COMPETENCY BASED QUESTION BANK

CLASS XII
ECONOMICS(030)

SESSION 2025-26
KENDRIYA VIDYALAYA SANGATHAN
ZONAL INSTITUTE OF EDUCATION & TRAINING, GWALIOR
OUR MENTOR: MR. B.L. MORODIA, DEPUTY COMMISSIONER &
DIRECTOR, ZIET GWALIOR
COURSE COORDINATOR : MRS. ANITA KANAJIA, T.A.
ECONOMICS

RESOURCE PERSONS

1. DR. NARENDRA KUMAR SHRIVASTAVA, PM SHRI KV-1 AFS

HINDAN
2. MRS. SANJANA SINGH, PM SHRI KV CRPF RAMPUR

COMPILATION COMMITTEE

1. MR. HARSHIT MANGLIK, PM SHRI KV AMC SHIFT-II,

LUCKNOW
2. MRS. RANJOO SINGH, KV BHU SHIFT -II, VARANASI
3. MRS. PRIYA SINGH, PM SHRI KV AYODHYA CANTT.
4. MR. HEERA LAL CHAUHAN, PM SHRI KV GOMTI NAGAR, SHIFT
II, LUCKNOW
5. MR. SHIVASHISH BANERJEE, PM SHRI KV CMM, JABALPUR

1
PART A: - MACRO ECONOMICS
PART B: - INDIAN ECONOMIC DEVELOPMENT

2
 TOPIC: NATIONAL INCOME, WORKSHEET-1

NAME____________________ ROLL NO._________

Q. 1 Assertion (A): Macroeconomics is essential for government policy 1 Marks
making.

Reason (R): It provides data on individual preferences.

A. Both Assertion and Reason are true and Reason is the correct
explanation.

B. Both Assertion and Reason are true but Reason is not the
correct explanation.

C. Assertion is true but Reason is false.

D. Assertion is false but Reason is true.

Q. 2 2Assertion: The value-added method takes into account the value of only 1 Marks
final goods and services.

Reason: Intermediate goods are not included in the calculation of

national income using the value-added method.

Which of the following options is correct?

A. Both Assertion and Reason are true and Reason is the correct
explanation.

B. Both Assertion and Reason are true but Reason is not the
correct explanation.

C. Assertion is true but Reason is false.

D. Assertion is false but Reason is true

Q. 3 Assertion (A): Net investment is a better indicator of economic growth 1 Marks

than gross investment.

Reason (R): Net investment considers depreciation, showing the actual

increase in productive assets.

A. Both Assertion and Reason are true and Reason is the correct
explanation.

3
 B. Both Assertion and Reason are true but Reason is not the
correct explanation.

C. Assertion is true but Reason is false.

D. Assertion is false but Reason is true.

Q. 4 Find the correct option based on the above picture 1 Marks

A Leakage – Tax, Saving & Exports

B Injection – Govt. Exp., Export & Investment

C Injection – Govt. Exp., Export & Imports

D. Leakage – Tourism, Saving & Export

Q. 5 Macroeconomics does not consider international trade.(True/False) 1 Marks

Q. 6 Statement 1. Real GDP is better indicator of economic growth than 1 Marks

nominal GDP.

Statement.2. Real GDP eliminates the change in prices.

(a) Both statement(A) and (R) are true and( R )is correct
explanation of (A).

(b) Both statement ( A) and (R) is true but R is not correct

explanation of (A)

(c) Statement A is true but R is false.

(d) Statement (A ) is false but (R) is true.

4
Q. 7 Identify, which of the following is not considered as 'Normal Resident of 1 Marks
India? (1)

(A) An Indian citizen working in U.S.A. embassy located at New

Delhi.

(B) An Indian officials working in Indian embassy in China.

(C) An Indian diplomats visiting Canada for a summit.

(D) An Indian working in an American Company located in New York

for a period of more than one year

Q. 8 8Suppose the Gross Domestic Product (GDP) of Nation X was Rs. 2,000 3 Marks
crores in 2018-19, whereas the Gross Domestic Product of Nation Y in
the same year was Rs. 120,000 crores. If the Gross Domestic Product of
Nation X rises to Rs. 4,000 crores in 2019-20 and the Gross Domestic
Product of Nation Y rises to Rs. 200,000 crores in 2019-20.

Compare the rate of change of GDP of Nations X and Y, taking 2018-19

as base year.

Q. 9 In response to an economic slowdown, the government of Country X 4 Marks

introduced a series of stimulus measures aimed at increasing national
income. These measures included

significant tax cuts for individuals and businesses, increased

government spending on

public infrastructure projects, and low-interest loans for small

businesses to stimulate

investment. As a result of these policies, the country's Gross

Domestic Product (GDP) grew

by 4% in the following year, up from 1.5% the previous year. The

increase in

government expenditure on infrastructure directly boosted

aggregate demand, leading

to job creation in construction and related sectors. At the same time,

lower taxes

increased household disposable income, encouraging greater

consumer spending on

5
 goods and services. However, the country's net exports remained
negative as imports of

capital goods, such as machinery for infrastructure, exceeded

exports. Despite this, the

overall increase in investment and consumption led to a significant

rise in national

income. Economists predict that as infrastructure improves and

industrial productivity

increases, the country will see long-term growth in exports, further

enhancing national

income.

A) What were the key measures implemented by the government of

Country X to boost

national income?

B) How did government spending on infrastructure affect national

income in the short term?

C) Why did net exports remain negative despite the increase in national
income, and what

were the main imports?

Q. 10 (A) As per a report, India's solar power generation capacity reaches 50 6 Marks
GW in 2024-25. Analyze the likely impacts of this
development on Gross Domestic Product (GDP) and Welfare.

(4)

(B). Riya is analyzing the economic performance of her country. She

found that the value of all final goods and services produced within the
country during the year was Rs.200 lakh crore. She also found that the
value of net factor income from abroad was Rs.5 lakh crore. Using this
information, answer the following:

6
 1. What is the Gross Domestic Product at Market Price (GDPMP)
of the country?

Calculate the National Income (NNP at Factor Cost).

Answer Hint
Q. 1 (C) By adding up the value added at each stage of production

Q. 2 (A) Both assertion and reason are true, and the reason is the correct
explanation of the assertion.

Q. 3 (C) Assertion is true, but the reason is false

Q. 4 B

Q. 5 False

Q .6 A

Q. 7 D

Q. 10 A- The increase in solar power generation capacity is likely to

have a positive impact on both GDP and welfare.

GDP Impact:

- Increased investment in the renewable energy sector will contribute to

GDP growth.

- Job creation in the solar power industry will add to economic activity.

- Reduced dependence on imported fossil fuels will save foreign

exchange.

Welfare Impact:

- Cleaner energy will reduce air pollution, improving public health and
welfare.

- Increased access to renewable energy can improve energy security and

reduce energy poverty.

- The growth of the solar power industry can also promote sustainable
development and reduce greenhouse gas emissions.

This development is likely to have a positive impact on both GDP and

welfare, contributing to sustainable economic growth and development.

7
 TOPIC NATIONAL INCOME, WORKSHEET,

NAME____________________ ROLL NO._________

Q. 1 How does the value-added method help in calculating national income? 1

A) By adding up all the incomes earned by individuals

B) By adding up the value of all goods and services produced

C) By adding up the value added at each stage of production

D) By subtracting imports from exports

Q. 2 Assertion (A): Unemployment is a macroeconomic issue. 1

Reason (R): It reflects the individual worker's productivity.

A. Both Assertion and Reason are true and Reason is the correct
explanation.

B. Both Assertion and Reason are true but Reason is not the
correct explanation.

C. Assertion is true but Reason is false.

D. Assertion is false but Reason is true.

Q. 3 Which method is used in the given picture to measure the national 1

income.

Q. 4 If a country's aggregate expenditure is Rs.10000 crores, and the 1

consumption expenditure is Rs.6000 crores, investment is Rs.1500
crores, and government spending is Rs.1000 crores, what is the value of
net exports? (1)

A) Rs.1500 crores

8
 B) Rs.1000 crores

C) Rs.500 crores

D) Rs.2500 crores

Q. 5 The expenditure method is useful for calculating national income only 1

in developed economies. (True or False)

Q. 6 GDP Deflator = ______ GDP ÷ Real GDP × 100 1

Q. 7 What is subtracted from GDP at Market Price to arrive at GDP at Factor 1

Cost?

a) Depreciation

b) Net Exports

c) Net Indirect Taxes

d) Net Factor Income from Abroad

Q. 8 Will the following be included in the domestic product of india ? Give 3

reasons for your answer

(A) Profits earned by foreign companies in India.

(B) Salaries of Indians working in the Russian Embassy in India.

Q. 9 Read the following report and answer the questions based on it. 4

New Delhi: un asserting that the “worst is behind us” veteran

banker Deepak Parekh on

Thursday said that India’s GDP growth will be in positive territory

in the fourth quarter

as demand has started picking up in all sectors. Citing an example,

he said during the

virtual conference organised by Canada – India based Council. he

said toll collection

are back to 88% of pre Covid level, e way bills are increasing and
electricity

consumption has stabilized. India is domestic-based economy and

demand is set to rise

9
 in the future.

a) Do you think higher level of Real GDP always lead to higher

availability of

goods per person in the domestic economy? With valid resign

b) Can we say GDP is true indicator of welfare?

c) Real GDP is the index of ___.

Q. 10 6

a) ‘Circular flow of income in a two sector economy is based on the axiom

that one’s expenditure is other’s income’. Do you agree with the given
statement? Support your answer with valid reasons.

b) Calculate Particulars Amount (in

compensation Rs.crores)
of employees
from the
following
data:

S. No.

I Profits after tax 20

Ii Interest 45

iii Gross Domestic Product at 200

Market Price

iv Goods and Services Tax 10

v Consumption of Fixed Capital 50

vi Rent 25

10
 vii Corporate Tax 5

Answer Hint
Q. 1 C

Q. 2 C

Q. 3 Expenditure Method

Q. 4 (A) ₹1500 crores

Q. 5: FALSE (The expenditure method can be used to calculate national

income in any economy, regardless of its level of development

Q. 6Nominal Q. 7 c) Net Indirect Taxes

11
TOPIC NATIONAL INCOME, WORKSHEET,
NAME____________________ ROLL NO._________

1 An economy that invests more in capital goods than in consumption goods may 1
sacrifice present comfort for future growth.

Which of the following best illustrates this trade-off?

A) Increasing food imports for immediate needs

B) Buying luxury cars for private use

C) Building more factories instead of shopping malls

D) Increasing wages to boost consumer spending

Q. 2 Assertion (A): Macroeconomics deals with the study of national income. 1

Reason (R): National income is a part of individual household budgets.

A. Both Assertion and Reason are true and Reason is the correct explanation.

B. Both Assertion and Reason are true but Reason is not the correct
explanation.

C. Assertion is true but Reason is false.

D. Assertion is false but Reason is true.

Q. 3 Assertion: The value-added method is useful for calculating national income in 1

economies with complex production processes. (1)

Reason: This method not helps to identify the contribution of each sector to national
income.

Which of the following options is correct?

A. Both Assertion and Reason are true and Reason is the correct explanation.

B. Both Assertion and Reason are true but Reason is not the correct
explanation.

C. Assertion is true but Reason is false.

D. Assertion is false but Reason is true.

12
Q .4 Writedown the name of two negative externalities based on given picture. 1

Q. 5 Statement I: Macroeconomic models help forecast economic trends. 1

Statement II: They are only theoretical and have no real-world applications.

(a) Both statement(A) and (R) are true and( R )is correct explanation of (A).

(b) Both statement ( A) and (R) is true bute R is not correct explanation of
(A)

(c) Statement A is true but R is false.

(d) Statement (A ) is fals but (R) is true.

Q.6 Goods used in the production of other goods and services are called __________ 1
goods.

Q. 7 Identify whether the following is a stock or a flow: 1

“National Income of India in the year 2024-25”

Q.8 Case Study: 3

A company, XYZ Inc., produces electronic components. The company purchases raw
materials worth Rs.50,000 and uses them to produce components worth Rs.1,00,000.
The company then sells these components to a manufacturer for Rs.1,20,000.

8.1 What is the value added by XYZ Inc. in the production process?

A) Rs.50,000

B) Rs.70,000

C) Rs.1,00,000

D) Rs.50,000

(Value added = Value of output - Value of input = Rs.1,00,000 - Rs.50,000 =

Rs.50,000)

13
 Q.8.2If the company sells the components for Rs.1,20,000, what is the additional
value added?

A) Rs.20,000

B) Rs.30,000

C) Rs.40,000

D) Rs.50,000

(Additional value added = Selling price - Value of output = Rs.1,20,000 -

Rs.1,00,000 = Rs.20,000)

Q. 8.3 What is the total value added by XYZ Inc. in the entire process?

A) Rs.50,000

B) Rs.70,000

C) Rs.1,20,000

D) Rs.70,000

(Total value added = Value added in production + Additional value added = Rs.50,000
+ Rs.20,000 = Rs.70,000)

Q. 9 “ Higher GDP means greater per capita availability of goods in the economy. “ Do 4
you agree with the given statement? Give valid reason in support of your answer.

Q. (A) Calculate the value of ‘Change in Stock’ from the following data. 3 6
10
S. No. Items Amount (in
Rs.Crores)
1. Sales 400

2. Net Value Added at Factor Cost (NVAFC) 200

3. Subsidies 10

4. Change in Stock ?

5. Depreciation 40

6. Intermediate Consumption 100

14
(B) Which among the following are final goods and which are intermediate goods ?
Give Reasons. `
3

(1) Milk Purchased by a tea stall

(2) Bus Purchased by a School

Answer Hint
Q. 1 C

Q. 2 C

Q. 3 A and R are both true, and R is the correct explanation of A.

Q. 4 Example

Q. 5 C

Q. 6 Intermediate Goods

Q. 7 Flow

Q. 8.1 (D) ₹50,000

8.2 (A) ₹20,000

8.3 ( B) ₹70,000

15
TOPIC NATIONAL INCOME, WORKSHEET,
NAME____________________ ROLL NO._________
Q. 1 Statement I: Macroeconomics emerged as a separate discipline after the Great 1
Depression.

Statement II: The Great Depression had no impact on unemployment

(a) Both statement(A) and (R) are true and( R )is correct explanation
of (A).

(b) Both statement ( A) and (R) is true bute R is not correct

explanation of (A)

(c) Statement A is true but R is false.

(d) Statement (A ) is fals but (R) is true.

Q. 2 Which of the following is deducted from GNP to get NNP? 1

a) Indirect tax
b) Depreciation
c) Net exports
d) Subsidies

Q. 3 Assertion (A): Depreciation affects the productive capacity of an economy. 1

Reason (R): Depreciated assets can still be used effectively in production

without any loss in efficiency.

A. Both Assertion and Reason are true and Reason is the correct
explanation.

B. Both Assertion and Reason are true but Reason is not the correct
explanation.

C. Assertion is true but Reason is false.

D. Assertion is false but Reason is true

Q. 4 Assertion (A): Continuous investment is necessary to maintain the capital 1

stock of an economy.

Reason (R): Depreciation gradually reduces the value of existing capital

goods.

16
 A. Both Assertion and Reason are true and Reason is the correct
explanation.

B. Both Assertion and Reason are true but Reason is not the correct
explanation.

C. Assertion is true but Reason is false.

D. Assertion is false but Reason is true.

Q. 5 If nominal GDP increases but real GDP remains the same, what is likely 1
happening?

a) The economy is experiencing economic growth.

b) The economy is experiencing deflation.

c) The economy is experiencing inflation.

d) The economy is experiencing a recession

Q. 6 GDP includes only the value of ______ goods and services produced within 1
a country in a given year.

Q. 7 An increase in GDP Deflator indicates a rise in the general ______ level. 1

Q. 8 3

Calculate GDP Deflator in year 2019 & 2020 on the basis of given data

Q. 9 Answer the following questions by using expenditure method 4

Component Value (Rs.crores)

Consumption 5000

17
 Investment 1000

Government Spending 2000

Net Exports 500

9.1 What is the national income using the expenditure method?

A) Rs.7000 crores

B) Rs.8000 crores

C) Rs.8500 crores

D) Rs.9000 crores

9.2 What percentage of national income is consumption expenditure?

A) 50%

B) 58.82%

C) 60%

D) 70%

9.3 If investment increases by 10%, what is the new national income?

A) Rs.8600 crores

B) Rs.8700 crores

C) Rs.8800 crores

D) Rs.8600 crores

(New Investment = 1000 + 10% of 1000 = 1100, New National Income

= 5000 + 1100 + 2000 + 500 = 8600)

9.4 What is the ratio of government spending to national income?

A) 0.2

B) 0.235

C) 0.25

D) 0.235 (Ratio = Government Spending / National Income = 2000 /

8500 = 0.235)

18
Q. Case Study: 6
10
India’s GDP at market prices for the year 2023-24 is estimated to be Rs.300
lakh crore. During the same year, the depreciation of capital is Rs.20 lakh
crore, and net factor income from abroad is Rs.(-5) lakh crore. The
government provided subsidies worth Rs.3 lakh crore and collected indirect
taxes of Rs.10 lakh crore.

