CHENNAI SAHODAYA SCHOOL COMPLEX

(General Instructions)
 This question paper contains 10 printed pages.
 This question paper contains 34 questions.
 Write down the question number before attempting.
 Reading time 15 minutes.
 This question paper contains two sections:
Section A – Macro Economics
Section B – Indian Economic Development
 This paper contains 20 Multiple Choice Questions type questions of 1 mark each.
 This paper contains 4 Short Answer Questions type questions of 3 marks each to
be answered in 60 to 80 words.
 This paper contains 6 Short Answer Questions type questions of 4 marks each to
be answered in 80 to 100 words.
 This paper contains 4 Long Answer Questions type questions of 6 marks each to be
answered in 100 to 150 words.

COMMON EXAMINATION

CLASS-12 (ECONMICS -030)

Time Allowed: 3 hours Maximum Marks: 80

Roll No.: Date: / /

SECTION A – MACRO ECONOMICS

1) Read the following statements carefully and choose the correct alternative: (1)
Statement 1: The value of MPS ranges from 0 to 1
Statement 2: If in an economy, the consumption and savings curves are parallel to each
other the value of investment multiplier will be 2.
a) Both the statements are true.
b) Both the statements are false.
c) Statement 1 is true, Statement 2 is false.
d) Statement 2 is true, Statement 1 is false.

2) "Government of India is giving incentives for exports." (1)

State the likely effect of the given statement on foreign exchange rate with reference to the
Indian Economy.
a) New equilibrium rate of foreign exchange will be determined which will be higher
than the prevailing foreign exchange rate, leading to depreciation of domestic
currency.

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 b) New equilibrium rate of foreign exchange will be determined which will be lower
than the prevailing foreign exchange rate, leading to Appreciation of domestic
currency.
c) New equilibrium rate of foreign exchange will be determined which will be lower
than the prevailing foreign exchange rate, leading to revaluation of domestic currency.
d) New equilibrium rate of foreign exchange will be determined which will be
higher than the prevailing foreign exchange rate, leading to devaluation of
domestic currency.

3) The value of credit multiplier will be high when (1)

a) Cash reserve ratio is high b) Cash reserve ratio is low
c) Cash reserve ratio is zero d) Cash reserve ratio is infinity

4) Read the following statements carefully and choose the correct alternative: (1)
Statement 1: Balance of Payment is an accounting statement which records all the economic
transaction that takes place between the residents of a country during a given period of
time. Statement 2: Current account of Balance of Payment records all the transactions that
relate to assets or liabilities.
a) Both the statements are true.
b) Both the statements are false.
c) Statement 1 is true, but statement 2 is false.
d) Statement 2 is true, but statement 1 is false

5) Read the following statement carefully and choose the correct alternative: (1)
Statement 1: Industrial waste driven into rivers is an example of positive externality.
Statement 2: Change in Inventory is a stock variable.
a) Both the statements are true.
b) Both the statements are false.
c) Statement 1 is true, Statement 2 is false.
d) Statement 2 is true, Statement 1 is false.
OR
Examine the following figure carefully and choose the correct option from the alternatives
given below

a) Nominal b) Circular c) Real d) Both (a) and (b)

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6) If C = 100 + 0.75Y, then the corresponding Saving Function will be expressed as: (1)
a) S = 100 + 0.25Y b) S = -100 + 0.75Y
c) S = -100 + 0.25Y c) S = 75 + 0.25Y

OR

At zero level of income, consumption is

a) Zero b) positive
c) Negative d) All of these

7) Which out of the following is not included in the money supply of the country. (1)
a) Stock of gold held with the Central bank b) Coins and currency
c) Demand deposits d) Time deposits

8) The Reserve Bank of India is said to have intervened lately to arrest the rupee's slide
by selling Dollars on a large scale. (1)
-Source: The Economic Times, March 03, 2021
Which of the following statements regarding the above news is FALSE?
a) The transaction above will be termed as an accommodating transaction.
d) The transaction will be categorised as a below-the-line item in the balance
of payments.
c) The value of the rupee against one dollar must be rising before the intervention.
b) The foreign exchange rate for one rupee must be rising before intervention

