. (b) 20. (c)
21. (a) 22. (b) 23. (c) 24. (b) 25. (c) 26. (b) 27. (a) 28. (a) 29. (d) 30. (b)
31. (c) 32. (b) 33. (a) 34. (b) 35. (c) 36. (a) 37. (b) 38. (c) 39. (d) 40. (b)
41. (c) 42. (a) 43. (c) 44. (b) 45. (c) 46. (c) 47. (a) 48. (a) 49. (a) 50. (b)
51. (a) 52. (c) 53. (d) 54. (d) 55. (b) 56. (c) 57. (c) 58. (c) 59. (a) 60. (c)
EXPLANATIONS
(Only for selected questions)
1. Denominated value or the face value of the 13. Capital expenditures are non-recurring in nature
currency refers to the actual purchasing power of i.e., these expenditures are not incurred on a
that currency in the market where as intrinsic regular basis.
value refers to the value of materials used in 14. The Ministry of Finance, govermment of India
making the currency. mints the currency coins in India while currency
2. Disinvestment doesn’t lead to transfer of notes are printed by the subsidiaries of the
ownership from public to private sector as it is central bank.
comprised of selling only a portion of PSU. 15. Revenue budget is a part of union budget
3. Legal tender money means anything which is comprised of all such transactions which do not
legally allowed to settle transactions i.e., used as impact the assets or liabilities of the country. Tax
a legal mode of payment for goods and services. and non-tax revenues are two components of
4. As per Indian Coinage Act, any receiver of revenue receipts.
payment can deny accepting payment of more 16. India has the highest stock of youth manpower
than ` 1,000 using currency coins. in the world and in recent time, skilled
5. Government budget is an estimated statement of development has made India a supplier of
government’s receipts and expenditures prepared skilled manpower to the world.
on a yearly basis by all the levels of government. 17. Escheat is an example of revenue receipts which
6. The criterion of poverty line set as per monthly do not impact either assets or liabilities of the
per capita expenditure in rural areas is equal to country.
` 816 per person per month. 18. The given case shows the example of investment
7. Indian banking system works on fractional reserve received from abroad. This item has an impact
system basis in which central bank can get any on the assets of the country thus recorded in the
amount of currency printed by keeping a reserve of capital account of BoP.
` 200 crores in form of gold and other assets. 19. Quota refers to the quantitative restriction on the
8. In pre-independence period, India not only volume of goods that can be imported from rest
experienced health infrastructure but also faced of the world.
many famines. These were responsible for low 20. Due to partition of the country during
life expectance during that time. independence, the jute producing regions
9. Import of machinery is considered as an import become part of either East Pakistan (now
of good, thus recorded under current account of Bangladesh) or West Pakistan which led to
BoP. decline of the jute industries in India.
SAMPLE PAPER 1
10. Human capital is inseparable from its owner and 21. Central Goods and Services Tax is imposed by
thus it cannot be directly bought or sold in the the central govermment on the intra-state supply
market. of different goods and services.
11. During the situation of global crisis, the trust of 22. Human development is comprised of education,
the foreign investors played a major role in their health etc, but not morality. Mortality is a
investment decisions which worked in favour of qualitative component which has no impact on
Indian economy. human capital formation.
12. As the family income of Rohan’s family is 23. During the initial phase of industrialisation,
irregular and don’t possesses any assets for their Indian govermment decided to give protection to
survival, they are in the state of absolute the domestic industries from foreign competition
poverty. using arbitrary restrictions like tariff and quotas.
24. Input tax credit is given when a producer has 42. Under fixed exchange rate system, the price of
already paid advance tax while purchasing foreign currency is determined by the Central
inputs. In such case, he is required to pay only bank and any required change is brought only
the balance as tax, after the final production. when required.
25. Commercial bank is considered as the creator of 44. Investment in education and health creates
currency in an economy while the central bank human capital.
performs the role of controller of credit. A human capital not only generates private
26. People who always remain above the poverty benefit in the form of better income but also
line are called non-poor while people who helps the society in developing their
sometimes falls below poverty line are called knowledge and skills.
occasionally poor.
45. Mortality rate and death rate of a country are
27. In India, the Reserve Bank of India holds the similar which indicates number of death per
authority of maintaining the reserve of foreign 1,000 population.
currency thus, it is also referred to as custodian
This comes under the demographic profile of a
of foreign exchange reserves.
country.
28. Revenue expenditures are non-developmental in
47. In Indian Policy Resolution 1956, licensing policy
nature, thus financing of revenue deficit by
was introduced by the govermment. to check the
borrowings increases future liability and can put
growth of private sector and also to ensure
into the situation of debt trap.
production of all types of goods required in the
29. Opening of Suez Canal reduced the distance economy.
between India and Britain, thus saved time and
49. India has become a favourite outsourcing
cost of transportation.
destination in recent years due to the availability
31. Tax revenues are the major source of of cheap skilled labour and favourable
govtermment. government policies.
33. As the inflow of foreign investment increases, it 50. Outsourcing need not always leads to
leads to increase in supply of foreign exchange. deterioration in the quality of goods or
This further leads to rightward shift in the services as the contracts are generally given to
supply of foreign exchange curve. the specialised companies to save on cost
34. Balance of payments is said to be in equilibrium and time.
or balanced state when the sum total of all its 51. Voice based services which are popularly known
accounts comes out to be zero. as Business Process Outsourcing (BPO) is the
35. Seasonal unemployment and disguised most common service that is outsourced from
unemployment are the common features of India due to its skilled labour base.
agricultural sector in rural areas. 52. In order to attract foreign companies in India,
36. Before year 1921, India was in the first phase of govermment has made the policies very
demographic profile where both death rate and favourable for these MNCs, which includes
birth rate were very high. flexibility in labour laws and further leading to
unsecure jobs.
37. Land reforms were institutional reforms
introduced during 1950 to give ownership rights 53. In India, as high as 94% workers working in
to the landless labourers. MNCs are off roll workers i.e., these workers can
be removed from jobs at any point of time.
38. Goods and Services Tax is an example of indirect
tax, whose incidence and impact falls on 55. Foreign exchange reserves of a country are
different persons, i.e. burden of such taxes is considered as an asset and increase in assets are
transferable. debited as per the accounting rule.
56. Demand for import of goods leads to rise in
SAMPLE PAPER 1
39. Human resources are most important for the

development of a country and training is an demand for foreign exchange. Due to fall in
integral part of the process that keeps the human demand for import of goods, oil and natural gas
resources updated and helps in the development leads to fall in demand for foreign exchange.
of the organisation as well. 57. Fall in demand for crude oil will lead to fall in
40. In recent years, self-help groups have played a demand for foreign exchange with no impact on
major role in bridging the gap between formal the supply of foreign exchange.
and informal lending in rural areas by organising 58. Portfolio investments are a type of investment
smaller groups and lending among themselves at received from abroad, which are recorded as
low interest rates. capital account and credit item of BoP.
SAMPLE PAPER 2
ECONOMICS
Instructions
Maximum Marks : 40
Section A
1. Which of the following act of money has removed the problem of lack of double
coincidence of wants?
(a) Store of value (b) Medium of exchange
(c) Unit of account (d) Standard of deferred payment
following.
Statement I A budget prepared by the state government is referred to as a union
budget.
Statement II Budget always represents estimated values of receipts and expenditures.
Alternatives
SAMPLE PAPER 2

3. Legal reserve ratio in India is equal to ………… .

(a) cash reserve ratio (b) statutory liquidity ratio
(c) liquidity convertibility ratio
(d) sum of cash reserve ratio and statutory liquidity ratio
4. The gestation period in agriculture is long as it has a natural process and constraint as
well. For this reason, farmer need credit on a regular basis and for a variety of
purposes. For which period short-term loans are taken for?
(a) Up to 6 month (b) Between 1 to 5 years
(c) Between 5 to 10 years (d) None of these
following.
Statement I The supply curve of foreign exchange is vertical line parallel to Y-axis.
Statement II Supply curve of foreign exchange represents direct relationship with
exchange rate and quantity of foreign exchange.
Alternatives
6. …………… is an estimated expenditure component of government budget which

increases assets or settles liabilities.
(a) Non-developmental expenditure (b) Revenue expenditure
(c) Capital expenditure (d) Both (a) and (b)
7. The performance of Indian economy during the period of 1950 to 1990 was not as per
the expectation. The performance of the different sectors are biased. In few regions,
green revolution gave result while in some regions, industrial development was good.
Which of the following reasons can be attributed for the same?
(a) Poor planning (b) Improper implementation
(c) Lack of public participation (d) All of these
following.
Statement I Commercial banks are the financial intermediaries between the borrowers
and lenders.
Statement II Functioning of commercial banks leads to the motive of profit earning.
Alternatives
9. Sale of less than 49 per cent of equity holdings of public sector undertaking is known
as ……………… .
SAMPLE PAPER 2
(a) Privatisation (b) Token selling

(c) Disinvestment (d) Both (b) and (c)
10. Exchange rate between US dollar and Indian rupees have changed several times in last
couple of years. As per a given data, Rupee-Dollar exchange rate was 71.49 in
November 2020 and changed to 72.82 in January 2021. This leads to which of the
following situations?
(a) Decrease in exports from India (b) Increase in exports from India
(c) Increase in exports from USA (d) Both (a) and (c)
11. ………… institution(s) is/are part of formal sector lending in rural banking.
(a) Commercial banks (b) Regional rural banks
(c) Cooperative societies (d) All of these
12. In ………… five-year plan, India focused upon development of human capital.
(a) fifth (b) sixth
(c) seventh (d) None of these
13. Which of the following is not an objective of economic planning in India?

(a) Economic growth (b) Self-reliance
(c) Full employment (d) Equity
14. …………… deficit shows the excess of government expenditures other than burden of
interest payment on loans.
(a) Revenue (b) Fiscal
(c) Budgetary (d) Primary
following.
Statement I Operation flood is also known as Milk Revolution.
Statement II Punjab has the success story of implementation of milk cooperatives in
the state and earn significant profits.
Alternatives
16. Indian companies have become multinational due to ………… policy measures.
(a) privatisation (b) globalisation
17. Government tries to improve the system of agricultural marketing system through
………… .
(a) control (b) regulation
following.
Statement I Money multiplier is the reverse of the total reverse requirement.
Statement II Money multiplier is directly proportional with statutory liquidity ratio.
Alternatives
SAMPLE PAPER 2

19. The ability of commercial banks to create currency in an economy is known as

………………
(a) Money creation (b) Credit creation
(c) Money production (d) Both (a) and (b)

Column I Column II
A. Borrowings from IMF (i) Revenue receipts
B. Construction of school building (ii) Capital expenditure
C. Taxes collected from public (iii) Capital receipts
D. Purchases of metro coaches (iv) Revenue expenditure
Codes
(a) A – (i) (b) B – (ii) (c) C – (iii) (d) D – (iv)
21. When a company trades with multiple countries in the world, it is known as ………… .
(a) Bi-lateral trade (b) Multi-lateral trade
(c) Domestic trade (d) International trade
22. Which of the following types of taxes is/are generally proportional in nature?
(a) Direct tax (b) Indirect tax
23. ………… is responsible to regulate the health infrastructure of the country.

(a) ICMR (b) AICTE
(c) NCERT (d) None of these
24. Labour and entrepreneurs are two important factors of production, these two comes
under …………… .
(a) physical capital (b) human capital
Section B
following.
Statement I AICTE is the facilitator of health sector in India.
Statement II Migration of people from rural to urban areas is known as brain drain.
Alternatives
26. Assertion (A) Cooperative marketing is an effective way of removing the middlemen
and giving farmers a fair price.
SAMPLE PAPER 2
Reason (R) Regulated markets give the farmers a protective environment free from
various forms of manipulation.
Alternatives
Assertion (A)
of Assertion (A)
27. Which of the following is/are true about revenue receipts of the government?
(a) It either creates assets or reduces liabilities
(b) It is recurring in nature
(c) It is spent on the routine functioning
(d) Both (b) and (c)
28. The part of agricultural produce sold in the market by the farmers is known as
(a) Surplus stock (b) Marketed surplus
(c) Buffer stock (d) None of these
29. Assertion (A) The incidence of poverty has declined faster in rural areas as compared
to urban areas in past few decades in India.
Reason (R) Economic growth during 1990s played a major role in reduction of poverty
in the country.
Alternatives
Assertion (A)
of Assertion (A)
following.
Statement I In the year of great divide, India officially entered into second phase of
demographic profile.
Statement II Population explosion started in India since 1921.
Alternatives
31. Reserve Bank of India does not deal with ………… .
(a) commercial banks (b) local level government
(c) central government (d) general public
32. Assertion (A) Globalisation has led to not only expansion of market but also led to
greater choice for consumers.
Reason (R) In the present period due to competition between firms, consumers gets
greater choice at low price.
Alternatives
SAMPLE PAPER 2
Assertion (A)
of Assertion (A)
33. ………… form of capital is marketable in nature.

(a) Physical (b) Human
34. The structural reforms during 1991 includes which of the following policy measures?
(a) Short-term policies
(b) Long-term policies
35. Assertion (A) Human capital formation implies the development of abilities and skills
among the population of the country.
Reason (R) Formation of human capital is a long-term and continuous process.
Alternatives
Assertion (A)
of Assertion (A)
36. Assertion (A) Absolute poverty is prevent only in developed country.
Reason (R) As the country develops, the income inequalities necessarily increases.
Alternatives
Assertion (A)
of Assertion (A)
(d) Both are false
37. A tariff imposed by the government on foreign trade leads to ……… .
(a) increase in demand of foreign exchange
(b) decrease in demand of foreign exchange
(c) Either (a) or (b)
38. Choose the incorrect statement from the given below
(a) The head count ratio is used to count the number of poor people in the country
(b) Poverty in urban areas has reduced at a lesser rate than in urban areas
(c) Underdevelopment intensifies the poverty in the country
(d) Poor families have lower family sizes
39. Assertion (A) The overseas investment leads to surplus in capital account of balance of
payments.
Reason (R) Foreign investments are considered as inflows and recorded on the credit
side of capital account.
SAMPLE PAPER 2
Alternatives
Assertion (A)
of Assertion (A)
following.
Statement I Reducing the burden of the public sector is known as privatisation.
Statement II Opening up of economies during new economic reforms adversely
affected the small manufacturers.
Alternatives
41. ………… is known as a dirty floating exchange rate.
(a) Fixed exchange rate (b) Floating exchange rate
(c) Managed floating exchange rate (d) None of these
42. Choose the incorrect pair from given below.
Column I Column II
A. Physical capital (i) Separable from its owner
B. Human capital (ii) Depreciates with time
C. Training (iii) Increases labour productivity
D. Migration (iv) Component of human capital formation
Codes
43. Assertion (A) In pre-independence period, land settlement systems were major cause
of the agricultural stagnation.
Reason (R) Zamindars were the large land owners who served as the intermediaries
between the government and actual tillers of the soil.
Alternatives
Assertion (A)
of Assertion (A)
44. Public expenditure plays a significant role in restoring economic stability, particularly
when there is an economic recession. In such situation, the aggregate demand in the
economy falls, which further leads to fall in employment in the economy. Which of the
following step government should take to deal with this situation?
SAMPLE PAPER 2
(a) Increase tax rates (b) Decrease government expenditure

(c) Increase government spending (d) Both (a) and (b)
45. Assertion (A) The supply of money in the economy at a given point of time is a stock
variable.
Reason (R) A variable, which is measured at point of time, is considered as a stock
variable.
Alternatives
Assertion (A)
of Assertion (A)

Column I Column II
A. Devaluation of Indian rupee (i) Foreign exchange reform
B. Reduction in the tax rates (ii) Tax reforms
C. Origin of private sector banks (iii) Land reforms
D. Change in role of RBI (iv) Financial sector reform
Codes
(a) A – (i) (b) B – (ii)
(c) C – (iii) (d) D – (iv)
47. Assertion (A) Disinvestment is a capital receipt of government budget as it leads to

creation of liabilities.
Reason (R) The process of selling a part of equity holdings of public sector
undertakings are referred to as disinvestment.
Alternatives
Assertion (A)
of Assertion (A)
48. Observe the picture given below.

Educational Attainment In India
S.No. Particulars 1990 2000 2005-10
1. Adult literacy rate (per cent of people aged 15+)
1.1 Male 61.9 68.4 76.7
1.2 Female 37.9 45.4 54.9
2. Primary completion rate (per cent of relevant age group)
2.1 Male 78 85 96
2.2 Female 61 69 95
3. Youth literacy rate (per cent of people aged 15+ to 24)
3.1 Male 76.6 79.7 88
SAMPLE PAPER 2
3.2 Female 54.2 64.8 74
As per the data given above, by what percent primary completion rate among female
have increased between 1990 to 2005-10?
(a) 45.23% (b) 55.73%
(c) 63.28% (d) 76.32%
Section C
While India did gain its independence from British rule in 1947, the country still suffers from
extreme poverty today. India has the largest number of poor people in one country of its nearly
one billion inhabitants about 350 million live in poverty. The division of resources and wealth is
very uneven. For example, Delhi, Punjab, both urban areas have very low poverty rates. On the
other hand, in rural cities of Bihar and Odisha, 40 to 50 percentage of the population lives in
destitution, among the world‘s most extreme rates.
Eradication of poverty can only be a long-term goal in India. Poverty in India is caused by multiple
factors. India was already in a poor state after becoming independent from Britain. However,
overpopulation tends to be the leading reason as there are poor employment opportunities in
villages, people moved to city‘s leading to crowded streets and unhealthy living conditions.
49. Eradication of poverty is a long objective of the government due to which of the
following reasons?
(a) Poor policy formation (b) Lack of resources
(c) Huge size of population (d) All of these
50. Assertion (A) India’s fight against the poverty have faced a major setback on account
of lack of public participation.
Reason (R) The exploitation by the British government has intensified the state of
poverty in India post-independence period.
Alternatives
Assertion (A)
of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true (d) Assertion (A) is true, but Reason (R) is false
51. As per the studies, it has been found that poverty in urban areas has declined at a
slower pace as compared to rural areas due to which of the following reasons?
(a) Constant migration from rural to urban areas
(b) Better implementation of poverty alleviation programmes in rural areas
following.
Statement I India has the highest population living below poverty line in absolute
terms in the world.
Statement II Causes of poverty are deep routed in India as there are social and cultural
factors also responsible for poverty among the people.
Alternatives
SAMPLE PAPER 2

53. Indian government’s approach to deal with poverty is said to be multi-dimensional.
Which of the following are the dimensions of poverty?
(i) Growth orientation (ii) Minimum basic needs
(iii) Provision of education and health for all (iv) Poverty alleviation programmes
(a) (i), (iii) and (iv) (b) (ii), (iii) and (iv)
(c) (i), (ii) and (iv) (d) All of these
54. India has experienced a regional imbalance in poverty reduction in the whole country.
Which of the following states have poverty greater than national average?
(a) Bihar (b) Odisha
According to the data released by the Controller General of Accounts (CGA), fiscal deficit during
April-August was at 109.3% of the annual target estimated in the budget. In absolute terms, the
fiscal deficit was at ` 8,70,347 crore. It stood at 78.7% of Budget Estimates (BE) in the
corresponding period of the last fiscal.
Fiscal deficit or the gap between expenditure and revenue had breached the annual target in
July. The government had pegged fiscal deficit for 2020-21 at ` 7.96 lakh crore or 3.5 percent of
GDP in the budget presented by Finance Minister Nirmala Sitharaman in February, 2020.
Source The Economic Times, 30th September, 2020.
55. What is the amount of borrowing for the period between April–August, 2019-20 in
absolute terms?
(a) 109.3 percent of the annual target (b) ` 8,70,347 crores
(c) ` 7.96 lakh crores (d) Can’t be predicted
following.
Statement I Fiscal deficit creates debt trap for the government.
Statement II Fiscal deficit can be reduced by making payment of interest due to loans.
Alternatives
57. Assertion (A) Fiscal deficit is excess of total revenue over total expenditure.
Reason (R) Total government receipts are comprised of debt creating receipts and
non-debt creating receipts.
Alternatives
Assertion (A)
of Assertion (A)
58. ………… is the correct formula of fiscal deficit.

(a) Primary deficit + Interest payments (b) Revenue deficit + Interest payments
SAMPLE PAPER 2
(c) Primary deficit − Interest payments (d) Revenue deficit − Interest payments
59. Which of the following is/are implications for fiscal deficit?

(a) Lower future growth (b) Inflation
(c) Foreign dependency (d) Both (a) and (c)
60. Which of the ways can help to reduce fiscal deficit?

(a) Reducing non-development expenditures (b) Settling the previous loans
(c) Increasing taxes (d) All of these
OMR SHEET SP 2
Roll No.
Instructions
by the software.

1 a b c d 21 a b c d 41 a b c d
2 a b c d 22 a b c d 42 a b c d
3 a b c d 23 a b c d 43 a b c d
4 a b c d 24 a b c d 44 a b c d
5 a b c d 25 a b c d 45 a b c d
6 a b c d 26 a b c d 46 a b c d
7 a b c d 27 a b c d 47 a b c d
8 a b c d 28 a b c d 48 a b c d
9 a b c d 29 a b c d 49 a b c d
10 a b c d 30 a b c d 50 a b c d
11 a b c d 31 a b c d 51 a b c d
12 a b c d 32 a b c d 52 a b c d
13 a b c d 33 a b c d 53 a b c d
14 a b c d 34 a b c d 54 a b c d
15 a b c d 35 a b c d 55 a b c d
16 a b c d 36 a b c d 56 a b c d
17 a b c d 37 a b c d 57 a b c d
18 a b c d 38 a b c d 58 a b c d
19 a b c d 39 a b c d 59 a b c d
20 a b c d 40 a b c d 60 a b c d


Answers
1. (b) 2. (b) 3. (d) 4. (a) 5. (b) 6. (c) 7. (d) 8. (c) 9. (d) 10. (b)
11. (d) 12. (c) 13. (c) 14. (d) 15. (a) 16. (c) 17. (b) 18. (a) 19. (d) 20. (b)
21. (b) 22. (b) 23. (a) 24. (b) 25. (d) 26. (b) 27. (d) 28. (b) 29. (b) 30. (d)
31. (d) 32. (a) 33. (a) 34. (b) 35. (b) 36. (d) 37. (b) 38. (d) 39. (a) 40. (b)
41. (c) 42. (b) 43. (b) 44. (c) 45. (a) 46. (c) 47. (b) 48. (b) 49. (d) 50. (b)
51. (a) 52. (c) 53. (c) 54. (c) 55. (b) 56. (a) 57. (c) 58. (a) 59. (d) 60. (d)
EXPLANATIONS
1. Money serves as the medium of exchange for 16. Post 1990s, private sector was given greater
various goods and services. Because of money, autonomy in its operations along with removal of
now we do not need to have double coincidence trade barriers leading to expansion of these
of wants to complete a transaction. companies as multinational companies.
2. Union budget refers to the budget prepared and 17. Agricultural marketing is a regulated system as
presented by the central government. Annual government itself takes care of the functioning of
budget prepared by the state governments is the system in every step to remove the role of
known as state budget. intermediaries.
5. The supply of foreign exchange and foreign 18. Money multiplier is inversely proportional to
exchange rate are directly proportional thus, the legal reserve ratio and not statutory liquidity ratio.
supply curve of foreign exchange is upward sloping. 19. Money or credit creation is the function of
6. Capital expenditures are the estimated commercial bank by which it multiplies the
government expenditures of the budget which money received in the form of primary deposits
either increases assets or reduces liabilities from the customers.
during a fiscal year. 20. Expenditures, which create assets or reduce
8. Commercial banks are the financial intermediaries, liabilities, are capital expenditures. Thus,
which bridges the gap between the borrowers and construction of school expenditure is a capital
lenders and works to earn profits. expenditure.
9. Selling a part of equity holding of the PSU is 21. Multi-lateral trade refers to the trade between
known as token selling or disinvestment. In this multiple countries facilitated by the private as
case, the ownership of the organisation still well as public enterprises.
remains with the government. WTO also advocates multi-lateral trade over
10. When the price of foreign currency increases, it bi-lateral trade.
makes domestic goods cheaper in international 22. Indirect taxes are generally proportionally in
market leading to rise in exports from domestic nature as they are charged on production of
country. goods and services at a fixed rate.
12. In India, first few five-year plans were focused 23. Indian Council of Medical Research (ICMR) is
upon development of agriculture. It was only responsible for research and development of
during 7th five-year plan, in which focus of health infrastructure of the country.
policy makers changed to development of
human capital. 24. Both labour and entrepreneur are forms of
human capital as their skills are used in the
13. Economic planning in India had four major
SAMPLE PAPER 2
process of production,
objectives namely, economic growth,
modernisation, self-reliance and equity. i.e. higher the skills, higher will be the
Full-employment is not an objective of economic productivity and production.
planning. 25. All India Council for Technical Education
14. Primary deficit indicates the difference between (AICTE) is responsible of research in education
fiscal deficit (borrowings) and interest payments in India, while brain drain refers to migration of
on previous borrowings. people from one country to another.
15. Gujarat has the success story in implementation of 26. Cooperative markets are organised by a group of
milk cooperatives in the state by the name of people who pool their output and sell
operation flood or milk revolution. collectively to avoid the role of intermediaries
and get better price for their produce.
27. The revenue expenditure of the budget neither 41. Managed floating exchange rate system is a
creates assets nor reduces liabilities, though these combination of both fixed and floating exchange
are continuous in nature and spent on routine rate systems and because of which it is known as
functioning of the government. dirty floating.
28. Marketed surplus refers to that part of produce 42. Human capital is the only form of capital, which
by the farmers which is meant for selling in the appreciates with time, i.e., its value increases
market and earn revenue. with its usage.
29. In past few decades, people have migrated from 43. Land tenure or revenue systems were one of the
rural areas to urban areas and hence adding to major causes of agricultural stagnation during
urban poor in spite of economic growth as all the the colonial period as the landlords used to
people cannot be absorbed in the formal sector. collect huge amount of tax from the farmers and
30. First official census was conducted in India in pay a portion of the same to the British
1881 and in year 1921 India entered the second government and keep rest as their revenue.
phase of demographic profile where death rate 44. Government can increase its spending in the state
becomes low and birth rate remains high leading of recession to create more employment, with
to population explosion. increase in employment, demand increases and
31. RBI is the central bank of the country that does recession situation can be taken care off.
not directly deal with public as a banker. 46. Origin of private sector banks was a part of
32. Globalisation has not only benefitted the financial sector reforms along with the change in
producers but also helped the consumers by role of RBI from being a regulator to facilitator.
giving them more variety of goods and better 47. Disinvestment leads to reduction in the assets of
quality at a lower price. the government as it losses the equity holdings of
33. Physical capital is separable form its owner thus PSU, thus considered as capital receipts.
can be bought and sold in the market while 48. As per the data given above, female primary
human capital is inseparable from its owner so, it completion rate has increased from 61% to 95%
cannot be directly bought or sold. between 1990 to 2005-10. So, the percentage
34. The structural reform polices included long- term change (95 – 61)/61 × 100 = 55.73%.
policy measures to make fundamental changes in 49. Poverty in India is one of the biggest challenge
the structure of the economy which need long due to its size, thus resources are always less
time to implement. than what is actually required and poor policy
35. Human capital refers to the stock of skills, formation.
knowledge and expertise present in a human at a 50. One of the major reasons of the failure of poverty
given point of time. Development of human alleviation programmes in India is poor public
capital is not only a long-term process but also participation i.e. people are reluctant to
continuous in nature. participate in these programmes.
36. Absolute poverty is majorly prevent in 51. In recent years, people have migrated from rural
developing and under developed countries, to urban areas in search of better jobs and
while it is not always necessary that income income. But this has led to increase in burden of
inequalities grows with development. employment in urban areas and added to urban
37. A tariff is imposed on import of goods. With poverty.
increase in tariff, demand for imports falls thus 54. India has also experienced regional variation in
there is a fall in demand of foreign exchange as poverty eradication with few states like Odisha
well. and Bihar has lacked behind many states due to
38. Poor families generally have large family size as lack of proper implementation of polices in these
states.
SAMPLE PAPER 2
they think more child means more working