India also saw strong performance in the services sector, especially IT and
finance, which contributed significantly to the GDP. However, agricultural
output remained stagnant due to erratic monsoons.

The government aims to improve national income figures by increasing

public investment and enhancing export capabilities, while monitoring
inflation and employment levels.

(i) Calculate Net National Product (NNP) at Factor Cost.

(ii) Identify which sector contributed the most to GDP in the above case.
(iii) What challenges did the agricultural sector face in the given year?
(iv) Suggest two measures the government can take to increase national
income.

Answer Hint
Q. 1 C

Q. 2 (B) The method that calculates national income by adding up all the
expenditures made by households, businesses, government, and foreigners

Q. 3 A is true, but R is false.

Q. 4 A and R are both true, and R is the correct explanation of A.

Q. 5 Answer: c) The economy is experiencing inflation.

Q. 6 final Q. 7 price Q. 9

9.1 C) ₹8500 crores (National Income = Consumption + Investment +

Government Spending + Net Exports = 5000 + 1000 + 2000 + 500 = 8500)

9.2 ( B) 58.82% (Percentage = (Consumption / National Income) x 100 =

(5000 / 8500) x 100 = 58.82%)

9.3 ( A) ₹8600 crores 9.4 ( B) 0.235

TOPIC MONEY AND BANKING, WORKSHEET-1,

NAME____________________ ROLL NO._________

19
Q. 1 Assertion (A): Barter system lacked a standard unit of account. 1

Reason (R): It was difficult to measure and compare the value of goods in
barter exchange.
Alternatives:
a. Both A and R are true, and R is the correct explanation of A
b. Both A and R are true, but R is not the correct explanation of A
c. A is true, but R is false
d. A is false, but R is true

Q. 2 Assertion (A): Legal tender money is accepted compulsorily for transactions. 1

Reason (R): Acceptance of legal tender is backed by law.

Alternatives:
a. Both A and R are true, and R is the correct explanation of A
b. Both A and R are true, but R is not the correct explanation of A
c. A is true, but R is false
d. A is false, but R is true

Q. 3 Read the statements given below and choose the correct option: 1
Statement I: Money serves as a medium of exchange, which eliminates
the need for a double
coincidence of wants.
Statement II: Under the barter system, transactions were easier as goods
were exchanged directly.
Options:
a. Both statements are true, and Statement II is the correct explanation of
Statement I.
b. Both statements are true, but Statement II is not the correct explanation
of Statement I.
c. Statement I is true, but Statement II is false.
d. Both statements are false.

Q. 4 Read the statements given below and choose the correct option: 1

Statement I: Fiat money has intrinsic value.

Statement II: Money supply includes currency held by the public and demand
deposits.
Options:
a. Both statements are correct
b. Both statements are incorrect
c. Statement I is correct, Statement II is incorrect
d. Statement I is incorrect, Statement II is correct

Q. 5 Refer to the image below and answer Questions 1

20
 Q5. What type of money does the image represent?
a. Commodity Money
b. Digital Money
c. Barter
d. Token Money

Q. 6 Read the following passage carefully and answer the questions: 1

Seema runs a tailoring business and accepts payments in cash, UPI, and
through mobile wallets. She finds UPI fast and reliable, while some of her
older clients still prefer cash. Her bank encourages her to use digital payments
as it increases transparency. Seema maintains a savings account and uses net
banking to pay for raw materials. She sometimes deposits her excess income
into a fixed deposit to earn interest.
UPI and mobile wallets used by Seema are examples of:
a. Near money
b. Commodity money
c. Digital money
d. non-monetary assets
Q. 7 1

.Identify the function of money and explain with suitable example

Q. 8 Explain the medium of exchange function of money 3

Q. 9 Explain the significance of standard of deferred payment function of money. 4

Q. How does money overcome the problems of barter system? Explain briefly 6
10

21
 Answer Hint-W1
1. A2. A
3. C
4. C
5. D
6. C
7. Money is an asset that retains its value over time. People store their wealth
in the form of money, without fearing for loss in its value. Money
overcomes the problem of storing perishable item under barter system of
exchange. With money, people hold liquidity and value in a much more
convenient manner.

8. The primary function of money is, acting as a medium of exchange

between two parties involved in a transaction. It avoids the practical
problems of wastage of time and resources, involved in the barter system of
an exchange and it improves the transactional efficiency. It also promotes
allocational efficiency in the trade and production of goods and services.
Hence, it can be said that money has separated the acts of sales and
purchases.

9. Money simplifies the mechanism of deferred payments significantly.

Deferred payments means future payment. When we take a loan from
somebody, we not only pay the principal amount but also the interest
amount. Under barter system of exchange, it was very difficult to make such
transactions. As money maintains a standard value over a period of time,
provided price remains constant, deferred payments can be easily made.

10.Money serves as a unit of value or common measure of value in terms of

which the value of all goods and services are measured. This helps in
measuring the exchange values of commodities. The prices of all the goods
and services can be fixed in terms of money and the problem of expressing
the value of each commodity in terms of quantities of other goods can be
avoided.

The related problem of barter which this function of money has solved is the
problem of Tack of common measure of value.In barter system, there was
absence of a common unit of measurement in which the value of goods and
services can be measured. In the absence of common unit, proper valuation
was not possible.
e.g. cloth is measured in metre (i.e. length) while milk is measured in litre
(i.e. capacity), hence both cannot be measured in a single unit, thereby
complicating the process of exchange. But the evolution of money has
solved this problem, and now every good or service can be measured in
terms of money.

22
TOPIC: MONEY AND BANKING, WORKSHEET-2,
NAME____________________ ROLL NO._________
Q. 1 1
Who is primarily responsible for creating money in an economy? 1

A. The Ministry of Finance B. Commercial banks and the

central bank
C. Stock exchanges D. Insurance companies
Q. 2 1
How do commercial banks create money? 1
A. By printing physical currency B. By collecting taxes
C. By issuing loans and creating deposits D. By exporting goods

Q. 3 1
Assertion (A): Commercial banks create money through the process of
lending.1
Reason : When banks give loans, they create new deposits in the borrower’s
account, increasing the money supply.

(a. )A is true, R is true and R is the correct explanation of A.

(b) A is true, R is true but R is not the correct explanation of A.

(c) )A is true, R is false.

(d) A is false, R is true.

Q. 4 In the image, what form of money is depicted? 1

Q. 5 Consider the following statements about the role of central banks: 1

a) . The central bank is the sole authority for issuing currency in a country.

b) .Central banks directly control the interest rates offered by commercial

banks to their customers.

23
 Which of the statements given above is/are correct

Q. 6 Case study based 1

The central bank buys $50 million worth of government bonds from
commercial banks. 1

Question:

What immediate effect does this have on the money supply?

A) Decreases money supplyB) Increases bank reserves and money supply

C) Has no effect on money supplyD) Decreases bank reserves

Q. 7 Discuss any two tools used by the central bank to control money supply in an 1
economy

Q. 8 Explain the mechanism of credit creation by the commercial banking system 3

if LRR is 10% and initial deposit in the banking system is Rs. 20,000?

Q. 9 Read the given excerpt taken from the article ‘What is ‘money” published by 4
The Economic Times on 20th September, 2022.

“The money came into existence to overcome the drawbacks of the barter
system. Earlier, people used to exchange goods and services as a form of
commerce. this often led to many disadvantages, one of which was the
double coincidence of wants. To solve this problem, a standard medium of
exchange, money, was introduced.”

Explain in brief the function of money highlighted in the given excerpt.

Q. How do central banks respond to stagflation when inflation and 6

10 unemployment are both high?

Answer Hint
Q.1 Commercial banks and the central bank

Q.2 By issuing loans and creating deposits

Q.3 A is true, R is true and R is the correct explanation of A.

Q.4 A is true, R is true and R is the correct explanation of A.

24
Q.6 Answer: B) Increases bank reserves and money supply

Q.7 Answer:

1. Open Market Operations: The central bank buys or sells government

securities to increase or decrease the money supply.

2. Bank Rate: The central bank increases or decreases the bank rate to make
borrowing more expensive or cheaper, thereby controlling the money supply.

Q.8 Ans. With a Legal Reserve Ratio (LRR) of 10% and an initial deposit of
Rs. 20,000, the commercial banking system can create a total of Rs. 200,000
in credit. This is because the money multiplier, which determines how much
the initial deposit can expand, is 1/LRR = 1/0.1 = 10. Therefore, the total
credit creation is Rs. 20,000 * 10 = Rs. 200,000.

Q.10 In a stagflation environment where inflation and unemployment are

both high, central banks face a difficult dilemma. They can’t easily use
traditional tools that address one issue without exacerbating the other.
Typically, central banks use monetary policy, such as adjusting interest rates,
to combat inflation. However, raising interest rates to curb inflation can also
slow down economic growth and increase unemployment.

25
TOPIC MONEY AND BANKING, WORKSHEET-3,
NAME____________________ ROLL NO._________
Q. 1 1. Which of the following is the primary objective of the Reserve Bank of 1
India's monetary policy?
a) Maximizing employment
b) Promoting economic growth
c) Maintaining price stability
d) Reducing income inequality

Q. 2 Assertion (A): The RBI issues currency notes and coins in India. 1
Reason (R): It is the sole authority for currency issuance, ensuring
uniformity and public confidence.
a) Both A and R are true and R is the correct explanation of A.
b) Both A and R are true but R is not the correct explanation of A.
c) A is true but R is false.
d) A is false but R is true.

Q. 3 Assertion (A): The RBI acts as a lender of last resort for commercial banks in 1
India. Reason (R): It provides financial assistance to banks facing temporary
liquidity shortages to prevent financial instability.
a) Both A and R are true and R is the correct explanation of A.
b) Both A and R are true but R is not the correct explanation of A.
c) A is true but R is false.
d) A is false but R is true

Q. 4 The Indian government needs to borrow a significant amount of money to finance 1

its budget deficit. Which function of the RBI would be relevant in this situation?
a) Banker's Bank
b) Custodian of Foreign Exchange Reserves
c) Banker to the Government
d) Regulator and Supervisor of the Financial System

Q. 5 The Reserve Bank of India manages the country's _________ reserves, ensuring 1
the stability of the Indian Rupee against other currencies.

Q. 6 The minimum percentage of a bank's deposits that it must hold with the RBI as 1
cash is known as the _________ Reserve Ratio.
Q. 7 Fill in blank 1

26
Q. 8 Identify the function of the Reserve Bank of India in below picture and How 3
does it help in maintaining the stability of the Indian banking system?

Q. 9 Discuss the role of the RBI in maintaining price stability in India. What are the 4
key tools it uses to achieve this objective, and how do they work?

Q. (A) Explain the 'Custodian of Foreign Exchange Reserves' function of the RBI. 6
10 Why is this function crucial for India's external sector stability and its ability to
conduct international trade?
(B) Describe any one qualitative measures used by the RBI to control credit in the
Indian economy

27
Answer Hint
1. c) Maintaining price stability
2. A) Both A and R are true and R is the correct explanation of A.
3. A) Both A and R are true and R is the correct explanation of A.
4. C) Banker to the Government
5. Foreign exchange
6. Cash
7. Quantitative measure
8. The RBI acts as the ‘Banker’s Bank’ by providing banking facilities to all
scheduled and commercial banks in India. It holds their cash reserves,
provides financial assistance during liquidity crises, and ensures smooth
interbank settlements. By regulating and monitoring banks, it maintains
trust and prevents systemic failures, thus ensuring the overall stability of
the banking system
9. . The RBI maintains price stability by controlling inflation and ensuring
that the purchasing power of the rupee remains stable. Key tools include:
Repo Rate: The rate at which RBI lends to commercial banks. Raising it
reduces money supply and controls inflation.

Reverse Repo Rate: Rate at which banks deposit with RBI; higher rates
encourage banks to park excess funds with RBI.

Cash Reserve Ratio (CRR): Reduces liquidity when raised, limiting inflation.

Open Market Operations (OMO): Buying/selling government securities to control

liquidity

10.

(A) The RBI manages India’s foreign exchange reserves and ensures that the
country has adequate reserves for imports, debt payments, and currency
stabilization. This role is crucial to avoid currency volatility, maintain investor
confidence, and enable smooth international trade by ensuring that exchange rates
remain stable and predictable.

(B) Credit Rationing is a qualitative tool where RBI limits the amount of credit to
specific sectors to control inflation or direct funds to priority areas. This ensures
better allocation of credit in the economy based on national priorities.

28
 Worksheet- 1
CHAPTER - DETERMINATION OF INCOME AND EMPLOYMENT
Name-………………………………………. Roll No. ………….

Time: 35 Minutes Maximum Marks: 20

Q.No. Question Marks

1. Complete the following table by choosing the correct option: 1

Income (Y) Savings (S) Consumption (C) Average Propensity

(in Rs. crore) (in Rs. crore) (in Rs. crore) to Consume (APC)

0 …..(i)..... 300 —-

1000 0 ……(ii)..... 1

2000 300 1700 0.85

3000 600 2400 0.8

(a) -300 , 1200

(b) 300 , 1200

(c) 0 , 700

(d) -300 , 1000

2. Statement 1: Autonomous consumption is the consumption expenditure that is 1

independent of the level of income.

Statement 2: Induced investment refers to the investment expenditure that is

determined by the rate of interest.

(A) Both Statement 1 and Statement 2 are true.

(B) Statement 1 is true, but Statement 2 is false.

(C) Statement 1 is false, but Statement 2 is true.

29
 (D) Both Statement 1 and Statement 2 are false.

3. Assertion (A): Excess demand in an economy leads to inflationary pressure. 1

Reason (R): Excess demand occurs when aggregate demand is greater than
aggregate supply at full employment level.

(a) Both A and R are true, and R is the correct explanation of A.

(b) Both A and R are true, but R is not the correct explanation of A.

(c) A is true, R is false.

(d) A is false, R is true.

4. Assertion (A): The saving function shows the relationship between income and 1
saving.

Reason (R): Saving increases as income increases because people save a part of
their additional income.

(a) Both A and R are true, and R is the correct explanation of A.

(b) Both A and R are true, but R is not the correct explanation of A.

(c) A is true, R is false.

(d) A is false, R is true.

5. Explain why the Aggregate Supply curve is drawn at a 45-degree angle in the 3
Keynesian model. How does this representation help in understanding the
equilibrium level of income and output in an economy?

6. The government invests ₹100 crores in rural manufacturing units. The MPC in 3
the region is 0.75.
Calculate the total increase in income and consumption expenditure resulting
from this investment.

7. In BharatLok, a health crisis struck in the form of a pandemic. Fear and 4

uncertainty caused people to cut down their spending drastically. Many
households started saving more, reducing their consumption expenditure. The
marginal propensity to consume (MPC) fell to 0.5. At the same time, investment
in the economy was ₹400 crore. This change in behavior had a visible impact on
the national income, which did not grow as expected.

1. Calculate the multiplier using the given MPC.

30
 2. How will lower MPC affect the overall income generation in the
economy?
3. Why does excessive saving during a crisis reduce economic growth, even
if investment levels remain the same?
What kind of government measures could help restore consumption demand in
such a situation?

8. Riya reads in her Economics textbook that a small increase in investment by the 6
government led to a much larger increase in national income. She is curious
how this is possible and asks her teacher during a classroom discussion.

Question:
With reference to Riya’s curiosity, explain the concept of the investment
multiplier. How does the multiplier effect contribute to an increase in national
income? Support your answer with a relevant example.

31
Hints: Worksheet-1
Ans. 1-D

Ans. 2- (B)

Explanation: Statement 1 is true, as autonomous consumption represents the basic level of

consumption even with zero income. Statement 2 is false; induced investment is typically
influenced by the level of income and profit expectations, while autonomous investment is
independent of income. The rate of interest primarily influences the cost of investment, not
necessarily whether it's induced or autonomous based on income.