OR

Look at the following data of a given country:

No. Particulars Value (in Million

US Dollars)
1 Exports (of goods) 150
2 Imports (of goods) 200
3 Net Invisibles 20

Which of the following is INCORRECT?

a) Balance of trade is unfavorable to the country
b) Balance of payment cannot be determined by the data.
c) There is Current account deficit of 30 million US Dollars.
d) There is Capital account Surplus of 50 million US Dollars

9) Read the following statement -Assertion (A) and Reason (R). Choose one of the correct
alternatives given below: (1)
Assertion (A): Rich people have a lower propensity to consume as compared to poor people.
Reason (R): Consumption can never be zero even if the national income is zero

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Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the
correct explanation of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct
explanation of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true

10) Read the following statement -Assertion (A) and Reason (R). Choose one of the correct
alternatives given below: (1)
Assertion (A): According to Keynesian theory, equilibrium level is always achieved at full
employment level.
Reason (R): At full-employment equilibrium, there is no involuntary unemployment.
Alternatives:
a) Both Assertion and Reason are true and Reason (R) is the
correct explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

11) Calculate Compensation of employees from the following data. (3)

S.No. Particulars Amount (in ₹

Crores)
i Profit after tax 20
ii Interest 45
iii Gross Domestic Product at market price 200
iv Goods and Service Tax 10
v Compensation of fixed Capital 50
vi Rent 25
vii Corporate tax 5

12) State the effect of the following on the balance of payments situation. (3)
i) Increase in import duty of gold.
ii) Rise in the price of foreign currency.

OR
Distinguish between Balance of Trade and Balance of Payment.

13) The Saving function of an economy is given as: (4)

S = (-) 10 + 0.20Y
If the ex-ante investments are ₹240 crores, calculate the following
a) Equilibrium level of income in the economy
b) Additional investments which will be needed to double the present level of
equilibrium income.

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14) Read the following text carefully and discuss briefly any two tools of correcting the
situation of deflation/recession in the economy. (4)
The Reserve Bank of India (RBI) cuts Repo Rate to 4.4%, the lowest in at least 15 years.
Also, it reduced the Cash Reserve Ratio (CRR) maintained by the banks for the first time
in over seven years. CRR for all banks was cut by 100 basis points to release ₹1.37 lakh
crores across the banking system. RBI governor Dr. Shaktikanta Das predicted a big
global recession and said India will not be immune. It all depends how India responds to
the situation. Aggregate demand may weaken and ease core inflation.
The Economic Times; March 27th, 2020
15)Read the following paragraph and answer the questions: (4)
Reserve Bank of India (RBI) is the central bank of the country. RBI is a statutory body. It
is responsible for the printing of currency notes and managing the supply of money in the
Indian economy. It plays multifaceted role by executing multiple functions such as
overseeing monetary policy, issuing currency, managing foreign exchange, working as a bank
of government and as banker of scheduled commercial banks, among others. It also works for
overall economic growth of the country.
a) Define a central bank.
b) Who issues the one-rupee notes and coins in the country?
c) RBI acts as the banker to the central government and commercial banks act
as banker to the state governments. (True/False)
d)When commercial banks fail to meet their financial requirements from
other sources; the central bank provides them funds through discounting of
approved securities and due to this central bank is said to be the .

OR

Using a hypothetical numerical example, explain the process of credit creation by a

commercial bank.