hands to support the family income. 56. Fiscal deficit is generally covered by borrowings
39. Inflow of foreign investments leads to increase in that create a trap for the government as they
inflow of foreign currency which is recorded on need to take a fresh loan every year to pay the
the credit side of capital account of BoP. previous one. Also, payment of interest doesn’t
Excessive inflows lead to surplus in the capital reduce the burden of loan thus, fiscal deficit
account and thus surplus in BoP. doesn’t get reduced.
40. Reducing the number of public sector companies 57. Fiscal deficit is the difference between total
does not necessarily leads to privatisation. In expenditure and total non-debt creating receipts
privatisation process, there is a transfer of during a fiscal year.
ownership from public to private sector.
SAMPLE PAPER 3
ECONOMICS
Instructions
Maximum Marks : 40
Section A
1. ……… is/are not considered as a banking institution.
(a) Commercial banks (b) Central bank
(c) Insurance companies (d) All of these
following.
Statement I Relative poverty is used to headcount the number of poors in the country.
Statement II India is comparatively poorer than the USA is an example of absolute
poverty.
Alternatives
3. India’s heavy good industries were suffering due to the colonial policies of
deindustrialisation, however one industry set up in 1907 as a heavy industry still
functions is ……… .
(a) BHEL (b) TISCO (c) RIL (d) None of these
4. The first passenger train ran between Bombay to Thane was operated in ……… .
(a) 1850 (b) 1853 (c) 1890 (d) None of these
5. Money supply in an economy refers to the quantity of money.

(a) During a fiscal year (b) As on 31st March every year
(c) At a given point of time (d) At a pre-specified date
6. In post-independence period, focus of Indian planning was self-reliance or

independent in terms of production. In present time, the NDP led central government
also focused on the same ideology to cope up with the outbreak of covid–19 pandemic.
Which of the following programme relates to the same?
(a) Kaushal Bharat (b) Atmanirbhar Bharat
(c) Ujjawala Programme (d) None of these
7. Land reform measures were successfully implemented in the states of ………… .

(a) Punjab (b) Haryana (c) Kerala (d) Uttar Pradesh
following.
Statement I Fiscal deficit is always inflationary in nature.
Statement II Fiscal deficits of the government budget forces the government to borrow
in the present period.
Alternatives
9. India became a member country of World Trade Organisation in year …………… .

(a) 1947 (b) 1951 (c) 1995 (d) 2000
following.
Statement I M 1 is the most liquid measure of money supply used in India.
Statement II Broad money is the most non-liquid measure of money supply.
Alternatives
11. In India, the expenditure on health and education is the responsibility of ………… .
(a) Union government (b) State government
(c) Private individual (d) Both (a) and (b)
12. Which of the following industry was famous for exports earnings in the initial years of
SAMPLE PAPER 3
British rule?
(a) Jute (b) Cotton
(c) Handicraft (d) None of these
13. In India’s case, ……… is/are major cause of poverty.

(a) British exploitation of India
(b) poor state of agriculture in India
(c) low growth rate and high population growth
14. India is majorly an agarin economy with majority of population depending upon
agriculture for their living. Over the years, the dependency of people for living in this
sector has declined but still it employs the majority of population. In spite of highest
contributor to employment, this sector is considered as the non-highest contributor to
employment in the country. Which of the following reasons can be attributed for the same?
(a) Low productivity of agriculture
(b) Lower proportion of landholdings for the majority of population
(c) Neglected in the reform process
15. If central bank increases the cash reserve ratio, the ability of commercial banks to
create currency will ……… .
(a) increase (b) decrease
(c) remain constant (d) Either (a) or (b)
16. The growth rate of agricultural output during 2007-12 was …………… .
(a) 1.5% per annum (b) 5% per annum
(c) 6% per annum (d) 32% per annum
17. Government’s expenditure on education for all indicates which of the following
objective of budget?
(a) Reducing inequality of income and wealth (b) Economic growth
(c) Fiscal discipline (d) Social welfare
18. Depreciation of foreign currency leads to ………… .

(a) increase in imports from domestic country
(b) increase in exports from domestic country
following.
Statement I Devaluation of domestic currency refers to the increase in the value of
domestic currency as planned by the government.
Statement II Devaluation of currency improves the export compatibility of the country
Alternatives
20. Over the years, India has experienced dependency on the agriculture. Though there is
SAMPLE PAPER 3
a significant decline in the population depending on agriculture in post reform period

but it remained uneven. Which of the following states experienced highest decline in
the dependency in agriculture?
(a) Punjab (b) West Bengal
(c) Maharashtra (d) Both (b) and (c)
21. If balance of trade deficit is ` 400 crores and value of exports is ` 300 crores, value of
imports will be …………… .
(a) ` 300 crores (b) ` 400 crores
(c) ` 700 crores (d) Can’t be determined
following.
Statement I Legal reserve ratio in India is comprised of CRR and SLR.
Statement II If legal reserve ratio is 25%, value of money multiplier will be 10.
Alternatives

Column I Column II
A. Rise in exchange rate (i) Appreciation of domestic currency
B. Fall in exchange rate (ii) Depreciation of domestic currency
C. Import of goods (iii) Supply of foreign exchange
Foreign tourist in domestic
D. (iv) Export of services
country
Codes
(a) A – (i) (b) B – (ii)
(c) C – (iii) (d) D – (iv)
24. Foreign exchange transactions dependent on other items are referred to as ………… .
(a) Current account items (b) Capital account items
(c) Autonomous items (d) Accommodating items
Section B
25. When government spending exceeds its receipts without creating debt, it is known
as ………… .
(a) Revenue deficit (b) Fiscal deficit
(c) Primary deficit (d) None of these
26. Assertion (A) Commercial banks functions as the lender of last resort for the general
bank.
Reason (R) Central bank as a banker to the banks also regulates the operations of the
commercial bank on a regular basis.
Alternatives
SAMPLE PAPER 3
Assertion (A)
of Assertion (A)
27. Balance in invisible account of balance of payments is equal to ……… .

(a) Export of services – Import of goods (b) Export of goods – Import of services
(c) Export of services – Import of services (d) Export of goods – Import of goods
following.
Statement I Export and import from rest of the world leads to inflow of foreign
currency.
Statement II Inflow of foreign exchange leads to surplus in BoP.
Alternatives
29. Assertion (A) Development of infrastructure in different parts of the country is a

revenue expenditure.
Reason (R) Developmental expenditures are generally recorded in capital account of BoP.
Alternatives
Assertion (A)
of Assertion (A)
30. Assertion (A) Information is a component of human capital which enhances labour
productivity.
Reason (R) Over the years, the information and technology has played increasingly
important role in human development.
Alternatives
Assertion (A)
of Assertion (A)
31. Which of the following items are not taxed under GST?
(a) Petroleum products (b) Alcohol items
32. Indian goods and services tax is comprised of ……… slabs.
(a) 3 (b) 4 (c) 5 (d) 6
33. Assertion (A) When there is a trade deficit and current account deficit, there will
always be BoP deficit.
SAMPLE PAPER 3
Reason (R) Capital and current account are two major components of balance of
payments account.
Alternatives
Assertion (A)
of Assertion (A)
following.
Statement I High fluctuations of fixed exchange rate system is controlled by RBI.
Statement II Accommodating transactions are only meant for adjusting the state of
balance of payment.
Alternatives
35. Government of Delhi decided to allocate a portion of the budget for the construction of
smog towers in the city to reduce the pollution levels that increases during the month
of November-December in the city. Which of the following expenditure of budget it
refers to?
(a) Revenue expenditure (b) Capital expenditure
(c) Non-developmental expenditure (d) None of these

(a) TISCO is the first heavy based industry established post-independence
(b) Economic benefits of poverty alleviation programmes do reach the target population in
the country
(c) There is no on-job-training in agricultural sector in India
(d) All of the above statements are incorrect
37. Assertion (A) Autonomous items of balance of payments are recoded across all the
accounts of BoP.
Reason (R) Items which are independent of the state of balance of payment are known
as above the line items.
Alternatives
Assertion (A)
of Assertion (A)
38. As the money supply in the economy increases, purchasing power of money ………… .
(a) increases (b) decreases
(c) remains constant (d) Both (a) and (b)
39. Assertion (A) Heavy tariffs were imposed during the initial reforms to protect
domestic companies from foreign competition.
SAMPLE PAPER 3
Reason (R) Import substitution industrialisation was the policy adopted by the Indian
policy makers post-independence.
Alternatives
Assertion (A)
of Assertion (A)
following.
Statement I New economic policies in India were an outcome of deep economic crisis.
Statement II During the economic crisis before 1990s, India applied for a loan of $10
billion from IMF.
Alternatives
41. Assertion (A) Minimum Support Price (MSP) is given to the farmers who could not sell
their produce at the regulated market setup by the government.
Reason (R) The organised market was formed to protect the farmers from market
intermediaries.
Alternatives
Assertion (A)
of Assertion (A)
42. Goods and Services Tax was introduced in 2017 as an important policy measure under
…………… .
(a) direct tax system (b) indirect tax system
43. Assertion (A) Goods and services tax is purely a consumption-based tax imposed on
consumption of goods and services.
Reason (R) GST council replaced personal consumption tax to introduce goods and
services tax.
Alternatives
Assertion (A)
of Assertion (A)
(d) Both are false

SAMPLE PAPER 3
Column I Column II
A. Socialist economy (i) Co-existence of public and private sector
B. Self-reliance (ii) Interdependence between countries
C. First five-year plan (iii) Promotion of agriculture
Codes
(a) A – (i) (b) B – (ii)
(c) C – (iii) (d) All of these
45. Assertion (A) Modernisation implies adoption of new technology along with a change
in the economic situation.
Reason (R) New production techniques can only be adopted with modernisation of
outlook.
Alternatives
Assertion (A)
of Assertion (A)
following.
Statement I Introduction of GST led to decrease in overall tax rates.
Statement II Burden of GST is unevenly distributed under GST.
Alternatives
Which of the features of new economic policy is shown in the above image?
(a) Greater choice of consumers (b) Integration of markets

SAMPLE PAPER 3
Column I Column II
A. ICMR (i) Indian Council of Medical Research
B. AYUSH (ii) Indian System of Medicines
C. UGC (iii) Universal Graduation Committee
Codes
(a) A – (i) (b) B – (ii)
Section C
Tamil Nadu Women in Agriculture (TANWA) is a project initiated in Tamil Nadu to train
women in latest agricultural techniques. It induces women to actively participate in raising
agricultural productivity and family income.
At a Farm Women’s Group in Thiruchirapalli, run by Anthoniammal, trained women are
successfully making and selling vermicompost and earning money from this venture. Many
other Farm Women’s Groups are creating savings in their group by functioning like mini banks
through a micro-credit system.
With the accumulated savings, they promote small-scale household activities like mushroom
cultivation, soap manufacture, doll making or other income-generating activities.
49. Assertion (A) TANWA is trained group of women to become self-employed by

organising them in self-help groups.
Reason (R) Self-help groups and micro credit institutions have helped in bridging the
gap between formal and informal credit.
Alternatives
Assertion (A)
of Assertion (A)
50. Self-help groups and micro credit programmes are present in ………… areas.
(a) rural (b) urban
following.
Statement I The farmers in rural areas get trapped due to absence of formal credit.
Statement II Formal sector credit of rural areas are mostly accessed by large farmers.
Alternatives
52. In the above paragraph, the activities like mushroom cultivation, soap manufacture,
doll making are an example of ………… .
SAMPLE PAPER 3
(a) farm activity (b) non-farm activity

(c) small scale manufacturing (d) Both (b) and (c)
53. In which of the following areas, TANWA focuses for employment?

(a) Farming (b) non-farm activities
54. Non-farm activities are promoted for which of the following reasons?
(a) It gives regular source of income (b) It involves less cost
(c) It can be done along with farming (d) All of these
The budget has lowered the Gross Tax Revenue (GTR) estimate for FY20 by a massive ` 3 lakh
crore or 12% with sharpest cut of ` 1.55 lakh crore or 20% in corporate tax estimate, but if the
April-December data put out by the Controller General of Accounts recently and trend share of
collections in the fourth quarter of a financial year are of any guidance, the actual GTR could
still fall short of the Revised Estimate (RE) by around ` 1 lakh crore.
As per an FE analysis, the approximate shortfall in each tax category from the respective REs
could be as follows personal income tax ` 63,000 crore; corporate tax ` 37,000 crore; GST
(including compensation cess) ` 11,000 crore, customs ` 21,000 crore; excise ` 21,000 crore.
While these add up to over ` 1.5 lakh crore, the government could manage to mop up some
` 25,000-30,000 crore from the indirect tax resolution scheme (the amount tax-payers have
agreed to settle their disputes is close to ` 40,000 crore and a bulk of it could be collected before
March-end). Also, the GST collections seem to be rising (January mop up was about ` 1.11 lakh
crore, the second highest in any month since the launch of the tax) and if the trend is sustained,
the shortfall could be reduced to that extent.
55. Which of the following is/are the sources of government revenue as mentioned in the
above paragraph?
(a) Tax revenue (b) Escheat (c) Profits (d) All of these
56. Gross Tax Tevenue (GTR) of the government budget is comprised of

(a) direct taxes only (b) indirect taxes only
57. Goods and Service tax mentioned in the above paragraph is ……… in nature.
(a) Proportional (b) Progressive
(c) Regressive (d) None of these
following.
Statement I Tax revenues are not debt-creating receipts of the budget.
Statement II Taxes are legal and compulsory payments and hence can’t be avoided.
Alternatives
59. Identify the non-tax revenue from the options given below.
(a) Export duty (b) Import duty
(c) Dividends (d) Excise
60. Assertion (A) A fall in tax revenue during the FY20 leads to fall in economic growth.
SAMPLE PAPER 3
Reason (R) The regular and sustained growth of the economy is one of the major
objectives of the central government budget.
Alternatives
Assertion (A)
of Assertion (A)
OMR SHEET SP 3
Roll No.
Instructions
by the software.

1 a b c d 21 a b c d 41 a b c d
2 a b c d 22 a b c d 42 a b c d
3 a b c d 23 a b c d 43 a b c d
4 a b c d 24 a b c d 44 a b c d
5 a b c d 25 a b c d 45 a b c d
6 a b c d 26 a b c d 46 a b c d
7 a b c d 27 a b c d 47 a b c d
8 a b c d 28 a b c d 48 a b c d
9 a b c d 29 a b c d 49 a b c d
10 a b c d 30 a b c d 50 a b c d
11 a b c d 31 a b c d 51 a b c d
12 a b c d 32 a b c d 52 a b c d
13 a b c d 33 a b c d 53 a b c d
14 a b c d 34 a b c d 54 a b c d
15 a b c d 35 a b c d 55 a b c d
16 a b c d 36 a b c d 56 a b c d
17 a b c d 37 a b c d 57 a b c d
18 a b c d 38 a b c d 58 a b c d
19 a b c d 39 a b c d 59 a b c d
20 a b c d 40 a b c d 60 a b c d


Answers
1. (c) 2. (d) 3. (b) 4. (b) 5. (c) 6. (b) 7. (c) 8. (b) 9. (c) 10. (c)
11. (d) 12. (c) 13. (d) 14. (d) 15. (b) 16. (d) 17. (d) 18. (a) 19. (b) 20. (d)
21. (c) 22. (a) 23. (d) 24. (d) 25. (a) 26. (c) 27. (c) 28. (b) 29. (c) 30. (b)
31. (c) 32. (c) 33. (c) 34. (b) 35. (b) 36. (a) 37. (b) 38. (b) 39. (b) 40. (a)
41. (b) 42. (b) 43. (d) 44. (c) 45. (a) 46. (a) 47. (c) 48. (c) 49. (b) 50. (c)
51. (c) 52. (d) 53. (b) 54. (d) 55. (a) 56. (c) 57. (a) 58. (c) 59. (c) 60. (b)
EXPLANATIONS
1. Insurance companies are known as non-banking 17. The said expenditure on education by the
financial companies which do perform all government is to fulfil the objective of social
functions of bank, such as accepting deposits welfare as education is an important component
and advancing loans. of human development.
2. Relative poverty is used in a comparative sense 18. Depreciation of foreign currency is connected
for comparison of different people, region or with appreciation of domestic currency.
states, where as absolute poverty is used to Appreciation of domestic currency makes
headcount the number of poor in the country at
foreign goods cheaper in the domestic economy
a given point of time. India is comparatively
leading to rise in imports.
poorer than USA reflects relative poverty as it is
a comparative situation. 19. Devaluation of domestic currency refers to the
4. Britishers introduced train in 1850 but the first decrease in the value of domestic currency as
passenger train was operated between Bombay planned by the central government or central
to Thane in 1853. bank.
5. Money supply is a stock concept that is 21. Trade Deficit = Value of Imports – Value of
measured at a given point of time to check for Exports
the adequate availability in the economy. 400 crores = Value of Imports – 300 crores
6. Atmanirbhar Bharat is based on the same Value of Imports = 400 + 300 = ` 700 crores
ideology of self-reliance to help the domestic 22. Money Multiplier = 1/LRR
firms to grow and become competitive. \Money Multiplier = 1/0.25 = 4
8. Fiscal deficit need not be inflationary in nature
23. Rise in exchange rate leads to depreciation of the
always; it depends upon how the borrowing is
domestic currency and vice-versa while import
spent by the government. If the borrowings are
used for repayment of loans, it creates inflation of goods leads to rise in demand for foreign
while if the borrowings are used for investment, exchange.
it does not create inflation. 24. Accommodating items are the balancing items of
9. WTO was formed in 1995 as a successor BoP which are undertaken for the motive of
organisation of GATT. India joined both the bringing BoP to the state of equilibrium.
organisations as their founding members. These items are only recorded in
11. In India, it is the responsibility of both levels of capital account.
government to invest for the provisions of health
25. Revenue budget is comprised of components
and education.
which have no impact on either assets or
12. Indian handicraft industry was famous around
SAMPLE PAPER 3
liabilities of the country. Thus, the mentioned

the globe and was a major source of exports case indicates revenue deficit.
earnings for the country, which was later
targeted by the colonial government. 26. It is not commercial bank but the central bank of
the country who functions as the lender of last
14. The poor performance of agriculture towards
GDP in spite of employing highest population resort for the commercial banks when they face
can be attributed to all of the said reasons. financial crunch and unable to get loan from any
source.
15. Money multiplier and cash reserve ratio are
inversely proportional, thus when CRR 28. Export of goods or services leads to inflow of
increases, LRR also increases leading to fall in foreign exchange while import of goods or
money multiplier and fall in the ability of services leads to outflow of foreign exchange.
commercial banks to create currency.
29. Developmental expenditures lead to creation of 44. In a socialist economy, public sector or any
assets in the economy and thus recorded in assigned authority takes decisions related to the
capital account of BoP. economy while self-reliance means
30. Investment in information is an integral independence in production activities.
component of human capital formation. When 46. Introduction of GST replaced all existing indirect
human resources spend money and time in taxes leading to fall in overall tax rates in the
resources in getting better education or health, country. Burden of GST is evenly distributed as
they are able to make better decisions for it is charged at a proportional rate.
themselves. 47. The given picture is showing globalisation,
31. The above two items are excluded from GST i.e., domestic and global markets have integrated
bracket due to strategic reasons. and thus consumers have got greater choice of
32. GST in India is comprised of 5 slabs including a goods.
0% tax rate slab which is for the goods with no 48. UGC stands for University Grants Commission
tax. which functions as a regulatory authority for
33. It is not necessary that current account deficit tertiary education.
will always leads to a deficit in capital account. 49. TANWA has helped many women in rural areas
BoP will be in deficit only when there is deficit to learn new skills and use them to generate
in both current and capital accounts. self-employment.
34. Fixed exchange rate system is the most stable 50. Micro credit institutions are meant for small
exchange rate system as it is fixed by the central finances in both rural and urban areas to meet
bank and changed only when required. the needs of credit of rural population.
35. The said expenditure is an example of capital 51. Farmers in rural areas need credit for variety of
expenditure as it leads to creation of an assets in reasons on a regular basis and absence of
the city. sufficient formal credit forces them in debt trap
36. Tata Iron and Steel Corporation (TISCO) was set due to borrowing from informal sector.
up in 1907 as the only heavy machine-made 52. In the given case, activities like mushroom
industry in the country. cultivation is a non-farm activity while soap
37. Autonomous items of BoP are independent of manufacturing and doll making are an example
the state of BoP as they are undertaken for the of small-scale manufacturing.
motive of earning profits and thus recorded in 53. The major focus of TANWA is to promote
both current and capital account of BoP. non-farm activity by helping the members in
38. When money supply in the economy increases, it starting any self-employment opportunity.
leads to fall in purchasing power of money as 55. All of the mentioned options are forms of
price levels increases. revenue of the government however, the given
39. Due to British exploitation on Indian industries paragraph only refers to the tax revenue.
over 200 years, planning commission of India 56. Gross tax revenue is the total receipts of the
decided to adopt import substitution government from tax collection and there are
industrialisation to protect the domestic two broad types of taxes i.e. direct and indirect
companies from foreign competition as well as to taxes.
save foreign exchange.
57. GST is imposed at a flat rate or proportional rate
40. During the economic crisis of 1990s, India was in i.e., rate of tax remains constant but the amount
a deep trouble, so it applied for an additional of tax varies based upon change in level of
loan of $7 billion from IMF to revive the production.
SAMPLE PAPER 3
economy.
58. Taxes are the legal and compulsory payments
41. Different policy measures were made by the that every individual (who are eligible) is
government to save the farmers from market supposed to pay without expecting any service
intermediaries. in return. Thus, these receipts do not create any
MSP is one of such policies which ensures that burden of repayment for the government.
the farmers get good price for their output. 60. Government spent the money received in the
43. GST is a consumption-based tax imposed on form of taxes (majority) on the growth and
production of goods and services. It replaced all development of the country. Therefore, a fall in
existing indirect forms of taxes. tax revenue has a negative impact on the
economic growth for the mentioned fiscal year.
SAMPLE PAPER 4
ECONOMICS
Instructions
Maximum Marks : 40
Section A
1. Transient poor refers to which of the following category of people?
(a) People who are never poor (b) People who are occasionally poor
(c) People who are churning poor (d) None of these
2. Read the following statements carefully and choose the correct alternative from
the following.
Statement I Systemic record of all transactions of goods and services between residents
of home country and residents of rest of the world is balance of trade.
Statement II Balance of invisible trade and balance of services are one or same thing.
Alternatives
SAMPLE PAPER 4

3. The central bank of a country functions as an advisor to ……… .
(a) commercial banks (b) general public
(c) government (d) All of these
4. The female literacy during colonial rule was ……… .
(a) 7% (b) 10% (c) 16% (d) 20%
5. In India, poverty line is comprised of ……… criterions.

(a) calorie’s consumption (b) monthly per capita expenditure
6. The data related to poverty in the country is collected by ……… .

(a) CSO (b) ISI
(c) NSSO (d) All of these
following.
Statement I It is difficult to bring chronically poor people above the poverty line.
Statement II People who are much below poverty line are referred to as chronical poor.
Alternatives
8. Foreign exchange reserves are considered as ……… for an economy.