Ans 3.(a) Both A and R are true, and R is the correct explanation of A.

Explanation: Excess demand beyond full employment causes inflation, and that’s due to AD
> AS.

Ans 4.(a) Both A and R are true, and R is the correct explanation of A.

Explanation: The saving function reflects the income-saving relationship, and savings rise
with income.

Ans. 5. The 45-degree inclination of the Aggregate Supply Curve represents the equilibrium
condition where Aggregate Demand (AD) equals Aggregate Supply (AS). It helps determine
the equilibrium level of income and output.

Ans.6. Multiplier = 1 / (1 - 0.75) = 4

ΔY = 4 × 100 = ₹400 crores
Consumption = 0.75 × 400 = ₹300 crores

Ans 7 (i) Multiplier (K) = 1 / (1 – MPC) = 1 / (1 – 0.5) = 2

Ans 7 (ii) Lower MPC means people are spending less, which results in a lower multiplier
and less increase in income for a given investment.
Ans 7 (iii) Reduced consumption leads to lower demand, which causes firms to reduce output
and employment, thereby slowing economic growth.
Ans 7 (iv) The government can reduce taxes, increase subsidies, or provide direct cash
transfers to encourage spending.

Ans. 8. Write definition and make table also.

32
 Worksheet- 2
CHAPTER - DETERMINATION OF INCOME AND EMPLOYMENT
Name-………………………………………. Roll No. ………….

Time: 35 Minutes Maximum Marks: 20

Q.No. Question Marks

1. Statement 1: The propensity to consume (MPC) indicates the proportion 1

of additional income that is saved.

Statement 2: The value of the multiplier is inversely related to the marginal

propensity to save (MPS).

(A) Both Statement 1 and Statement 2 are true.

(B) Statement 1 is true, but Statement 2 is false.

(C) Statement 1 is false, but Statement 2 is true.

(D) Both Statement 1 and Statement 2 are false.

2. Statement 1: Full employment equilibrium implies a situation where there 1

is no unemployment in the economy.

Statement 2: Underemployment equilibrium occurs when the equilibrium

level of output is less than the full employment level of output.

(A) Both Statement 1 and Statement 2 are true.

(B) Statement 1 is true, but Statement 2 is false.

(C) Statement 1 is false, but Statement 2 is true.

(D) Both Statement 1 and Statement 2 are false.

3. If an upward sloping straight line consumption function makes an intercept 1

at the Y-axis at a positive coordinate, it implies that Marginal Propensity
to Consume (MPC)................... and Average Propensity to Consume
(APC).............. as the income increases.

(Choose the correct option to fill in the blanks)

(a) remain constant, rises

(b) rises, rises

33
 (c) remain constant, falls

(d) falls, falls

4. Assertion (A): When marginal propensity to consume (MPC) increases, 1

the value of the multiplier also increases.

Reason (R): Multiplier is inversely related to marginal propensity to

consume.

(a) Both A and R are true, and R is the correct explanation of A.

(b) Both A and R are true, but R is not the correct explanation of A.

(c) A is true, R is false.

(d) A is false, R is true.

5. Assertion (A): Autonomous consumption exists when income is zero. 1

Reason (R): Autonomous consumption depends on income level.

(a) Both A and R are true, and R is the correct explanation of A.

(b) Both A and R are true, but R is not the correct explanation of A.

(c) A is true, R is false.

(d) A is false, R is true.

6. During a classroom debate, students discuss the relationship between 3

saving and investment. One student says, “If people plan to save more
than what firms plan to invest, it might disturb the economy.”

Question:
Using this scenario, explain what happens when ex-ante saving is
greater than ex-ante investment. How does the economy adjust itself to
reach equilibrium?

7. The government of a country notices a rise in inflation. To control it, it 3

decides to reduce its spending and increase taxes.

Question:
Using an Aggregate Demand–Aggregate Supply (AD-AS) diagram,
explain how contractionary fiscal policy can help reduce an
inflationary gap.

34
8. An economy reports declining consumer demand and falling prices for 3
several months. Economists warn about a deflationary gap.

Question:
With the help of an AD-AS diagram, explain how a leftward shift in
aggregate demand can lead to a deflationary gap. What could be the
possible effects on employment and production?

9. India’s economy witnessed a sharp decline in consumption and investment 6

demand during a global crisis. Factories remained underutilized, and
unemployment increased. In response, the government introduced a
stimulus package and increased public spending on infrastructure and
welfare schemes. This led to a gradual revival in demand and employment
levels.
Based on the above case, answer the following:

(a) Identify and explain the type of demand gap initially faced by the
economy.
(b) How does this gap affect employment and output levels?
(c) Explain how government spending helps reduce this gap using the
concept of multiplier.

35
Hints: Worksheet -2
Ans: 1 (C) Explanation: Statement 1 is false because MPC indicates the proportion of
additional income that is consumed, not saved. The propensity to save (MPS) indicates the
proportion of additional income that is saved. Statement 2 is true; the multiplier formula is
1/(1-MPC) or 1/MPS, showing an inverse relationship with MPS.

Ans: 2 (C) Explanation: Statement 1 is false. Full employment equilibrium does not mean zero
unemployment; it means no involuntary unemployment. There can still be natural
unemployment (frictional and structural). Statement 2 is true; underemployment equilibrium
signifies that the economy is producing below its potential.

Explanation: Involuntary unemployment results from insufficient aggregate demand, even

when people are willing to work.

Ans. 3-A

Ans. Ans 4.(c) A is true, R is false.

Explanation: Multiplier is directly (not inversely) related to MPC.

Ans 5.(C) A is True, R is false.

Explanation: Autonomous consumption exists even when income is zero; it is income-

independent.

Ans.6. If ex-ante saving exceeds ex-ante investment, the economy will adjust through a
decrease in income and output. As saving exceeds investment, inventories will pile up, leading
firms to reduce production, thereby decreasing income until saving equals investment.

Ans.7 AD>AS, Diagram

Decreasing government spending, or

Increasing taxes

Ans.8 AD<AS, diagram

Potential Consequences:

Rising unemployment

Lower economic growth

Downward pressure on prices

Ans.9 (a) Deflationary gap: AD < AS at full employment.

(b) Causes unemployment and lower output.

(c) Govt. spending raises AD; multiplier increases income and jobs.

36
 Worksheet- 3
CHAPTER - DETERMINATION OF INCOME AND EMPLOYMENT
Name-………………………………………. Roll No. ………….

Time: 35 Minutes Maximum Marks: 20

Q.No. Question Marks

1. If the value of Investment Multiplier (K) is 2, the relevant consumption 1

function would be:

(a) C = 50 + .25Y

(b) C = 50 + .75Y

(c) C = 50 + .50Y

(d) C = 50 + .25Y

2. Assertion (A): Involuntary unemployment occurs when people are 1

willing to work at the prevailing wage rate but cannot find jobs.

Reason (R): Involuntary unemployment arises due to deficiency of

aggregate demand in the economy.

(a) Both A and R are true, and R is the correct explanation of A.

(b) Both A and R are true, but R is not the correct explanation of A.

(c) A is true, R is false.

(d) A is false, R is true.

3. Assertion (A): The equilibrium level of income is determined where 1

aggregate demand equals aggregate supply.

Reason (R): At this point, there is no tendency for output and income to
change.

(a) Both A and R are true, and R is the correct explanation of A.

(b) Both A and R are true, but R is not the correct explanation of A.

(c) A is true, R is false.

(d) A is false, R is true.

37
4. Statement 1: According to Keynesian theory, the equilibrium level of 1
income and employment is determined at the point where aggregate
demand equals aggregate supply.

Statement 2: In a two-sector economy, aggregate demand is the sum of

consumption expenditure and government expenditure.

(A) Both Statement 1 and Statement 2 are true.

(B) Statement 1 is true, but Statement 2 is false.

(C) Statement 1 is false, but Statement 2 is true.

(D) Both Statement 1 and Statement 2 are false.

5. India's economy recently experienced rapid increases in consumer 3

spending and government expenditure. As a result, prices began to rise
sharply.

Question:
Using an AD-AS diagram, illustrate the concept of an inflationary gap.
Based on the scenario, explain the causes of such a gap and discuss its
possible consequences on the economy.

6. The government observes that the consumption function in the economy 3

is C = 200 + 0.8Y. Investment is ₹3000 crores.
(i) Find equilibrium national income (ii) Calculate saving at equilibrium
level.

7. In the country X, the government initiated an ambitious infrastructure 4

development program by investing ₹500 crore in building highways, rail
networks, and bridges. This investment created jobs for workers,
engineers, suppliers, and local businesses. As incomes rose, people
increased their spending on goods and services, which encouraged private
businesses to expand production. This led to multiple rounds of income
generation. Economists later found that this ₹500 crore investment led to
a total increase in national income of ₹1500 crore.

Questions:

1. Calculate the investment multiplier in Country X. (1M)

2. If the government increases its investment to ₹800 crore, how
much increase in income can be expected, assuming the same
MPC? (1M)
3. What would happen to the multiplier effect if people started saving
more and consuming less? (2M)

38
8. Look at the following graph and 1
answer the questions below:

a) What happens to the equilibrium

level of income when AD shifts from 3
AD to AD1?

b) Explain one possible reason for the

shift in AD.

c) If the economy was initially in

recession, how does this shift affect employment?

39
Hints: Worksheet 3
Ans: 1 (C) Explanation: Statement 1 is false because MPC indicates the proportion of
additional income that is consumed, not saved. The propensity to save (MPS) indicates the
proportion of additional income that is saved. Statement 2 is true; the multiplier formula is
1/(1-MPC) or 1/MPS, showing an inverse relationship with MPS.

Ans: 2 (C) Explanation: Statement 1 is false. Full employment equilibrium does not mean zero
unemployment; it means no involuntary unemployment. There can still be natural
unemployment (frictional and structural). Statement 2 is true; underemployment equilibrium
signifies that the economy is producing below its potential.

Explanation: Involuntary unemployment results from insufficient aggregate demand, even

when people are willing to work.

Ans. 3-A

Ans. Ans 4.(c) A is true, R is false.

Explanation: Multiplier is directly (not inversely) related to MPC.

Ans 5.(C) A is True, R is false.

Explanation: Autonomous consumption exists even when income is zero; it is income-

independent.

Ans.6. Y = C + I → Y = 200 + 0.8Y + 3000

0.2Y = 3200 → Y = ₹16000 crores
C = 200 + 0.8×16000 = ₹13000 crores
S = 16000 - 13000 = ₹3000 crores

Ans.7 AD>AS, Diagram

Decreasing government spending, or Increasing taxes

Ans 8 The equilibrium level of income increases as the new intersection of AD1 and AS is at
a higher output level. b) One possible reason for the AD shift is an increase in government
expenditure, investment, or consumer spending. c) If the economy was in recession, the shift
increases demand, leading to higher production and employment.

40
 Worksheet- 4
CHAPTER - DETERMINATION OF INCOME AND EMPLOYMENT
Name-………………………………………. Roll No. ………….

Time: 35 Minutes Maximum Marks: 20

Q.No. Question Marks

1. An economy is facing a persistent rise in consumer prices which attracts 1

real economic hardship. This situation may be the result of —------

(a) deflationary gap

(b) inflationary gap

(C) both deflationary as well as inflationary gap

(d) neither inflationary gap nor deflationary gap

2. Assertion (A): According to Keynes, full employment is a rare situation in 1

an economy.

Reason (R): Full employment is achieved when there is no involuntary

unemployment in the economy.

(a) Both A and R are true, and R is the correct explanation of A.

(b) Both A and R are true, but R is not the correct explanation of A.

(c) A is true, R is false. (d) A is false, R is true.

3. Assertion (A): When investment increases, income increases by a 1

multiple of the increase in investment.

Reason (R): This happens due to the working of the investment

multiplier.

(a) Both A and R are true, and R is the correct explanation of A.

(b) Both A and R are true, but R is not the correct explanation of A.

(c) A is true, R is false.

(d) A is false, R is true.

4. Assertion (A): When investment increases, income increases by a 1

multiple of the increase in investment.

41
 Reason (R): This happens due to the working of the investment
multiplier.

(a) Both A and R are true, and R is the correct explanation of A.

(b) Both A and R are true, but R is not the correct explanation of A.

(c) A is true, R is false.

(d) A is false, R is true.

5. An economy exists in equilibrium only at full employment level of 3

income and employment. Defend or Refute this statement with valid
reasons.

6. During a festive season, people increase their spending significantly. 3

How will this affect the level of income and employment in the
economy? Explain using the concept of Aggregate Demand.

7. A family has a disposable income of ₹2500 crores and is saving ₹500 4

crores.
Question: Calculate the average propensity to consume (APC). What
does this tell us about consumer behavior?

8. Given the following data on a hypothetical economy:

Assume MPC = 0.8.

a) Find the Marginal Propensity to Consume (MPC). 2

b) Calculate the equilibrium level of income if the Autonomous Investment

is ₹200 crore.
2
c) If government expenditure increases by ₹50 crore, what will be the new
equilibrium income?
2
National Income (Crores Rs.) Consumption (Crores Rs.)

0 100

100 180

200 260

300 340

400 420

42
Hints: Worksheet-4
Ans. 1-B
Ans 2.(a) Both A and R are true, and R is the correct explanation of A.
Explanation: Keynes argued full employment is rare due to persistent involuntary
unemployment.
Ans 3.(a) Both A and R are true, and R is the correct explanation of A.
Explanation: The multiplier causes a larger income increase from a smaller investment
increase.
Ans. (a) Both A and R are true, and R is the correct explanation of A.
Explanation: The multiplier causes a larger income increase from a smaller investment
increase.
Ans. 5 This statement can be refuted. According to Keynesian economics, equilibrium can
occur at less than and more than full employment levels of income and employment due to
deficient and excess aggregate demand. The economy can be in equilibrium with
unemployment and over full employment. Full employment is not a necessary condition for
equilibrium.
Ans. 7. Consumption = 2500 - 500 = ₹2000 crores
APC = 2000 / 2500 = 0.8
Interpretation: 80% of income is used for consumption.
Ans.8. a) MPC = Change in Consumption / Change in Income National Income
(180 - 100) / (100 - 0) = 80/100 = 0.8
b) Equilibrium level of income is determined using: Y=C+I
C = 𝐶̅ + 𝑀𝑃𝐶
Y = 100 + 0.8 Y
Y = 100 + 0.8 Y + 200 ‘
(1 – 0.8) Y = 300
0.2 Y = 300
Y = 300/0.2 = 1500 crore
c) Using the Multiplier Formula, We know, K = ∆ Y / ∆I or ∆ Y = K x ∆I
K = 1/(1 – MPC) = 1/(1-0.8) = 1/0.2 = 5
Therefore, ∆ Y = 5 x 1500 = 1750 crores. New equilibrium income = ₹1500 + ₹250 = ₹1750 crore

43
 UNIT 4- GOVERNMENT BUDGET

WORKSHEET: 1

Name of Student ……………… Roll No……….

Time allowed: 35 minutes Max Marks: 20

Q.N QUESTION MAR

. K
1 Borrowing in government budget is: 1

(a) Revenue deficit

(b) Fiscal deficit

(c) Primary deficit
(d)Deficit in taxes
2 Government expenditure on Mid-Day Meal scheme running in 1
government (state run) schools is a type of ------------expenditure in
government budget (Fill up the blank with correct answer).
3 Statement -1 : Government budget is an accounting statement showing 1
actual receipts and expenditure of the government during a fiscal year.
Statement -2 : Two components of government budge are : Revenue
budget and Capital budget.

Alternatives:

(a). Both the statement are true.

(b) Both the statement are false.

(c ). Statement 1 is true, but Statement 2 is false

(d.) Statement 2 is true, but Statement 1 is false

4 ASSERTION (A) : Interest paid on National Debt is a 1

revenue expenditure. REASON (R): Revenue expenditure
refer to those expenditure which either create assets or
decrease the liability of the government.

(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).

44
 (C) Assertion (A) is true but Reason (R) is false.
(D) Assertion (A) is false but Reason (R) is true.

5 CASE STUDY: 1*2=2

Fiscal deficit can prove inflationary if deficit is financed by
printing of new currency as it will increase the money supply
and purchasing power in the economy. It will further worsen
the situation if new money is used to finance the current
consumption expenditure of the government. However, if
the increase in money supply leads to increased supply of
goods and services or new money is used for infrastructural
activities or other capital projects, then fiscal deficit will not
prove to be inflationary.

Questions:
1.In which condition fiscal deficit cause inflation in an economy.

