Economics Set B

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BANGALORE SAHODAYA SCHOOLS COMPLEX ASSOCIATION (BSSCA)

PRE-BOARD EXAMINATION (2023-2024)


ECONOMICS /GRADE XII
Date: 22/12/2023 Max. Marks: 80
Subject: Economics (Set-B) Time: 3 Hrs

GENERAL INSTRUCTIONS :-
1. This question paper contains two sections:
Section A – Macro Economics
Section B – Indian Economic Development
2. This paper contains 20 Multiple Choice Questions type questions of 1 mark each.
3. This paper contains 4 Short Answer Questions type questions of 3 marks each to be
answered in 60 to 80 words.
4. This paper contains 6 Short Answer Questions type questions of 4 marks each to be
answered in 80 to 100 words.
5. This paper contains 4 Long Answer Questions type questions of 6 marks each to be
answered in 100 to 150 words.

SECTION A – MACROECONOMICS
[40 MARKS]

1. Read the following statements carefully


Statement 1: Leakages are flow variables which are withdrawals from the circular
flow income.
Statement 2: Export is an example of leakage.
In the light of the given statements, choose the correct alternative from the following.
a. Both statements are true
b. Both statements are false
c. Statement 1 is true and statement 2 is false
d. Statement 1 is false and statement 2 is true
OR
Which of the following is a flow variable?
a. Wealth of a nation
b. Closing stock of the firm
c. Balance in bank account
d. Depreciation of machines

2. When the government increases taxes on liquor, which of the following objectives
related to the budget is being met?
a. Economic stability
b. Reallocation of resources
c. Reducing inequalities in income and wealth
d. Economic Growth

3. Identify revenue receipts from the following options


a. Loans recovered from public sector enterprises
b. Sale of shares of public sector undertaking to a private company
c. Profits of public sector enterprise
d. None of the above

4. Money supply in India will increase if


1. The RBI injects more money in circulation
2. The commercial banks expand their credit operation
3. Tax rates are reduced by the Central government.
4. RBI increases the Bank Rate.
a. 1,2 and 3 are correct
b. 2,3 and 4 are correct
c. 1,3 and 4 are correct
d. All are correct
5. Assertion (A)Demand deposits with commercial banks are not part of money supply
Reason (R) Demand deposits are treated as equal to currency held as they are readily
accepted as means of payment
a. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).
b. Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct
explanation of Assertion (A).
c. Assertion (A) is true but Reason (R) is false.
d. Assertion (A) is false but Reason (R) is true.

6. In August 1971, U.S. President Richard Nixon announced the "temporary" suspension
of the dollar's convertibility into gold. This announcement led to the end of
a. Gold standard system of exchange rate
b. The Bretton Woods system
c. Flexible exchange rate system
d. Dollar being the world currency

7. Where will remittances from abroad be recorded in BoP account?


a. Debit side in current account
b. Credit side in current account
c. Debit side in capital account
d. Credit side in capital account

8. Statement 1: Any addition to foreign exchange is entered in the debit side of BOP
Statement 2: Autonomous transactions account for deficit or surplus in BoP.
a. Both statements are true
b. Both statements are false
c. Statement 1 is true and statement 2 is false
d. Statement 1 is false and statement 2 is true

9. Out of the following, which can have a negative value ?


a. MPC
b. APC
c. APS
d. MPS
10. Consumption curve makes an intercept on the Y axis. It indicates that
a. Savings is positive when income is zero
b. Consumption is positive when income is zero
c. Saving is negative when income is zero
d. Both b and c

11. Geopolitical uncertainties like wars can lead Indian investors to retreat from emerging
markets like India to the safety net of USD. Explain the impact of this on the market
exchange rate.
OR
Differentiate among fixed exchange rate, flexible exchange rate and managed floating
exchange rate 3 marks

12. What is the difference between nominal GDP and real GDP? The value of nominal
GNP of an economy was Rs 2500 crore in a particular year. The value of GNP of that
country during the same year evaluated at the prices of the same base year was Rs 3000
crores. Calculate the value of GNP deflator of the year in percentage terms. Has the
price level increased between the base year and the year under consideration? 3marks

13. Explain the working of credit multiplier using a numerical illustration where initial
deposit is Rs 1000 and LRR is 20%.(Show atleast three rounds).In this context explain
how launching of Pradhan Mantri Jan Dhan Yojana can lead to economic growth.
3+1 marks
OR
Explain any four “banker to the government functions’ of the central bank.