(a) an asset (b) a liability
(c) a flow variable (d) None of these
following.
Statement I Regional imbalance is an objective of government budget.
Statement II Government budget uses taxes and subsidies to reduce income inequalities.
Alternatives
10. In India, income inequality is a major concern not in terms of income but also in terms
of distribution of assets and wealth. Government through its policies tries to minimise
this difference. Which of the following types of tax is used in the country to reduce
income inequalities?
(a) Progressive tax (b) Regressive tax
(c) Proportional tax (d) None of these
SAMPLE PAPER 4
following.
Statement I Currency held by public is not a component of money supply, if hoarded
by the public.
Statement II Currency notes and coins are the most liquid form of money supply.
Alternatives
12. Goods which are socially non desirable are discouraged by the government through
……… .
(a) heavy subsidies (b) low subsidies
(c) high taxes (d) lower taxes
13. At a given point of time, commercial banks created ` 5,000 crores when they were
required 25% as reserves. What should have been the amount of primary deposits with
the bank?
(a) `1,000 crores (b) `1,250 crores
(c) ` 2,000 crores (d) `2,500 crores
14. The occupational structure of India was majorly divided in ……… sector(s) during
colonial period.
(a) one (b) two
(c) three (d) four
15. India meets most of its crude oil demand by the way of imports as the reserves are not
sufficient for meeting demand. UAE is the most important trading partner of India in
that respect. In which of the following account of BoP, will this import be recorded?
(a) Capital account (b) Current account
(c) Accommodating account (d) None of these
16. Choose the correct pair from given below

Column I Column II
A. Planned decrease in the value of domestic currency (i) Depreciation
B. Above line items of BoP (ii) Accommodating items
C. Increase in value of domestic currency (iii) Revaluation
D. Market determination as well as govternment intervention (iv) Managed floating rate
Codes
(a) A – (i) (b) B – (ii)
(c) C – (iii) (d) D – (iv)
17. The reduction of …………… is an inalienable component included in the conditionality

of structural reforms during the new economic policy.
(a) trade deficit (b) fiscal deficit
18. Which of the following is not an example of a commercial bank in India?

SAMPLE PAPER 4
(a) LIC (b) SBI (c) ICICI (d) PNB
19. In Indian System of Medicine (ISM) AYUSH, letter S stands for ……… .
(a) Sindhu (b) Siddha
(c) Siddhu (d) None of these
20. ……… is not a source of institutional credit in rural banking system.

(a) Commercial banks (b) Regional rural banks
(c) Moneylenders (d) Micro-credit institutions
following.
Statement I Increase in money supply in the economy leads to fall in purchasing
power of money.
Statement II Money supply in the economy is controlled only by the central bank of
the country.
Alternatives
22. ……… is/are an indicator of poverty in India.

(a) Income level (b) Illiteracy level
(c) Employment level (d) All of these
23. India’s health infrastructure has improved a lot since independence in terms of number
of hospitals, hospital bed, PHCs, CHCs, doctors, medical staff etc. In spite of all these
efforts, the resources are not sufficient as compared to the few neighbouring countries
due to which of the following reasons?
(a) Rapid population growth
(b) Unequal distribution in rural and urban areas
(c) Less proportion of expenditure on health by government
24. Various types of production included in primary sector are ………… .

(a) animal husbandry (b) production of milk
(c) goods related to animal produce (d) All of these
Section B
25. Assertion (A) Deficit in balance of payment is caused by autonomous items.
Reason (R) The aim of the country is to bring BoP in balanced situation so as to stop
further inflow and outflow of foreign exchange.
Alternatives
Assertion (A)
SAMPLE PAPER 4
of Assertion (A)
26. The calorie requirement for poverty line is higher in the rural areas because ……… .
(a) they can’t enjoy as much as people in the urban areas
(b) food is less expensive
(c) they are engaged in mental work
(d) people are engaged in physical labour
27. Assertion (A) Commercial banks are the bankers for all levels of government.
Reason (R) Government need financial help whenever it faces a situation of budget
deficit.
Alternatives
Assertion (A)
of Assertion (A)
28. Which of the following statements is/are true about current account of BoP?
(i) These items are non-debt creating
(ii) These are recurring in nature
(iii) It leads to assets creation
(a) (i) and (ii) (b) (i) and (iii)
(c) (ii) and (iii) (d) (i), (ii) and (iii)

Column I Column II
A. Jan Dhan Yojana (i) 2014
B. MGNREGA (ii) 2005
C. Debt trap (iii) Cause and consequence of poverty
D. SJSRY (iv) Social security program for elderly people
Codes
(a) A – (i) (b) B – (ii)
(c) C – (iii) (d) D – (iv)
30. Choose the correct statement from the given below.

(a) Demand curve for foreign exchange is upward sloping.
(b) Supply curve for foreign exchange is downward sloping.
(c) Both (a) and (b) are correct
(d) Both (a) and (b) are incorrect
31. India’s HDI rank was too low because of ……… .

(a) poor literacy rate (b) poor education facilities
SAMPLE PAPER 4
(c) poor health services (d) All of these
following.
Statement I Licencing policy was introduced during 1950s for controlled growth of
public sector.
Statement II Licencing leads to privatisation and disinvestment.
Alternatives
33. Assertion (A) Borrowings are capital receipts but payment of interest on borrowings is
Reason (R) Borrowings create liability but payment of interest does not reduce liability.
Alternatives
Assertion (A)
of Assertion (A)
34. Which banks come under multi-agency system?

(a) Cooperative banks (b) Commercial banks
(c) Regional rural banks (d) All of these
35. Blue revolution is associated with ……… .

(a) indigo cultivation (b) fisheries
(c) availability of drinking water (d) None of these
36. In which of the following ways, colonial government drained India’s revenue from
foreign trade?
(a) Payment for losses (b) Payment of salaries
(c) War expenses (d) All of these
37. Assertion (A) Appreciation of domestic currency means a rise in the price of domestic
currency.
Reason (R) Appreciation leads to decrease in exports.
Alternatives
Assertion (A)
of Assertion (A)
SAMPLE PAPER 4

Column I Column II
A. World trade organisation (i) 1948
B. Implementation of GST (ii) 2016
C. GATT (iii) 1995
Codes
(a) A – (i) (b) B – (ii)
following.
Statement I Human development and economic growth are positively related.
Statement II Human capital creates both private and social benefits.
Alternatives
40. ………… policy is used to encourage public sector companies to perform better.
(a) Maharatna (b) Navratna
(c) Miniratna (d) All of these
41. Assertion (A) Agricultural subsidies are the major reason of government deficit,
specially the fertiliser subsidy.
Reason (R) The economic help given to farmers leads to overuse of resources and
under productivity.
Alternatives
Assertion (A)
of Assertion (A)
42. Rural development is the process of improving the quality of life and economic well
being of people living in rural areas. It focuses on all major areas. In broad sense,
which of the following categories are included in rural development?
(a) Social development
(b) Economic development
(d) None of these
43. Assertion (A) The economic motive of infrastructure development during the colonial
rule was to establish better administrative control.
SAMPLE PAPER 4
Reason (R) Infrastructural development is one of the positive contributions of colonial

government in India.
Alternatives
Assertion (A)
of Assertion (A)

(a) If primary deficit is ` 3,500 and interest payment is `500, then fiscal deficit will be `3,000
(b) The difference between borrowings and interest payment is fiscal deficit
(c) Surplus budget is when estimated revenue of the government is more than estimated
expenditure of the government
45. Assertion (A) Poverty line can lead to misleading conclusion related to the group of
people who are poor.
Reason (R) Poverty line creates a line of bifurcation between people who are poor and
who are not.
Alternatives
Assertion (A)
of Assertion (A)
46. Assertion (A) India’s poverty alleviation programmes faced major setback due to lack
of proper implementation.
Reason (R) Growth rate of population has led to availability of less resources for
poverty alleviation
Alternatives
Assertion (A)
of Assertion (A)
47. Observe the image given below carefully.
Barter Gold Metall Paper Plastic Electronic Crypto

coins Money cards Money currency
Which of the following about the money is indicated above?

(a) Money demand (b) Components of money supply
(c) Evolution of money (d) Modes of money supply
48. Assertion (A) Credit creation process increases the money supply in economy.
SAMPLE PAPER 4
Reason (R) By credit creation process, commercial banks can distribute loans many
more times compared to their initial deposits.
Alternatives
Assertion (A)
of Assertion (A)
Section C
On 12th May, 2020, the Prime Minister, in an address to the nation, said that the coronavirus
crisis should be seen as an opportunity, laying emphasis on domestic products and “economic
self-reliance”, creation of an Atmanirbhar Bharat (transl. Self-reliant India), through Atmanirbhar
Bharat Abhiyan (transl. Self-reliant India Mission).
He announced a 20 trillion rupees stimulus package, equivalent to 10% of India’s GDP, which
was laid out in detail by the Finance Minister in a series of tranches. During the COVID-19
pandemic in India, Finance Minister announced a ` 1.70 Lakh Crore ($24 billion) relief package
under Pradhan Mantri Garib Kalyan Yojana for the poor.
As per the estimates of the government, data is given below.
= ` 500 each to 19.86 crore women Jan Dhan account holders.
= ` LPG cylinders to be provided to 8 crore poor families for the next three months free of cost.
= ` 1,000 for senior citizens to tide over difficulties during the next three months.
= As of 11th April, ` 28,256 crores ($4 billion) were distributed through PMGKY to nearly 32
crore beneficiaries.
= ` 50,000 crore in Garib Kalyan Rojgar Abhiyan for returne migrant workers.
49. The Pradhan Mantri Garib Kalyan Yojana indicates which of the following objectives of
government budget?
(a) Reducing inequality of income and wealth
(b) Reallocation of resources
(c) Economic growth
50. The relief package announced by the government is an example of which of the
following types of expenditures?
(a) Revenue expenditure
(b) Capital expenditure
51. Assertion (A) Relief packages announced by the government during the pandemic are
a non-planned expenditures.
Reason (R) Non-planned expenditures are generally non-developmental in nature.
Alternatives
Assertion (A)
SAMPLE PAPER 4
of Assertion (A)
52. There are various relief packages mentioned above, which of the following indicates
the reallocation objective of government budget?
(a) Jan Dhan Yojana (b) Atmanirbhar Bharat
(c) Ujjawala Yojana (d) All of these
53. ‘‘`1,000 for senior citizens to tide over difficulties during the next three months.’’ This
announcement indicates which of the following objectives of budget?
(a) Reducing inequality of income
(b) Social welfare
following.
Statement I Non-planned expenditures of government budget leads to revenue deficit.
Statement II No provision can be made for non-planned expenditures.
Alternatives
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 Indian economy for the global exposure for
the first time.
In this new economic policy, P. V. Narasimha Rao government reduced the import duties,
opened reserved sector for the private players and devalued the Indian currency to increase the
export. This is also known as the LPG Model of growth.
New economic policy refers to economic liberalisation 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. He introduced the NEP on 24th July, 1991.
55. Who was the finance minister to introduced new economic policy of 1991?
(a) P.V. Narasimha Rao
(b) Dr. Manmohan Singh
(c) Indira Gandhi
56. Assertion (A) Indian currency was revalued during the NEP to improve the export
compatibility of India.
Reason (R) Decrease in the value of domestic currency makes domestic goods cheaper
in international market leading to inflow of foreign exchange.
SAMPLE PAPER 4
Alternatives
Assertion (A)
of Assertion (A)
57. Statement I New economic policy gave greater autonomy to private sector.
Statement II Increasing role of public sector in the economic functioning leads to major
inefficiencies.
Alternatives
58. Licencing policy was not removed for few industries which includes ……… .
(a) liquor (b) cigarette
(c) industrial explosive (d) All of these
59. Tax reforms introduced as a part of liberalisation includes which of the following?
(a) Reduction in tax rate
(b) Simplification of tax payment process
60. Globalisation policy is an outcome of which of the following policies?

(a) Disinvestment and privatisation
(b) Disinvestment and liberalisation
(c) Liberalisation and privatisation
(d) Liberalisation, disinvestment and privatisation
SAMPLE PAPER 4
OMR SHEET SP 4
Roll No.
Instructions
by the software.

1 a b c d 21 a b c d 41 a b c d
2 a b c d 22 a b c d 42 a b c d
3 a b c d 23 a b c d 43 a b c d
4 a b c d 24 a b c d 44 a b c d
5 a b c d 25 a b c d 45 a b c d
6 a b c d 26 a b c d 46 a b c d
7 a b c d 27 a b c d 47 a b c d
8 a b c d 28 a b c d 48 a b c d
9 a b c d 29 a b c d 49 a b c d
10 a b c d 30 a b c d 50 a b c d
11 a b c d 31 a b c d 51 a b c d
12 a b c d 32 a b c d 52 a b c d
13 a b c d 33 a b c d 53 a b c d
14 a b c d 34 a b c d 54 a b c d
15 a b c d 35 a b c d 55 a b c d
16 a b c d 36 a b c d 56 a b c d
17 a b c d 37 a b c d 57 a b c d
18 a b c d 38 a b c d 58 a b c d
19 a b c d 39 a b c d 59 a b c d
20 a b c d 40 a b c d 60 a b c d


Answers
1. (d) 2. (b) 3. (c) 4. (a) 5. (c) 6. (c) 7. (c) 8. (a) 9. (b) 10. (a)
11. (c) 12. (c) 13. (b) 14. (b) 15. (b) 16. (d) 17. (b) 18. (a) 19. (b) 20. (c)
21. (c) 22. (b) 23. (d) 24. (d) 25. (b) 26. (d) 27. (c) 28. (a) 29. (d) 30. (d)
31. (d) 32. (d) 33. (a) 34. (b) 35. (b) 36. (d) 37. (b) 38. (d) 39. (c) 40. (d)
41. (a) 42. (c) 43. (b) 44. (c) 45. (a) 46. (b) 47. (c) 48. (a) 49. (a) 50. (a)
51. (b) 52. (b) 53. (c) 54. (c) 55. (b) 56. (c) 57. (c) 58. (d) 59. (c) 60. (c)
EXPLANATIONS
1. Transient poor refers to the people who 11. When the public hoards currency, it moves out
regularly moves above or below poverty line the circulation and is not used for exchange of
due to changing circumstances. goods or services. This part of money cannot
2. The systemic record of all transactions of be included as a part of money supply in that
goods is recorded as balance of trade while all given time period.
services are recorded as balance of invisible 12. There are various goods like cigarettes and
trade. Both of these are components of balance liquor which are discouraged as these are not
of payments account. socially desirable by imposing heavy taxes.
3. The central bank not only functions as banker 13. Money created = Primary deposits ´ Money
to the government of a country but also serves multiplier
as an advisor to the government on the
5,000 = Primary deposits ´ 4*
financial fronts to deal with the situations of
5 ,000
deficit or crisis. Primary deposits = = ` 1,250 crore
4
4. Overall literacy during the colonial rule was
1 1
16% and female literacy was as low as 7%. *Money multiplier = = =4
LRR 0.25
5. Both the criterions of calorie’s consumption
and monthly per capital expenditure are used 14. India’s occupational structure was majorly
to measure the number of poor in the country. divided into two sectors i.e., primary and
secondary during the colonial period.
6. The National Sample Survey Organisation
(NSSO) is responsible to collect necessary data 15. Import of crude oil will be recoded in current
related to poverty in the country. account’s debit side and it is considered as an
import of good which has no impact on the
7. Chronically poor are the people who fall assets and liabilities of the country.
further below the poverty line and it is most
difficult task for the policy makers to bring 16. Planned decrease in the value of domestic
currency is known devaluation, while above the
these people above poverty line.
line items are known as autonomous items of
8. Foreign exchange reserves are an asset for an BoP. Increase in value of domestic currency is
SAMPLE PAPER 4
economy as these are used for international known as appreciation of domestic currency.
trade and treated as per accounting rule in the
17. India was experiencing high fiscal deficit
BoP account.
majorly on account of interest payment before
9. Reducing regional imbalance or promoting 1990s. So, reduction in the fiscal deficit was a
regional balance is one of the major objectives part of structural reforms during the new
of the government budget. economic policy.
10. Progressive tax imposes higher burden of tax 18. Life Insurance Corporation (LIC) is an
on higher income group and lower tax on insurance company and not a commercial
lower income group, this is most suitable to bank while rest of the three are examples of
deal with income inequalities. commercial banks in India.
19. Indian System of Medicine popularly known as 34. In a multi-agency system, multiple banking
AYUSH stands for Ayurveda, Yoga, Unnani, institutions works together and commercial
Siddha and Homeopathy. banks are the part of the same.
20. Moneylenders are a form of non-institutional 35. Blue revolution was related to promote the
or informal sector credit which do not follow income of people associated with fishing
any rules or regulations, rest of the three are community.
types of institutional credit. 36. Colonial government had a monopoly control
21. When there is more money in the economy, it over India’s foreign trade and used the
leads to increase in general price level, which revenue for all of the mentioned purposes.
further leads to fall in purchasing power of 37. When the price of foreign currency increases,
money. it leads to depreciation while increase in price
22. Lack of educational attainment or illiteracy is of domestic currency leads to appreciation of
both a cause and consequence of poverty in domestic currency.
India. 38. General agreement on trade and tariff was
24. The production activities listed above indicates established in 1948 while WTO came in
non-farm activities in rural areas as a source of existence from 1995 and GST in India was
livelihood. implemented in 2017.
25. Any surplus or deficit in BoP is caused by the 39. Economic growth leads to increase in per
autonomous items as they are undertaken with capita income keeping population growth
the motive of earning profits. Balanced BoP is rate constant, increase in per capita income
the situation where the total balance on BoP leads to increase in investment in human
account becomes equal to zero. capital which further leads to improvement in
26. The nature of work in rural areas is mostly human development.
manual which needs more physical strength, 40. All the mentioned points are the badges given
thus the calories requirement in rural areas has to public sector companies which is given as a
kept higher as compared to urban areas. status to encourage them to improve their
27. Commercial banks are the banker for the public efficiency.
and not for the government. 41. It is always recommended that subsidy
28. Current account of BoP records all those items should be given for adoption of latest
which have no impact on either assets or technology but it should not lead to misuse or
liabilities of the country and undertaken on a overuse of resources, in that case it defeats the
regular basis. purpose of subsidy.
29. Swarna Jayanti Shahari Rozgar Yojana (SJSRY) 43. Development of infrastructure, specially
aims at providing self-employment railways was introduced to maintain better
opportunity to educated unemployed youth. administrative control but it proved to be
beneficial for Indian economy.
30. Demand curve for foreign exchange is
downward sloping while the supply curve for 45. Poverty line does not give a clear picture
foreign exchange is upward sloping. about the condition of people who are poor
and who are very poor.
32. The licensing policy during 1950s was meant for
It is just a line that divide between poor and
SAMPLE PAPER 4
private sector to ensure equitable distribution of

non-poor people at a given point of time.
production of goods in the economy as private
sector only works for profit motive. 46. Poverty alleviation programmes were
criticised not only due to lack of proper
Licencing policy was to control the growth of implementation but also due to shortage of
private sector, not for disinvestment or sufficient resources to meet the objectives.
privatisation.
47. The picture indicates the evolution of money
33. Borrowings creates liability while payment of from barter system of exchange to the present
interest has no impact on the assets or modes of money used in an economy.
liabilities thus, is a revenue expenditure.
48. Credit creation is the most important function 54. Non-planned expenditures are
of commercial banks by which it multiplies the non-developmental in nature, which creates
deposits received from customers. revenue deficit as revenue expenditure
49. The said programme was aimed, providing exceeds receipts in such case.
food and other necessity to all those who lost 56. Indian currency was devalued during 1990s to
their source of living due to lockdown. improve the export compatibility of the
50. As this expenditure was a relief package and currency and accumulate foreign exchange.
do not have any affect on the assets or 57. Public sector was given leading role in the
liabilities of the country, it is a revenue initial phase of development but during NEP,
expenditure. role of public sector was gradually reduced
51. Any expenditure by the government which and private sector was given more liberty in
was not planned during the budget by the its operations.
government is an example of non-planned 58. Licencing policy was removed from private
expenditure and these are generally sector except the mentioned industries due to
non-developmental in nature. strategic reasons.
52. The mentioned programme aims at achieving 59. Tax reforms were part of liberalisation process
self-reliance, which leads to reallocation of which is comprised of the mentioned reforms
resources from the areas where it is less to make the system transparent and simpler.
desirable to the areas where it is more required.
60. Globalisation refers to integration of world
53. The provision made for the senior citizens in economies which is possible only through
the budget indicates the objective of both liberalisation and privatisation policies.
social welfare and reducing income inequality.
SAMPLE PAPER 4
SAMPLE PAPER 5
ECONOMICS
Instructions
Maximum Marks : 40
Section A
1. When government takes decision related to the economic problems of what, how and
for whom to produce, this refers to ……… economic structure.
(a) capitalist (b) socialist
(c) mixed (d) None of these
following.
Statement I Disinvestment of public sector unit is an example of revenue receipts.
Statement II Disinvestment results in decrease in assets of the government for a
particular fiscal year.
Alternatives
3. The upper limit imposed on import of goods during the initial economic reform is
known as ……… .
(a) Tariff (b) Quota
4. Which of the following functions of money has simplified the process of borrowings
and lendings?
(a) Medium of exchange (b) Unit of account
(c) Story of value (d) Standard of deferred payments
5. The schedule C of IPR 1956 was left for ……… companies.

(a) public sector (b) private sector

Column I Column II
A. Market determination of (i) Fixed exchange rate

exchange rate
B. Planned determination of (ii) Managed floating exchange
exchange rate rate
C. Devaluation of currency (iii) Balance of trade surplus
Codes
(a) A – (i) (b) B – (ii)
7. ……… is the most important component of the process of human capital formation.
(a) Right to information (b) Right to work
(c) Defence (d) Education
following.
Statement I Colonial government made no efforts to count the number of poors in the
country.
Statement II Jail cost of living index developed by Dadabhai Naoroji was used to compute
poverty line during the colonial rule in India.
Alternatives
9. Farmers need credit for variety of purposes, ……… is the reason for taking medium
term credit.
(a) personal expenditures (b) purchase of seeds, pesticides etc
SAMPLE PAPER 5
(c) purchases of fixed assets (d) None of these
10. India experienced high infant mortality rate during colonial rule owing to which of the
following reasons?
(a) Poor health infrastructure (b) Low level of literacy
(c) Lack of public investment (d) All of these
11. Increase in foreign exchange rate leads to ……… in balance of payments.

(a) improvement (b) deterioration
(c) No impact (d) Either (a) or (b)
following.
Statement I Indian goods and services tax model is based upon the Australian model
of indirect tax reform.
Statement II GST replaced all existing direct taxes in the country.
Alternatives
13. A small-scale industry is presently defined as the one whose investment does not exceed
` 5 crores. During the initial reform, the limit was only ` 5 lakhs and gradually increased
later on. What other provision(s) were made by the government to protect SSI?
(a) Reservation of goods for SSI (b) Subsidies
(c) Protected from foreign competition (d) All of these
14. Fiscal policy of the government budget is comprised of ……… .

(a) revenue policy (b) expenditure policy
following.
Statement I Revenue deficits need not be always inflationary in nature.
Statement II A deficit in budget leads to inflation when the money is used for
consumption purposes.
Alternatives
16. Import substitution means substituting imports with domestic production. Imports
were protected by the imposition of tariff and quotas which protect the domestic firms
from foreign competition. Choose the most appropriate reason for opting this strategy.
(a) Save foreign exchange reserve (b) Allow domestic industries to grow
17. Cross-boarder transactions are recorded in ……… .

(a) government budget (b) balance of trade
(c) balance of payments (d) Both (a) and (c)
18. The time period between 1991 to 2003 is known for ……… in agricultural sector in
SAMPLE PAPER 5
India.
(a) green revolution (b) golden revolution
(c) white revolution (d) blue revolution
19. In general terms, minimising the deficits are considered as a good measure but in the
context of government budget which of the following types of deficits should never be
equal to zero?
(a) Revenue deficit (b) Fiscal deficit
(c) Primary deficit (d) All of these
20. Purchase of shares of Microsoft by Tata will be recorded in ……… account and ………
side of balance of payments account.
(a) current account and credit (b) current account and debit
(c) capital account and credit (d) capital account and debit
following.
Statement I Supply of foreign exchange is inversely proportional to foreign exchange
rate.
Statement II Increase in foreign investment leads to rightward shift in the demand curve for
foreign exchange.
Alternatives
22. Floating exchange rate is fixed by ……… .

(a) government (b) central bank
(c) market forces (d) Both (b) and (c)
23. Under managed floating exchange rate, when exchange rises more than the desired
level, which of the following steps central bank should take?
(a) Supply foreign exchange from its stock
(b) Demand for more foreign exchange in the market
(c) No intervention in the market
(d) Either (a) or (b)
24. Marketable surplus refers to ……… in agriculture sector.