2. In which condition fiscal deficit will not prove to be inflationary.

6 The maximum value of primary deficit can be equal to fiscal deficit. 1

(True/False).
7 Which of the following is not a tax receipt? 1
(a)Gift Tax (b) Sale Tax (c) Dividend (d) Excise Duty

8 Given the following data estimate the values of (i) Revenue 4

deficit and (ii)Fiscal deficit.

Items Rs.in crore

I Tax revenue 1,000

II Revenue expenditure 3,821
III Non-tax revenue 2,000
IV Recovery of loans 135
V Capital expenditure 574
VI Disinvestment 100
VII Interest payment 1,013

9 Which of the following is/are included in the capital budget of the 4

government? Give reasons for your answer.
(a) Borrowings from the public.

45
 (b) Loans received from foreign government.
(c) Expenditure on acquisition of assets like roads, buildings, machinery
etc.
(d) Loans and advances granted to the States Government.

10 Explain (a) allocation of resources, and (b) economic stability as 2*2=4

objectives of government budget.

HINT ANSWERS-WORKSHEET-1

Q1-(b) Fiscal deficit

Q2-Revenue Expenditure

Q3-(d.) Statement 2 is true, but Statement 1 is false

Q4- (c) Assertion (A) is true but Reason (R) is false

Q5 (i) if deficit is financed by printing of new currency as it will increase the money supply
and purchasing power in the economy

(ii) If new money is used for infrastructural activities or other capital projects.

Q6-True

Q7-(c) Dividend

Q8- Ans. Revenue deficit = Revenue expenditure – Revenue Receipts ( tax revenue +
non- tax revenue) = Rs.3821 crore – (Rs.1000crore + 2000 crore) = Rs. 821 crore

Fiscal deficit = total expenditure (Revenue expenditure + Capital expenditure) – Total

Receipts (Revenue receipts + Capital receipts) other than borrowings

= 3,821 crore + 574 crore – (1000 crore + 2000 crore) – (135 crore + 100 crore)

= 3821 crore + 574 crore – 3000 crore – 235 crore

= Rs. 4,395 crore – Rs. 3,235 crore

= Rs. 1,160 crore

Q9- All are included in capital budget (Marks will be accorded when valid reason is given)

Q10-Correct explanation of the objectives of govt. budget.

46
 UNIT 4- GOVERNMENT BUDGET

WORKSHEET: 2

Name of Student ……………… Roll No……….

Time allowed: 30 minutes Max Marks: 20

Q.N QUESTION MAR

. K
1 Receipts which do not affect assets or labiality status of the government, 1
Capital Receipts (b) Revenue Receipts (c) Budgetary Receipt (d)
None of these
2 Example of non-debt creating capital receipts 1
(a) Borrowings (b) Extension of Borrowings (c) Recovery of loans
(d) None of these

3 Statement -1 : Tax is legally compulsory payment 1

Statement -2 : Directs are capital receipts of the government .
(a)Both the statement is true
(b) Both the statement is false.
(c ). Statement 1 is true, but Statement 2 is false
(d.) Statement 2 is true, but Statement 1 is false

4 ASSERTION (A) : In case of public goods ,Nonpaying users are known 1

as free riders .
REASON (R): Public goods are rivalrous and non-excludable in nature.
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is
the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true and Reason (R) is
not the correct explanation of Assertion (A).
(C) Assertion (A) is true but Reason (R) is false.
(D) Assertion (A) is false but Reason (R) is true.

5 CASE STUDY 1
India’s fiscal deficit touched 115% of the budgeted target in the first half
of 2020-21 as the Covid-19 pandemic continued to hurt government’s
receipts while expenditure remained
close to the same level of last year. The gap between revenue and
expenditure stood at Rs 9.14 lakh crore during April-September,
according to data on the website of the Controller General of Accounts.

Questions:
Q1. Why fiscal deficit touched 115% of the budget target in the first
half of 2020-21.?
.

6 Q6- Government budget helps maintaining economic stability. 1

(True/False).

47
 7 Fiscal deficit equals: 1
(a) interest payments (b) borrowings
(c) Interest payments less borrowings (d)borrowings less
interest payments

8 On the basis of following data calculate the value of revenue deficit. 3

SN ITEMS AMOUNT
(In crores)
1 Tax Receipts 1542
2 Revenue Expenditure 1927
3 Direct Taxes 670
4 Non-Tax Receipts 303
9 4
Giving reason categories the following into revenue receipts and
capital receipts:
(a) Recovery of loans
(b) (B) cooperation tax
(c) Dividends on investment made by government
(d) Sale of public sector undertaking

10 (a) “Through its budgetary policy, a government allocates resources 3*2=6

as per the requirements of the country” Do you agree with the given
statement? Support your answer with a valid reason.
(b) Define direct tax.

ANSWERS-WORKSHEET- 2
Q1(b) Revenue Receipts
Q2-(c) Recovery of loans
Q3-(c ). Statement 1 is true, but Statement 2 is false
Q4- (c) Assertion (A) is true but Reason (R) is false
Q5- It is due to covid-19 pandemic.
Q6-True
Q7-(b) borrowings
Q8- Ans. 82 crores
Q9- Marks will be accorded on the basis of valid reason.
Q10- (i)Yes (Marks will be accorded on the basis of valid reasons.)
Correct explanation of the objectives of govt. budget.
(ii) The tax which burden cannot be transferred on some one other….as Income Tax

48
 Balance of Payment Graded Worksheet 1

Name_______________ Roll No. _____________

Time 35 min MM - 20
Q.No Questions Marks

1. The measurement of Balance of Payments deficit is based on 1

_______ transaction

a) Accommodating
b) Autonomous
c) Current account
d) Capital account
2. Assertion (A): Trade of invisible items between two nations is a 1
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.

A statement of Assertion (A) followed by a statement of Reason

(R) is given.

Choose the correct answer out of the following choices.

(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

3. Which of the following statement is not true? 1

(A) Borrowing from the Asia development bank by the

Government is an accommodating transaction.

(B) Loans given to Sri Lanka by the Government are an

accommodating transaction.

(C) Buying of machinery from Japan is an accommodating

transaction.

(D) Borrowing from the public is an accommodating transaction.

49
4. Agrawal group of real estate company received rent from a 1
foreign firm in New York. This transaction would be recorded on
________ side ______ account of Balance of Payment.

(A) Credit, Current (B) Debit, Current (C) Credit, Capital (D)
Debit, Current

5. 3

Based on the interpretation of above given picture should a

current account deficit be always a cause for alarm?

6. Suppose balance of payment of current account of India in a 3

year was (–) 2579 million US$, whereas Balance on its capital
account was 8409 million $, how will it affect the foreign
exchange reserve of India?

7. Discuss the effect of the following on the Balance of Payments: 4

(i) ‘Make in India’ Programme, (ii) Import of Petrol.

Or

Deficit or Disequilibrium in BOP may occur either due to

autonomous transactions or due to accommodating
transactions.’ Defend or refute

8. Are the following entered (i) on the credit side or the debit side 6
and (ii) in the current account or capital account in the Balance
of Payments account? You must give reason for your answer

a. Purchase of shares of TATA by Microsoft.

b. Imports of computer spare parts from France.
c. Borrowings from World Bank.
d. Repayment of loan by Indian Government taken from
Russia.
50
 Or

Case Study: -

India’s Balance of Payments for the fiscal year 2023–24 showed

a widening current account deficit, mainly due to increased
imports of crude oil and gold. However, the capital account
recorded a surplus owing to higher Foreign Direct Investment
(FDI) and portfolio investment inflows. The country’s foreign
exchange reserves remained stable due to RBI’s interventions in
the forex market.

During this period:

1. Merchandise exports slightly declined due to a global

economic slowdown.

2. Service exports, especially in IT and business

outsourcing, grew significantly.

3. Remittances from overseas Indians increased.

4. Loan repayments to foreign lenders rose

Based on the above case study answer the following questions

a) Identify two components of the Current Account

mentioned in the case.

b) Are remittances from overseas Indians included in the

Current or Capital Account? Justify.

c) Why do foreign exchange reserves remain important in

managing the Balance of Payments?(GNP), there’s an
important distinction:

51
ANSWER
1. b) Autonomous transaction.
2. (D) Assertion (A) is false but Reason (R) is true
3. (A) Borrowing from the Asia development bank by the Government is an
accommodating transaction.
(C) Buying of machinery from Japan is an accommodating transaction.
4. Agrawal group of real estate company received rent from a foreign firm in New York. This
transaction would be recorded on (A) Credit, Current account of Balance of Payment. (It's
an inflow of income, hence credit, and relates to services/income from factors of production,
hence current account).
5. Based on the interpretation of the picture (which is not provided, so I will answer generally
about current account deficit), should a current account deficit always be a cause for alarm?
No, a current account deficit should not always be a cause for alarm.
A current account deficit essentially means a country is importing more goods and services
than it is exporting, and/or net income from abroad is negative. While a persistent and large
deficit can be problematic, signaling a country living beyond its means, it's not inherently
alarming for several reasons:
6. Since the overall BOP is positive (a surplus of 5830 million US$), it means that the
country has received more foreign currency than it has spent. This surplus will lead to an
increase in the foreign exchange reserves of India by 5830 million US$.
7. Discuss the effect of the following on the Balance of Payments: (i) ‘Make in India’
Programme, (ii) Import of Petrol.

(i) ‘Make in India’ Programme: The 'Make in India' program aims to boost domestic
manufacturing and reduce reliance on imports. Its effects on the Balance of Payments would
likely be:

• Reduced Imports,Current Account balance (specifically, the balance of visible

trade) by reducing outflows.
• Increased Exports
• Increased Foreign Direct Investment (FDI
• Technology Transfer and Skill Development

• (ii) Import of Petrol: Import of petrol (crude oil) has a significant effect on the
Balance of Payments:
Increased Imports:
• Deterioration of Current Account:
• Impact on Exchange Rate:

8. a. Purchase of shares of TATA by Microsoft.

• (i) Credit side: This is an inflow of foreign currency into India because Microsoft (a
foreign entity) is investing in an Indian company (TATA).
• (ii) Capital Account: This is a foreign direct investment (FDI) or portfolio
investment, which affects the asset/liability position of the country.

b. Imports of computer spare parts from France.

• (i) Debit side: This is an outflow of foreign currency from India as payment is made
for goods imported from France.

52
 • (ii) Current Account: This relates to the trade in visible goods.

c. Borrowings from World Bank.

• (i) Credit side: This represents an inflow of foreign currency into India as the country
is receiving a loan from the World Bank.
• (ii) Capital Account: This is an external borrowing, which changes the country's
external debt (a liability).

d. Repayment of loan by Indian Government taken from Russia.

• (i) Debit side: This is an outflow of foreign currency from India as the Indian
government is sending money to Russia to repay its loan.
• (ii) Capital Account: This transaction reduces India's external liability.

53
 Balance of Payment Graded Worksheet II

COMPONENTS OF BALANCE OF PAYMENT MM – 20

Name_______________ Roll No. _____________

S.No Questions Marks

9. If Indian students pay fees to foreign universities, it will be 1
recorded as:

a) Debit in current account

b) Credit in current account
c) Debit in capital account
d) Credit in capital account

10. Which of the following scenarios would most likely require 1

official reserve transactions?
a) Increase in gold imports
b) Continuous capital inflows
c) Current account deficit leading to pressure on rupee
d) Rise in tourism revenue

11. A fall in foreign exchange reserves due to RBI intervention is 1

recorded as:
a) Credit in current account
b) Debit in current account
c) Credit in capital account
d) Debit in capital account

12. Which of the following will lead to a credit entry in the BOP? 1
a) Import of machinery
b) Payment of interest on foreign loans
c) Exports of software
d) Purchase of shares in a foreign company

13. India has been witnessing a continuous increase in petroleum 3

imports due to rising domestic demand. Simultaneously, there
has been a surge in remittances from Indians working in the Gulf
countries.

Answer the following:

a) What impact do petroleum imports have on the BOP?
b) Under which account will remittances be recorded?
c) Suggest one policy measure the government can take to
manage this situation

54
14. Analyze the relationship between exchange rate fluctuations and 3
Official Reserve Transactions and Evaluate the effectiveness of
Official Reserve Transactions in correcting persistent BoP
imbalances.

15. 4

Based on the picture given above, answer the following questions

-

a) Whether the trade account is in surplus or deficit in the year

April – Nov 2023. Calculate the trade balance for the quarter
Nov 2023.

b) Which component of balance of trade contributes negatively

and why might that be a concern?

c) Suggest a way to improve the trade account balance.

16. India's Capital Account Surplus: Role of FDI and NRI 6

Deposits

In recent years, India's capital account has recorded high

inflows, primarily due to:

• Increased Foreign Direct Investment (FDI): Global

companies are investing in India’s sectors like digital
technology, infrastructure, and manufacturing under the
“Make in India” and “Digital India” initiatives.
• Rising Non-Resident Indian (NRI) Deposits: With
greater trust in India’s financial system and attractive
interest rates, NRIs are sending more money into Indian
bank accounts and long-term deposit schemes.

a) Under which account are FDI and NRI deposits recorded?

b) Why are capital inflows important for a developing country

55
 like India?
c) What risk does over-reliance on capital inflows pose?

Or

Case Study:

India’s Balance of Payments showed a deficit due to rising oil

imports and a weak export performance. The rupee began to
depreciate sharply, increasing the cost of imports further. To
manage the situation, the Reserve Bank of India sold $5 billion
from its foreign exchange reserves in the global market.

Answer the following:

a) What type of transaction did the RBI carry out? 1

b) How is this recorded in the BoP accounts? 1

c) What is the intended effect of this action on the rupee? 2

d) Mention one risk of frequent use of official reserves. 2

Answers

1 a , 2 c, 3 d, 4 c,

Ans 5 a)Petroleum imports increase debit entries in the current account, widening the
current account deficit (CAD).

b) Under which account will remittances be recorded?

→ Remittances are recorded as current transfers in the current account (credit side), as they
bring in foreign exchange.

c) Suggest one policy measure the government can take to manage this situation
→ The government can promote renewable energy or electric vehicles to reduce petroleum
dependence OR diversify export markets to improve trade balance.

Ans 6 In accounting terms, every debit has a corresponding credit. If there's a current account
deficit, it is matched by a surplus in the capital account (like foreign loans or RBI
reserves).Economically, a deficit in the current account indicates problems like over-
dependence on imports, low exports, or weak competitiveness.

Example - India has a large trade deficit, it might cover this by borrowing externally or using
forex reserves.

Ans 7 a) Trade balance is in deficit b) exports have decreased by 6% hence this will reduce
foreign exchange earnings c) increase exports of goods and services and reduce imports.

56
Foreign Exchange Rate Graded Worksheet 1
Name_______________ Roll No. _____________
Time 35 min MM -
20
S.No Questions Marks

17. Which of the following best describes a flexible exchange rate system? 1

A. Fixed by the central bank

B. Determined by government

C. Determined by demand and supply in the market

D. Fixed by international agreement

18. Assertion (A): An increase in imports leads to a depreciation of the domestic 1

currency.

Reason (R): Higher imports increase the demand for foreign currency.

Options:

A. Both A and R are true, and R is the correct explanation of A

B. Both A and R are true, but R is not the correct explanation of A

C. A is true, but R is false

D. A is false, but R is true

19. Assertion (A): Under a flexible exchange rate system, the central bank frequently 1
intervenes in the foreign exchange market.

Reason (R): Flexible exchange rate is determined by the forces of demand and
supply.

Options:

A. Both A and R are true, and R is the correct explanation of A

B. Both A and R are true, but R is not the correct explanation of A

C. A is true, but R is false

D. A is false, but R is true

20. Under a fixed exchange rate system, the value of currency is determined by the 1
market forces of demand and supply.

(True / False)

21. A student claims that if the exchange rate changes from ₹75 = $1 to ₹70 = $1, 3
Indian exports will increase.

57
 a. Do you agree or disagree with the student? Justify your answer with economic
reasoning. or

b. How will this appreciation of the Rupee affect importers in India?