16) a)How will you treat the following while estimating domestic product of India? Give
reasons. (3)
i) Rent received by a resident Indian from his property in Singapore.
ii) Profits earned by a branch of an American Bank in India.
iii) Salaries paid to Koreans working in Indian embassy in Korea.

b) Calculate GNPfc from the given data: (3)

S.No. Particulars ₹ in
crores
i Indirect tax 50
ii Consumption of fixed capital 60
iii Net factor income received from abroad (-)10
iv Net domestic product at factor cost 120
v Net current transfers paid to the rest of the world 30
vi Subsidies 25

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17) a) Classify the following statements into revenue receipts and capital receipts give valid
reasons in support of your answer. (3)
i) Financial help from a multinational corporation for victims in a flood affected
area ii)Sale of shares of a public sector undertaking to a private company
iii) Dividend paid to the government by the state bank of India

b) State any three objectives of a government budget. (3)

OR

a) How can budgetary policy be used to reduce inequalities of income? (3)

b) On what basis is government expenditure classified into capital expenditure and revenue
expenditure? Give an example of each.

SECTION B – INDIAN ECONOMIC DEVELOPMENT

18) Identify the correct sequence of alternatives given in Column II by matching them with
respective terms in Column I. (1)

Column – I Column - II
i) Motive of the British de-industrialization a) To serve various colonial interests, like
mobilizing the army shifting raw materials
ii) Motive of British behind infrastructural b) To use export surplus to make
development payments for expenses incurred by an
office set up by the colonial government in
Britain, to meet expenses on war fought
by the British
government and to import invisible items.
iii) Motive of the British behind monopoly c) To get raw materials from India at
control over India's exports and imports cheap rates and to sell finished British
products in India at higher prices.

a) i) – a), ii) – b), iii) – c) b) i) – b , ii) – a) , iii) – c)

c) i) – a) , ii) – c) , iii) – b) d) i) – c) , ii) – a) , iii) – b)

19) Inward looking trade policy aimed at : (1)

a) Substituting imports with domestic production
b) Substituting exports of consumer goods with capital goods
c) Follow an open economy model
d) Restrictions on movement of currency flows
OR

implies setting up an upper limit of the land that could be owned by a land
owner.
a) Land ceiling b) Land fragmentation
c) Land quota d) Land restriction
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20) One child norm was a feature of (1)
a) France b) India c) Pakistan d) China

OR
Arrange the following events of China in chronological order & choose the correct alternative.
a) Great Proletarian Cultural Movement b) Great Leap Forward Campaign
c) Introduction of Economic Reforms d) First Five Year Plan
Choose the correct alternative:
a) (ii), (iv), (iii), (i) b) (iv), (ii), (i), (iii)
c) (ii), (iv), (i), (iii) d) (iv), (i), (ii), (iii)
21) Three tier system of rural co-operative credit societies is……… (1)
a) Primary agricultural credit societies (PACS) b) Central co-operative banks
c) State co-operative banks d) All of these

22) For the purpose of development, which type of economic system is followed
in China? (1)
a) Mixed economy b) Socialist economy
c) Capitalist economy d) None of these

23) In the following question, two statements are given. Read the statements carefully
and choose the correct alternative among those given below. (1)
Statement 1: Seasonal employment is not associated with the seasonal nature of crop
production.
Statement 2: Disguised unemployment and seasonal employment is most prominent in rural
India.
Alternatives:
a) Both the statements are true
b) Both the statements are false
c) Statement 1 is true and Statement 2 is false
d) Statement 2 is true and Statement 1 is false
24) Read the following statements carefully and choose the correct alternative.
Statement-1: After the establishment of Peoples Republic of China under one party rule, all
critical sectors of the economy, enterprises and lands owned and operated by individuals were
brought under government control.
Statement-2: The Great Leap Forward (GLF) campaign initiated in 1958 in Pakistan aimed
at inducing the country on a massive scale.
a) Both the statements are true.
b) Both the statements are false
c) Statement-1 is true, Statement-2 is false.
d) Statement-ll is true, Statement-l is false

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[

25) Sustainable development refers to

a) Long-term increase in real per capita income
b) Long-term increase in economic welfare
c) Increase in real per capita income along with equitable distribution both for the
present and future generations
d) all of these (1)
OR
Environmental crisis occurs when:
a) Absorptive capacity of environment exceeds the generation of wastes
b) Generation of wastes exceeds the absorptive capacity of environment
c) Wastes occur due to production and consumption activities in the economy
d) None of these