(a) production for self-consumption (b) production for selling in market
(c) selling of excess crops in market (d) None of these
Section B
25. Assertion (A) A balanced budget indicates a balanced development of the country.
Reason (R) A budget is said to be balanced when estimated revenue is equal to estimated
expenditure.
Alternatives
Assertion (A)
SAMPLE PAPER 5
of Assertion (A)
following.
Statement I Autonomous items are independent of state of balance of payments.
Statement II Accommodating transactions are done to earn profit from rest of the world.
Alternatives
27. Assertion (A) Stability in the economy promotes both economic growth and
development.
Reason (R) Price and interest rate stability brings stability in overall economic situation.
Alternatives
Assertion (A)
of Assertion (A)
28. Assertion (A) Unilateral transfers are one-way transactions recorded in capital account
of BoP.
Reason (R) Items which impact the liabilities or assets of the country at a given point of
time, are recorded in capital account of BoP.
Alternatives
Assertion (A)
of Assertion (A)
(d) Both are false
following.
Statement I Central bank and central government works in isolation of each other.
Statement II Economic growth leads to increase in demand for money in the economy.
Alternatives

SAMPLE PAPER 5
Column I Column II
A. Promotion of multilateral trade (i) Objective of WTO
B. Production on contractual trade (ii) Outsourcing
C. Trade between two countries (iii) Bilateral trade
Codes
(a) A – (i) (b) B – (ii)
31. ……… is/are the most critical problem(s) in the process of human capital formation in
India.
(a) Lack of proper manpower planning (b) Growth rate of population
32. Assertion (A) When CRR is increases, credit creation capacity of commercial banks
reduces.
Reason (R) With increase in reserve ratios, banks have less funds available for loans.
Alternatives
Assertion (A)
of Assertion (A)
33. Institutional agricultural reforms introduced during 1950s are comprised of which of
the following?
(a) Abolition of intermediaries (b) Land reforms
(c) Removal of land removal systems (d) All of these
34. Which of the following statements is/are true about the state of India’s industry during
colonial rule?
(a) Deindustrialisation of handicraft industries
(b) Lack of capital goods industries
(c) Lack of public investment (d) All of these
35. Assertion (A) Public expenditure generates investment-friendly environment in the

economy for both domestic investors and foreign investors.
Reason (R) Increase in public expenditure leads to infrastructural development.
Alternatives
Assertion (A)
of Assertion (A)
36. Match the correct pairs of column I and column II given below.
Column I Column II
A. Sustained source of living (i) Golden revolution

SAMPLE PAPER 5
B. Rise in the production of fruits and (ii) Diversification

vegetables
C. Production of different types of crops (iii) Non-farm activity
together
Codes
A B C A B C
(a) (i) (ii) (iii) (b) (ii) (i) (iii)
(c) (iii) (i) (ii) (d) (ii) (iii) (i)
37. Assertion (A) Land reform policy of India during first phase of economic reforms,
faced a major setback.
Reason (R) People with money and power misused the loopholes in the systems and
delayed the process of implementation of institutional reforms in agriculture.
Alternatives
Assertion (A)
of Assertion (A)
38. In ……… states, land reforms were successfully implemented.
(a) Haryana (b) Kerala (c) West Bengal (d) Both (b) and (c)
following.
Statement I Fixing a cap in the maximum holding of land is known as land ceiling.
Statement II Land ceiling policy was introduced to stop the role of intermediaries in
agriculture.
Alternatives
40. Choose the true statement from given below.
(a) Land reforms gives ownership right to the actual tillers of the soil
(b) Land redistribution from the people having more than to those having no land is the
process of land ceiling
41. Through which of the following way, large landowners created hurdles in the process
of implementation of land reforms?
(a) By challenging the policy in court
(b) By registration of land in the name of close relative
(c) By bribing the authorities
42. ……… is not a cause of poverty.
(a) Debt trap (b) Unemployment (c) Economic growth (d) Both (a) and (c)
SAMPLE PAPER 5
43. Reducing inequality of income and wealth is one of the major objectives of budget by
which it reduces the difference between the states. Economic development is not
possible without development of all regions. Which of the following fiscal tools are
used for the attainment of this objective?
(a) Taxes (b) Subsidies (c) Both (a) and (b) (d) Neither (a) nor (b)
44. Assertion (A) Green revolution introduced in India during 1960s was a partial success
and limited to fewer regions.
Reason (R) Most of the farmers in the country are small and marginal who cannot afford to
buy expensive equipments required in modern farming methods.
Alternatives
Assertion (A)
of Assertion (A)
45. Assertion (A) Liberalisation policy in India was imposed by the international monetary
fund and not intentionally implemented.
Reason (R) India was a highly indebted country before 1990s with huge burden of interest
payments and BoP crisis.
Alternatives
Assertion (A)
of Assertion (A)
46. Planning commission was replaced in year ……… .

(a) 1990 (b) 2010 (c) 2015 (d) 2020
47. Assertion (A) Poverty leads to loss of human capital formation leading to the loss of
resources for the economy.
Reason (R) Prolonged unemployment and poverty lead to developing the sense of
hopelessness and loss of confidence.
Alternatives
Assertion (A)
of Assertion (A)
48. Observe the picture given below carefully.

Total expenditure Person days generated
under MGNREGA (in ` crore) (in ` crore)
235.6
Y Normal Drought Normal Y 235.2 231.6
monsoon year monsoon 220.4
70,000
Drought Normal
year monsoon
166.2
SAMPLE PAPER 5
60,000
63,887.35
50,000
38,552.62
40,000
X X
30,000
2013-14 2015-16 2017-18 2013-14 2015-16 2017-18
2014-15 2016-17 2014-15 2016-17
What is total expenditure on MGNREGA in a normal monsoon season?

(a) 38,552.62 crores (b) 63,887.35 crores
(c) 220.4 crores (d) 231.6 crores
Section C
During the independence, money lenders and traders played a significant role in exploiting the
small and marginal farmers and landless labourers by lending to them on high interest rates and
by manipulating the accounts to keep them in a debt-trap. It was only during 1969, when a major
change occurred when India adopted social banking and multi-agency approach to adequately
meet the needs of rural credit.
The institutional structure of rural banking today consists of a set of multi-agency institutions,
namely, commercial banks, regional rural banks, cooperatives and land development banks.
They are expected to dispense adequate credit at cheaper rates.
In recent times, self-help groups have emerged to fill the gap in the formal credit system. The
SHGs promote thrift in small proportions by a minimum contribution from each member. From
the pooled money, credit is given to the needy members to be repayable in small installments at
reasonable interest rates.
By May 2019, nearly 6 crore women in India have become member in 54 lakh women SHGs.
About ` 10-15,000 per SHG as a community investment support fund are provided as part of
renovating fund to take up self-employment for income generation.
49. Institutional credit excludes which of the following institutions given below?
(a) Land development banks (b) Reginal rural banks
(c) Self-help groups (d) All of these
50. Assertion (A) Commercial banks in rural areas played an insignificant role to bridge
the gap between formal and informal lending.
Reason (R) Commercial banks work to earn profit and the incidence of defaults are high in
rural banking.
Alternatives
Assertion (A)
of Assertion (A)
following.
Statement I Institutional credit availability is imperative for development of rural
SAMPLE PAPER 5
areas.
Statement II Reserve Bank of India is the apex institution in rural banking to regulate
the banking system.
Alternatives
52. Which of the following is not an advantage of institutional credit?

(a) Varying maturity (b) Fixed interest rate
(c) Non-manipulation of accounts (d) All of these
53. As of May, 2019, how many women SHGs are functional in the country?
(a) 15,000 (b) 6 lakhs (c) 54 lakhs (d) 60 lakhs
54. SHGs becomes eligible to get credit from formal source when
(a) they are regular for more than one year
(b) they are consisting of large number of members
(c) they are comprised of both men and women
India money supply surge signals pandemic-related uncertainty, not growth. Heightened
uncertainty in India caused by the coronavirus pandemic has led to a surge of currency in
circulation as people hoard cash or park money in accessible deposits to safeguard themselves
against salary cuts or job losses.
According to RBI data, India’s M3 money supply rose 6.7% in the first five months of this year as
compared to the same period last year, the highest growth in seven years.
Currency in circulation, which measures money with the public and in banks has also surged.
A rise in money supply usually is seen as a leading indicator of growth in consumption and
business investments, but the rise this time is unlikely to bolster either, analysts said.
Source The Economic Times, 23rd June, 2020.
following.
Statement I Money supply in an economy is a flow variable.
Statement II Quantum of money in the economy changes overtime.
Alternatives
56. As mentioned in the above paragraph that India’s M 3 rose by 6.7% during first five
months of 2020, M 3 is a ……… .
(a) component of money supply (b) measure of money supply
57. Assertion (A) Rise in M 3 increased economic growth during first half of 2020.
Reason (R) M 3 is considered as broad money and less liquid as it is comprised of
SAMPLE PAPER 5
components which cannot be converted in cash easily.

Alternatives
Assertion (A)
of Assertion (A)
58. The most liquid measure of money supply, M 1 is also known as ……… .
(a) broad money
(b) narrow money
(c) base money
(d) high powered money
59. A rise in money supply is an indicator of which of the following in general times?
(a) Growth in consumption
(b) Business investment
60. As per the data given above, M 3 rose by 6.7% during the first five months of this year.
Which of the following will be the impact of this move in the economy as a whole?
(a) Increase in money supply
(b) Increase in purchasing power of money
(c) Decrease in purchasing power of money
(d) Both (a) and (c)
SAMPLE PAPER 5
OMR SHEET SP 5
Roll No.
Instructions
by the software.

1 a b c d 21 a b c d 41 a b c d
2 a b c d 22 a b c d 42 a b c d
3 a b c d 23 a b c d 43 a b c d
4 a b c d 24 a b c d 44 a b c d
5 a b c d 25 a b c d 45 a b c d
6 a b c d 26 a b c d 46 a b c d
7 a b c d 27 a b c d 47 a b c d
8 a b c d 28 a b c d 48 a b c d
9 a b c d 29 a b c d 49 a b c d
10 a b c d 30 a b c d 50 a b c d
11 a b c d 31 a b c d 51 a b c d
12 a b c d 32 a b c d 52 a b c d
13 a b c d 33 a b c d 53 a b c d
14 a b c d 34 a b c d 54 a b c d
15 a b c d 35 a b c d 55 a b c d
16 a b c d 36 a b c d 56 a b c d
17 a b c d 37 a b c d 57 a b c d
18 a b c d 38 a b c d 58 a b c d
19 a b c d 39 a b c d 59 a b c d
20 a b c d 40 a b c d 60 a b c d


Answers
1. (b) 2. (b) 3. (b) 4. (d) 5. (b) 6. (c) 7. (d) 8. (c) 9. (b) 10. (d)
11. (a) 12. (d) 13. (d) 14. (c) 15. (b) 16. (c) 17. (c) 18. (b) 19. (c) 20. (d)
21. (d) 22. (c) 23. (a) 24. (c) 25. (b) 26. (a) 27. (a) 28. (c) 29. (b) 30. (d)
31. (b) 32. (a) 33. (d) 34. (d) 35. (b) 36. (c) 37. (a) 38. (d) 39. (d) 40. (c)
41. (d) 42. (c) 43. (c) 44. (a) 45. (a) 46. (c) 47. (a) 48. (b) 49. (c) 50. (a)
51. (a) 52. (a) 53. (c) 54. (a) 55. (b) 56. (b) 57. (c) 58. (b) 59. (c) 60. (d)
EXPLANATIONS
1. In socialism, all the economic decisions are domestic country increases, increase in
taken by the centrally appointed authority. exports leads to inflow of foreign exchange
2. Disinvestment is an example of capital receipt and improvement in balance of payments.
as it leads to decrease in assets of the 12. GST in India was introduced by replacing all
government. existing indirect taxes in the country and is
4. Evolution of money has made the future based upon the Canadian model of GST.
payment easier as now money can be saved 14. Fiscal policy of government is comprised of
and deposited in banks and borrowers can both revenue policy which includes taxes and
borrow money from the bank at pre-specified expenditure policy which includes subsidies
interest rates. and other government expenditures.
5. Industrial policy resolution of 1956 was 15. Revenue deficits are always inflationary in
comprised of three schedules, in which nature as these expenditures are used for
schedule C was kept for the operation of consumption purposes which increases the
private sector. demand in economy and hence prices of the
6. Exchange rate is determined on the basis of commodities.
demand and supply of foreign exchange 17. All transactions between residents of home
under both floating and managed floating country and residents of rest of the world are
exchange rate. Planned determination recoded in balance of payment account.
exchange rate is under fixed exchange rate 18. The period between 1991 to 2003 is known as
system. the period of golden revolution as during this
7. Education is the most important component of time, non-food crops production increased by
the process of human capital formation which many times in India.
helps in development of knowledge and skills. 19. Primary deficit indicates the burden of interest
8. In independent India, different committees, payments on the previous borrowings from the
commissions and task forces were set up to borrowing of the current period. A zero primary
calculate the poverty line. Jail cost of living deficit indicates that in the present period,
was used before independence to identify government has borrowed just for interest
poor people. payment which further creates a debt trap and
hence zero primary deficit is not desirable.
SAMPLE PAPER 5
9. Medium term credit is generally taken by the

farmers for purchases of seeds, pesticides, 20. Purchase of shares of foreign company by a
fertilizers etc. domestic company leads to creation of assets
thus it will be recorded in the debit side of
10. Infant mortality rate refers to the death of an capital account of BoP.
infant before completing one year per 1,000. It
was very high during the colonial rule due to 21. Increase in foreign investment leads to
all of the mentioned reasons. increase in supply of foreign exchange as they
are directly proportional and thus supply
11. Increase in foreign exchange rate leads to curve of foreign exchange will shift to the
depreciation of domestic currency. With the right with no impact on the demand curve of
depreciation of currency, the exports from foreign exchange.
22. Floating exchange rate is purely determined was due to not only the loophole in the policy
by the market forces of demand and supply of but also in the system that the large
foreign exchange. landowners used their power to delay the
23. If foreign exchange rate rises due to rise in process.
demand for foreign currency in the market, in 38. States like Kerala and West Bengal have a
this situation, central bank should supply success story in implementation of land
foreign exchange from its stock to bring the reforms due to the commitment of the
exchange rate to its desired level. government of these states.
24. Marketable surplus refers to excess of crops 39. Ceiling refers to the maximum limit and land
left after self-consumption to be sold in the ceiling means the capping on the maximum
market. holding on the land that one individual can
25. A balanceed budget is a type of budget where possess.
receipts and expenditures are equal but it 40. Land reforms are the broader aspect of the
need not necessarily be prepared when the agricultural reform which is comprised of
economy needs a balanced growth. land ceiling and abolition of intermediaries.
26. Autonomous transactions are done to earn 42. Economic growth is not a cause of poverty
profit as independent of state of balance of rather it helps in dealing with the situation of
payments. poverty.
27. Economic stability refers to the situation 43. The major fiscal policy tools are comprised of
where key economic indicators like general taxes and subsidies, which are used to achieve
price level, interest rates etc remains stable in all the objectives of the government budget.
the economy. 44. Green revolution or modern farming
28. Unilateral transfers have no impact on the techniques required use of chemical-based
assets or liabilities of the county and that is fertilizers, pesticides and irrigation facilities
why recorded in the current account of BoP. which small and marginal farmers couldn’t
29. Central bank and central government are two afford. This leads to partial success of the
independent authorities who works with each green revolution as it was confined to fewer
other for the development of the country. regions and fewer crops.
31. Rapid growth rate of population has proved 45. It is true to say that the new economic reforms
to be the most critical problem in the process in India were implemented under the
of human capital formation. pressure of IMF as India was under huge
burden of loans and other forms of crisis and
32. Money multiplier is inversely related to LRR required major institutional changes in the
and CRR is a component of the same. With system.
increase in CRR, LRR increases which leads to
fall in ability of commercial banks to create 46. Planning commission was replace by NITI
credit. Aayog in 2015 by NDA government.
33. Agriculture is the most labour absorbing 47. Poverty not only impacts the individual but
sector in India, even today. So, post- also impacts the economy in the form of
independence, Indian policy makers focused underutilisation or no-utilisation of human
on the development of this sector by taking resources and hence creating a burden for the
the mentioned measures. economy.
34. British colonial government exploited Indian’s 49. Self-help groups are form of non-institutional
SAMPLE PAPER 5
economy in all possible ways to make Indian source of credit but in a more organised
economically dependent on them. All of the manner, in which lending happens within the
mentioned points signifies the state of Indian group at low and fixed interest rate.
industries during that time. 50. Although commercial banks are present in
35. When government spends in the economy it rural areas, but their presence is confided to
increases the confidence of the investor to limited loan coverage in the fear of defaults.
invest as it promotes economic discipline. So, these banking institutions have failed to
bridge the gap between informal and formal
37. It is true that the land reforms policy has not credit.
achieved the target what it was meant for, it
51. National Bank for Agricultural and Rural M4 to measure the required amount of money
Development (NABARD) is set up as an apex supply in the economy.
body to regulate and develop rural banking. 57. Rise in M3 need not necessarily means
52. Institutional sources of credit give a fixed economic growth. During the first half of
maturity for returning the loans taken from 2020, there was lockdown due to the
them. Rest all are the advantages of pandemic so, more money was required in the
institutional credit. economy as relief packages.
53. As per the survey reports of NABARD, about 58. M1 is comprised of the components which are
54 lakhs women SHGs alone are functional in most liquid form, so this measure of money
India by May, 2019. supply is also referred to as narrow money.
54. When a SHG is regular and working for more 59. Money supply in the economy rises due to
than an year, it becomes eligible to get credit either economic growth when income
from formal sources without producing increases or increase in investment by the
equivalent collateral. firms as money is required for business
55. Money supply in any economy is measured at transactions.
a particular point of time and thus it is a stock 60. M3 is a measure of money supply, so with the
variable/concept. increase in this, money supply in the economy
56. In India, central bank uses four measures of increases leading to fall in purchasing power
money supply comprised of M1 , M2 , M3 and of money as they are inversely proportional.
SAMPLE PAPER 5
SAMPLE PAPER 6
ECONOMICS
Instructions
Maximum Marks : 40
Section A
1. Read the following statements carefully and choose the correct alternatives from the
following.
Statement I Banks deposit with the central bank is not a part of narrow money of
monetary measures.
Statement II Currency notes and coins are most liquid components of measures of
money supply.
Alternatives
2. Farmers in rural areas need credit for a variety of reasons. For ……… , they need long-
SAMPLE PAPER 6
term credit.
(a) personal expenditures
(b) purchase of seeds, fertilizers etc
(c) digging of well, purchase of tractor etc
3. Which of the following components doesn’t ensure the quality of education in the country?
(a) Gross enrolment ratio (b) Years of schooling
(c) Life expectancy (d) Teacher-student ratio
4. ……… is/are the component(s) of M 1 .

(a) Time deposits (b) Treasury bills
(c) Bills of exchanges (d) None of these
5. Loans offered by commercial banks leads to ……… in money supply.

(a) increase (b) decrease
(c) no impact (d) Either (a) or (b)
following.
Statement I Revaluation and depreciation are the components of fixed exchange rate.
Statement II Revaluation leads to rise in imports while depreciation leads to rise in
exports.
Alternatives
7. India is experiencing high infant mortality rate even today. Infant mortality rate refers
to ……… .
(a) death of a child before completing 5years per 100 live births
(b) death of a child before completing 1 year per 100 live births
(c) death of a child before completing 1 year per 1000 live births
(d) death of a child before completing 5years per 1000 live births

Column I Column II
A. Depreciates with time (i) Physical capital
B. Promotes innovation and inventions (ii) Human capital
Cause and consequence of human
C. (iii) Economic growth
development
Codes
(a) A – (i) (b) B – (ii) (c) C – (iii) (d) All of these
9. As per IPR 1956, there are three schedules made to divide the industries. Schedule B
was comprised of ……… .
(a) public sector companies (b) private sector companies
(c) public sector and private sector companies working together
SAMPLE PAPER 6
10. Gujarat has a success story in organising milk cooperative. The programme is also
known as
(a) White revolution (b) Operation flood
11. If legal reserve ratio increases from 20% to 25%, money multiplier will fall from ………
to ……… .
(a) 6, 4 (b) 5, 4
(c) 3, 2 (d) 2, 1
12. The main objective of the British colonial government is to make India economically
dependent on them. For that motive, they used various policies in all spheres of the
economy. Commercialisation of agriculture led to deterioration of the conditions of the
farmers due to which of the following reasons?
(a) Britishers forced farmers to grow crops which are required in British industries
(b) Indian famers are mostly subsistence farmers who produced for self-consumption
13. The commission for Agricultural Costs and Prices was set up in year ……… .
(a) 1950 (b) 1965
(c) 1970 (d) 1990
14. Under Bretton Woods system, foreign currencies were pegged against ……… .
(a) Gold (b) US Dollar
(c) Pound (d) Euro
following.
Statement I As per the legal definition of money, it has only solved the medium of
exchange function of money.
Statement II In the process of evaluation of money all the limitations of barter system
were removed.
Alternatives
16. Mahatma Gandhi National Rural Employment Guarantee Act is linked with ………
which is a fundamental right of every citizen.
(a) right to education (b) right to work
(c) right to equality (d) right to information
17. As per the occupational structure during colonial rule, maximum population was
engaged in which of the following sectors for their living?
(a) Agriculture (b) Handicraft
(c) Small scale manufacturing (d) All of these
following.
Statement I Steel Authority of India Limited (SAIL) is public sector undertaking of
SAMPLE PAPER 6
government which received a badge of Maharatna company.

Statement II Policy related to Navratnas helps in improving the productivity and
competitiveness of public sector undertakings.
Alternatives
19. Government distributed food including grains, pulse etc to poor people to fight against
the pandemic in year 2020 under ……… scheme.
(a) MGNREGA
(b) Pradhan Mantri Garib Kalyan Anna Yojana
(c) National food for work programme
(d) None of these
20. Under flexible exchange rate system, price of foreign currency is determined by the
market forces of demand and supply. Any change in the exchange rate that occurs is
due to demand and supply only. In this situation which of the following policies
remains independent of exchange rate?
(a) Monetary policy (b) Fiscal policy (c) Both (a) and (b) (d) Neither (a) nor (b)
21. ……… is a type of budget deficit which is comprised of all the components of budget.
(a) Revenue deficit (b) Fiscal deficit (c) Primary deficit (d) All of these
following.
Statement I Poor revenue utilisation is one of the major causes of fiscal deficit in the
country.
Statement II Reducing unplanned expenditures reduces the burden on future
generations.
Alternatives
23. The objective of the government budget is not only maintaining balance between
various sections of the society but also ensuring economic growth and development.
However, at times government imposes heavy taxes on consumption of certain goods
like liquor. Which of the following objective of budget is fulfilled through this step?
(a) Economic equality (b) Social welfare
(c) Social disparity (d) None of these
24. Revenue deficit can be covered by ……… .

(a) reducing revenue expenditures (b) borrowings
(c) disinvestments (d) All of these
Section B
SAMPLE PAPER 6
following.
Statement I Economic stability increases foreign investment.
Statement II Public expenditure plays a critical role at the time of recession in the
economy.
Alternatives
26. Assertion (A) In India, government imposes higher incidence of tax on lower income
group and lower incidence of tax on higher income groups.
Reason (R) Income inequality is a common problem in developing countries like India,
where fiscal tools are used for the same.
Alternatives
Assertion (A)
of Assertion (A)
27. Increase in price of foreign exchange leads to ……… in demand for foreign exchange.
(a) increase
(b) decrease
(c) no change
(d) Either (a) or (b)
following.
Statement I Informal sector credit has been completely removed from the rural areas
post-independence.
Statement II There are proper terms of trade in formal sector lending.
Alternatives
29. India opted for a mixed economic structure during the initial phases of economic
reforms, though the policies adopted during that time indicates …….. type of economy.
(a) capitalist (b) socialist
(c) opportunist (d) None of these
30. Assertion (A) Central bank having the sole authority is able to control the money
supply in a better way.
Reason (R) When a single authority controls the issue of currency, it brings uniformity
in the system.
Alternatives
Assertion (A)
SAMPLE PAPER 6
of Assertion (A)
31. If BoT shows a balance of (-) ` 500 and imports from rest of the world is ` 3,000, the
value of exports will be ……… .
(a) ` 2,000 (b) ` 2,500
(c) ` 3,000 (d) ` 3,500
32. Assertion (A) Fiscal deficit in India specially in 2020, is generally due to the unplanned
Reason (R) Revenue deficit is a major component of India’s budget deficit in every
budget.
Alternatives
Assertion (A)
of Assertion (A)
following.
Statement I Alternative marketing channels are one of the most important components
of agricultural marketing.
Statement II Agricultural marketing helps farmers to get fair price for their produce.
Alternatives
34. Choose the pair which is incorrectly matched from the given below.
Column I Column II
A. Dual policy motive (i) De-industrialisation
B. Land tenure systems (ii) Stagnation of agriculture
C. Infrastructural development in India (iii) Opening of Suez canal
Codes
(a) A – (i) (b) B – (ii)
35. Assertion (A) Subsidies are economic help given to encourage farmers.
Reason (R) Subsidies leads to misuse or overuse of resources.
Alternatives
Assertion (A)
of Assertion (A)
SAMPLE PAPER 6

36. Which of the following is not a part of the formal source of rural banking today?
(a) Commercial banks
(b) Regional rural banks
(c) Non-banking financial companies
(d) Land development banks
37. Assertion (A) Central bank maintains foreign exchange reserves to check the
exchange rate.
Reason (R) Buying and selling of foreign exchange by central bank influences the
exchange rate.
Alternatives
Assertion (A)
of Assertion (A)
38. Which of the following can be considered as an advantage of green revolution?
(a) Food-sufficiency
(b) Reducing regional variation
(c) Reducing income inequality
39. Due to lack of ……… in rural areas, small and marginal farmers suffers the most.
(a) irrigation (b) storage
(c) finance (d) All of these
40. Which of the following is not true about the advantage of globalisation process in
India?
(a) Expansion of market (b) Weakening of social safety net
(c) Greater choice of goods (d) Both (a) and (b)
41. Match the column I and column II given below.