22. Ravi wants to visit Europe and exchange ₹1,00,000 for Euros. 3

a. If the exchange rate changes from ₹90 = €1 to ₹100 = €1, how will it impact his
travel budget? (2 marks)

b. Explain how changes in foreign exchange rate affect international tourism. (1

marks)

23. 4

: a) What does the sharp decline in "Foreign Exchange Reserves" as shown

in the graph typically indicate about the country's Balance of Payments? (1
mark)
b) Explain how the central bank (represented by the icon) might intervene
using these reserves to manage the situation depicted in the graph and
stabilize the economy. (3 marks)

24. Read the following case and answer the questions that follow: 6

India is experiencing an increase in demand for foreign goods, resulting in a surge

in demand for US dollars. At the same time, foreign investors are withdrawing
their investments from the Indian stock market.

a. What impact will the above situation have on the exchange rate of the Indian
Rupee? (3 marks)

b. Suggest any two government or RBI measures that can be taken to stabilize the
Rupee. (3 marks)

58
ANSWER
Q1.? C. Determined by demand and supply in the market
Q2. A. Both A and R are true, and R is the correct explanation of A
Q3.. D. A is false, but R is true
Q4. False
Q5. When the exchange rate changes from ₹75 = $1 to ₹70 = $1, it means that now ₹70 buys
$1, whereas previously ₹75 was needed to buy $1. This signifies an appreciation of the Indian
Rupee. An appreciation of the domestic currency (Rupee) makes Indian goods more
expensive for foreign buyers
OR
b. An appreciation of the Rupee from ₹75 = $1 to ₹70 = $1 means that Indian importers now
need to pay fewer Rupees to obtain the same amount of foreign currency. For example, to
import goods worth $1, an Indian importer now pays ₹70 instead of ₹75. This effectively
makes imports cheaper for Indian importers. As a result, the cost of imported goods will
decrease, which could lead to an increase in imports into India.
Q6. Analyze and Reason (3 marks) Ravi wants to visit Europe and exchange ₹1,00,000 for
Euros. a. If the exchange rate changes from ₹90 = €1 to ₹100 = €1, how will it impact his
travel budget? (2 marks) When the exchange rate changes from ₹90 = €1 to ₹100 = €1, it
means that more Indian Rupees are now required to buy one Euro. This indicates a
depreciation of the Indian Rupee against the Euro.
• At ₹90 = €1, Ravi would get: ₹1,00,000 / ₹90 = €1111.11
• At ₹100 = €1, Ravi would get: ₹1,00,000 / ₹100 = €1000 This change in the exchange
rate will negatively impact Ravi's travel budget because he will get fewer Euros for
the same amount of Indian Rupees (from €1111.11 to €1000). His purchasing power
in Europe will decrease.
b. Explain how changes in foreign exchange rate affect international tourism. (1 mark)
• Depreciation of domestic currency
• Appreciation of domestic currency
• Q7.
Answer: a) The sharp decline in "Foreign Exchange Reserves" typically indicates that the
country is experiencing a Balance of Payments deficit. Sells foreign currency from its
reserves:
• Impact on exchange rate:
• Restores confidence:
Q8. The situation described will lead to a depreciation of the Indian Rupee against the US
dollar. Here's why:
• Increase in demand for foreign goods:
• Foreign investors withdrawing investments:
• Combined effect: b. Suggest any two government or RBI measures that can be taken
to stabilize the Rupee. (3 marks) To stabilize the Rupee (i.e., prevent or reverse its
depreciation), the government or RBI can take the following measures:
1. Intervention in the Foreign Exchange Market (RBI):
2. Increase Interest Rates (RBI): The RBI can raise domestic interest rates.
3. Encourage Foreign Direct Investment (FDI) and Exports (Government)

Graded Worksheet II
59
 FOREIGN EXCHANGE RATE MM – 20
Name ____________________ Roll No. _____________ Time: 35 Minutes
S.No Questions Marks

25. Assertion (A): When the value of Indian Rupee depreciates against the US Dollar, 1
imports become more expensive.

Reason (R): Depreciation of the domestic currency increases the cost of buying
foreign goods and services.

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.

26. Which of the following is NOT a component of the Capital Account? 1

A. Foreign Direct Investment (FDI)

B. Portfolio Investment

C. External Commercial Borrowings

D. Unilateral transfers (e.g., gifts, remittances)

27. India is planning to import electronic components from the USA. Last month, the 1
exchange rate was ₹75 = $1, but now it has changed to ₹82 = $1. Based on this
change, what should Ravi expect?

A. The cost of importing components will decrease.

B. The cost of importing components will remain the same.

C. The cost of importing components will increase.

D. Exchange rate changes have no impact on imports.

28. When the Indian Rupee appreciates against the US Dollar, Indian exports become 1
more competitive in the global market. (True /
False)

29. Explain how changes in foreign exchange rates can affect a country's imports and 3
exports. Give one real-life example to support your answer.

30. Katrina is planning to study abroad in the USA. Recently, the Indian Rupee has 3
depreciated against the US Dollar. How will this affect her expenses, and how can
this be explained using the concept of foreign exchange rate?

60
 31. A recent report from the Reserve Bank of India (RBI) indicated that for the 4
fiscal year 2024-25, India experienced a significant increase in its foreign
direct investment (FDI) inflows, reaching an all-time high. Simultaneously,
there was a noticeable decline in the number of Indian students opting for
higher education abroad, and a rise in foreign tourists visiting India.
However, the software and IT services exports, which traditionally
contribute significantly to India's foreign exchange earnings, saw a slight
dip due to global economic slowdown.

(a) Identify two components of the Current Account that would be

positively impacted by the trends mentioned in the case study. (1 mark)

(b) Explain how the increased FDI inflows would be recorded in India's Balance
of Payments account and discuss its likely impact on the overall balance and in
the economy(3 marks )

32. Read the situation carefully and answer the following questions. 6Marks(3+3) 6

Situation:

Ashok is an Indian businessman who imports electronic gadgets from Japan.

Recently, the exchange rate between the Indian Rupee (INR) and Japanese Yen
(JPY) changed from 1 INR = 1.7 JPY to 1 INR = 1.5 JPY.

(a) Explain how this change in the exchange rate will affect Ravi’s import
business. (3 marks)

(b) Suggest two ways Ravi can reduce the negative impact of the exchange rate
fluctuation on his business. (3 marks)

ANSWER
Q.No.1- A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct
explanation of Assertion (A).

Q.No.2-? D. Unilateral transfers (e.g., gifts, remittances)

Q.No.3- C. The cost of importing components will increase.

Q.No.4- (False)

Q. No.-5

Changes in foreign exchange rates significantly impact a country's imports and exports:

• Appreciation of Domestic Currency:

61
 o Imports become cheaper:
o Exports become more expensive
• Depreciation of Domestic Currency:
o Imports become more expensive:
o Exports become cheaper
o Real-life example

Q.No-6- : Riya's expenses for studying in the USA will increase significantly.

Explanation using the concept of foreign exchange rate: The foreign exchange rate is the
price of one currency in terms of another. When the Indian Rupee (INR) depreciates against
the US Dollar (USD), it means that you need more Indian Rupees to buy one US Dollar.

For example:

• Before depreciation: ₹75 = $1

• After depreciation: ₹82 = $1 (or even more)

Q.No 7-

(a) Services (Travel/Tourism):.

1. Services (Education): (b)

Recording of Increased FDI Inflows: Increased Foreign Direct Investment (FDI) inflows
would be recorded as a credit item in the Capital Account of India's Balance of Payments
(BOP) account.

Q.No.8-Read the situation carefully and answer the following questions. 6Marks(3+3)

(a)The change in the exchange rate from 1 INR = 1.7 JPY to 1 INR = 1.5 JPY signifies an
appreciation of the Japanese Yen against the Indian Rupee, or conversely, a depreciation
of the Indian Rupee against the Japanese Yen.

To understand the impact on Ravi's import business, let's consider it from the perspective of
how many Rupees he needs to buy a certain amount of Yen.

• Earlier: 1 INR = 1.7 JPY. This means to get 1 JPY, Ravi needed 1/1.7≈0.588INR.
• Now: 1 INR = 1.5 JPY. This means to get 1 JPY, Ravi now needs 1/1.5≈0.667INR.

(b)Here are two ways Ravi can reduce the negative impact of the exchange rate fluctuation:

Diversification of Sourcing/Importing from Multiple Countries:

62
63
 UNIT 6- DEVELOPMENT EXPERIENCE (1947-90) AND ECONOMIC
REFORMS SINCE 1991

A BRIEF INTRODUCTION OF THE STATE OF INDIAN ECONOMY

ON THE EVE OF INDEPENDENCE

WORKSHEET: 1

Name of Student __________________ Roll No_______

Time: 30min Max Marks: 20

S.No. Questions marks

1 Assertion (A): The introduction of railways by the British led to the revival of Indian 1
industries.
Reason (R): Railways enabled faster transportation of raw materials to ports for
export, but not necessarily for industrial growth within India.

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

2 Assertion (A): The Indian economy witnessed significant industrial growth during the 1
British colonial period.
Reason (R): The British established modern industries to develop India’s self-reliant
manufacturing base.

Alternatives:
(a) Both Assertion (A) and Reason (R) are true and the Reason (R) is the correct
explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true and the 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.

64
3 Which of the following statements are true regarding India's foreign trade on the 1
eve of independence?

1. India had a large export surplus that benefited the Indian economy.
2. British policies led to India exporting raw materials and importing finished
goods.
3. The composition of India’s exports included mainly agricultural and primary
products.
4. India had control over its trade policy during the British period.

Options:
A. 1 and 2 only
B. 2 and 3 only
C. 2, 3, and 4 only
D. 1, 2, 3, and 4
4 Identify the correct statements about India’s trade partners during the colonial 1
period:

1. Britain was India’s chief trading partner.

2. India's trade was diversified across many countries.
3. India imported capital goods and exported raw materials.
4. Most of India’s trade was directed to countries under British influence.

Options:
A. 1, 3, and 4
B. 2 and 3 only
C. 1 and 4 only
D. 1, 2, 3, and 4
5 In …………… sector most of the work force were engaged during british rule.( 1
Agriculture/Service/Industry)
6 “There was regional variation in the occupational structure of India during British 1
rule.”True/False?

7 Analyse the picture and answer thefollowing questions: 1+1+2=4

65
 a) What does the image tell you about the scale and organization of indigo
production during British rule?

b) Why was indigo such an important crop for the British?

c)Discuss whether the indigo production system shown in the image was beneficial
or exploitative for Indian peasants. Justify your answer.

8 ”British policy affected positively the agriculture sector” .Defend or Refute yhe 4
statement with valid reason

9 Case Based Questions: 2+2+2=6

During the British colonial period, India’s foreign trade was heavily controlled by the
British. The East India Company first gained monopoly rights over India’s trade, and
later, the British government continued to direct the terms of trade to suit British
economic interests. India was turned into a supplier of raw materials like cotton,
indigo, and jute, and a market for British manufactured goods, particularly textiles.
High tariffs were imposed on Indian goods exported to Britain, while British goods
entered India with little to no duties. India had no control over its trade policy, and the
profits from India’s export surplus were not invested in the Indian economy but
transferred to Britain, a phenomenon known as the "economic drain."

(a)Why did the British promote export of raw materials from India and import of
manufactured goods into India?

(b)What is meant by the term “economic drain,” and how is it related to British
monopoly over trade?

(c)How did the lack of control over trade policy affect India’s economy before
independence?
Answer:
Remarks- Teacher’s Signature-

S.No. Answers marks

1 Answer: 1
Option C: A is false, but R is true.
2 Answer: 1
Option D: A is false, but R is true.

66
3 Answer: 1
B. 2 and 3 only
(Explanation: Export surplus benefited Britain, not India. India had no control over its
trade policy.)
4 Answer: 1
A. 1, 3, and 4
(Explanation: India's trade was largely limited to Britain and its allies, not
diversified.)
5 Agriculture sector. 1

6 Answer: 1
✅ True
✅ Reason is correct
Explanation: Different regions had varying degrees of development; for example,
Madras and Bengal were more agriculture-dependent, while Bombay had some
industrial employment.
7 a) The image shows a large, industrial-style setup with many workers, vats, and 1+1+2=4
buildings, indicating that indigo production was organized on a large scale under
British supervision.

b) Indigo was in high demand in Europe for dyeing textiles. Natural indigo from India
was a valuable export, and the British profited greatly from its trade.

c)The system was exploitative. Indian peasants were often forced into unfavorable
contracts (like the Tinkathia system) and were paid very little. They had no control
over the price or market. While the British profited, the farmers suffered poverty, food
insecurity, and sometimes violent repression.
8 The statement is refuted with valid reason . 4

9 (a)To support the growth of British industries by ensuring a steady supply of cheap 6
raw materials from India and providing a ready market in India for their finished
goods. This helped Britain industrialize while keeping India dependent and
underdeveloped.

(b)"Economic drain" refers to the transfer of wealth from India to Britain without
equivalent returns. This was a result of trade policies where export profits,
administrative costs, and remittances were taken out of India, benefiting Britain at
India’s expense.

(c)India could not protect or develop its own industries, nor could it diversify trade.
The colonial trade policies kept the economy backward, agriculture-based, and
dependent on Britain, leading to stagnation and poverty.

67
 INDIAN ECONOMY 1950-1990
WORKSHEET: 1

Name of Student ……………………………… Roll

No……….

Time allowed: 30 minutes Max

Marks: 20

Q.N QUESTION MAR

. K
1 The main objectives to develop the agriculture sector ensure food security 1
and build basic infrastructure was the objective of which Five-year plan?
(A) First five-year plan 1951 to 1956
(B) Second five-year plan 1956 to1961
(C) Third five-year plan 1961 to 1966
(D) None of the above

2 India adopted a type of economic system between 1950 -1990 1

______________.
(A) Capitalistic economy
(B) Socialistic economy
(C) Mixed the economy
(D) None of these

3 Statement 1: The Industrial Policy Resolution of 1956 aimed at 1

establishing a socialist state pattern of society.
Statement 2: It encouraged private sector dominance in all industries.
(A) Both statements are true
(B) Both statements are false
(C) Statement 1 is true and 2 is false
(D) Statement 1 is false and 2 is true

4 Statement 1: Import substitution policy led to rapid modernisation of 1

Indian industries.
Statement 2: It discouraged foreign competition to protect domestic
industries.

(A) Both statements are true

(B) Both statements are falls
(C) Statement 1 is true and 2 is false
(D) Statement 1 is false and 2 is true

68
5 ASSERTION (A): India adopted Five-year plans for economic 1
development.
REASON (R): The Soviet Union successfully used planning to grow its
economy.

(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 ASSERTION (A): Land reforms in India achieved only limited success. 1

REASON (R): Implementation of land reforms varied widely across
States.

(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
7 ASSERTION (A): India's trade policy from 1950 - 1990 was inward 1
looking.
REASON (R): The governments focus on import substitution to reduce
foreign dependence.

(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

8 3

69
 See the above picture carefully. On the basis of your observation explain
the objectives of Government planning.

9 Read the passage and answer the questions: 4

The Industrial Policy Resolution of 1956 classified industries into three
categories: those exclusively under the public sector, those where both
public and private sectors could operate, and those left to the private
sector. The policy aimed to build a strong industrial base through state
ownership and control in key sectors such as heavy industries, defense,
and transport.
Questions:
9.1. Why were certain industries reserved for the public sector? (2 marks)
9.2. Mention any two limitations of this industrial policy. (2 mark)

10 Read the passage and answer the questions: 6

The Green Revolution in the 1960s introduced high-yielding variety
(HYV) seeds, chemical fertilizers, and irrigation methods. It significantly
increased food grain production, especially in Punjab, Haryana, and
Western Uttar Pradesh. However, it also led to regional imbalances,
increased mechanization, and greater income disparity among farmers.
The green revolution in India refers to a period when Indian Agriculture
was converted into an industrial system due to the adoption of modern
methods and technology such as the use of HYV seeds, tractors, irrigation
facilities, pesticides and fertilizers.
It was funded by the US and the Indian Government and the Ford and
Rockefeller Foundation. The Green Revolution in India is largely the
Wheat Revolution as the wheat production increased by more than three
times between 1967-68 and 2003-04, while the overall increase in the
production of cereals was only two times.

Questions:

70
1. Elaborate the key components of the Green Revolution? (3 marks)
2. Name two states that benefited the most. (1 mark)
3. Mention two negative consequences of the Green Revolution. (2
marks)

Answers Hints:
1. A 2. C 3. C 4. D 5. B 6. A 7. A
8. Explain the role of major projects initiated by government of India
during 1950-1990.
9.1 Due to the need for strategic control and the difficulty private
sector faced with large, risky investments and long gestation periods.
9.2 Any two limitation of IPR 1956.
10.1 HYV Seeds, Chemical fertilizers.
10.2 Punjab, Haryana
10.3 Degradation of Land, degradation of quality of food.