14. Read the following passage and answer the following questions
Some states are identified as fiscally stressed which is measured in terms of level of
revenue deficit. Their specific shares of revenue deficit in fiscal deficit for 2023-24 are
Andhra Pradesh(40.9%),Haryana (50.9%)Kerala (60.4%), Punjab (70.7%)Rajasthan
(39.7%), TamilNadu (40.8%) and West Bengal (47%). It is true that mere presence of
a revenue deficit cannot be considered as a sign of fiscal profligacy. It is also true that
pressure on revenue expenditure was high during Covid 19 pandemic. However
increasing revenue deficit driving the fiscal imbalance has long run fiscal implications
and there is a need to correct this imbalance in the revenue account.
(Excerpt from the article A Macro view of the fiscal health of states, The Hindu,
July 5 2023)
a. Write the formulas for calculating revenue deficit and fiscal deficit. 1 mark
b. What is the criteria used to identify fiscally stressed states? 1 mark
c. Can an economy incur fiscal deficit without incurring revenue deficit? Explain.1m
d. Why do you think revenue deficit need to be controlled? Explain giving a reason.
1 mark

15. Graphically derive the aggregate savings function from a linear aggregate
consumption function. Briefly explain the procedure. 3 marks

Explain the significance of the point where APC =1 1 mark

16. A. Under what situation will the following equations be true? 2 marks
a. Value of output = Value added
b. National income = Domestic income

B. Calculate GDPmp by income method and closing stock 4 marks


Particulars Rs in crore
Private final consumption expenditure 450
Rent 120
Government final consumption expenditure 50
Indirect taxes 60
Interest 150
Mixed income of self employed 20
Consumption of fixed capital 30
Opening stock 10
Gross fixed capital formation 300
Compensation of employees 200
Net exports -10
Net factor income from abroad -10
Subsidies n 10
Profit 250
17. Using a suitable diagram show the determination of equilibrium aggregate income
according to the AD=AS approach. 4marks
What do you understand by ‘paradox of thrift’? 2marks
OR
Using a suitable diagram show the determination of equilibrium aggregate income
according to the S=I approach. 4marks
What is the difference between autonomous and induced investment? 2marks

SECTION B INDIAN ECONOMIC DEVELOPMENT


[40 MARKS]

18. First stage of demographic transition is characterised by


a. High birth rate and high death rate
b. High birth rate and low death rate
c. Low birth rate and low death rate
d. Low birth rate and high death rate

19. Dr. M.S. Swaminathan was undoubtedly a visionary who initiated a great change in
India. What was the change that he initiated?
a. Golden Revolution
b. Operation Flood
c. Green Revolution
d. Five year plans

20. Which of the following is not a feature of financial sector reform initiated in 1991?
a. Reduce role of RBI from regulator to facilitator
b. Foreign investment limit in banks increased
c. Simplification of tax procedures
d. Allow FIIs to invest in Indian financial markets

21. Statement 1:Physical capital is tangible


Statement 2: Both physical and human capital depreciate with time.
a. Both statements are true
b. Both statements are false
c. Statement 1 is true and statement 2 is false
d. Statement 1 is false and statement 2 is true
22. Assertion(A) Organic produce has a longer shelf life.
Reason (R) Yields from organic farming are less that modern agricultural farming
a) (A) IS True AND (R) is False
b) ( A) IS False AND (R) is True
c) Both (A) and (R) are TRUE and R is the correct explanation of A
d) Both (A) and (R) are TRUE but R is not the correct explanation of A

23. Identify the incorrect statement


A. Casual wage labourers constitute the majority of the workforce in India
B. The difference in participation rates among males and females is higher in rural
areas when compared to urban areas
C. Primary sector is the main source of employment for majority of workers in India
D. Distribution of workforce by industrial sectors have shown substantial shift from
farm work to non farm work
a. Only A
b. Both A and B
c. Both C and D
d. Both A and D

24. From the set of terms given in Column I and corresponding definitions/categories
given in Column II.
Choose the correct pair of statement :
Column I Column II
A Labour force (i) Secondary sector
B Mining (ii) Number of people who are employed plus the unemployed
who are looking for work
C Workforce (iii) Primary sector
D Paper production (iv) Total number of people who work in a company, factory, etc.