Column I Column II
A. Generates both economic and social benefit (i) Sustained source of living
B. Minimum basic needs (ii) Human capital
C. Horticulture (iii) Dimension of poverty alleviation programme
Codes
A B C A B C
(a) (i) (iii) (ii) (b) (ii) (iii) (i)
(c) (iii) (i) (ii) (d) (ii) (i) (iii)

(a) Increase in GDP indicates economic growth
(b) Human capital and human development are positively associated with economic growth
SAMPLE PAPER 6
(c) Knowledge and skills are the two important components of human capital formation
(d) Skill development helps in generating more employment than wage employment.
43. Assertion (A) Import substitution industrialisation controlled the growth of foreign
industries in India.
Reason (R) Quantitative restrictions on trade saved the foreign exchange reserves of
the country.
Alternatives
Assertion (A)
of Assertion (A)
44. During the year 2020, many countries helped each other by providing various
equipments like medical equipments, vaccination etc. Which of the following item of
BoP it will be considered as?
(a) Export and import of goods
(b) Export and import of service
(c) Unilateral transfers
45. Assertion (A) India faced the situation of hyperinflation during 1991 leading to fall in
purchasing power of currency.
Reason (R) The conflict in the gulf country around 1991 further intensified India’s need for
economic reforms.
Alternatives
Assertion (A)
of Assertion (A)
46. Assertion (A) Underemployment and unemployment have been a major cause of
poverty in rural areas.
Reason (R) Per capita availability of land for cultivation in country declined owing to
rising population.
Alternatives
Assertion (A)
of Assertion (A)
47. Assertion (A) Effective use of physical capital depends upon continuous training of
human capital.
SAMPLE PAPER 6
Reason (R) In every county, the methods of production techniques changes overtime
with technological upgradation.
Alternatives
Assertion (A)
of Assertion (A)
48. Observe the chart carefully.

Country 2017 Rank 2018 Rank
India 130 129
Brazil 79 79
China 86 85
Russia 49 49
South Africa 113 113
Pakistan 150 152
Afghanistan 168 170
Sri Lanka 76 71
Bhutan 134 134
Nepal 149 147
Bangladesh 136 135
Maldives 101 104
HDI ranking of which of the following countries deteriorated between 2017 and 2018?
(a) India (b) Afghanistan (c) Maldives (d) Both (b) and (c)
Section C
India’s current account balance posted a marginal surplus of USD 0.6 billion (0.1% of GDP) in the
Jan-Mar quarter 2020, as against a deficit of USD 4.7 billion in Jan-Mar 2019 and USD 2.6 billion
in the previous quarter. It is noteworthy that this is the first quarterly current account surplus
since the Jan-Mar quarter of 2007.
It is primarily on account of lower trade deficit at USD 35 billion and a rise in net invisible
receipts (which includes services, primary and secondary income) at USD 35.6 billion. The lower
trade deficit is a result of the sharp decline in demand at both the national and international
levels following the implementation of COVID-19 lockdowns and a fall in global crude oil prices
since the beginning of this year.
In the financial account, net foreign direct investment at USD 12 billion was higher than USD 6.4
billion in Jan-Mar quarter 2019. On the portfolio investment side, there was a net outflow of USD
13.7 billion as compared to USD 9.4 billion inflow in the same quarter last year on account of
money being pulled out from both debt and equity markets. A surplus at both current and
capital account has resulted in a forex reserve accretion of USD 18.8 billion in the Jan-Mar
quarter 2020.
49. Current account surplus indicates which of the following?

SAMPLE PAPER 6
(a) Debit side total exceeds credit side total (b) Credit side total exceeds debit side total
(c) Credit side total is equal to debit side total (d) Either (a) or (b)
50. Which of the following is a major cause of current account surplus as per the situation?
(a) Low trade deficit (b) Fall in demand for imports
(c) Rise in export of invisibles (d) All of these
51. Current account is a ……… concept.

(a) stock (b) flow
52. Assertion (A) Portfolio investment from abroad is recorded on the credit side of capital
account of BoP account.
Reason (R) A surplus in both current and capital account leads to accumulation of
foreign exchange reserve.
Alternatives
Assertion (A)
of Assertion (A)
53. Foreign direct investments are recoded in which of the following accounts of BoP?
following.
Statement I Trade deficit indicates excess of import of services over export of services.
Statement II A trade deficit need not necessarily leads to balance of payments deficit.
Alternatives
The Green Revolution, or the Third Agricultural Revolution, is the set of research technology
transfer initiatives occurring between 1950 and the late 1960s, that increased agricultural
production worldwide, beginning most markedly in the late 1960s. The initiatives resulted in the
adoption of new technologies, including High Yielding Varieties (HYVs) of cereals, especially
dwarf wheat and rice. It was associated with chemical fertilizers, agrochemicals, and controlled
water-supply (usually involving irrigation) and newer methods of cultivation, including
mechanisation.
National Bank for Agriculture and Rural Development is an apex development finance
institution fully owned by government of India. The bank has been entrusted with “matters
concerning policy, planning and operations in the field of credit for agriculture and other
economic activities in rural areas in India”.
55. Who among the following is known as the father of green revolution in India?
(a) MS Swaminthan (b) Dadabhai Naoroji
(c) Vikram Sarabhai (d) None of these
SAMPLE PAPER 6
56. Green revolution is also known as ……… .

(a) Golden revolution (b) Milk revolution
(c) Wheat revolution (d) None of these
57. Assertion (A) Green revolution has widened the gap between the income levels of
small and large farmers.
Reason (R) The modern farming method is expensive in nature and difficult for most
of the farmers to adopt the technique.
Alternatives
Assertion (A)
of Assertion (A)
following.
Statement I Modern farming method required use of more ground water as compared
to traditional farming.
Statement II Green revolution uses traditional knowledge and practice to increase
productivity from the existing land.
Alternatives
59. Which of the following institutions were set up as the apex body in rural areas to
support the small farmers in the adoption of modern farming methods?
(a) RRBs
(b) SIDBI
(c) RBI
(d) NABARD
60. Green revolution was the ……… set of agricultural reforms brought in India.
(a) first (b) second
(c) third (d) fourth
SAMPLE PAPER 6
OMR SHEET SP 6
Roll No.
Instructions
by the software.

1 a b c d 21 a b c d 41 a b c d
2 a b c d 22 a b c d 42 a b c d
3 a b c d 23 a b c d 43 a b c d
4 a b c d 24 a b c d 44 a b c d
5 a b c d 25 a b c d 45 a b c d
6 a b c d 26 a b c d 46 a b c d
7 a b c d 27 a b c d 47 a b c d
8 a b c d 28 a b c d 48 a b c d
9 a b c d 29 a b c d 49 a b c d
10 a b c d 30 a b c d 50 a b c d
11 a b c d 31 a b c d 51 a b c d
12 a b c d 32 a b c d 52 a b c d
13 a b c d 33 a b c d 53 a b c d
14 a b c d 34 a b c d 54 a b c d
15 a b c d 35 a b c d 55 a b c d
16 a b c d 36 a b c d 56 a b c d
17 a b c d 37 a b c d 57 a b c d
18 a b c d 38 a b c d 58 a b c d
19 a b c d 39 a b c d 59 a b c d
20 a b c d 40 a b c d 60 a b c d


Answers
1. (c) 2. (c) 3. (c) 4. (d) 5. (a) 6. (b) 7. (c) 8. (d) 9. (c) 10. (c)
11. (b) 12. (c) 13. (b) 14. (b) 15. (b) 16. (b) 17. (a) 18. (c) 19. (b) 20. (a)
21. (b) 22. (c) 23. (b) 24. (d) 25. (c) 26. (c) 27. (b) 28. (b) 29. (b) 30. (b)
31. (b) 32. (b) 33. (c) 34. (c) 35. (b) 36. (c) 37. (b) 38. (a) 39. (d) 40. (b)
41. (b) 42. (c) 43. (c) 44. (c) 45. (a) 46. (a) 47. (a) 48. (d) 49. (b) 50. (d)
51. (b) 52. (b) 53. (b) 54. (b) 55. (a) 56. (c) 57. (a) 58. (b) 59. (d) 60. (c)
EXPLANATIONS
1. Narrow money or M1 is the most liquid 13. In year 1965, the commission was set up by
measure of money supply which do not the government to set the minimum support
include bank’s deposit with the central bank. price for the agricultural produce in the
2. Farmers in rural areas need long-term credit country.
for acquiring fixed assets like tractors, land or 15. As per the legal definition of money, the
digging of well. present currency has been authorised to
3. Life expectancy doesn’t ensure the quality of function as money and hence solved all the
educational attainment in the country, it is an problems faced under barter economy.
indicator of health-related factors. 16. MGNREGA is one of the most successful
4. M1 is comprised of currency with public, employment generation programmes in the
demand deposits and other deposits with RBI. country which guarantees 100 days of
None of the mentioned components are part employment in a year and this programme is
of M1. eventually linked to right to work.
5. When commercial banks offer loans to the 17. India pre-dominantly remain an agarin
consumers, it leads to increase in deposits economy as maximum population finds their
with the commercial banks as all transactions living in agriculture or related activities.
are carried through banks only, this further Similar situation prevailed during colonial
leads to increase in money supply by the rule as well.
process of credit creation. 18. As per the policy of government of India, it
6. Revaluation is a component of fixed exchange gives different badges like Maharatna,
rate while depreciation is a component of Navratna, Mini ratna to the most
flexible exchange rate. profit-making companies with special
privileges. SAIL is one of such examples.
9. As per IPR 1956, schedule B is comprised of 12
such industries which are led by public sector 19. During the outbreak of covid-19 pandemic,
and private sector was in supporting role. government distributed free food grains and
pulses to the poor people to fight against the
10. Gujarat has a success story in organising milk situation.
cooperatives which eventually lead to
SAMPLE PAPER 6
operation flood and increased the per capita 20. Under flexible exchange rate system,
income of the state manifold. monetary policy of the central bank remains
completely independent as no intervention in
11. Money Multiplier (M) = 1/LRR. So, when LRR the foreign exchange market is done to change
is 20%, multiplier will be 5 while when LRR the exchange rate.
rises to 25%, multiplier will be 4.
21. Fiscal deficit is comprised of all the
12. Commercialisation of agriculture in India was components of budget including revenue
forced by the Britishers because of which receipts, revenue expenditures, non-debt
farmers left with no crops for self- creating capital receipts and capital
consumption leading to deteriorating their expenditures.
conditions.
23. In the above situation, government discourage 35. Subsidies are economic help given to anyone
consumption of those goods which are who cannot afford to buy a certain goods at
socially non-desirable like liquor through the market price.
heavy taxes as government knows what is the 36. Non-banking financial companies are not
best interest of the citizens. included in rural banking as they are not
25. Government budget and its expenditure plays considered as a bank in general.
an important role in dealing with the 37. Central bank of the country is responsible for
economic situations like recessions and leads maintaining the reserves of foreign exchange
to increase in foreign investment. and uses the same to check the exchange rate
26. India uses a progressive tax structure to whenever required.
reduce income inequalities by imposing 38. Green revolution leads to increase in food
higher taxes on higher income groups and grain production and achievement of
lower taxes on lower income groups. self-sufficiency of food.
27. Exchange rate and demand for foreign 39. All of the above are the areas of concern for
exchange are inversely proportional. So, with the people in rural areas specially for small
increase in exchange rate, demand for foreign farmers and they do subsistence farming.
exchange falls. 40. It is due to the globalisation process that the
28. Before independence, about 93% of total credit MNCs are able to understand and change the
requirement was fulfilled by informal sector pattern of demand in their favour. This has
but post-independence, due to development lead to weakening of social safety net.
of formal sector lending, this percentage has 42. Skill and knowledge itself are present in a
gradually decreased. However, it won’t be human capital and they are not the
correct to say that the informal sector has been components of the human capital formation
completely removed from the rural areas. process.
29. Although India opted for a mixed economic 43. Import substitution was not to control the
system, but the policies indicates towards growth of foreign companies in India rather to
socialism as public sector was given leading restrict their entry in the country to allow
role in the economic development. domestic companies to grow.
30. Central bank has the sole authority in issue of 44. The mentioned example shows the case of
currency in the country which gives it more unilateral transfers as these are one way
power to control the volume and quality of transactions and not supposed to be returned.
money in the economy. 45. India was already facing a deep crisis due the
internal situations and burden of debts, this
31. BoT = Value of Exports – Value of Import
was intensified by rising fuel prices due to the
(-) 500 = Value of Exports – 3,000
war between gulf countries, which are major
Value of Exports = 3,000 – 500 = ` 2,500
exporter of oil in India.
32. Year 2020 is marked as the year of covid 46. In rural areas, main source of living has been
pandemic where government had to agriculture.
announce multiple relief packages for the
affected people. These unplanned Over a period of time due to rising population
expenditures lead to increase in fiscal deficit of the country, many more people become
dependent on agriculture leading to
during the given year.
underemployment and unemployment as the
33. Alternative marketing channels like Apni area under cultivation haven’t increased.
SAMPLE PAPER 6
Mandi are set up as an organised markets by

47. On-the-job training is an important
the farmers and traders in those areas where
component of human capital as overtime
agricultural marketing is either not available technology changes and human needs to be
or not accessible. trained to match up and effectively use the
34. Opening of Suez Canal by the Britishers served latest techniques.
as the easy, faster and cheaper route to travel 49. Surplus refers to the situation where net
between India and Britain. But, it was not for inflow of foreign exchange becomes more
the development of infrastructure in India. than net outflows of currency.
50. As per the paragraph, during the covid-19 56. The production of wheat increased mostly
lockdown there was sharp fall in demand for due to adoption of green revolution, thus it is
import of goods leading to trade surplus, this is also referred to as wheat revolution.
accompanied by rise in exports of invisible trade.
57. Modern farming method is expensive thus
All these contributed to current account surplus.
small farmers could not afford the same,
51. Current account balance is measured over a leading to widening the gap in the income
period of time, thus it is considered as a flow levels of rich and poor farmers.
concept.
58. Modern farming method uses HYV seeds and
52. Portfolio investment impact the assets of the chemical based fertilizers which require more
country, thus they are recorded in capital water absorption; thus, it leads to overuse of
account of BoP. Also, inflows are recorded on ground water level.
the credit side.
59. National bank for agricultural and rural
53. Foreign direct investments are also similar to development was setup as the apex body to help
portfolio investments which have an impact small and marginal farmers in adoption of
on the assets of the country and thus recorded modern tools and techniques of production to
in the capital account of BoP. increase the yield from the existing piece of land.
54. Trade deficit refers to the situation where 60. Green revolution is the third agricultural
import of goods exceeds exports of goods i.e., revolution.
it is comprised of visible trade. It is the set of research technology transfer
55. Prof. MS Swaminathan is known as the father initiatives occurring between 1950 and the
of green revolution in India as he adopted the late 1960s.
technology in India from the USA.
SAMPLE PAPER 6
SAMPLE PAPER 7
ECONOMICS
Instructions
Maximum Marks : 40
Section A
1. Money is the most liquid form of asset due to which of the following reasons?
(a) It can be exchanged easily
(b) It can be stored without any additional cost
(c) Its value remains constant overtime
2. Government has no role to play in which of the ……… policies.

(a) fiscal (b) monetary
following.
Statement I Social discrimination intensifies the incidence of poverty in the country.
Statement II People are generally discriminated on economic ground and hence not
able to earn sufficient income.
Alternatives
4. Short-term objectives vary from plan to plan to depend on current needs of the country.
For example, first plan (1951-56) focused on higher agricultural production while in
second plan (1956-61) shifted the focus from agriculture to industry. In India, growth
and equity are the objectives of all the five-year plans. The goal of 12th five-year plan,
2012-17 was
(a) inclusive development (b) exclusive development
5. The regulatory body set up for the medical research and development in India is
ICMR. Its full form is ……… .
(a) International Council of Medical Research
(b) Indian Council of Medical Resources
(c) International Council of Medical Resources
(d) Indian Council of Medical Research
6. Which of the following factors has led to low economic growth in the country?
(a) Changing economic structure (b) Jobless growth
7. India’s foreign trade policy have changed many times since independence. In the initial
phase, India followed a closed macroeconomic model and tried to fulfil the domestic
demand by domestically produced goods. This strategy was technically known as
(a) Export promotion (b) Import substitution
(c) Inward looking trade (d) Both (b) and (c)
8. ……… is/are advantage(s) of loans taken from moneylenders.
(a) Easy procedure of lending
(b) Available for both productive and unproductive purposes
(c) Loans are non-collateralised
following.
Statement I The value of money remains constant overtime making it the most
preferred medium of exchange.
Statement II General price level and purchasing power of money are inversely
proportional.
Alternatives
10. WTO is ……… based organisation as compared to GATT, also the trade under WTO is
SAMPLE PAPER 7
based on bilateral and multi-lateral agreements.

(a) rule (b) agreement
(c) international (d) Both (a) and (b)
following.
Statement I Fines and penalties imposed by the government are part of non-tax
revenue of the union budget.
Statement II Non-tax revenue is the major component of governments receipts.
Alternatives
12. ……… concept of poverty is used in a comparative aspect.
(a) Absolute poverty (b) Relative poverty
13. Export of goods and services lead to ……… in the stock of foreign exchange reserves.
(a) rise (b) fall
(c) no change (d) None of these
14. ……… is excluded from current account of BoP.
(a) Investment incomes (b) Invisible trade
(c) Merchandise trade (d) Investment from rest of the world
following.
Statement I Reserve Bank of India issues all currencies in the country except
one-rupee notes.
Statement II Intrinsic value of coins must be less than the denominated value of the
same.
Alternatives
16. In agriculture marketing, when the price of goods is set by government, it is known as
……… .
(a) Minimum support price (b) Regulated price
(c) Market price (d) None of these
17. Recently, government of India merged several public sector banks due to strategic
reasons. This step leads to which of the following impact on the money supply in the
economy?
(a) Increase in money supply (b) Decrease in money supply
(c) No change in money supply (d) Either (a) or (b)
18. The price of one currency in terms of another is known as ……… .
(a) Foreign exchange (b) Foreign exchange rate
SAMPLE PAPER 7
(c) Interest rate (d) Trade rate

19. Poverty alleviation programmes in the country faced a major setback due to which of
the following reasons?
(a) Gender discrimination (b) Caste system
(c) Inefficient macroeconomic policies (d) All of these
20. The fraction by which money is multiplied in the economy is known as ……… .
(a) Primary deposit (b) Legal reserve ratio
(c) Money multiplier (d) None of these
following.
Statement I Under the fixed exchange rate system, the price of currency once fixed
cannot be changed ever.
Statement II Managing exchanging rate brings stability in the system.
Alternatives
22. Operation flood leads to increase in production milk through organising milk
cooperative. This shows ……… .
(a) agricultural marketing (b) diversification of agriculture
(c) centralisation (d) commercialisation
23. Choose the correct pair from given below

Column I Column II
A. Export and import of goods (i) Balance of invisibles
B. Unilateral receipts (ii) Capital account
C. Increase in for-ex reserves (iii) Debit item of BoP
D. Import of machinery (iv) Credit item of BoP
Codes
(a) A – (i) (b) B – (ii)
(c) C – (iii) (d) D – (iv)
24. ……… is a central government scheme which focused upon financial inclusion to
target poverty by promoting self-employment.
(a) MGNERGA (b) Jan Dhan Yojana
(c) PMGSY (d) None of these
Section B
25. Opening of Suez Canal served as a direct route between India and Britain, when was it
started?
(a) 1869 (b) 1881
(c) 1907 (d) 1909
SAMPLE PAPER 7
26. ……… is/are the component(s) of globalisation process under the new economic policy
of 1991.
(a) Partial convertibility of the Indian rupee
(b) Increase in equity limit of foreign investment
(c) Reduction in tariffs (d) All of the above
27. Assertion (A) The primary objective of the central bank is welfare of the general public.
Reason (R) Commercial banks are the financial institutions which works for the motive
of maximising the profit.
Alternatives
Assertion (A)
of Assertion (A)
28. ……… is among the economist who estimated per capita income during colonial
period.
(a) William Digby (b) Findley Shirras
(c) Dadabhai Naoroji (d) All of these
29. Which of the following is not a function of a commercial bank?

(a) Creation of credit (b) Advancement of loans
(c) Custodian of foreign exchange (d) Accepting deposits
30. Assertion (A) Foreign investment from abroad to India will be recorded on the debit
side of the capital account in the balance of payments account.
Reason (R) Foreign investment in India is of capital nature which leads to inflow of
foreign currency.
Alternatives
Assertion (A)
of Assertion (A)
31. ……… refers to migration of people between country and considered as problem of
human capital formation.
(a) Relative poverty (b) Illiteracy
(c) Brain drain (d) None of these
following.
Statement I Poor life expectancy during colonial rule is attributed to poor health and
famines.
Statement II Life expectancy rate of India during colonial rule was 44 years.
Alternatives
SAMPLE PAPER 7

33. Assertion (A) Economic inequality has created more poor people in the country than
unemployment.
Reason (R) The changing structure of the economy leads to displacement of people
from employment as they are not able to adapt to the latest techniques.
Alternatives
Assertion (A)
of Assertion (A)
following.
Statement I Although there is a steady decline in poverty over the last two decades,
but total number of the poor people have remained constant.
Statement II Poverty in urban areas have decreased at a slower pace as compared to
urban areas.
Alternatives
35. Choose the correct statement from given below related to Indian economy between
1950-90.
(a) The share of agricultural products in country’s exports increased
(b) The share of agricultural products increased while that of manufacturers decreased
(c) The share of manufactured goods in country’s exports increased
36. Assertion (A) Governor of RBI gives advise to central government regarding tax
revenue.
Reason (R) It is imperative for the central government to follow the advise of RBI.
Alternatives
Assertion (A)
of Assertion (A)
(d) Both are false

Column I Column II
SAMPLE PAPER 7
A. Migration (i) Physical capital

B. Knowledge resource (ii) Labour supply
C. Employment exchange (iii) Getting information regarding jobs
D. Property (iv) Working in another city
Codes
(a) A – (i) (b) B – (ii)
(c) C – (iii) (d) D – (iv)
38. Assertion (A) Rapid growth of the banking system had a positive impact on rural farm
and non-farm output.
Reason (R) The institutional credit arrangement continues to be inadequate.
Alternatives
Assertion (A)
of Assertion (A)
39. The vegetable and fruit market in Andhra Pradesh is called as ……… .
(a) Apni Mandi (b) Hadaspar Mandi
(c) Rythu Bazars (d) Uzhavar Sandies
40. Assertion (A) Accommodating items of trade are undertaken to bring BoP to surplus.
Reason (R) Accommodating items are net consequences of autonomous transactions
that are undertaken to correct imbalance in autonomous items of BoP.
Alternatives
Assertion (A)
of Assertion (A)

Column I Column II
A. Prior to 1921 (i) Death rate
B. After 1921 (ii) First stage of demography
C. The number of death per 1,000 persons in a year (iii) Second stage of demography
D. The number of births per 1,000 person in a year (iv) Birth rate
Codes
(a) A – (i) (b) B – (ii)
(c) C – (iii) (d) D – (iv)
42. Assertion (A) Modernisation as an objective of planning means adoption of new

technology along with a change in the social and economic outlook.
Reason (R) With the progress of the economy, techniques of production along with
SAMPLE PAPER 7
preference of people also changes.

Alternatives
Assertion (A)
of Assertion (A)
following.
Statement I Import of services leads to increase in supply of foreign exchange.
Statement II Import of both goods and services is part of current account of BoP.
Alternatives
44. Assertion (A) Role of RBI changed from being a regulator to a facilitator during the
new economic reforms.
Reason (R) The financial market of the country is regulated by RBI.
Alternatives
Assertion (A)
of Assertion (A)
45. Kerala, Punjab, Tamil Nadu, Maharashtra and Haryana have good HDIs. But states like
Bihar, Uttar Pradesh, Madhya Pradesh, Rajasthan and Odisha have HDIs close to
nearly one-half to that of Kerala. Which of the following reasons can be attributed for
good HDIs of Kerala, Punjab, etc?
(a) Better education facility
(b) Proper implementation of policies
(c) People participation
46. Assertion (A) The high default rate of agricultural loans has led to lower sanction rate
of agricultural credit.
Reason (R) Agriculture has remained a risky occupation due to natural constraint in
farming.
Alternatives
Assertion (A)
of Assertion (A)
SAMPLE PAPER 7

(a) Demand deposits with commercial banks are a liquid component of money supply
(b) Increase in M1 indicates increase in money supply in the economy
(c) Time deposits are most liquid measure of money supply
(d) RBI controls the ability of commercial bank to create money
48. Observe the image graph below. $
Foreign exchange rate

Assuming that the above curve shows the demand curve for
foreign exchange, the movement from point A to B represents 16
B
which of the following? 12 A
(a) Appreciation of domestic currency
(b) Depreciation of domestic currency
(c) Depreciation of foreign currency D
(d) Revaluation of domestic currency 60 80 Q

Quantity of foreign exchange
Section C
On 8th November, 2016, Prime Minister Narendra Modi in a surprise announcement said the
existing higher denomination currency (` 500 and ` 1,000) will cease to be legal tenders. PM said
this is government’s biggest push to fight black money and end corruption. The opposition,
however, criticised the government for poor implementation of the scheme and said a lot of
people have died standing in queues trying to get their hands on the new currency.
The government introduced new ` 500 and ` 2,000 notes and urged people to move towards
cash-less economy. This is not the first time that demonetisation has been implemented in India.
In 1936, `10,000, which was the highest denomination note, was introduced but was demonetised
in 1946. Though, it was re-introduced in 1954 but later, in 1978, the then Prime Minister Morarji
Desai in his intensive move to counter the black money, introduced The High Denomination
Banks Act (Demonetisation) and declared ` 500, ` 1,000 and ` 10,000 notes illegal.
49. Which of the following is true about the demonetisation policy?
(a) It refers to the removal of legal tender status of the existing currency notes
(b) The exchange of goods and services is not possible using the existing currency notes
50. The recent demonetisation was carried with which of the following objectives?
(a) Removing black money from the economy
(b) To bring transparency in the system
following.
Statement I Demonetisation resulted in increase in digital modes of payments.
Statemant II Digitalisation brings transparency in the system.
SAMPLE PAPER 7
Alternatives
52. Before 2016, how many times demonetisation policy was adopted in India?
(a) Two (b) Three
(c) Four (d) Five
53. Assertion (A) Demonetisation increases the economic growth of the country by
increasing number of tax payers.
Reason (R) Post-demonetisation, many shall companies were identified and shut down
leading to increase in money supply.
Alternatives
Assertion (A)
of Assertion (A)
54. First demonetisation in India happened in which year?