71
 INDIAN ECONOMY 1950-1990
WORKSHEET: 2

Name of Student ……………………………… Roll No……….

Time allowed: 30 minutes Max Marks: 20
Q. QUESTION MAR
N. K
1 Main objective of India's First Five-Year Plan initiated in 1951-1956 1
was………………?
(A) Industrial development
(B) Self-reliance in defence
(C) Agricultural development
(D) Import substitution
2 The Green Revolution in India was mainly associated with the increase in 1
the production of:
(A) Pulses
(B) Wheat and rice
(C) Sugarcane
(D) Oilseeds
3 Read the following statements and choose the correct option: 1
Statement 1: The public sector was given a leading role in India’s
economic development during the early planning years.
Statement 2: The private sector was restricted due to the lack of capital
and technical know-how.
Options:
a) Only Statement 1 is correct
b) Only Statement 2 is correct
c) Both statements are correct
d) Both statements are incorrect

4 Read the following statements and choose the correct option: 1

Statement 1: Demographic transition in India has resulted in a higher
dependency ratio.
Statement 2: Youth in the working-age group is an asset to the economy.
Options:

72
 a) Only Statement 1 is correct
b) Only Statement 2 is correct
c) Both statements are correct
d) Both statements are incorrect

5 Assertion (A): India adopted economic planning to ensure equitable 1

distribution of wealth.
Reason (R): Economic planning helps eliminate poverty and bridge
income disparities.
Options:
a) Both A and R are true, and R is the correct explanation of A
b) Both A and R are true, but R is not the correct explanation of A
c) A is true, R is false
d) A is false, R is true

6 After studying the economic strategies adopted by India between 1950 and 1
1990, a student concluded that the government played a central role in
economic planning, focusing on self-reliance and heavy industry.
Which of the following developments best supports this conclusion?

A. Rapid liberalization of foreign trade and investment policies

B. Growth of private sector enterprises with minimal government control
C. Implementation of Five-Year Plans emphasizing public sector and
import substitution
D. Adoption of a free market economy with limited state intervention
7 During the period 1950–1990, India adopted a mixed economy model. 1
What does a mixed economy imply in the Indian context?
a) Complete control of private sector over resources
b) Complete government ownership of all businesses
c) Co-existence of public and private sectors with planned development
d) Economy driven entirely by market forces

8 Read the passage and answer the questions below: 3

India launched the New Economic Policy (NEP) in 1991 due to a severe
balance of payments crisis. The policy aimed to liberalize the economy
through deregulation, privatization, and globalization (LPG). The policy
helped increase foreign investment and improved export performance, but
also led to rising inequality.

73
 Q8.1. On the basis of above passage state the main reason for launching the
New Economic Policy in 1991? (1 mark)
Q8.2. As per your ideas from the above passage state the most effective
tool of NEP 1991. (1 mark)
Q8.3. On consequence of economic reforms mentions one positive impact
of the policy. (1 marks)

9 Read the case and answer the questions: 4

India's economic development was characterized by state-led planning and

an emphasis on import-substitution industrialization. Five-Year Plans,
developed by the Planning Commission, guided economic development,
aiming for growth, modernization, self-reliance, and equity. The period saw
significant progress in agriculture, with land reforms and the Green
Revolution boosting food production. Industrialization was promoted
through public sector expansion and import substitution policies. However,
the economy also faced challenges, including a focus on inward-looking
policies, which hindered export growth and led to dissatisfaction with the
performance of public sector enterprises.

Q9.1. If you were a policy advisor in the 1980s, based on the information in
the passage, what changes would you suggest to improve the economic
strategy of India? Justify your answer. (2 mark)
Q9.2. Compare the intended goals of import-substitution industrialization
with its actual outcomes, as highlighted in the passage. What inferences can
you draw about the effectiveness of this strategy? (2 mark)

74
10 10.1 Analyze the trend in GDP growth rates from the 1950s to the 1990s. 6
What does this suggest about the effectiveness of economic policies during

this era? (3Marks)

10.2 Read the passage and answer the following questions:

Modernization and self-reliance, by themselves, may not improve the kind
of life which people are living. A country can have high growth; the most
modern technology developed in the country itself, and also has most of its
people living in poverty. It is important to ensure that the benefits of
economic prosperity reach the poor sections as well instead of being
enjoyed only by the rich. So, in addition to growth, modernisation and self-
reliance, equity is also important. Every Indian should be able to meet his
or her basic needs such as food, a decent house, education and health care
and inequality in the distribution of wealth should be reduced.

Q10.2.1. A country can be technologically advanced and still have a

majority of its population living in poverty. Analyze this statement in light
of the passage and explain the role of equitable wealth distribution. (2
mark)
Q10.2.2. Suggest one policy measures a government could take to ensure
that economic growth benefits all sections of society, especially the poor.
Justify how these would help achieve equity. (1 mark)

75
Answers Hints:
1. C 2. B 3. C 4. B 5. A 6. C 7. C
8. 1 Economic crisis.
8.2 Liberalisation
8.3 Gradual increase in foreign exchange reserves.
9.1 Shift Focus from Only Growth to Inclusive Growth, Increase
Investment in Human Development (Health & Education) Any other.
9.2 Self-reliance, Modernization of Industry, Economic Growth,
Achieve high GDP growth through industrial expansion.
10.2.1 Lack of medical facilities compare to urban areas.
10.2.2 A country may achieve high economic growth and develop
advanced technologies domestically. However, if the benefits of growth
are concentrated among the rich, most people especially the poor
continue to live in poverty. This leads to a situation where progress is
visible on paper, but not in the lives of the majority.

76
 Economic Reforms

Worksheet – 1

Name of the student: Roll No.

Time allowed: 30 min. Max. Marks: 20

Q.No. Questions Marks

Q.1. Read the following statements assertion (A) and reason (R), and choose the
correct alternative given below:
Assertion (A): Agriculture sector experienced an increase in growth during the
reform period. 1
Reason (R): Decline in public investment and removal of fertilizer subsidy adversely
affected the status of agriculture.
(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) are true.
Q.2. Read the following statements assertion (A) and reason (R), and choose the
correct alternative given below:

Assertion (A): The economic reforms of 1991 in India were primarily triggered by a
severe balance of payments crisis, leading to the liberalization of the economy.

Reason (R): The 1991 reforms completely eliminated the role of the public sector in
India, shifting the economy entirely to a market-driven model.
1
(a) Both A and R are true, and R is the correct explanation of A.

(b) Both A and R are true, but R is not the correct explanation of A.

(c) A is true, but R is false.

(d) A is false, but R is true.

77
Q.3. Read the following statements carefully and choose the correct option:

Statement I: The 1991 economic reforms in India promoted greater government 1

control over industries to ensure balanced growth.
Statement II: One of the key features of the 1991 reforms was the removal of
licensing requirements for most industries.

Options:
(a) Both statements I and II are correct.
(b) Both statements I and II are incorrect.
(c) Statement I is correct, but Statement II is incorrect.
(d) Statement I is incorrect, but Statement II is correct.
Q.4. Which of the following statements about the 1991 economic reforms in India is
correct?
1
(a) The reforms focused mainly on improving agricultural subsidies to
boost rural income.
(b) Privatization involved increasing government ownership in public
sector enterprises.
(c) Liberalization aimed at reducing government restrictions on
economic activities.
(d) Globalization meant limiting foreign investment to protect domestic
industries
Q.5. Match the components of economic reforms with their correct objectives:

Column A (Reform Component) Column B (Objective)

A. Liberalization 1. Opening up to foreign trade

B. Privatization 2. Reducing government control

C. Globalization 3. Selling public sector units

1

Options:
(a) A–2, B–3, C–1 (b) A–3, B–1, C–2
(c) A–1, B–2, C–3 (d) A–2, B–1, C–3

78
Q.6. Anita is a chartered accountant advising a client who operates across multiple Indian
states. The client is confused about how taxes will apply when goods are sold from
Delhi to Maharashtra. Anita explains that under GST, the tax mechanism differs based
on the type of transaction — inter-state or intra-state.

Based on this situation, which of the following statements is most accurate about
how GST works in such inter-state transactions?

(a) The seller will charge only SGST and CGST because the transaction is between 1
registered businesses.
(b) The buyer must pay SGST in Maharashtra and claim a refund from the seller’s
state.
(c) IGST will be levied, which is shared between the Centre and the destination state.
(d) No tax is charged in inter-state sales under GST due to the "One Nation, One Tax"
policy.
Q.7. Apple is planning to shift its production from China to India. What could be the 3
reasons behind this decision of the company.
Q.8. John noticed that after the 1991 reforms, many government-owned companies were 3
sold to private firms or saw private investment. She wondered why the government
made such a move.

Question:
Based on Anita’s observation, explain why privatization was adopted as a part of
economic reforms in 1991 and how it helped improve the performance of public
sector enterprises.
Q.9. Rohit read in the newspaper that after 1991, many foreign companies started
investing in India, and Indian consumers got access to a wider variety of goods at
competitive prices. He is curious to know how this change happened.
4
Question:
Using Ravi’s observation, explain how globalization as a part of the 1991 economic
reforms impacted the Indian economy and consumers.
Q.10. In 1991, India faced a severe balance of payments crisis with foreign exchange
reserves barely enough to cover two weeks of imports. This prompted the Indian

79
government to implement major economic reforms under the guidance of Finance
Minister Dr. Manmohan Singh. These reforms aimed at liberalizing the economy,
reducing government control, and encouraging private and foreign investments. The
reforms included de-licensing of industries, reduction of import tariffs, deregulation of
interest rates, privatization of public sector enterprises, and encouragement of foreign
direct investment (FDI). These steps marked a shift from a planned economy to a
market-oriented one. The reform policies were based on Liberalization, Privatization,
and Globalization (LPG).

As a result, India witnessed increased industrial and service sector growth, rise in
exports, and a substantial increase in foreign exchange reserves. However, the reforms
also led to greater income inequality and regional disparities. While urban areas and
skilled labor benefited, rural regions and unskilled workers faced challenges.

Thus, the 1991 reforms played a crucial role in transforming India's economy, laying
the foundation for high economic growth in the subsequent decades.

(a). Explain how liberalization under the 1991 reforms affected the industrial sector in 2
India.

(b). Give your opinion regarding positive and negative impacts of the economic
reforms of 1991.
2

80
Hint- Answers:
Q.1- d. Assertion (A) is false but Reason(R) are true.

Q.2- c) A is true, but R is false.

Q.3- D. Statement I is incorrect, but Statement II is correct

Q.4- C. Liberalization aimed at reducing government restrictions on economic activities.

Q.5- A. A–2, B–3, C–1

Q.6- C. IGST will be levied, which is shared between the Centre and the destination state.

Q.7- Cheap Labour, Favourable govt. policies, Availability of skilled work force. Or any 3
valid points.

Q.8- Privatization was adopted to reduce the financial burden on the government and improve
the efficiency of public sector enterprises (PSEs). Many PSEs were running at losses due to
bureaucratic control and lack of competition. By allowing private investment or transferring
ownership, the reforms aimed to bring better management practices, accountability, and
profitability. This move encouraged competitiveness and improved the overall productivity of
the economy.

Q.9- Globalization, introduced in the 1991 economic reforms, opened India's economy to the
global market. It allowed foreign companies to invest in India, leading to increased
competition, improved product quality, and availability of a wide range of goods and
services. Consumers benefited from better choices and competitive prices, while Indian firms
gained access to international markets and advanced technology.

Q.10- (a) Liberalization removed industrial licensing for most industries, reduced government
control over production and pricing, and opened markets to competition. This led to increased
efficiency, innovation, and growth in the industrial sector.

(b) Urban middle class and skilled professionals benefited from increased job opportunities
and higher incomes, especially in the service and IT sectors.

Rural and unskilled workers saw limited benefits as agriculture was not prioritized, leading to
income inequality and slower rural development.

81
 Economic Reforms

Worksheet – 2

Name of the student: Roll No.

Time allowed: 30 min. Max. Marks: 20

Q. No. Questions Marks

Q.1. “The 1991 LPG reforms aimed to transform India’s economic structure. A major 1
challenge was balancing liberalisation with social equity”.
Which of the following policy changes best illustrates the paradox between economic
efficiency and social welfare in the LPG reforms?

(a). Reduction of import tariffs and quantitative restrictions on goods

(b). Abolition of industrial licensing for most sectors
(c) Introduction of targeted Public Distribution System (TPDS) and reduced subsidies
(d). Permission for 100% FDI in certain sectors
Q.2. “India’s New Economic Policy of 1991 focused on reducing the role of the public 1
sector”.
Which of the following outcomes best reflects a long-term risk associated with
excessive privatisation under the LPG model?

(a). Increase in foreign exchange reserves

(b). Decline in government fiscal deficit
(c). Monopolisation and widening income inequality
(d). Enhanced efficiency and innovation in production
Q.3. Liberalisation opened the Indian economy to global trade and investment. 1
Which scenario best demonstrates the impact of liberalisation on domestic
industries?

(a). Local textile producers expanding to foreign markets with competitive pricing
(b). Government increasing corporate tax to fund welfare schemes
(c). Nationalised banks opening rural branches for financial inclusion
(d). Farmers receiving minimum support prices for their crops

82
Q.4. Read the following statements assertion (A) and reason (R), and choose the correct 1
alternative given below:

Assertion (A): Demonetisation in 2016 led to a sudden decline in cash-intensive informal

sector activities in India.

Reason (R): The informal sector primarily relies on digital transactions and was thus
unaffected by the withdrawal of ₹500 and ₹1000 notes.

Options:
(a). Both A and R are true, and R is the correct explanation of A.
(b). Both A and R are true, but R is not the correct explanation of A.
(c). A is true, but R is false.
(d). A is false, but R is true.
Q.5. Read the following statements assertion (A) and reason (R), and choose the correct 1
alternative given below:

Assertion (A): The economic reforms of 1991 led to a shift in India’s development
strategy from a public sector-driven model to a market-oriented approach.

Reason (R): The government reduced its role in direct production and allowed private
and foreign players to operate in sectors previously reserved for the public sector.

Options:
(a). Both A and R are true, and R is the correct explanation of A.
(b). Both A and R are true, but R is not the correct explanation of A.
(c). A is true, but R is false.
(d). A is false, but R is true.
Q.6. Read the following statements assertion (A) and reason (R), and choose the correct 1
alternative given below:

Assertion (A): The implementation of GST in India has improved tax compliance and
widened the tax base.

83
 Reason (R): GST is levied only at the final point of consumption, eliminating the need
for tax payments at each stage of production.

Options:
(a). Both A and R are true, and R is the correct explanation of A.
(b). Both A and R are true, but R is not the correct explanation of A.
(c). A is true, but R is false.
(d). A is false, but R is true.
Q.7. Consider the following statements about the economic reforms of 1991: 1

Statement 1: The reforms abolished industrial licensing for most industries to encourage
private sector participation.

Statement 2: The government increased import tariffs to protect domestic industries

from foreign competition.

Which of the following is correct?

(a). Both Statement 1 and Statement 2 are true.

(b). Statement 1 is true, but Statement 2 is false.
(c). Statement 1 is false, but Statement 2 is true.
(d). Both Statement 1 and Statement 2 are false.
Q.8. 3

Think and analyse the image given above. Also explain how it has benefitted Indian
economy?

84
Q.9. “The LPG reforms of 1991 significantly increased the inflow of foreign investment by 4
liberalising regulations and allowing greater foreign direct investment (FDI) in various
sectors of the Indian economy”.

In the light of given statement explain that how did the LPG reforms of 1991 impact the
inflow of foreign investment in India?
Q.10. Read the following case study and answer the question on the basis of the case
study and your common understanding.

Case Study: Liberalisation, Privatisation, and Globalisation (LPG) in India

In 1991, India faced a severe economic crisis characterized by a balance of payments

deficit and low foreign exchange reserves. To overcome this, the government introduced
a series of economic reforms collectively known as Liberalisation, Privatisation, and
Globalisation (LPG). Liberalisation involved reducing government control over industries
by abolishing industrial licensing and lowering import tariffs. This encouraged private
sector participation and opened the economy to international trade. Privatisation meant
reducing the role of the public sector by disinvesting government stakes in public
enterprises and encouraging private ownership. Globalisation focused on integrating
India’s economy with the world by inviting foreign direct investment (FDI) and removing
restrictions on capital flows.

These reforms transformed the Indian economy from a closed, centrally planned system
to a more market-oriented and globally connected economy. As a result, India experienced
higher economic growth, increased foreign investment, and greater access to technology
and global markets. However, the reforms also posed challenges such as increased
competition for domestic industries and concerns about income inequality.