26) Read the following statement -Assertion (A) and Reason (R). Choose one of the
correct alternatives given below: (1)
Assertion (A): A huge percentage of female workforce is engaged in primary sector.
Reason (R) : Mobility of women in rural areas is extremely low
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) in 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.
27) Read the following statement -Assertion (A) and Reason (R). Choose one of the
correct alternatives given below: (1)
Assertion (A): Pakistan has experienced a phenomenal rise in its growth rate.
Reason (R): Domestic investment and FDI has been shrinking in Pakistan.
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) in 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.
28) Analyse the given picture and answer the question. (3)

"Recently Indians have drifted away from the traditional knowledge and practices and caused
large scale damage to environment".
Explain how, adopting the traditional practices can be helpful in achieving the objective of
sustainable development?.
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29) Discuss the importance of credit in rural development. (3)

OR

State any three challenges facing rural development in India.

30) Compare the position of India with China and Pakistan on the basis of sectoral
development. (4)
Sectoral comparison of India, China and Pakistan is shown in the table below:

Contribution to GDP (2015-17)

Sector India China Pakistan
Agriculture 17 9 25
Industry 30 43 21
Service 53 48 54
Total 100 100 100

31) Mention the objectives or goals of planning in India. Briefly explain it. (4)

OR

What is marketed Surplus? Mention the development of Agriculture sector between 1950 –
1990.

32) a) Differentiate between human development and human capital. (2)

b) “Human capital formation give birth to innovation, invention and technological

improvement” Do you agree with the given statement? Support your answer with valid
argument. (2)

33) a) Write a short note on the role and performance of SHGs as a source of credit. ; (3)

b) Explain the policy instruments introduced by the government to safeguard the interests
of farmers. (3)
OR
a) Workers are exploited in the unorganised sector. Do you agree with this view? Give
reasons in support of your answer.

b) Disguised unemployment is not prevalent in agriculture alone. Comment.

34) Read the news report given below and answer the questions that follow:
In a 40 minutes long speech Prime Minister Mr.Narendra Modi announced the
demonetization of existing notes of ₹500 and ₹1000 during a televised address on Tuesday
evening.
Modi announced that the notes of ₹500 and ₹1000 "will not be legal tender from midnight
tonight" and these will be "just worthless pieces of paper. PM also urged people to ‘join this
mahayajna against the ills of corruption.
Here is a guide for you explaining everything about the move.
Demonetization for us means that Reserve Bank of India has withdrawn the old 500 and 1000
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notes as a official mode of payment. According to Investopedia, demonetization is the act of
stripping a currency unit of its status as legal tender.
The reason given by PM Modi was:
 To tackle black money in the economy.
 To lower the cash circulation in the country which "is directly related to corruption
in our country," according to PM Modi.
 To eliminate fake currency and dodgy funds which have been used by terror groups
to fund terrorism in India.
 The move is estimated to scoop out more than 5 lakhs crore black money from
the economy.
-The Economic Times-November 09, 2020

i) Why is demonetisation termed as the Mahayajna by the Prime Minister? (1)

a) It is to curb the ills of corruption. b) It is to tackle the black money.
c) It is to digitalise the economy. d) All of the above.

ii) What is not the benefit of demonetisation? (1)

a) To lower the cash circulation
b) To tackle black money in the economy
c) To eliminate fake currency
d) Growth of Revenue in States and Union Territories
.
iii) Demonetisation is an act of (stripping/ covering/clothing/removing) a currency unit of
its status as legal tender. (1)

iv) How much black money is the move estimated to Scoop out? (1)

v) Prime Minister Mr.Narendra Modi announced that the notes of ₹500 and ₹1000 "will
not be legal tender from midnight tonight"- What do you infer from this? (2)

“End of the paper”

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