(a) 1936 (b) 1946
(c) 1954 (d) 1978
In India, there is a constitutional requirement as per Article 112 to present before the Parliament
a statement of estimated receipts and expenditures of the government in respect of every
financial year, which runs from 1st April to 31st March.
This ‘Annual Financial Statement’ constitutes the main budget document of the government.
Although the budget document relates to the receipts and expenditures of the government for a
particular financial year, the impact of it will be there in subsequent years.
There is a need therefore to have two accounts, i.e. those that relate to the current financial year
only are included in the revenue account (also called revenue budget) and those that concern the
assets and liabilities of the government into the capital account (also called capital budget). In
order to understand the accounts, it is important to first understand the objectives of the
government budget.
55. Which of the following components of government budget is based upon influencing
the burden of future liability?
(a) Revenue budget (b) Capital budget
56. Which of the following is not a component of revenue budget?

(i) Capital receipts
(ii) Revenue receipts
(iii) Capital expenditure
(iv) Revenue expenditure
(a) (i) and (iii) (b) (ii) and (iv)
(c) (i) and (iv) (d) (ii) and (iii)
SAMPLE PAPER 7
following.
Statement I Corporate profit tax will be a part of revenue budget.
Statement II Revenue budget is non-recurring in nature.
Alternatives
58. Assertion (A) The union budget in India is presented before the Parliament twice
during the fiscal year.
Reason (R) Budget presented by the government is comprised of revenue budget and
capital budget in its estimated form.
Alternatives
Assertion (A)
of Assertion (A)
59. Which of the following is a form of indirect tax as a component of revenue receipts of
the budget?
(a) Wealth tax (b) Income tax
60. All the components of revenue budget are in ……… terms.

(a) actual (b) potential
(c) estimated (d) Both (b) and (c)
SAMPLE PAPER 7
OMR SHEET SP 7
Roll No.
Instructions
by the software.

1 a b c d 21 a b c d 41 a b c d
2 a b c d 22 a b c d 42 a b c d
3 a b c d 23 a b c d 43 a b c d
4 a b c d 24 a b c d 44 a b c d
5 a b c d 25 a b c d 45 a b c d
6 a b c d 26 a b c d 46 a b c d
7 a b c d 27 a b c d 47 a b c d
8 a b c d 28 a b c d 48 a b c d
9 a b c d 29 a b c d 49 a b c d
10 a b c d 30 a b c d 50 a b c d
11 a b c d 31 a b c d 51 a b c d
12 a b c d 32 a b c d 52 a b c d
13 a b c d 33 a b c d 53 a b c d
14 a b c d 34 a b c d 54 a b c d
15 a b c d 35 a b c d 55 a b c d
16 a b c d 36 a b c d 56 a b c d
17 a b c d 37 a b c d 57 a b c d
18 a b c d 38 a b c d 58 a b c d
19 a b c d 39 a b c d 59 a b c d
20 a b c d 40 a b c d 60 a b c d


Answers
1. (a) 2. (b) 3. (c) 4. (a) 5. (b) 6. (c) 7. (b) 8. (d) 9. (b) 10. (b)
11. (a) 12. (b) 13. (a) 14. (d) 15. (a) 16. (b) 17. (c) 18. (b) 19. (d) 20. (c)
21. (b) 22. (b) 23. (c) 24. (b) 25. (a) 26. (d) 27. (b) 28. (c) 29. (c) 30. (c)
31. (c) 32. (c) 33. (b) 34. (c) 35. (a) 36. (d) 37. (c) 38. (b) 39. (c) 40. (c)
41. (d) 42. (a) 43. (b) 44. (b) 45. (d) 46. (a) 47. (c) 48. (b) 49. (c) 50. (c)
51. (c) 52. (b) 53. (b) 54. (a) 55. (b) 56. (a) 57. (a) 58. (c) 59. (d) 60. (c)
EXPLANATIONS
1. Currency is the most liquid form of money 15. RBI issues all currencies in the country except of
which do not need to be converted before doing one-rupee note that is issued by government of
any transaction. Thus, it is the most liquid form India. For coins, the intrinsic value is close to the
of money. denominated value.
2. Monetary policy of the country is taken care of 16. Regulated price is the price which is set and
by the central bank hence, government has no changed by the government, it reduce the impact
role to play in this. Though both central bank of fluctuation in market price.
and central government works in coordination 17. Merger of bank has no impact on the quantum of
with each other. money supply in the economy as the customers
4. Inclusive development means development of all remains same in spite of mergers.
the groups of societies taken together. 18. Price of one currency in terms of the other
5. ICMR stands for Indian Council of Medical currency in the foreign exchange market is known
Resources which is responsible for research and as foreign exchange rate. In other words, different
development of health infrastructure in the country. currencies are traded with each other at this rate.
6. Economic growth in India is affected by 19. The government of India adopted different
changing structure as people lacked skills approaches to fight against poverty but
required for new techniques and led to government has faced major setback due to all of
unemployment and poverty. the mentioned reasons.
7. Import substitution is the term used to substitute 20. Money multiplier refers to the fraction by which
imports by domestically produced goods to money is multiplied in the process called credit
achieve self-reliance. or money creation.
9. The value of money remains constant overtime 21. Under fixed exchange rate system, price of the
only when the general price level remains foreign currency is fixed by the central bank and
constant. If prices of the commodity increase, change happens whenever there is a need to
purchasing power of money falls and vice-versa. improve the export compatibility.
10. WTO functions on agreement-based system to 23. Foreign exchange reserves are an asset for the
facilitate internal trade and promote country and increase in assets are debited as per
multi-lateral trade agreement. the accounting rule of BoP account.
11. Non-tax revenue is not the major source of 24. Jan Dhan Yojana was started with the objective
of bringing every individual to the banking
government revenue as it is received against
system, this helps in mobilising the money in the
optional provisions and not compulsory.
SAMPLE PAPER 7
economy, which will further help in creating

12. Relative poverty is used in a relative or self-employment opportunity.
comparative sense as it is used to compare
25. Opening of Suez Canal reduced the cost as well
different people or regions.
as time of transportation between India and
13. Export of goods and services leads to inflow of Britain, which helped the British government in
foreign currency in the country which further further serving their motive of exploitation of
accumulates the stock of foreign exchange in the Indian economy.
country.
27. Central bank of the country is the regulator of
14. Investment from rest of the world is recorded in the financial market of the country which tries to
the capital account of BoP as it affects the assets include everyone with the financial market for
of the country at a given point of time. the welfare of the general public.
28. Dadabhai Naoroji is known for his contribution 44. RBI as the apex institution was regulating the
towards India to calculate national income, entire financial market of the country, during the
poverty line etc as Britisher’s didn’t took serious new economic reforms of 1991, its role changed
efforts for the same. from a regulator to facilitator.
29. The foreign exchange reserves are maintained by 46. Farming in India has always been a risky
the central bank, thus central bank is known as occupation causing in high default rates of the
the custodian of foreign exchange reserves, not farmers and increasing losses of formal banking
the commercial banks. system.
30. Investment from aboard leads to inflow of 47. Time deposits are least liquid component of
foreign currency and thus recorded as a credit money supply as they cannot be withdrawn
side item and not as a debit side item. before a stipulated time.
31. Brain drain is a serious problem of human 48. The given graph indicates the depreciation of
capital formation as skilled people migrate to domestic currency as the price of foreign
other country in search of better opportunity. currency has increased in terms of domestic
32. During colonial period, the life expectancy of currency.
India was low due poor health infrastructure as 49. Demonetisation refers to the process of removal
well as widespread famines. of the legal tender status of an existing currency
33. Economic inequality refers to the situation where which makes it invalid to use those currency for
people are paid different wages due to various exchange.
forms of discriminations like gender. 50. The recent demonetisation was brought with the
34. The percentage of poor in the country has objective of removing black money and bringing
declined gradually but due to rapid growth in more transparency in the system to increase tax
the rate of population, number of poors in payers.
absolute terms remain high in the country.
51. One other objective of demonetisation was to
35. The period between 1950 to 1990 is marked as a promote digital modes of payments as it brings
period of green revolution as well as golden more transparency in the economy.
revolution, this led to increase in the
53. Demonetisation policy led to removal of black
productivity of agriculture and hence the share
money to a large extent and thus increasing the
in exports also increased.
number of tax payers in the country which
36. Central bank as an institution helps the central further leads to economic growth.
government in overall financial front, but it is
not compulsory for the central government to
54. In India demonetisation first happened in year
1936 when ` 10,000 notes were demonetised.
follow the directions of RBI.
37. Employment exchanges are used to hire labour 55. Capital budget is comprised of receipts and
for variety of jobs in different industries as they expenditures which either impacts the assets of
possess the information about the availability of the country or the liabilities.
labour. 56. Revenue budget is comprised of revenue receipts
38. Credit plays a vital role in the development of and revenue expenditures while capital budget is
rural areas and in recent times, the expansion of comprised of capital receipts and capital
credit facilities has helped in the growth of both expenditure.
farm and non-farm produce. 57. Corporate profit tax is a form of direct tax and
39. Rythu Bazars were established in 1999 in Andhra does not have any impact on the assets or
Pradesh as an alternative marketing channel to liabilities thus included in revenue budget.
protect the farmers from the intermediaries. Revenue budget is comprised of tax and non-tax
revenues and tax-revenues are recurring in
SAMPLE PAPER 7
40. Accommodating items are taken for the motive

nature.
of bringing BoP to a state of balance and not to
bring a surplus in it. 58. The union budget is presented before the
Parliament only once in a fiscal year, in the
42. Planning policy in India had four major
month of February every year.
objectives, modernisation is one of the major
objectives which focus on bringing modern 59. The mentioned taxes are types of direct tax.
production techniques as well as changing 60. Government budget includes all its components
people’s outlook. in an estimated term as it is presented for the
43. Import of goods or services leads to increase in coming fiscal year.
demand for foreign exchange as one has to make
payment to buy from foreign country.
SAMPLE PAPER 8
ECONOMICS
Instructions
Maximum Marks : 40
Section A
1. Which of the following was the feature on Indian economy on the eve of
independence?
(a) Poor and backward (b) Modern
(c) Self-reliant (d) None of these
2. High birth rate and low death rate is a feature of …… phase of demographic profile.
(c) third (d) None of these
following.
Statement I Taxes are legal payments but not compulsory payments.
Statement II Anyone who doesn’t pay any tax is not eligible to use public services
Alternatives
4. ……… was replaced by WTO as the governing body for regulating international trade.
(a) IMF (b) GTTA (c) GATT (d) IBRD
5. Invisible balance can be calculated as ……… .

(a) Export – Imports of services
(b) Trade balance + Balance of non-factor service
(c) Balance of non-factor service + Balance of transfers
(d) Exports–Imports + Balance of factor services
6. ……… can be used to deal with the situation of hyperinflation in the economy at a
given point of time by the government.
(a) Balanced budget (b) Deficit budget
(c) Surplus budget (d) None of these
7. Which of the following is/are true about liberalism?

(a) It promotes economic development (b) It leads to political liberty
(c) It gives freedom of private enterprises (d) All of these
8. India’s growth in terms of HDI has shown dismal trends during the recent past. ………
can be attributed for the same.
(a) communal feelings (b) lack of resources
(c) illiteracy (d) All of these
9. In agriculture, due to long time gap between crop sowing and realisation of income,
farmers are in strong need for credit. Various needs for loans of farmers can be
categorised as under
(a) short-term credit (b) medium-term credit
(c) long-term credit (d) All of these
10. The literacy rate during the colonial rule was very low. Literacy rate is a part of ………
of the country.
(a) infrastructure (b) demographic profile
(c) occupational structure (d) None of these
11. Which one of the following is used as a fraction to multiply currency in the economy
by the commercial banks?
(a) M = 1/LRR (b) M = 1/SLR (c) M = 1/CRR (d) None of these
12. The current account of BoP excludes items related to ……… .

(a) financial assets (b) borrowing from foreign countries
(c) foreign investment (d) All of these

(a) Currency held by public is most liquid form of money
(b) The number of times a unit of money change hands is known a velocity of money
(c) Commerical banks are financial intermediaries which to earn profit
SAMPLE PAPER 8
(d) M1 is the least liquid measure of money supply in India
14. In order to fulfill the ……… objective of planning, Indian policy makers opted for a
closed macroeconomic model during the initial phase of industrialisation.
(a) growth (b) modernisation (c) self-reliance (d) equity
15. Indian banking works on the system called fractional reserve, in which every
commercial bank is required to keep certain portion of total deposits as reserves.
Which of the following ratios are part of the reserve requirements?
(a) CRR (b) SLR (c) Both (a) and (b) (d) None of these
following.
Statement I Poverty and unemployment leads to loss of human capital.
Statement II Human capital creates a virtuous cycle which improve the living
conditions of each coming generations.
Alternatives
17. The number of persons employed from the labour force per hundred persons is termed
as ……… .
(a) Worker population ratio (b) Headcount ratio
(c) Capital gain ratio (d) Legal reserve ratio
18. If `75 are required to buy 1$, instead of `78, it represents

(a) domestic currency has appreciated
(b) domestic currency has depreciated
(c) rupee value of import bill will increase
19. Occasional intervention by central bank in the foreign exchange market to influence
the exchange rate is known as ……… .
(a) Managed floating rate (b) Hedging
(c) Appreciation (d) Depreciation
20. Write the correct pair.

Column I Column II
A. Export and import of goods (i) Accommodating item
B. Foreign exchange reserve (ii) Autonomous item
C. Balance of trade (iii) Difference between the export and import of
visible items
D. Unilateral transfers (iv) Factor incomes in the form of interest, rent etc
Codes

(a) NITI Aayog started functioning from 1st January, 2018.
SAMPLE PAPER 8
(b) Before 1921, India was in the second stage of demographic profile.
(c) Opening of Suez Canal by colonial government, reduced the cost of production and
made Indian market accessible.
(d) Tata Iron and Steel Corporation was set-up in 1807.
22. Goods and Services Tax was introduced in 2017 as reform in the tax structure of the
country. Burden of GST is ……… onto those who are not meant for it.
(a) non-transferable (b) transferable
23. Central bank of the country is completely responsible of controlling the money supply
in the economy in every situation. One such policy is dear money policy. Dear money
policy of central bank is used to keep the growth steady and in-line with other
economic factors. This refers to
(a) Tighten the money supply in the economy (b) Ease the money supply in the economy
(c) Allow commercial banks to work under less strict environment
24. ‘Above the line items’ of BoP are undertaken with the motive of ……… .
(a) balancing BoP (b) social welfare (c) profit motive (d) All of these
Section B
25. Assertion (A) Adoption of new technology in the production of goods and services to
increase the output is called modernisation.
Reason (R) Modernisation does not refer only to the use of technology but also to
change in social outlook.
Alternatives
Assertion (A)
of Assertion (A)
26. Demand deposits have which of the following features?

(a) Cheque able deposits (b) Deposits which can be withdrawn on demand
(c) Fixed deposits for a specific period (d) Both (a) and (b)
27. Assertion (A) Under the IPR 1956, the private sector was kept under state control
through licensing system.
Reason (R) Licencing policy led to controlled growth of private sector enterprises.
Alternatives
Assertion (A)
of Assertion (A)
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28. Identify the correct sequence of alternatives given in column II by matching them with
respective terms in column I.
Column I Column II
A. Occupational structure (i) Percentage of population that can read and write
B. Infant mortality rate (ii) Distribution of workforce in primary, secondary and tertiary
sector
C. Literacy rate (iii) National Income ÷ Population
D. Per capita income (iv) Number of infants who die every year, per thousand infants
Codes
A B C D A B C D
(a) (ii) (i) (iv) (iii) (b) (i) (iii) (ii) (iv)
(c) (ii) (iv) (i) (iii) (d) (iii) (ii) (iv) (i)
(a) Railways was introduced for easy mobilisation of goods and passengers in India.
(b) Colonial government developed major ports for easy transportation of goods from India
to Britain.
(c) Colonial government focused on development of all reason roads in every part of the
country.
30. Prior to independence, farmers, while selling their produce to traders, suffered from
faulty weighing and manipulation of accounts. In order to protect the farmers from this
post-independence, which of the following measures were introduced?
(a) Alternative marketing channel (b) Self-help groups
(c) Agricultural marketing (d) All of these
31. Assertion (A) Foreign trade creates an opportunity for the producers to reach beyond
the domestic markets.
Reason (R) Expansion of trade beyond domestic boarders leads to increase in profit
margin of the firms involved in trade.
Alternatives
Assertion (A)
of Assertion (A)
(a) Social infrastructure directly contributes in the production activities.
(b) ‘Jail Cost of Living’ index was introduced by Amartya Sen.
(c) Poverty line of rural areas has been set below poverty line of urban areas.
(d) India’s infant mortality rate is higher than that of Bangladesh.
33. In a market economy, central problem is dealt by
(a) market forces of demand and supply (b) planning by capitalist
(c) invisible hands (d) Both (a) and (c)
34. Assertion (A) Rapid economic growth is one way to solve the problem of poverty and
not the only way of doing so.
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Reason (R) Growth of GDP indicates nothing about the distribution of income among
the people of the country.
Alternatives
Assertion (A)
of Assertion (A)
35. India occupies ……… place in milk production in the world.

(c) third (d) fourth
following.
Statement I Present monetary system was introduced during the colonial rule
Statement II India learned effective administration from the British government.
Alternatives

Column I Column II
A. Non-tariff barriers (i) Imposed by WTO
B. Bank rate (ii) Also known as discount rate
C. Custom duties (iii) Post 1991, maximum rate of duty is 50%
Codes
(a) A – (i) (b) B – (ii) (c) C – (iii) (d) All of these
38. Assertion (A) Foreign exchange reserves are considered as a liability for the economy.
Reason (R) The currency issued by the central bank is its monetary liability.
Alternatives
Assertion (A)
of Assertion (A)
39. Assertion (A) Central government is responsible for the provision of public goods in
the economy.
Reason (R) Public goods once provided in the economy, no one can be denied its
consumption.
Alternatives
Assertion (A)
SAMPLE PAPER 8
of Assertion (A)
following.
Statement I Absolute poverty and human poverty are one or the same thing.
Statement II Poverty measures in India do not indicate the condition of poor.
Alternatives
Government
Budget
----------- -----------
Revenue Revenue Capital Capital

Receipts Expenditure Receipts Expenditure
Tax Revenue Non-tax

Revenue
Direct Tax Indirect Tax
Which of the following correctly complete the flow chart in the order from left to right?
(a) Capital account, Revenue account (b) Capital budget, Revenue budget
(c) Revenue budget, Capital budget (d) Revenue account, Capital account
42. Assertion (A) Monetary policy of RBI is a part of central bank’s function as banker to
the government.
Reason (R) Central bank as a banker to the government meets all banking needs of the
government.
Alternatives
Assertion (A)
of Assertion (A)
43. Agriculture marketing does not comprised of ……… .
(a) transportation of produce to the market place for sale.
(b) grading of the produce according to the quality
(c) storage of the produce for sale in future
(d) credit taken to meet expenditure on agriculture
following.
SAMPLE PAPER 8
Statement I Owing to the new economic reforms, Indian economy became more
vibrant.
Statement II Economic growth accelerated after the economic reforms of 1990s.
Alternatives
45. ……… is used to measure the relative poverty in the country.

(a) Poverty line (b) Gini coefficient
46. Assertion (A) Balance of payments account always balances in accounting terms.
Reason (R) When the balance of all the accounts of BoP comes to be zero, it is said to be
in equilibrium.
Alternatives
Assertion (A)
of Assertion (A)
47. MGNREGA guarantees ............ days of guaranteed employment in a calendar year.

(a) 100 (b) 120
(c) 150 (d) 200
48. Assertion (A) Managed floating exchange rate system brings stability in the market as
well as reduces the burden of the central bank.
Reason (R) Determination of exchange rate by market forces and check by the central
bank is the key feature of dirty floating exchange rate.
Alternatives
Assertion (A)
of Assertion (A)
Section C
India has plunged into recession for the first time in nearly a quarter of a century as the
pandemic continues to weigh heavily on Asia’s third biggest economy, which economists warn
will struggle to recover from the slump.
Official data published on Friday showed gross domestic product for the July-September quarter
fell by 7.5% compared to the same period last year, when the economy was growing by more
than 4%. That follows a record drop of nearly 24% in GDP in the April-June period, the first
SAMPLE PAPER 8
quarter of India’s fiscal year.

“With a view to contain the spread of the Covid-19 pandemic, restrictions were imposed on the
economic activities not deemed essential during the first quarter,” the Indian Ministry of
Statistics said in a statement on Friday. “Though the restrictions have been gradually lifted, there
has been an impact on the economic activities.”
While manufacturing returned to growth, the services sector suffered a second consecutive
double-digit decline. Government consumption also fell sharply in part because of an
“inadequate fiscal response to the crisis,” said senior India economist at capital economics, Shilan
Shah.
Source CNN India, 27th November, 2020.
49. India has plunged into recession for the first time in nearly a quarter of a century as the
pandemic continues to weigh heavily on Asia’s third biggest economy. Which of the
following fiscal measures can be taken to deal with this situation?
(a) Increase in tax rate (b) Decrease in subsidies
(c) Increase government spendings (d) Both (a) and (c)
50. The restrictions in the economic activities during the lockdown has led to
(a) fall in GDP (b) fall in number of tax payers
51. Assertion (A) The covid-19 pandemic have intensified the fiscal deficit of India.
Reason (R) Government announced many relief packages during the lockdown to
support the living of people, all these are unplanned expenditures.
Alternatives
Assertion (A)
of Assertion (A)
following.
Statement I Inadequate fiscal response led to the economic crisis during the pandemic.
Statement II Fiscal discipline cannot be maintained in a situation of an unforeseen
circumstances.
Alternatives
53. Which of the following sectors of the Indian economy suffered a decline in the growth
post the lockdown rules were eased?
(a) Manufacturing (b) Services (c) Both (a) and (b) (d) Neither (a) nor (b)
54. Government consumption expenditures ……… post the lockdowns.

(a) increased (b) decreased
(c) remain constant (d) None of these
SAMPLE PAPER 8
Diversification includes two aspects - one relates to change in cropping pattern and the other
relates to a shift of workforce from agriculture to other allied activities like livestock, poultry,
fisheries etc. and non-agriculture sector. The need for diversification arises from the fact that
there is greater risk in depending exclusively on farming for livelihood.
Diversification towards new areas is necessary not only to reduce the risk from agriculture sector
but also to provide productive sustainable livelihood options to rural people. Much of the
agricultural employment activities are concentrated in the Kharif season.
But during the Rabi season, in areas where there are inadequate irrigation facilities, it becomes
difficult to find gainful employment. Therefore, expansion into other sectors is essential to
provide supplementary gainful employment and in realising higher levels of income for rural
people to overcome poverty and other tribulations.
55. Diversification helps in increasing farmers income. Diversification in agriculture is

comprised of
(a) change from mono-cropping to multiple-cropping
(b) scientific crop rotation
(c) shift to non-farm activities
following.
Statement I Diversification towards new areas helps in reducing crop failure.
Statement II People in rural areas do not prefer diversification due to lack of
awareness.
Alternatives
57. Assertion (A) Diversification helps in sustaining the income of the farmers in rural
areas.
Reason (R) Non-farm activities are not seasonal and gives employment throughout the
year.
Alternatives
Assertion (A)
of Assertion (A)
58. Livestock comes under the category of ……… activities.

(a) farm (b) allied
(c) diversification (d) Both (b) and (c)
59. It is difficult to find gainful employment in which of the following seasons due to
inadequate irrigation facilities?
(a) Rabi (b) Kharif
(c) Zaid (d) None of these
60. Agriculture is the main source of occupation even today, which of the following
challenges of Indian economy can be addressed by opting for diversification in
SAMPLE PAPER 8
agriculture?
(a) Poverty (b) Unemployment
OMR SHEET SP 8
Roll No.
Instructions
by the software.