Overall, LPG reforms laid the foundation for India’s emergence as one of the fastest-
growing major economies in the world.
1
(a) What was the main reason behind India adopting LPG reforms in 1991?
2
(b) How did liberalisation affect industrial licensing in India?
(c) What role did globalisation play in transforming the Indian economy after 1991? 3

Tutorial Link: https://youtu.be/roZYXtmq6I0?si=VeHPZZWqMxmbbCbw

85
Answer Hints:

Q.1- C. Introduction of targeted Public Distribution System (TPDS) and reduced subsidies.

Q.2- C. Monopolisation and widening income inequality.

Q.3- A. Local textile producers expanding to foreign markets with competitive pricing.

Q.4- C. A is true, but R is false.

Q.5- A. Both A and R are true, and R is the correct explanation of A.

Q.6- B. Both A and R are true, but R is not the correct explanation of A.

Q.7- B. Statement 1 is true, but Statement 2 is false.

Q.8- Employment Generation, Foreign Exchange Earnings, Skill Development, Growth of

Urban Infrastructure, Boost to IT and Telecom.

Q.9- The LPG reforms of 1991 liberalised India’s economy by reducing restrictions on
foreign investment and allowing greater foreign direct investment (FDI) in many sectors.
This encouraged more foreign investors to invest in India, leading to increased inflow of
foreign capital, technology, and expertise, which helped accelerate economic growth.

Q.10- (a) India adopted LPG reforms in 1991 primarily to overcome a severe economic crisis
marked by a balance of payments deficit and low foreign exchange reserves.

(b) Liberalisation abolished or reduced industrial licensing requirements, allowing private

companies to set up and expand businesses more freely without heavy government
restrictions.

(c) Globalisation integrated India’s economy with the world by encouraging foreign direct
investment, removing restrictions on capital flows, and opening up markets for trade and
technology exchange.

86
 GST & DEMONETIZATION
WORKSHEET

Name of Student ……………………………… Roll No……….

Time allowed: 30 minutes Max Marks: 20

Q.N. QUESTION MARK

1 GST introduced by Government of India. Choose the correct objective of 1
GST from the following.
a) Increase direct taxes
b) Simplify indirect tax structure
c) Promote black money
d) Increase import duties
2 Demonetisation was a major initiative of India. Find the primary goals of 1
demonetisation in 2016?
a) Reduce FDI
b) Promote cash economy
c) Tackle black money and counterfeit currency
d) Increase inflation
3 Statement 1: GST is a destination-based tax. 1
Statement 2: GST is applicable only on imported goods.
a) Only Statement 1 is correct
b) Only Statement 2 is correct
c) Both statements are correct
d) Both statements are incorrect

4 Statement 1: Demonetisation impacted the informal sector more 1

severely.
Statement 2: High denomination currency notes were banned during
demonetisation.
a) Only Statement 1 is correct
b) Only Statement 2 is correct
c) Both statements are correct
d) Both statements are incorrect
5 Assertion (A): GST eliminates the cascading effect of taxes. 1

87
 Reason (R): GST allows input tax credit across goods and services.
a) Both A and R are true, and R is the correct explanation of A
b) Both A and R are true, but R is not the correct explanation of A
c) A is true, R is false
d) A is false, R is true

6 Assertion (A): Demonetisation led to a short-term fall in consumption. 1

Reason (R): Cash shortage affected daily transactions across the
economy.
a) Both A and R are true, and R is the correct explanation of A
b) Both A and R are true, but R is not the correct explanation of A
c) A is true, R is false
d) A is false, R is true

7 Assertion (A): GST helps in improving tax compliance. 1

Reason (R): Under GST, transactions are recorded digitally and matched
online.
a) Both A and R are true, and R is the correct explanation of A
b) Both A and R are true, but R is not the correct explanation of A
c) A is true, R is false
d) A is false, R is true

8 3

On the basis of the above picture find the concept and its consequences.

88
9 Read the passage and answer the questions: 4

GST was implemented on 1st July 2017 as a single unified indirect tax. It
replaced multiple indirect taxes like VAT, service tax, and excise duty.
GST is levied at each stage of the supply chain and allows seamless input
tax credit, making it more efficient and transparent.

Mention four benefits of GST for businesses or consumers.

10 Read the passage and answer the questions: 6

The government is saying that there are only advantages of
demonetization policy and this will be seen in the long term. Former
Prime Minister Manmohan Singh who is a noted economist, former RBI
governor and former Finance Minister of the country, dubs the
demonetization move as an 'organized loot and legalized plunder'.
However, if we compare the merits verses demerits, it will be safe to
conclude that the former outweighs the latter.
Even though there is suffering and agony among the masses right at the
moment but the forecast is that its benefits will be seen in the long run.
The government is taking all the necessary steps and actions to meet the
currency demand and soon the trial and tribulations of the people will be
over with the smooth flow of the new currency.
Post demonetisation, digital payment platforms like UPI, Paytm, and
Google Pay witnessed a sharp rise in usage. Even small vendors began
accepting cashless payments, indicating a shift toward a more formal
economy. Government schemes like “Digital India” supported this
transformation.
Q10.1 Some economist argue that Demonetization is harmful for
developing countries like India. Give your opinion regarding this. (3
marks)
Q10.2 Demonetization promotes digital transactions. How it is beneficial
for general public. Elaborate. (3 marks)

Answers Hints:
1. B 2. C 3. A 4. B 5. A 6. A 7. A
8. Demonetization, Positive and Negative effects on general public.
9.1 Any four benefits of GST
10.1 Give your opinion. Open end question.
10.2 Benefits of digitalization.

89
 ZONAL INSTITUTION OF EDUCATION & TRAINING GWALIOR

INDIAN ECONOMIC DEVELOPMENT

CLASS XII

WORKSHEET-1 HUMAN CAPITAL

FORMATION

NAME OF STUDENT- ROLL NO-

TIME:- 35 MINUTES MAX MARKS:-20

Q.N QUESTIONS M

From Que 1 to 3 Read the following statements – Assertion (A) and

Reason (R).

Choose the correct alternative from the options given below:

Options:

(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the
correct explanation of Assertion (A).

(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the
correct explanation of Assertion (A).

(C) Assertion (A) is true, but Reason (R) is false.

(D) Assertion (A) is false, but Reason (R) is true.

1 Read the following statements – Assertion (A) and Reason (R). 1

Choose the correct alternative from the options given below:

Assertion (A):Information plays a crucial role in judicious decision-

making about investing in human capital.

Reason (R):Individuals invest to acquire information about the labour

market and other areas such as education and healthcare.

2 Read the following statements carefully: Assertion (A) and Reason (R). 1
Choose the correct option from those given below:

Assertion (A): Human capital formation increases the rate of participation

of population to economic activities and leads to economic growth.

Reason (R): Rate of participation of people refers to the percentage of

people engaged in production process of a country.

90
3 Read the following statements - Assertion (A) and Reason (R). 1

Choose the correct option from the options given below :

Assertion (A) :People spend to acquire information related to labour and

other markets (like, education and health).

Reason (R) :Expenditure on information is necessary for efficient

utilisation of the human capital stock.

4 Statement 1- basic education and basic health are important in themselves, 1

irrespective of their contribution to labour productivity.

Statement 2- Human capital treats human beings as a means to an end;.

a) Both the statements are correct b) Both the statements are incorrect

c)Statement 1 is correct and statement 2 is incorrect d)Statement 1 is

incorrect and statement 2 is correct

5 Identify, which of the following isa feature of physical capital. (Choose the 1
correct option)

(i) Tangibility (ii) Tradability (iii) Immobility

Options: (A) (i) and (ii) (B) (ii) and (iii)

(C) (i) and (iii) (D) (i), (ii), and (iii)

6 _____ is based on the idea that education and health are integral to human 1
well-being.

(Choose the correct option to fill up the blank)

(A) Human Resource (B) Human Development

(C) Human Capital (D) Economic Development

7 Mahesh and Dinesh both had their own farms. Mahesh invested in a few 3
agricultural courses, learnt modern farming techniques and trained her
labourers on best practices related to soil fertility, crop management, pest
control etc.

Whereas, Dinesh invested heavily in, by purchasing advanced farming

machinery, irrigation systems, and high quality seeds.

Do you agree that, Dinesh had made investment in human capital? Give
valid reason in support of your answer.

91
 8 “Expenditure on preventive medicine, curative medicine and social 3
medicine helps in building human capital and economic development.”

Do you agree with the given statement ? Give valid arguments in support
of your answer.

9 On the basis of the given image, explain the source of human capital 4
formation which may contribute to the economic growth in India.

10 This enhanced productivity of human beings or human capital contributes 4=1+3

substantially not only towards increasing labour productivity but also
stimulates innovations and creates ability to absorb new technologies.
Education provides knowledge to understand changes in society and
scientific advancements, thus, facilitate inventions and innovations.
Similarly, the availability of educated labour force facilitates adaptation to
new technologies.

On the basis of above passage give answers of the following questions :

(a)Which factor is responsible to enhance productivity of human capital?

(b) Why do you think that educated labour force is considered as for human
capital?

ANSWER KEY OF WORKSHEET 1 HUMAN CAPITAL FORMATION

1 A, 2 A, 3 A, 4A , 5D, 6B 7 NO Dinesh invest in physical capital

8 yes agree give any three vaid reasons

9 The source of Human Capital Formation (HCF) indicated in the given image is investment in
education.

10 a education b) changes in society and scientific advancements, thus, facilitate inventions

and innovations, educated labour force facilitates adaptation to new technologies.

92
WORKSHEET-2 HUMAN CAPITAL FORMATION

NAME OF STUDENT- ROLL NO-

TIME:- 35 MINUTES MAX MARKS:-20

Q.N QUESTIONS M
.

From Que 1 to 3 Read the following statements – Assertion (A) and

Reason (R).
Choose the correct alternative from the options given below:
Options:
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the
correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not
the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.
1 Read the following statements – Assertion (A) and Reason (R). 1
Choose the correct alternative from the options given below:
Assertion (A):Expenditure incurred for acquiring information relating to
the labour market and other markets is also a source of human capital
formation..

Reason (R):This information is necessary to make decisions regarding

investments in human capital as well as for efficient utilisation of the
acquired human capital stock.

2 Read the following statements carefully: Assertion (A) and Reason (R). 1
Choose the correct option from those given below:
Assertion (A): expenditure on migration is also a source of human capital
formation.

Reason (R): The enhanced earnings in the new place outweigh the costs of
migration.
3 Read the following statements - Assertion (A) and Reason (R). 1
Choose the correct option from the options given below :
Assertion (A) :Expenditure regarding on-the-job training is a source of
human capital formation.

Reason (R) :on-the-job training may take different forms :one, the workers
may be trained in the firm itself under the supervision of a skilled worker;
two, the workers may be sent for off-campus training.

4 Statement 1- Health expenditure directly increases the supply of healthy 1

labour force

93
 Statement 2- The amount of money spent on preventive medicine
(vaccination),

curative medicine (medical intervention during illness), social medicine

(spread of

health literacy) and provision of clean drinking water and good sanitation
are the various forms of health expenditures..

a) Both the statements are correct b) Both the statements

are incorrect

(c) Statement 1 is correct and statement 2 is incorrect

(d) Statement 1 is incorrect and statement 2 is correct

5 1. Ramesh invests in a skill development course to improve his job 1

prospects. This is an example of:

A. Capital consumption B. Physical

capital formation

C. Human capital formation D. Financial

investment

6 4. A country invests heavily in public health and education. Which of the 1

following is a likely long-term benefit?
A. Decrease in GDP B. Increase in capital
depreciation
C. Improved workforce efficiency D. Increase in fiscal
deficit only
7 The Indian software industry has been showing an impressive record 4
over thepast two decades. 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.

Do you think IT – based services in rural areas will lead to human

development? Defend or refute give answer with valid reasons.

8 As an educated person, how will be you make your contribution into 4

human capital formation through education sector?

94
 09 2+2+
2

Look at picture and give answers

(a) What are the advantages of having proper ‘classroom’?

(b) Do you think the children going to this school are receiving quality
education?

(c) Why these schools do not have buildings?

ANSWER KEY OF WORKSHEET 1 HUMAN CAPITAL FORMATION

1 A, 2 A, 3 A, 4A , 5C, 6C

7 Defend, give any two valid reasons.

8 Explain education as source of HCF give any three vaid reasons

9 A)advantage of infrastructure b) YES as per HCF , LACK of expenditure by govt

95
WORKSHEET-3 HUMAN CAPITAL FORMATION CLASS- XII

NAME OF STUDENT- ROLL NO-

TIME:- 30 MINUTES MAX MARKS:-20

Q. QUESTIONS M
N

From Question 1 to 3 Read the following statements – Assertion (A) and

Reason (R).
Choose the correct alternative from the options given below:
Options:
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the
correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.
1 Read the following statements – Assertion (A) and Reason (R). 1
Choose the correct alternative from the options given below:
Assertion (A) In the case of human capital, depreciation takes place with
ageing
Reason (R):It can be reduced, to a large extent, through continuous
investment
in education, health, etc..
2 Read the following statements carefully: Assertion (A) and Reason (R). Choose 1
the correct option from those given below:
Assertion (A): Though, on an average, the government spends lesson tertiary
education,.
Reason (R): expenditure per student’ in tertiary education is higher than that of
elementary..
3 Read the following statements - Assertion (A) and Reason (R). 1
Choose the correct option from the options given below :
Assertion (A) : During 1952-2020,education expenditure as percentage of total
government expenditure
Increased from 7.92 to 16.54 and as percentage of GDP increased from 0.64 to
4.47.
Reason (R) :The Education Commission (1964–66) had recommended that at
least 6 per cent of
GDP be spent on education so as to make a noticeable rate of growth in
educational achievements.
4 On the basis of the given picture below give reason of the question arise in the 1
mind of the farmer at right side in the picture

96
5 The ownership of physical capital is the outcome of the conscious decision of 1
the owner — the physical capital formation is mainly an economic and technical
process. A substantial part of the human capital formation takes place in one’s
life when she/he is unable to decide whether it would maximize her/his
earnings. Children are given different types of school education and health care
facilities by their parents and the society.

On the basis of above paragraph give answer the following question :

When will human capital formation takes place one’s life?

6 _____ is based on the idea that education and health are integral to human well- 1
being.
(Choose the correct option to fill up the blank)
(A) Human Resource (B) Human Development
(C) Human Capital (D) Economic Development
7 3

On the basis of above picture give answer of the following questions—

(a) The above picture is related with …………(School training / On the

job training)
(b) Why such kind of investment made by investors in an economy?
(c) How this kind of investment benifited the economy?

97
8 This expenditure by the government is expressed in two ways(i) as a percentage 3
of ‘total government
expenditure’ (ii) as a percentage of Gross Domestic Product (GDP).The
percentage of education expenditure of total government expenditure’ indicates
the importance of education in the scheme of things before the government. The
percentage of ‘education expenditure of GDP’ expresses how much of people’s
income is being committed to the development of education in the country.
During 1952 2020,education expenditure as percentage of total government
expenditure Increased from 7.92 to 16.54 and as percentage of GDP increased
from 0.64 to 4.47.
(a) Do you think government provide proper importance to education
sector? Give reason
(b) Compare with reason to the The percentage of ‘education expenditure of
total government expenditure’ during 1952-2020

9 4

On the basis of above table give answers of the following questions

(a) In which decade education sector shows highest growth ?

(b) How many % IMR declined between 1951 to 1981?
(c) What changes shown in the life expectancy of male and female in the
year 1951 to 2018-21
(d) Do you think living standard of people in India has been increased ?
How can be determined it?

10 In India, the ministries of education at the union and state level, departments of 4
education and various

organizations like National Council of Educational Research and

Training(NCERT), University Grants Commission(UGC) and All India Council

98
 of Technical Education (AICTE) facilitate institutions which come under the
education sector.

On the basis of above paragraph identifies any one objectives of the following
institutions

(a) NCERT (B) UGC (C) AICTE (D) ICMR

ANSWER KEY OF WORKSHEET 1 HUMAN CAPITAL FORMATION

1 A, 2 A, 3 A, 4 -adequate training and education of farmers , 5by expenditure on

education &health, 6B 7 A) on-the-job training B) to enhance efficiency and
productivity of employee C) enhances human capital which lead to enhance
productivity & production

8 a) no, not spending required The percentage of ‘education expenditure of GDP’ , b) enhance

9 as per table.