Alternatives :
a. A-(i) (b) B-(ii) (c) C-(iii) (d) D-(iv)
b. A-(ii) (b) B-(iii) (c) C-(iv) (d) D-(i)
c. A-(iii) (b) B-(iv) (c) C-(ii) (d) D-(ii)
d. A-(iv) (b) B-(ii) (c) C-(iii) (d) D-i
25. Following are the rankings based on HDI of India, China and Pakistan 86, 130 150.
What is India’s HDI rank?
a. 86
b. 130
c. 150

26. A richer country lends to poorer countries – that are resource-rich or strategically
placed – overwhelming them with debts that are not sustainable. This leads the poorer
countries to give up their strategic assets or give in to political leverage. The term
referring to this
a. Debt trap diplomacy
b. Import substitution strategy
c. Closed door policy
d. Inward looking strategy

27. Which of the following is not a characteristic of renewable resource?


a. It cannot deplete over time
b. It includes sunlight, wind, water etc.
c. It involves comparatively higher carbon footprints and carbon emissions
d. The upfront cost is high

28. Giving three reasons, argue in favour of the need for government intervention in
education and health sectors. 3 marks

29. Large export surplus generated by India came at a huge cost to the country’s economy.
Explain giving two points. 3 marks
OR
Indicate the volume and direction of trade at the time of independence.

30. What are the two aspects related to diversification? Why is agricultural diversification
essential for sustainable livelihoods? 4 marks
OR
Explain two merits and two demerits each associated with organic farming.
31. What is the information that can be deduced from the graph presented below? Is the
feature presented in the graph a boon for India's economy? Defend or refute giving any
two valid reasons. 4marks

32. The destruction wreaked by the floods in north India in August has evoked concern at
the highest levels. In August 2023, the Supreme Court suggested that an expert
committee conduct a “complete and comprehensive” study on the carrying capacity of
the Himalayan region. Generally, population exceeding capacity will lead to a natural
decline in numbers, as witnessed when grasslands or overgrazed or invasive species
throttle existing biome. Applying these ideas in the context of hill-stations and
Himalayan States — the challenge is between balancing rising population,
infrastructural needs and the precarious geography — is bound to be a challenging
enterprise. Going by recent history, it is unlikely that a disinterested scientific opinion
will be palatable to every stakeholder in the Himalayan States. (The Hindu, Sep 2023)
4 marks
a. What is carrying capacity ?
b. What happens if the carrying capacity is exceeded ?
c. All the stakeholders will not be happy with the outcome if a balance is tried to be
struck between the various factors. Explain.

33. Compare and contrast agricultural policies during colonial period and post
independence period. 6 marks
OR
Compare and contrast the trade policies during post independence period and post
reform period.

34. Read the excerpts from various sources and answer the questions below. 6 marks
China’s Belt and Road Initiative (BRI), sometimes referred to as the New Silk Road, is
one of the most ambitious infrastructure projects ever conceived. Launched in 2013,
the vast collection of development and investment initiatives was originally devised to
link East Asia and Europe through physical infrastructure. In the decade since, the
project has expanded to Africa, Oceania, and Latin America, significantly broadening
China’s economic and political influence.
(Council on Foreign relations, Feb 2, 2023)

India, the United States, Saudi Arabia, and the European Union have unveiled a
groundbreaking multinational rail and ports initiative aimed at countering China's Belt
and Road Initiative at the G20 summit in Delhi recently. The initiative, dubbed the
"Modern-day Spice Route," aims to enhance trade between India, the Middle East, and
Europe, with significant infrastructure projects, including rail, electricity, and hydrogen
pipelines. This game-changing plan offers an alternative to China's extensive strategic
investments and seeks to boost prosperity, address infrastructure needs, and reduce
regional instability. It comes as a response to China's Belt and Road Initiative, which
faces challenges like rising loan defaults and slowing investments. (Times of India, Sep
23)

The ongoing conflict between Hamas militants and Israel in recent days has likely cast
a shadow on India’s ambitions to play a bigger role in global trade. The recently
announced complex trade corridor linking India to the Middle East and Europe may
have fallen flat before it ever bore wings. (The Economic Times, Oct 10)

a. What are the two trade routes that are initiated by China and India respectively?
Explain each one briefly. 3 marks
b. How can wars impact the economy of the nations? Explain giving any two points.
3 marks

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