1 a b c d 21 a b c d 41 a b c d
2 a b c d 22 a b c d 42 a b c d
3 a b c d 23 a b c d 43 a b c d
4 a b c d 24 a b c d 44 a b c d
5 a b c d 25 a b c d 45 a b c d
6 a b c d 26 a b c d 46 a b c d
7 a b c d 27 a b c d 47 a b c d
8 a b c d 28 a b c d 48 a b c d
9 a b c d 29 a b c d 49 a b c d
10 a b c d 30 a b c d 50 a b c d
11 a b c d 31 a b c d 51 a b c d
12 a b c d 32 a b c d 52 a b c d
13 a b c d 33 a b c d 53 a b c d
14 a b c d 34 a b c d 54 a b c d
15 a b c d 35 a b c d 55 a b c d
16 a b c d 36 a b c d 56 a b c d
17 a b c d 37 a b c d 57 a b c d
18 a b c d 38 a b c d 58 a b c d
19 a b c d 39 a b c d 59 a b c d
20 a b c d 40 a b c d 60 a b c d


Answers
1. (a) 2. (b) 3. (d) 4. (c) 5. (a) 6. (c) 7. (d) 8. (d) 9. (d) 10. (b)
11. (a) 12. (d) 13. (d) 14. (c) 15. (c) 16. (c) 17. (a) 18. (a) 19. (a) 20. (c)
21. (c) 22. (b) 23. (a) 24. (c) 25. (a) 26. (d) 27. (b) 28. (c) 29. (b) 30. (c)
31. (b) 32. (c) 33. (d) 34. (a) 35. (a) 36. (c) 37. (b) 38. (d) 39. (b) 40. (b)
41. (c) 42. (c) 43. (d) 44. (c) 45. (b) 46. (a) 47. (a) 48. (a) 49. (c) 50. (c)
51. (a) 52. (c) 53. (b) 54. (b) 55. (d) 56. (c) 57. (a) 58. (c) 59. (a) 60. (c)
EXPLANATIONS
1. The condition of Indian economy was very 16. Unemployment leads to poverty and these
poor and backward as the British colonial two leads to loss of human capital as the
government paid no attention for the resources could not be properly utilised while
development of India. the benefits of human capital are passed onto
2. Second phase of demographic profile is from one generation to another.
characterised by high birth rate and low death 17. Worker population ratio indicates the number
rate which leads to population explosion in of persons working as a percent of total
the country. population from the country at a given point
3. Taxes are both legal and compulsory of time.
payments and required to be paid by all 18. When the foreign exchange rate falls, it leads
individuals who are eligible. However, no to appreciation of domestic currency as now
one can be denied use of public services even we are required to pay less price as compared
if he or she doesn’t pay taxes. to previous situation.
4. General Agreement on Trade and Tariff 20. Balance of trade which is also known as
(GATT) was replaced by WTO as a governing balance of visible items is calculated as the
body to regulate international trade in 1995. difference between export of goods and
6. A surplus budget is the situation where import of goods.
government spends less than the receipts, thus 22. As GST is a form of indirect tax, burden of
in the situation of high inflation, this can be which is transferable to others on whom these
opted to correct the situation. taxes are not imposed.
7. Liberalism is similar as liberalisation which 23. Dear money policy is used to reduce the
gives greater autonomy to both private and money supply in the economy when required
public sectors to function in the economy. by reducing the ability of commercial banks to
9. Farmers takes credit for a variety of purposes. create money.
These loans are categorised on the basis of 24. Above the line items are the autonomous
time periods known as short-term, items of BoP which are undertaken to earn
medium-term and long-term loans. profits and are independent of state of BoP.
11. The fraction by which commercial banks 25. Modernisation is a planning objective which
create money in a given period of time is not only includes adoption of modern
equal to the reverse of legal reserve ratio, techniques of production but also comprised
known as money multiplier. of change in attitude or outlook of individuals
12. All of the above mentioned items are included to accept the change.
SAMPLE PAPER 8
in capital account of BoP as they impact the 26. Demand deposits are those which are
assets and liabilities of the country. withdrawable on demand by issuing cheques.
13. M1 is the most liquid measure of money 27. IPR 1956 introduced categorisation of
supply in the economy as it is comprised with industries into various schedules and
currency in hand and demand deposits which introduced the licensing system to control the
are withdrawal on demand. growth of private sector so as to ensure
15. The legal minimum fraction of deposits that equitable production of various goods.
commercial banks must reserve is known as 29. India’s infrastructural development was
LRR which is comprised of two components motivated to serve the objective of
known as CRR and SLR in India. industrialisation of Britain, for that reason they
developed the ports in order to reduce the it is always balanced by accommodating

cost and time of transportation of goods. transactions.
30. Agricultural marketing was setup by the 47. Under MGNREGA, government gives 100 days of
government to reduce the role of guaranteed employment to all those who
middleman and give the benefit of market volunteer to do unskilled manual work.
price to the farmer. 48. Under managed floating exchange rate system,
31. As an outcome of globalisation, there has exchange rate is determined by market forces of
been an integration of markets around the demand and supply while the fluctuations are
globe. This has expanded the market size checked by the central bank, this reduces the
and help the producers earning more burden on central bank to determine the price of
profits by selling internationally. exchange rate.
32. In monetary terms, poverty line in rural 49. During recession period, the employment in the
areas is less than that of urban areas due to economy decreases, in such a situation government
lower prices in rural areas. should spend more to boost employment.
34. In India, a three-dimensional approach is 50. The lockdowns have witnessed decrease in
adopted to deal with poverty and growth employment leading to fall in GDP and government’s
of GDP is one of the such components. As revenue collection in the form of taxes.
the economy grows overtime, countries 51. Fiscal deficit is the overall deficit of the budget
need to ensure the equality in the and due to increase in unplanned expenditure of
distribution of income to deal with the the government the amount of fiscal deficit has
problem of poverty. grown over time.
35. India is the largest producer of milk in the 52. This global pandemic has appeared as a surprise
world due to white revolution. for the whole globe and in short-run, most of the
37. Banks rates are interest rate charges by economies were not able to cope up with the
central bank, these were reduced during same due to the failure of planning and thus the
the new economic reform of 1990s. fiscal discipline cannot be maintained in such a
38. Foreign exchange reserves are an asset for situation.
the economy as they are reserved for 53. As per the available data, post easing the
foreign transactions. lockdown restrictions services sector faced a
39. Public goods are those goods which are double-digit decline in the growth rate.
provided by the government as they are 54. Government consumption fell sharply in part
generally non-profitable and thus private because of an inadequate fiscal response to the
sector doesn’t take interest in providing crisis, as per the available data.
these goods. 55. Diversification includes two aspects, one relates
40. Human poverty is a broader concept then to change in cropping pattern and the other
absolute poverty as it is comprised of all relates to a shift of workforce from agriculture to
the components which are required for a other allied activities.
good living. 56. Through diversification, the chances of crop failure
41. The government budget is broadly can be reduced as by growing multiple crop the
comprised of revenue budget and capital risk of failure is less. But the people do not prefer
budget, these two will complete the flow this, as they are unaware of its advantages.
chart in the required order. 57. Diversification is not only done in farming but
42. Monetary policy of RBI is independent of also in non-farm activities which helps in
the function performed by the central bank providing a sustained living for the people
as a banker to the government. engaged in the same.
58. Livestock keeping is an important source of
SAMPLE PAPER 8
44. It is true that, due to the economic reforms of

1990s, India economy became more vibrant non-farm activity which is categorised under
to adopt new changes that accelerated allied activities.
economic growth. 59. In Rabi season, there is no monsoon and most of
the farmers of our country are dependent upon
45. The concept of relative poverty is used to rain for water, thus lack of irrigation facility
compare various regions, people or areas. makes it difficult to gain employment during Rabi
The statistical tool used to measure the season.
same is known gini coefficient.
60. Poverty and unemployment in agriculture are
46. BoP may not balance in operational sense common issues in the country. Diversification can
as different accounts of BoP shows help in dealing with these two challenges on a
different balance, but in accounting sense sustained basis.
SAMPLE PAPER 9
ECONOMICS
Instructions
Maximum Marks : 40
Section A
1. Special Economic Zones are created by the government to achieve which of the
following objectives?
(a) Balanced regional development (b) Reallocation of resources
(c) Economic stability (d) All of these
2. If money created by commercial banks is ` 5,000 with a reserve requirement of 50%, the
value of initial deposits will be ……… .
(a) ` 1,000 (b) ` 2,000
(c) ` 2,500 (d) ` 3,000
following.
SAMPLE PAPER 9
Statement I Small scale industries promote balanced regional growth.

Statement II The effect of tariffs and quotas is that they restrict imports and protect
domestic firms from foreign competition.
Alternatives
4. ………… is an example of non-tariff barriers imposed by the government, to restrict

international trade during 1950s.
(a) Export duty (b) Import duty
(c) Quota (d) All of these
5. India’s foreign exchange reserves have jumped by $100 billion in 10 months to a record
high of $534.5 billion. This transaction will be recorded in which side of capital account?
(a) Debit side (b) Credit side
(c) Not recorded in capital account (d) It is official reserve item
6. Fees received from a government college is an example of ………… of budget.

(a) revenue receipt (b) capital receipt
7. Rural development attempts improve ………… .

(a) agricultural production (b) living of rural people
(c) infrastructure (d) All of these
following.
Statement I Swarn Jayanti Gram Swarozgar Yojana was implemented in April 1999.
Statement II A healthy person contributes to economic growth by providing uninterrupted
labour supply for a longer period of time.
Alternatives
9. Raw material required in the process of production is a form of ……… .

(a) human capital (b) working capital
(c) fixed capital (d) None of these
10. When transactions are conducted across national borders, one currency must be
converted into another. The rate at which this is done is known as
(a) Foreign exchange (b) Foreign exchange rate
(c) Monetary policy (d) None of these

Column I Column II
A. Food For Work Programme (i) Launched in 1980-81
B. Swarna Jayanti Shahari Rozgar Yojana (ii) Launched in December, 1997
SAMPLE PAPER 9
C. Integrated Child Development Scheme (iii) Launched on 31st January, 1975

D. Mid-day Meal Scheme (iv) Launched on 15th August, 1997
Codes
12. If the balance of current account of BoP is ` 10,000 crores and balance of capital
account of BoP shows a negative balance of ` 20,000, the state of BoP will be ……… .
(a) surplus (b) deficit
(c) balances (d) None of these
13. In 2014, ……... raised the MPCE levels to ` 972 for rural areas and ` 1,407 for
urban areas.
(a) S.D. Tendulkar committee (b) Rangarajan committee
(c) Mahalnobis committee (d) None of these
14. If borrowing in a budget is equal to ` 2,000 crores and interest payments are 10% of
borrowings, what will be the value of primary deficit?
(a) ` 2,000 crores (b) ` 1,800 crores
(c) ` 1,600 crores (d) Can’t be determined
following.
Statement I Deficit in balance of trade account indicates greater value of visible
imports over value of visible exports.
Statement II Improvement in exchange rate of country’s currency necessarily means
improvement in its BoP status.
Alternatives
16. ………… production comes under agricultural diversification.

(a) Food grains (b) Commercial crops
(c) Horticulture and dairy (d) All of these
following.
Statement I Borrowing from RBI by the government is a revenue receipt of budget.
Statement II Construction of a flyover is a capital expenditure of the government.
Alternatives
18. Which of the following is a non-tax revenue receipt of government budget?

(a) GST (b) Import duty
(c) Escheat (d) Wealth tax
19. During a year of surplus crop production, government purchases crops directly from
the farmers by providing MSP. This expenditure by the government is a part of which
SAMPLE PAPER 9
component of government budget?

(a) Revenue expenditure (b) Capital expenditure
(c) Both (a) and (b) (d) Non-planned expenditure
20. Benefit of economic growth which percolates down to all the sections of the society is
termed as ………… .
(a) Poverty alleviation programme (b) Social participation
(c) Trickle down approach (d) Redistribution of income
21. Poverty line is measured normally in terms of ……… .

(a) gross income (b) per capita income
(c) per capita expenditure (d) Both (b) and (c)
following.
Statement I LPG subsidies given by the government to poor rural households is an
example of revenue expenditure of the government.
Statement II Tax payments to the government do not provide any direct benefit to the tax
payer.
Alternatives
23. Presently, there are only three industries reserved for public sector, viz ....... , .... and ... .
(a) railways (b) atomic energy
(c) defence (d) All of these
24. Which of the following accounts for the largest share in the livestock sector of India?
(a) Poultry (b) Cattle
(c) Goats (d) Ponies and mules
Section B
25. To meet the foreign exchange crisis, the Indian government ……… the Indian rupee in
1991.
(a) devalued (b) revalued
(c) depreciated (d) appreciated
following.
Statement I Fiscal deficit is zero in case there is no provision for borrowing in the
government budget.
Statement II A progressive tax causes a greater burden on poor.
Alternatives
27. Assertion (A) The sole purpose of Britishers was to exploit the natural resources of India.
SAMPLE PAPER 9
Reason (R) They wanted to reduce India to being a raw material supplier for Britain’s
industries.
Alternatives
Assertion (A)
of Assertion (A)

Column I Column II
A. Right to Education (i) Education is a matter of right to all
children in the age-group of 6-16 years
B. Adult Literacy Rate (ii) 76.7% for males in the period 2005-10
C. Primary Completion Rate (iii) 88% for females in the period 2005-10
Codes
29. Which one of the following statements is incorrect?

(a) Revenue receipts are regular in nature
(b) There is no future obligation to return the amount in case of revenue receipts
(c) Capital receipts either create an asset or cause a reduction in the liabilities of the
government
(d) Borrowings are treated as capital receipts as they lead to an increase in liability
30. Through the budgetary policy, the government of a country directs the allocation of
resources in a manner such that there is a balance between the goals of profit
maximisation and social welfare. This reflects which objective of government budget?
(a) Reducing income inequality (b) Promoting regional balance
(c) Reallocation of resources (d) None of these
31. The portion of agricultural produce which is sold by the farmers in the market after
meeting their own requirement is known as ………… .
(a) Subsistence crop (b) Deficit crop
(c) Marketable surplus (d) None of these
following.
Statemet I There is no difference between BoT and balance of current account.
Statement II ‘Transfer from rest of the world’ is a debit component of BoP on current account.
Alternatives
33. Assertion (A) Even with expanded employment opportunities, the poor will not be
able to buy for themselves all the essential goods and services.
SAMPLE PAPER 9
Reason (R) Three major programmes that aim at improving the food and nutritional status
of the poor are Public Distribution System, Integrated Child Development Scheme and
Mid-day Meal Scheme.
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)
34. Choose the incorrect option from the given below

(a) Absolute poverty in India is measured in terms of GDP.
(b) WTO promotes multilateral trade agreements.
(c) India’s development is possible only through Rural development.
(d) The proportion of people depending on agriculture did not decline as expected in the
planning phase.
35. Assertion (A) Commercialisation of agriculture helped the farmers.

Reason (R) Their financial status improved drastically.
Alternatives
Assertion (A)
of Assertion (A)
(d) Both Assertion (A) and Reason (R) are false
36. Assertion (A) Poverty is a challenge for the world.

Reason (R) About 300 million people are poor in this world.
Alternatives
Assertion (A)
of Assertion (A)
37. Assertion (A) Many of the services such as voice-based business processes, record
keeping, accountancy are being outsourced by multinational companies to India.
Reason (R) The low wage rates and availability of skilled manpower in India have
made it a destination for global outsourcing in the post-reform period.
Alternatives
Assertion (A)
of Assertion (A)
38. As per the IPR, 1956, small scale industries are considered as ……… intensive.
(a) cost (b) labour
SAMPLE PAPER 9
(c) capital (d) Both (a) and (b)
39. India opted for economic planning due to which of the following weaknesses of the
free market system?
(a) Inequalities
(b) Exploitation of workers
(c) Instability
(d) All of these
40. Assertion (A) Credit creation process increases the money supply in economy.
Reason (R) In credit creation process, commercial banks multiply loans many times as
compare to their primary deposits.
Alternatives
Assertion (A)
of Assertion (A)
41. Assertion (A) Borrowings are a type of revenue receipts but payment of interest on
borrowings are capital expenditure.
Reason (R) Capital receipts create liability but payment of interest does not reduce
liability.
Alternatives
Assertion (A)
of Assertion (A)
following.
Statement I Non-farm activities are seasonal in nature.
Statement II The fishing community considers water bodies as the providers.
Alternatives
43. Large increase in production of food grains resulting from the use of HYV seeds is
called ……… .
(a) Modern farming method (b) Golden revolution
(c) Green revolution (d) Both (a) and (c)
44. Which of the following is not a problem of human capital formation in India?
(a) Population growth (b) Proper manpower planning
(c) Brain drain (d) All of these
45. Assertion (A) Appreciation of domestic currency happens owing to a rise in the value
SAMPLE PAPER 9
of domestic currency.
Reason (R) Appreciation of domestic currency boosts imports from foreign country.
Alternatives
Assertion (A)
of Assertion (A)

Column I Column II
A. It has been set up to improve the system of (i) Land ceiling
agriculture marketing
B. It ensures the availability of food grains at cheap (ii) Technical reforms
and subsidised rates to the consumes
C. It was introduced to give ownership rights to the (iii) Land reforms
actual tillers of the soil
Codes
(a) A – (i) (b) B – (ii)
47. Assertion (A) Fixed exchange rate system involves active involvement of state
government of the respective countries.
Reason (R) In fixed exchange rate system, once the exchange rate is decided, it is
usually kept as fixed in order to maintain the stability in economic transactions.
Alternatives
Assertion (A)
of Assertion (A)
Current Account Capital Account Financial Account

Goods & Services (Asset) (Investment & Intangible)
Which of the following components will complete the flow chart given above?
(a) BoT components (b) BoP components
(c) Accommodating components (d) Official reserve account components
Section C
SAMPLE PAPER 9
Before the beginning of Industrial Revolution in England, the East Indian Company concentrated
on the export of Indian manufactured goods, textiles, spices, etc., to Europe where these articles
were in great demand. The Industrial revolution reversed the character of India's foreign trade.
Tremendous expansion of productive capacity of manufactures resulted in increased demand of
raw materials for British industry and the need to capture foreign markets. As a first step,
attempts were made to restrict and crush Indian manufactures.
On the other hand, efforts were made to commercialise agriculture so as to step up the export of
raw materials. The Indian textile handicrafts were the first to be hit. The decline of this industry
started a chain reaction leading to the speedy decline of other handicrafts.
49. Which of the following reasons can be attributed for the decline of India’s world-
famous handicraft industry during the colonial rule?
(a) Commercialisation of agriculture (b) Discriminatory tariff policies
50. Assertion (A) The dual policy motive led to systematic de-industrialisation of Indian
handicraft.
Reason (R) The colonial rule turned India into a mere exporter of raw materials.
Alternatives
Assertion (A)
of Assertion (A)
following.
Statement I Decline in handicraft led to increase in unemployment in India.
Statement II During colonial rule, there was huge export surplus from India’s foreign
trade.
Alternatives
52. Tremendous expansion of productive capacity of manufacturers resulted in …………

demand of raw materials for British industry and the need to capture foreign markets.
(a) increased (b) decreased
(c) unchanged (d) None of these
53. Which was the first industry to be hit due to the colonial government policies?
(a) Cotton textile (b) Jute textile
54. Which of the following goods were exported from India before the colonial rule?
(a) Manufactured goods (b) Textiles
SAMPLE PAPER 9
(c) Spices (d) All of these

The Reserve Bank of India raised inflation forecasts on the back of higher oil and other raw
materials while it maintained the growth forecast at 9.5% for FY22 despite anemic investment
demand. Governor Shaktikanta Das said inflation measured by the Consumer Price Index (CPI)
might remain close to the upper tolerance band of 6% up to September expecting easing of
pressure thereafter on kharif harvest arrivals. (RBI has fixed inflation rate target in between
2%-6 %.) The central bank projected CPI at 5.7% for FY22 as compared to its earlier projection
of 5.1%.
“The supply-side drivers could be transitory while demand-pull pressures remain inert, given
the slack in the economy. A pre-emptive monetary policy response at this stage may kill the
nascent and hesitant recovery that is trying to secure a foothold in extremely difficult
conditions,” Das said.
Crude oil prices are volatile with implications for imported cost pressures on inflation, RBI said.
“The combination of elevated prices of industrial raw materials, high pump prices of petrol and
diesel with their second-round effects, and logistics costs continue to impinge adversely on cost
conditions for manufacturing and services, although weak demand conditions are tempering the
pass-through to output prices and core inflation.
55. Inflation in the economy indicates ………… in the economy.

(a) excess of money supply (b) shortage of money supply
(c) adequate money supply (d) None of these
following.
Statement I During inflation, central bank uses dear money policy.
Statement II Dear money policy reduces the ability of government to invest in the
economic activity.
Alternatives
57. Assertion (A) Demand-side reasons cases high inflation in the economy.
Reason (R) Demand pull inflation increases due to increase in money supply in the
economy.
Alternatives
Assertion (A)
of Assertion (A)
58. How does RBI promote growth of the country?

(a) By controlling price level in country
(b) By changing various interest rates and money supply
SAMPLE PAPER 9
59. RBI fixes inflation target for which of the following reasons?
(a) To make growth process faster
(b) To make coordination with government
(c) To stabilise economy
60. Increase in crude oil prices leads to ……… .

(a) increase in money supply (b) increase in prices
(c) increase in economic growth (d) All of these
OMR SHEET SP 9
Roll No.
Instructions
by the software.

1 a b c d 21 a b c d 41 a b c d
2 a b c d 22 a b c d 42 a b c d
3 a b c d 23 a b c d 43 a b c d
4 a b c d 24 a b c d 44 a b c d
5 a b c d 25 a b c d 45 a b c d
6 a b c d 26 a b c d 46 a b c d
7 a b c d 27 a b c d 47 a b c d
8 a b c d 28 a b c d 48 a b c d
9 a b c d 29 a b c d 49 a b c d
10 a b c d 30 a b c d 50 a b c d
11 a b c d 31 a b c d 51 a b c d
12 a b c d 32 a b c d 52 a b c d
13 a b c d 33 a b c d 53 a b c d
14 a b c d 34 a b c d 54 a b c d
15 a b c d 35 a b c d 55 a b c d
16 a b c d 36 a b c d 56 a b c d
17 a b c d 37 a b c d 57 a b c d
18 a b c d 38 a b c d 58 a b c d
19 a b c d 39 a b c d 59 a b c d
20 a b c d 40 a b c d 60 a b c d


Answers
1. (a) 2. (c) 3. (c) 4. (c) 5. (a) 6. (a) 7. (d) 8. (c) 9. (b) 10. (b)
11. (b) 12. (b) 13. (b) 14. (b) 15. (a) 16. (d) 17. (b) 18. (c) 19. (a) 20. (c)
21. (c) 22. (c) 23. (d) 24. (a) 25. (a) 26. (a) 27. (a) 28. (b) 29. (c) 30. (c)
31. (c) 32. (d) 33. (b) 34. (a) 35. (d) 36. (a) 37. (a) 38. (d) 39. (d) 40. (a)
41. (c) 42. (b) 43. (d) 44. (b) 45. (d) 46. (c) 47. (c) 48. (b) 49. (b) 50. (a)
51. (c) 52. (a) 53. (c) 54. (d) 55. (a) 56. (a) 57. (b) 58. (c) 59. (c) 60. (b)
EXPLANATIONS
1. Special economic zones are created in the most 10. When one currency is converted into another
backward regions to promote the regional currency for international transactions, it is
development and ensuring equality of various known as foreign exchange rate.
sections. 12. As the negative balance on the capital account
2. Money Created = Initial Deposits × Multiplier exceeds the positive balance of current
5,000 = Initial Deposits × (1/0.50) account, there will be deficit in overall BoP.
5,000 = Initial Deposits × 2 13. Rangarajan committee was setup to review the
Initial Deposits = 5,000/2 = ` 2,500 poverty line in 2014 and they gave the
3. Small scale industries are labour intensive in recommendation to revise the poverty line as
nature and thus promotes regional balance mentioned.
while India opted for import substitution 14. Primary deficit = Fiscal deficit – Interest
using quotas and tariffs. payments
4. Quota is a quantitative restriction on the Fiscal deficit = Borrowings
quantity that can be imported. This is an
So, Primary deficit = 2,000 – (10% of 2,000)
example of non-tariff barrier.
= 2,000 – 200 = ` 1,800 crores
5. Foreign exchange reserves are considered as
an assets for the economy and as per the 15. Balance of trade account is comprised of
accounting rule, increase in assets is recorded visible trade and deficit is a situation where
on the debit side of capital account. imports exceed exports. Improvement in
exchange rate indicates appreciation of
6. Fees received from a government college is currency and need not necessarily means
paid against the services received by an improvement in BoP.
individual and thus compulsory, also it does
not create assets or liabilities of the 16. Agricultural diversification is not only
government. confined to farm activities but also comprised
of non-farm activities.
7. Rural development aims at improving overall
quality of life of rural people which is 17. Borrowing from the central bank is a capital
comprised of the all of the mentioned receipt as it creates liabilities for the govern-
components. ment and burden of repayment in future.
SAMPLE PAPER 9
8. SJGSY is a self-employment generation 18. Escheat is a non-tax revenue receipt as it is not

programme started in 1999 to deal with a compulsory payment to the government and
poverty. Health is an important component of also non-recurring in nature.
human development as it ensures efficient 19. The mentioned case is an example of revenue
utilisation of human capital. expenditure as it neither create assets nor
9. Broadly, there are two types of capital, reduces liabilities of the government.
physical and human capital. Further, physical 20. When impact of a policy benefits few in the
capital includes working capital like inputs beginning and later to the masses, it is known
and fixed capital like plants and buildings. as trickle down approach.
21. In India, poverty line is estimated using per 35. Commercialisation of agriculture during the
monthly capital expenditure of people. colonial period led to worsening of the
22. Any type of subsidy is a revenue expenditure conditions of the farmers as they were forced
of budget as it neither impacts assets nor to grow crops which were required in British
liabilities. Tax is a compulsory payment, thus industries.
the payer does not receive any direct benefit of 37. India has become a favourite outsourcing
the same. destination in past few decades due to the fact
23. During the reforms of 1990s, role of public that India has skilled labour and many
sector was gradually reduced and allowed services like voice process are outsourced
private sector to step in. Thus, only the from India.
mentioned industries were kept under 38. Small scale industries employ more labour
government control due to strategic reasons. than capital thus they are considered as labour
24. In India, livestock population is most intensive in nature and hence, save the total
important source of livelihood after farming cost of production.
and poultry contributes the most in livestock. 39. The market economies or capitalist economies
25. Indian currency was devalued to improve faces the mentioned drawbacks which leads to
export compactivity and increase the stock of promotion of planning in India.
foreign exchange in the eonomy. 40. Money supply is the quantity of money in the
26. Fiscal deficit is equal to the borrowings and economy at a given point of time and through
zero borrowing indicates no fiscal deficit. A credit creation process, commercial banks
progressive tax imposes more burden on multiply money many more times as
higher income groups then lower income compared to their initial deposits.
group. 41. Borrowings are capital receipts as they creates
27. Britishers exploited Indian economy in all liability of future payment, while payment of
possible ways to fulfil need of their native interest is a revenue expenditure as it doesn’t
country. They took resources from India and reduce the burden of borrowings.
sold finished goods at a higher price to 42. Non-farm activities provide regular source of
Indians. income and thus not a seasonal work. For
29. Capital recepits are those which either creates fishing community, water bodies are most
liabilities or reduces assets of the government. important and thus they consider it as mother
or provider.
30. Transfer of resources from a place where it is
less required to those areas where it is socially 43. Green revolution used modern farming
more desirable is known as reallocation of methods like HYV seeds and fertilizers to
resources. increase production of agricultural output in
the country.
31. The part of total production of crops which is
not consumed rather sold in the market is 44. Proper manpower planning is required to use
known as marketable surplus. the resources properly in the economy and not
considered as a problem of human capital
32. BoT is only comprised of visible trade while formation in India.
current account also includes invisible items
and unilateral transactions. Transfers from 45. A fall in price of foreign exchange leads to
rest of the world are recorded as credit item of increase in the value of domestic currency
BoP. known as appreciation. Appreciation increases
SAMPLE PAPER 9
the imports from domestic country.

33. It is true that the benefits of poverty
alleviation programmes haven’t reached the 47. Under fixed exchange rate system, price is
targeted population due to several reasons fixed by the central government bank and
including not proper planning and price is changed whenever needed by the
implementation. same authority.
34. Absolute poverty in India is determined by 48. All the mentioned options in picture are of
calories consumption and monthly per capita BoP account so, it completes the flow chart.
income expenditure.
49. Britishers followed a discriminatory tariff 56. It is true that during inflation, central bank
policy which made Indian goods expensive in uses dear money policy by making it difficult
international market leading to fall in for commercial banks to create currency. This
demand. has no impact on the investment capacity of
50. The dual policy motive was comprised of the government in the economy.
taking raw materials from India at cheap rate 57. Demand-side inflation is caused by increase in
and selling manufactured goods from their demand and demand increase due to
industries at at higher price in Indian market. increasing the money supply.
This led to de-industrialisation of Indian 58. Economic growth of the country is measured
handicraft. by increase in GDP and the mentioned
52. Britishers had colonies all around the globe, measures are taken by RBI to promote the
and with rapid industrialisation their demand economic growth.
for raw materials increased which they took 59. Economic stability is not only the
from countries like India. responsibility of government but also of the
53. The Indian textile handicrafts were the first to central bank, and controlling inflation is a
be hit. The decline of this industry started a major component of economic stability.
chain reaction leading to the speedy decline of 60. Crude oil is an important component for any
other handicrafts. economy, increase in crude oil leads to
55. Increase in money supply in the economy increase in supply side inflation.
leads to increase in demand and hence, prices.
SAMPLE PAPER 9
SAMPLE PAPER 10
ECONOMICS
Instructions
Maximum Marks : 40
Section A
1. ……… is a type of deficit of government budget which includes interest payments on
previous loans.
(a) Fiscal deficit (b) Revenue deficit
(c) Primary deficit (d) All of these
2. ‘A’ has a good that ‘B’ wants and ‘B’ has a good that ‘A’ wants. This is referred to as
……… under barter system of exchange.
(a) lack of double coincidence of wants (b) lack of unit of account
(c) lack of store of value (d) None of these
3. Private enterprises will always desire to allocate resources to those areas of production
where profits are high. However, it is possible that such areas of production (like
SAMPLE PAPER 10
production of alcohol) may not promote social welfare. In such situation, what
government should do to discourage its consumption?
(a) Impose heavy taxes
(b) Make people aware of the disadvantages of consumption of such goods
(c) Discourage production
4. Human capital is a ……… concept.

(a) stock (b) flow
5. Identify the correct sequence of alternatives given in column II by matching them with
respective terms in column I.
Column I Column II
A. Apni Mandi (i) Andhra Pradesh
B. Hadaspar Mandi (ii) Punjab, Rajasthan
C. Rythu Bazars (iii) Tamil Nadu
D. Uzhavar Sandies (iv) Pune
Codes
A B C D A B C D
(a) (i) (ii) (iii) (iv) (b) (iii) (ii) (i) (iv)
(c) (ii) (iv) (i) (iii) (d) (iv) (i) (iii) (ii)
6. Cheques are an example of ……… .

(a) legal money (b) bank money
(c) fiat money (d) None of these
7. Since 2014, the banking sector has witnessed the adoption of the JAM (Jan-Dhan,
Aadhaar and Mobile) trinity and issuance of licences to payments banks and Small
Finance Banks (SFBs) to achieve last-mile connectivity as a part of
(a) banking revolution (b) financial inclusion
(c) promotion of trade (d) None of these
following.
Statement I Money is used as standard for deferred payments.
Statement II In credit money, the money value is less than the commodity value.
Alternatives
9. Under the industrial sector reforms, government abolished the licensing requirement
of all industries, except for three industries. Which of the following reasons can be
accounts for the same?
(a) These industries were of strategic importance
(b) Government wants to maintain the power in its hand
(c) Private sector was not capable enough
SAMPLE PAPER 10
following.
Statement I Gross demand deposits include inter-bank claims whereas net demand deposits
do not include inter-bank claims.
Statement II The central bank is the sole supplier of money in an economy.
Alternatives
11. ……… refers to the shift from farming pattern from subsistence farming to commercial
farming.
(a) Revolution (b) Marketing
(c) Diversification (d) None of these
12. High powered money is equal to

(a) money supplied by the RBI only
(b) total supply of money in the economy
(c) notes and coins held by the people
(d) money (notes and coins) held by the public, vault cash of the commercial banks as well
as cash reserves of the commercial banks with the RBI
13. ……… refers to stock maintained by the government through purchase from the
farmers in the years of surplus crop production.
(a) Public distribution (b) Minimum support price
(c) Buffer stock (d) None of these
following.
Statement I Public enterprise always discourage production of goods which is
profitable.
Statement II GDP growth is not an objective of economic growth.
Alternatives
15. ……… is known as the architect of Indian planning in India.

(a) Dadabhai Naoroji (b) VKRV Rao
(c) P.C. Mahalanobis (d) None of these
16. ..............industries were built up to set up infrastructural base of the country.

(a) Small scale (b) Medium scale
(c) Large scale (d) All of these
following.
Statement I The government of India has constituted NITI Aayog to replace the
Planning Commission. The full form of NITI is National Institution of Technology in
India.
Statement II ‘Economic growth’ and ‘Economic development’ means one and the same.
SAMPLE PAPER 10
Alternatives
18. ..............gives more bargaining power to small and marginal farmers.

(a) Land ceiling (b) Commercialisation
(c) Cooperative farming (d) None of these
19. Expenditure on preventive medicine means expenditure on

(a) vaccination (b) lifesaving drugs
(c) spread of health literacy (d) All of these
20. Government budget deficit can be financed by ……… .

(a) borrowing from RBI (b) borrowing from the public
following.
Statement I Flexible exchange rate is determined by the supply and demand of foreign
exchange in the international market.
Statement II Currency appreciation depicts a situation when domestic currency gains
its value in relation to a foreign corrency.
Alternatives
22. ……… helps in the promotion of regional equality.

(a) Small scale industries (b) Medium scale industries
(c) Large scale industries (d) All of these
23. Post-independence, the exchange rate was determined under

(a) fixed exchange rate system (b) flexible exchange rate system
(c) manage floating system (d) None of these
24. ……… items of BoP are only recorded in capital account of BoP.
(a) Above the line items (b) Below the line items
Section B
25. Financial help received from an MNC to fight against the pandemic by the Indian
government is a type of ……… .
(a) capital receipt (b) revenue receipt
26. Assertion (A) During 2014-15, the GVA growth rate of agriculture and its allied sectors
was less than 19%.
SAMPLE PAPER 10
Reason (R) Decrease in public investment since 1991 was the main reason for this
trend.
Alternatives
Assertion (A)
of Assertion (A)
27. ……… is an alternative method of estimation of poverty in India.

(a) Gini coefficient (b) Jail cost of living index
(c) HDI (d) Sen index
following.
Statement I Rural development is a process which attempts to improve the standard of
living of rural people.
Statement II Commercial banks were inducted into the field of agricultural credit
under the Banking Reforms Act, 1975.
Alternatives
29. Assertion (A) With the introduction of railways, it became easy for the colonial
government to administer different parts of the country and raw materials from India
via sea route.
Reason (R) Development of railways in India had led to reduction in the cost of
transportation for both passenger and goods traffic. Eventually, it become the cheapest
mode of transportation.
Alternatives
Assertion (A)
of Assertion (A)
30. Public distribution system is comprised of ……… .
(a) fair price shops (b) buffer stock
(c) open market (d) Both (a) and (b)
31. Write the incorrect pair.
Column I Column II
A. Chairman of Planning Commission (i) Prime Minister
B. The monetary assistance given by government for production activities (ii) Subsidy
C. Quantity of goods that can be imported (iii) Tariff
D. Improvements in the field of agriculture to increase its productivity (iv) Land Reforms
Codes
SAMPLE PAPER 10
32. Assertion (A) The green revolution led to the rise in the production of foodgrains.
Reason (R) It led to mechanisation and increase in public investment in infrastructure.
Alternatives
Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct
explanation of Assertion (A)
33. Assertion (A) Money as medium of exchange, has overcome the problem of lack of
double coincidence under the C-C economy.
Reason (R) Currency has a general acceptance which makes it convenient to use and
has segregated buying and selling activities.
Alternatives
Assertion (A)
of Assertion (A)
34. Primary deficit in a government budget will be zero, when ……… .
(a) revenue deficit is zero (b) net interest payments are zero
(c) fiscal deficit is zero (d) fiscal deficit is equal to interest payment
following.
Statement I Sale of a portion of equity share holdings to private sector is
disinvestment.
Statement II Privatisation leads to transfer of ownership.
Alternatives
Column I Column II
A. Progressive Tax (i) Tax rate rises with rise in income
B. Regressive Tax (ii) It causes more burden on the rich
C. Proportional Tax (iii) Rate of taxation is constantly changing
D. Indirect Tax (iv) Burden of tax cannot be shifted
Codes
(a) A-(i) (b) B-(ii)
37. Which of the following is not true for Small Scale Industries (SSIs)?
(a) SSI is labour intensive and therefore, employment oriented.
(b) SSI needs small investment and is therefore, equity oriented.
SAMPLE PAPER 10
(c) SSI is capital intensive and therefore, increases productivity.

(d) SSI shows locational flexibility and is therefore, equality oriented.
38. Assertion (A) Lack of training in farming activity leads to low productivity and
growth of agriculture in India.
Reason (R) Reforms in India focused upon development of industries which was failed
to generate enough employment.
Alternatives
Assertion (A)
of Assertion (A)
39. In the colonial period, which of the following infrastructure was poor?
(a) Social infrastructure (b) Economic infrastructure
40. Assertion (A) An educated person is able to generate more income than an uneducated
person.
Reason (R) The labour skill of an educated person is more than that of an uneducated
person.
Alternatives
Assertion (A)
of Assertion (A)
41. Assertion (A) A country always tries to balance the BoP, i.e., balance in current account
equals to balance in capital account.
Reason (R) Balanced BoP indicates stable economic relation with rest of the world.
Alternatives
Assertion (A)
of Assertion (A)
42. Observe the graph given below.

INR-{USD, GBP, EUR, JPY}
Sep 1998 Sep 2000 Sep 2002 Sep 2004 Sep 2006 Sep 2008 Sep 2010 Sep 2012
20
30
40
USD
50
` GBP
60 EUR
100 JPY
SAMPLE PAPER 10
70
80
90
100
As per data given, price of euro is falling against Indian rupee, this indicates which of
the following?
(a) Appreciation of INR (b) Depreciation of Euro
(c) Appreciation of Euro (d) Both (a) and (b)
43. Choose the incorrect option from the given below.

(a) Public enterprises are owned by both public and private sector
(b) TISCO was set up by Darobji Tata
(c) Green revolution helped India to attain food sufficiency
(d) Buffer stock in India is maintained by FCI
44. Assertion (A) With decrease in SLR, credit creation capacity of commercial banks
reduces.
Reason (R) When there is a decrease in reserve ratios, banks have less funds available
for loans.
Alternatives
Assertion (A)
of Assertion (A)
(d) Both are false
following.
Statement I High degree of consumer’s sovereignty leads to greater consumer choice.
Statement II Liberalisation and laissez faire policy are one or the same thing.
Alternatives
46. Assertion (A) All the objectives of budget are inter-related to each other and lead to
social welfare.
Reason (R) Government makes provisions of public goods when their demand can’t be met
alone by private sector.
Alternatives
Assertion (A)
of Assertion (A)
47. Use of chemical fertilizers is related to which of the following reforms in agriculture?
(a) Institutional (b) Technical
SAMPLE PAPER 10
(c) General (d) None of these

48. India was under a deep crisis before 1990s due to low economic growth and balance of
payment deficits. India was a highly indebted country too. In spite of this, India
approached for further a loan of $7 billion from which of the following international
agencies?
(a) WTO (b) GATT
(c) IMF (d) IBRD
Section C
Direction Read the following case study answer questions 49 to 54 on the basis of the same.
Foreign trade influences Indian aggregate demand in two ways. First, when Indians buy foreign
goods, this spending i.e., imports escape as a leakage from the circular flow of income decreasing
aggregate demand. Second, our exports to foreigners enter as an injection into the circular flow,
increasing aggregate demand for goods produced within the domestic economy.
Balance of payments record the transactions in goods, services and financial assets between
residents of a country with the rest of the world. In the financial account, net foreign direct
investment at USD 12 billion was higher than USD 6.4 billion in Jan-Mar quarter 2019.
On the portfolio investment side, there was a net outflow of USD 13.7 billion as compared to
USD 9.4 billion inflow in the same quarter last year on account of money being pulled out from
both debt and equity markets. A surplus at both current and capital account has resulted in a
forex reserve accretion of USD 18.8 billion in the Jan-Mar quarter 2020.
following.
Statement I Imports are considered as leakages and thus not recorded in BoP account.
Statement II Increase in foreign exchange boosts aggregate demand in the economy.
Alternatives
50. Assertion (A) A surplus in both current and capital accounts of BoP leads to
accumulation of foreign exchange reserve.
Reason (R) Increase in foreign exchange reserve promotes economic growth in
the country.
Alternatives
Assertion (A)
of Assertion (A)
51. Portfolio investments are part of ……… account of BoP.

(a) current (b) capital (c) Both (a) and (b) (d) Neither (a) nor (b)
52. On the portfolio investment side, there was a net outflow of USD 13.7 billion as
compared to USD 9.4 billion inflow in the same quarter last year on account of money
being pulled out from both debt and equity markets. Net outflow is ……… item.
SAMPLE PAPER 10
(a) debit side (b) credit side

53. Income from financial assets is recorded in which account of BoP?

54. Foreign trade leads to ……… in aggregate demand in the economy.

(a) increase (b) Decrease
(c) Either (a) or (b) (d) None of these
On-the-job training, also known as OJT, is a hands-on method of teaching the skills, knowledge
and competencies needed for employees to perform a specific job within the workplace.
Employees learn in an environment where they will need to practice the knowledge and skills
obtained during their training. The Indian software industry has been showing an impressive
record over the past decade. Entrepreneurs, bureaucrats and politicians are now advancing
views about how India can transform itself into a knowledge-based economy by using
Information Technology (IT). There have been some instances of villagers using e-mail which are
cited as examples of such transformation. Likewise, e-governance is being projected as the way
of the future. The value of IT depends greatly on the existing level of economic development.
55. Which of the following components of human capital formation are mentioned in
above paragraph?
(a) On-job-training (b) Information technology
(c) Government policies (d) Both (a) and (b)
56. Assertion (A) Training is must for human development along with education and
health.
Reason (R) Training increases the productivity and keeps the human capital pro active.
Alternatives
Assertion (A)
of Assertion (A)
following.
Statement I On-job-training is a hands on method of teaching the skills and
knowledge.
Statement II Agricultural yield can be increased through training farmers about
modern farming methods.
Alternatives
58. Which of the following is/are the advantage(s) of information and technology in
human development?
(a) It helps to make informed choice (b) It enhances productivity
(c) It helps in e-governance (d) All of these
SAMPLE PAPER 10
59. In which of the following ways, IT can help in transformation of rural areas?
(a) e-governance (b) e-mails
60. Who among the following advocates to transform India into a knowledge hub?
(a) Bureaucrat (b) Politicians
(c) Entrepreneurs (d) All of these
OMR SHEET SP 10
Roll No.
Instructions
by the software.

1 a b c d 21 a b c d 41 a b c d
2 a b c d 22 a b c d 42 a b c d
3 a b c d 23 a b c d 43 a b c d
4 a b c d 24 a b c d 44 a b c d
5 a b c d 25 a b c d 45 a b c d
6 a b c d 26 a b c d 46 a b c d
7 a b c d 27 a b c d 47 a b c d
8 a b c d 28 a b c d 48 a b c d
9 a b c d 29 a b c d 49 a b c d
10 a b c d 30 a b c d 50 a b c d
11 a b c d 31 a b c d 51 a b c d
12 a b c d 32 a b c d 52 a b c d
13 a b c d 33 a b c d 53 a b c d
14 a b c d 34 a b c d 54 a b c d
15 a b c d 35 a b c d 55 a b c d
16 a b c d 36 a b c d 56 a b c d
17 a b c d 37 a b c d 57 a b c d
18 a b c d 38 a b c d 58 a b c d
19 a b c d 39 a b c d 59 a b c d
20 a b c d 40 a b c d 60 a b c d


Answers
1. (d) 2. (a) 3. (d) 4. (a) 5. (c) 6. (b) 7. (b) 8. (a) 9. (a) 10. (c)
11. (c) 12. (d) 13. (c) 14. (d) 15. (c) 16. (c) 17. (d) 18. (c) 19. (a) 20. (c)
21. (c) 22. (a) 23. (a) 24. (b) 25. (b) 26. (a) 27. (d) 28. (a) 29. (a) 30. (d)
31. (c) 32. (b) 33. (a) 34. (d) 35. (c) 36. (a) 37. (c) 38. (b) 39. (c) 40. (a)
41. (b) 42. (d) 43. (a) 44. (d) 45. (a) 46. (b) 47. (b) 48. (c) 49. (b) 50. (b)
51. (b) 52. (a) 53. (a) 54. (c) 55. (d) 56. (a) 57. (c) 58. (d) 59. (c) 60. (d)
EXPLANATIONS
1. Payment of interest is revenue expenditure as 14. Public enterprises work for public welfare with
it doesn’t lead to decrease in liabilities. minimum amount of profit required for
However, as revenue expenditures are part of continuing production, while GDP growth is one
all types of deficit, interest payments are also of the major objectives of government budget.
included in all types of deficits. 15. P.C. Mahalanobis is the head of second five
2. The given situation in which one individual is year plan in 1956. He focused upon
unable to find someone to exchange goods industrialisation and thus considered as
was the foremost problem under barter known architect of Indian planning.
as lack of double coincidence of wants. 16. Large scale industries are the heavy
3. Government knows what is best in the machine-made industries and thus considered
interest of the people of country and thus as the infrastructural base of the country.
discourage consumption of goods which are 17. NITI stands for National Institution for
not socially desirable. Transforming India. Economic growth and
4. Human capital refers to the stock of skills and development are two different terms, economic
knowledge present in a human at a given growth only focuses on quantitative growth
point of time. while development is comprised of both
6. Cheques are known as bank money as they qualitative and quantitative aspects.
are issued by the banks only because of the 18. Under cooperative marketing, farmers pool their
trust that people have in the banking system produce and sell them together in the market,
of the country. which gives them better bargaining power.
7. Fiancial inclusion is the campaign to connect 19. Preventive medicines include vaccinations
all individuals to the banking system to which helps in saving from communicable
increase the flow of money in the economy. diseases like polio etc.
8. Money is used to make future payments thus 20. When government is in deficit, it opt for
known as standard for deferred payments, borrowings to cover the deficit either from
while in case of credit money, money value is internal sources or from external sources.
much higher than the commodity value. 22. Small scale industries are labour intensive in
9. Few industries were kept under government nature and thus helps in reducing regional
due to strategic reasons as private sector variation.
cannot be allowed to function in industrial
SAMPLE PAPER 10
23. India followed a fixed exchange rate system

explosives, nuclear energies etc. ever since the independence till 1990s, in which
10. Gross demand deposits indicate all deposits government determined the price of foreign
including interbank claims. It is true that currency.
central bank is the sole supplier of currency 24. Accommodating items or below the line items
in the country, though the coins are minted are those which are recorded only in capital
by the government but they are brought in account of BoP as they are meant for balancing
circulation by central bank only. the BoP.
13. Buffer stock refers to the stock maintained by 25. This is an example of revenue expenditure as it
the government to meet the storage of crop doesn’t create any burden of repayment on
due to a bad cropping season. government.
26. Gross Value Added (GVA) is the total output 42. As the price of euro is falling against Indian
produced during a particular year in a sector. rupee, it shows appreciation of domestic
During 2014-15, it decreased in agriculture currency and depreciation of foreign currency.
owing to low public investment. 43. Public sector is only owned by the public
27. Sen index is an alternative method of sector or government There is no involvement
estimation of poverty in India as poverty line of private sector in this.
doesn’t give the actual condition of poor. 44. Reserve ratios and credit creation ability of
28. Commercial banks were inducted in commercial banks are inversely proportional,
agricultural credit system in year 1972. as with increase in reserve ratio, banks are
29. Railways was introduced by the colonial required to keep more in the form of reserve
government for their economic motive but then the money left for lending purposes.
indirectly it helped in the development of 45. Liberalisation means making policies liberal
India as well. for private sector while laissez faire policy
30. It is comprised of fair price shops or ration refers to no involvement of the government.
shops and buffer stock. 46. Government through its budget tries to fulfil
31. Quantity of goods that can be imported is the objective of social welfare, as it is the
known as quota while tariff is the tax charged constitutional duty of the government Also, it
on imports. ensures the provision of public goods when
ever needed.
32. Green revolution used modern farming
methods and as a result of which the 47. Use of chemical-based fertilisers was under
production of food grains increased many green revolution and it comes under technical
more times as compared to pre-reform period. reform.
34. Primary deficit is the difference between fiscal 48. India approached International Monetary
deficit or borrowing and interest payments on Fund (IMF) for a loan of $7billion to revive
previous loans. from the situation it was facing.
35. Privatisation and disinvestment are similar 49. Imports are considered as leakages from
but disinvestment doesn’t lead to transfer of economic perspective as it leads to outflow of
ownership from public to private sector. foreign exchange and thus recorded as a debit
item of BoP.
36. Progressive tax rate is the one in which rate of
tax is directly proportional to the level of 50. Surplus is a situation where inflows of foreign
income as income, i.e. level increases, tax rate exchange exceeds outflow of foreign exchange
also increases and vice-versa. thus, surplus in both current and capital
account of BoP accumulates foreign exchange
37. Small scale industries are labour intensive and reserves.
not capital intensive in nature and thus
required less capital and low investment. 51. Portfolio investments are part of foreign
investment, thus recorded in the capital
38. It is true that there is absence of training in account of BoP.
agricultural sector due to which the yield of
agriculture is less despite of employing 52. Outflow of foreign exchange will be recorded
highest population of the country. in debit side item of capital account of BoP.
39. During the colonial period, both social and 53. Income from property and entrepreneurship is
economic infrastructure were poor including recorded in current account of BoP.
SAMPLE PAPER 10
health and power. 54. Foreign trade, both export and import boosts
40. Education is the first component of human aggregate demand, if exports exceed import
development and with education, a human aggregate demand increases and if imports
generate more income by productively exceed exports, then aggregate demand
involving himself in work. decreases.
41. A balanced BoP of the country indicates a 55. Human capital development depends upon
stable relation with rest of the world as there the investment on information technology and
is not further inflow or outflow of foreign training, while government policies are not
exchanges. important for the same.

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As per CBSE Sample Paper

Issued On 02 Sep, 2021...

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ARIHANT PRAKASHAN (School Division Series)

Administrative & Production Offices

Sample Paper 1 61-74

Sample Paper 2 75-87

Sample Paper 3 88-100

Sample Paper 4 101-115

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Sample Paper 9 173-186

Sample Paper 10 187-199

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Term MCQ Based Question Paper

Part A Introductory Macroeconomics

Part B Indian Economic Development

Part B Indian Economic Development

Focus on Theory Learn to Identify Wrong Answers

Attempting MCQs in Exams

1. Read the paper from beginning to by step solution is not required in

n Money and Banking

5. Money Supply means total amount of money

n Government Budget and Economy

n Foreign Exchange Rate

5. Capital Account records transactions representing (ii) Unfavourable balance of trade

n Indian Economy on the Eve of Independence

n Indian Economy (1950-1990)

n Liberalisation, Privatisation and Globalisation

In this sector, as a part of the reform process,

n Human Capital Formation in India

4. Rural Credit is the lifeline of the farming activity. It

1. Money and Banking

2. Assertion (A) Currency held by public is a monetary liability of central bank.

4. Which of the following statements is incorrect?

5. Functions performed by Central Bank related to government do not include which of

(a) RBI manages public debt

6. Supply of money is ............ concept.

7. Assertion (A) Paper money is becoming more popular these days.

10. Choose the correct pair from the below.

D. Central bank (iv) Provides ‘clearing house’ facility

(c) high powered money (d) fiduciary money

12. High powered money is equal to

13. Credit creation in commercial banks is determined by

2. Government Budget and Economy

(c) regressive taxes (d) indirect taxes

11. Match the following.

3. Foreign Exchange Rate

2. Assertion (A) Depreciation of domestic currency leads to rise in exports.

3. Under depreciation of a foreign currency in terms of domestic currency, who will be

4. Decrease in the value of a domestic currency in terms of a foreign currency. It is known as