10 . give one objectives of ea

99
RURAL DEVELOPMENT WORKSHEET-1

NAME OF THE STUDENT: ROLL NO.:

TIME:30 Minutes MM:20

Q QUESTION MARKS
NO

1 1.Assertion (A): Even today more than 10% of goods produced in farms are 1
wasted.

Reason (R): The current storage facilities are quite inadequate to meet the
growing demands.

(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
correct explanation of Assertion (A)

(C) Assertion (A) is true but Reason (R) is false

(D) Assertion (A) is false but Reason (R) is true.

2 2. ______can be classified as one of the alternative sources of 1

diversification from farm output

a) Green revolution b) Horticulturec) Organic farming d) Conventional

farming

3 3.Which type of problem of agricultural marketing in India shown here? 1

a)Lack of infrastructural facilities b)Lack of transport facilities

100
 c)Distress sale due to lack of market information d)Predominance of
private traders

4 4. Assertion (A). Since the default rates of farm loans have become 1
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.

a)Both Assertion (A) and Reason (R ) are true and Reason (R ) is the
correct explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R ) are true and Reason (R ) is not
the correct explanation of Assertion (A).

(c ) Assertion (A) is true but Reason (R ) is false.

(d) Assertion (A) is false but Reason (R ) is true.

5 5. Assertion (A). The institutional structure of rural banking consists of a 1

set of multi-agency institutions, namely commercial banks, regional rural
banks, cooperatives and land development banks.

Reason (R ). Self-Help groups have emerged to fill the gap in the formal
rural credit system. These promote thrift in small proportions by a
minimum contribution from each member. From this pooled money.
Credit is given to the needy members.

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 6. Statement 1: Small and marginal farmers find it difficult to adapt to 1

organic farming.

101
 Statement 2: Organic farming may have a longer shelf life than sprayed
produce.

a)Both the statements are true. b) Both the statements are false

c) Statement 1 is true and statement 2 is falsed) Statement 2 is true and

statement 1 is false.

7 7. A rural community is struggling with low agricultural yields. What 1

could be a possible solution?

(a) Encouraging farmers to grow only traditional crops.

(b) Providing farmers with access to better seeds and fertilizers.

(c ) Implementing stricter land laws.(d) Disallowing private investment in

agriculture.

8 Short Answer Type Question (3x1=3) 3

8. Interpret the given picture based on an initiated by Government of

India.

9 Source Based Questions (1x4=4) 4

9. Read the following News report and answer the following questions on
the basis of same

The government is planning to enhance welfare schemes for villagers by

making sure that all eligible people in various databases in different
ministries get benefits. Officials said they have begun the process by

102
looking at the Aadhar-based list of ration card holders and the rural
development ministry’s data on deprived household.

“The convergence of data will help in mapping the eligible people in rural
areas who are still not covered under Food Security Act that provides rice
and wheat at subsidized prices. At the same time, it will bring a fair
picture of rural households in the country which are deprived of basic
amenities. This will also help government to reach out to people who are
in need”, said a food ministry official.

The government has database of more than 800 million beneficiaries

covered under Food Security Act. It has implemented ‘one nation one
ration card scheme in 28 states and union territories covering 686 million
people where a person can get subsidized food grains from any ration shop
irrespective of the state, municipality or panchayat where the person is
registered.

Source: The Economic Times, Nov. 19, 2020

9.1.The government of India is targeting welfare schemes for people in

rural areas by taking data from

(a) Aadhar-based list of ration card holders

(b) Rural development ministry’s data on deprived households
(c) both (a) and (b)
(d) Neither (a) nor (b).
9.2. Government has implemented _________________(one nation one
card/Food security act) to provide subsidised food grain through fair price
shops to the eligible persons.

9.3. Rural development includes development of

(a) Human resources

(b) Infrastructure
(c) productive resources of each locality
(d) All of these.
9.4 To develop rural India:

(a) Special measures for alleviation of poverty must be undertaken

(b) Significant improvements in their living conditions must be focused
(c) access to employment opportunities should be ensured
(d) All of these.

103
 10 6
Long Answer Type Question (6x1=6)

10.(A) Rohit visited his uncle in Solon during summer vacation . He

noticed that his uncle supplied plums @ Rs. 6 per kg from his orchard .He
was surprised to find that plums are usually sold at Rs. 35 to 40 per kg in
his city. He realized that the long chain of middleman leads to high profit
margin. What do you suggest to solve this inefficiency?
(2)

(B)“Over the past few years, India has witnessed a shift from traditional
conventional farming to natural/organic farming”. Discuss briefly any two
reasons behind this shift towards organic produce and give two challenges
in organic farming . (4)

TOPIC: RURAL DEVELOPMENT

Answers WORKSHEET -1

1. a; 2. b) Horticulture

3. c)Distress sale due to lack of market information

4. (b) Both Assertion (A) and Reason (R ) are true and Reason (R ) is not the correct
explanation of Assertion (A).

5. (b) Both Assertion (A) and Reason (R ) are true and Reason (R ) is not the correct
explanation of Assertion (A).

6. c) Statement 1 is true and statement 2 is false

7. (b) Providing farmers with access to better seeds and fertilizers.

8. SansadAdarsh Gram Yojana (SAGY) is a rural development

9.1 both (a) and (b) 9.2 one nation one card

9.3 All of these. 9.4 All of these.

10. A) He is right to analyze that the long chain of middlemen creates high marketing margin
or profits. any other relevant answer

10 B) 1.Environmental Sustainability Conventional farming practices 2. Economic

Benefits for Farmers : Farmers are increasingly turning to organic farming. (any other
relevant answer)

104
RURAL DEVELOPMENT WORKSHEET-2

NAME OF THE STUDENT: ROLL NO.:

TIME:30 Minutes MM:20

Q QUESTION MARKS
NO

1 Q1. Assertion (A): Self Help Groups (SHGs) help in promoting 1

savings among rural women.

Reason (R): SHGs allow women to participate in international trade.

Options:

a) Both A and R are true, and R is the correct explanation of A.

b) Both A and R are true, but R is not the correct explanation of A.

c) A is true, but R is false.

d) A is false, but R is true

2 Q2. Assertion (A): Agriculture is no longer the only source of income 1

for rural people.

Reason (R): Rural non-farm activities have seen a gradual rise in

employment share.

Options:

a) Both A and R are true, and R is the correct explanation of A.

b) Both A and R are true, but R is not the correct explanation of A.

c) A is true, but R is false.

d) A is false, but R is true

3 Q3. Which of the following is a rural employment generation scheme 1

in India?

a) Make in India b) MGNREGA c) Digital India

d) Smart Cities Mission

4 Q4. Which organization is responsible for providing and regulating rural 1

credit in India?

105
 a) RBI. b) SEBI c) NABARD. d)
SIDBI

5 Q5. Read the statement and choose the correct option: 1

“Rural roads improve access to health, education, and markets.

This statement refers to:

a) Social infrastructureb) Market reformc) Financial assistanced) Irrigation

services

6 Q6. Choose the most appropriate option: 1

“Diversification in agriculture means:”

a) Growing the same crop on a large scaleb) Engaging only in farming

activities

c) Combining crop cultivation with allied activities like dairy, poultry,

etc.d) Using more chemical fertilizers

7 Q7. True or False: 1

“Only urban people benefit from rural development schemes in India.”

8 Q8. 3

106
 On the basis of above picture which kind of non-farm activities are
performed that provide employment in rural areas.and explain briefly.

9 Q9. 4

Do you think that the above picture shows, infrastructure development

play an important role in promoting rural development? Give examples to
support your answer.

10 Read the following passage and answer the questions that follow 6
(2+2+2)

“The development of rural India is essential not only for improving the
standard of living of a large segment of the population but also for
ensuring the overall economic development of the country. The
government has launched several programs such as MGNREGA, PMGSY
(Pradhan Mantri Gram Sadak Yojana), and the National Rural Health
Mission to improve rural employment, connectivity, and healthcare.
Financial institutions like NABARD also play a critical role in providing
rural credit.”

a) Why is rural development essential for national economic growth? (2

marks)

b) Name any two government schemes mentioned in the passage and state
their objectives. (2 marks)

c) How does NABARD contribute to rural development? (2 marks)

107
Answer Key: Rural Development Worksheet-2

Q1.Answer: c) A is true, but R is false.

Q2.Answer: a) Both A and R are true, and R is the correct explanation of A.

(Rural people are increasingly engaging in non-farm activities, making agriculture no longer
the only income source.)

Q3. Answer: b) MGNREGA

Q4. Answer: c) NABARD

Q5.Answer: a) Social infrastructure

Q6.Answer: c) Combining crop cultivation with allied activities like dairy, poultry, etc.

Q7. Answer: False

Q8. Three non-farm activities providing rural employment:

1. Dairying: Involves production and sale of milk and milk products.

2. Poultry farming: Rearing chickens and other birds for meat and eggs.
3. Cottage and Handicraft Industry: Producing goods like handwoven clothes, pottery,
etc., for income generation.
Q9.Role of infrastructure in rural development:

1. Roads: Improve connectivity to markets, schools, and hospitals, reducing isolation.

2. Electricity: Enables irrigation, cold storage, and small-scale industries.
3. Irrigation: Reduces dependence on rainfall and increases crop yields.
Q10. a) Rural development is crucial for national growth because a large portion of India’s
population lives in villages. Improved rural living standards contribute to higher productivity,
reduced poverty, and balanced economic growth. (2 marks)

b)

• MGNREGA: Provides at least 100 days of guaranteed wage employment in a year to

rural households.
• PMGSY: Aims to provide all-weather road connectivity to unconnected villages. (2
marks)
c) NABARD contributes by offering credit facilities to farmers and rural institutions,
promoting rural infrastructure, supporting agricultural and non-agricultural projects, and
strengthening cooperative banks and SHGs. (2 marks)

108
RURAL DEVELOPMENT WORKSHEET-1

NAME OF THE STUDENT: ROLL NO.:

TIME:35 Minutes MM:20

Q QUESTION MARK
N S
O

1 Which of the following activities does not fall under agricultural 1

diversification?1
a) Sericultureb) Floriculture c) Sugarcane monocultured)
Organic vegetable farming

2 Assertion (A): Agricultural marketing includes activities beyond just 1

selling crops. 1
Reason (R): Marketing also involves grading, packaging, storage, and
transportation.

a) Both A and R are true, and R explains A. b) Both A and R are

true, but R does not explain A.
c) A is true, R is false. d) A is false, R is
true.
3 One key objective of agricultural diversification is: 1 1

a) Increasing government revenue b)

Increasing dependency on imports
c) Enhancing income and reducing risk for farmers d)
Promoting only food grain production

4 A major barrier to agricultural diversification is: 1 1

a) Availability of water b) Crop insurance c) Lack of awareness

and poor infrastructure d) Digital literacy

5 Assertion (A): Grading and standardization of agricultural produce help in 1

better marketing. 1
Reason (R): Grading reduces confusion and helps consumers identify
quality products easily.

a) Both A and R are true, and R is the correct explanation of A.

b) Both A and R are true, but R is not the correct explanation of A.
c) A is true, but R is false.
d) A is false, but R is true

109
6 Assertion (A): Storage facilities are not important in agricultural marketing. 1
1
Reason (R): Farmers can sell all their produce immediately after harvest.

a) Both A and R are true, and R is the correct explanation of A.

b) Both A and R are true, but R is not the correct explanation of A.
c) A is true, but R is false.
d) Both A and R are false.

7 Complete the flowchart by filling in the missing steps in the journey from 1
farmer to consumer.1

Farmer → _______ → Mandi → _______ → Retail Shop → Consumer .

8 Due to frequent droughts in Rajasthan, farmers are unable to rely only on 3

wheat cultivation. Some have started goat-rearing and growing
drought-resistant crops like bajra (pearl millet).

8.1. What is agricultural diversification ?1

8.2. How can diversification make farming more sustainable in drought-
prone areas? 1

8.3. How many type of agricultural diversification is being practiced here?

1

9 Read the passage and answer the following questions: 3

The government of India has been making several efforts to modernize the
agricultural marketing system. The launch of the e-NAM platform was a
step in this direction. It integrates the existing mandis and promotes
transparency in the buying and selling of agricultural produce. However,
issues like lack of infrastructure, poor digital literacy among farmers, and
limited market access still persist.

Questions:
a) What is the main objective of e-NAM? (1 mark)
b) Identify one major benefits of e-NAM for farmers. (1 marks)
c) Suggest two solutions to overcome the challenges faced by e-NAM. (2
marks)

110
 10 Question-10. Observe the image And answer following questions. 3

a) Identify the type of marketing system shown in the image.(1 mark)

b) What are two possible disadvantages for the farmer in this system?(2
marks)

c) Suggest two government initiative that can help the farmer avoid
middlemen.(2 marks)

d) Why agricultural marketing is required ? (Any one purpose) (1 marks)

ANSWER KEY WORKSHEET -3

Rural development

Q.1.Answer: c) Sugarcane monoculture

(Monoculture is the opposite of diversification.)

Q.2.Answer: a) Both A and R are true, and R explains A

Q.3.Answer: c) Enhancing income and reducing risk for farmers

Q.4.Answer: c) Lack of awareness and poor infrastructure

Q.5.Answer: a) Both A and R are true, and R is the correct explanation of A.

111
Q.6.
Answer: d) Both A and R are false

Q.7.

Complete the flowchart:

Answer: Farmer → Village Trader/Agent → Mandi → Wholesaler → Retail Shop →
Consumer

Q.8.

8.1. Answer: The practice of shifting from traditional farming of only food grains to the
cultivation of other crops and allied activities like animal husbandry, horticulture, etc.

8.2. Answer: It reduces dependency on one crop and provides alternative sources of income,
making farmers less vulnerable to climate risks like drought.

8.3. Answer: Mixed farming (crop + livestock) and cultivation of climate-resilient crops (like
bajra).

Q.9.

a) Answer: To create a unified national market for agricultural produce through digital
platforms.

b) Answer: It promotes transparency and better price discovery for farmers.

c) Answer:

1. Improve digital literacy through farmer training programs.

2. Upgrade rural market infrastructure and internet connectivity.

Q. 10 . A.Middle man In marketing .

B.e-NAM (Electronic National Agriculture Market) and other relevant

suggestions

C Agricultural marketing system refers to the processes and activities

involved in the movement of agricultural produce from the farm to the final
consumer, including storage, transportation, grading, packaging, and selling
d) Any one purpose) (1 marks)

112
WORKSHEET-1 EMPLOYMENT CLASS- XII

NAME OF STUDENT- ROLL NO-

TIME:- 35 MINUTES
MAX MARKS:-20

Q. QUESTIONS M
N.

1. Read the following statements – Assertion (A) and Reason (R). 1

Choose the correct alternative from the options given below:

Options:

(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the
correct explanation of Assertion (A).

(C) Assertion (A) is true, but Reason (R) is false.

(D) Assertion (A) is false, but Reason (R) is true.

A: Most people in India are employed in primary sector.

R: India is an agriculture-dominated economy

Case:

A family of 6 works on a small farm. The work can be easily done by 2 people.
Yet, all members work What kind of unemployment is this?
2. 1
Is the marginal productivity of extra members zero?
3. 1

4 Match the Following 1

A B

A. Self-employed – i. Own enterprise

B. Casual labour – ii. No job security

C. Regular salaried – iii. Fixed monthly pay

113
5 Fill in the blanks 1

Unemployment where marginal productivity is zero is called ____.

6 A line graph shows drop in rural regular employment. What does it suggest. 1

7 True or False

MGNREGA provides unemployment allowance………..

8 3

On the basis of table given below analysis the conditions of primary

,secondary and services sectors

From 1972-73 to 2011-12

Trends in Employment pattern (sector- wise), 1972-2012 (in %)

9 Ravi works in a government office and receives a fixed salary, pension, paid 4
leaves, and other social security benefits. His friend Arjun works in a private
shop with no job security or benefits.

a) Identify the employment sectors for both.

b) Mention two key differences between the two sectors.

10 (A)Given:- Work Participation Rate 3+

3
Rural Male – 54%

Rural Female – 25%

Urban Male – 56%

Urban Female – 16%

114
 Interpret two major insights about gender and regional disparities in
employment.

(B) "The nature of unemployment in India is different from that of developed

countries." Justify this statement using any two relevant points.

ANSWER KEY WORKSHEET-1 EMPLOYMENT CLASS- XII

Q.1 (A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).

Q.2 Disguised unemployment

Q.3 Yes

Q.4 A-i, B-ii, C-iii

Q.5 Disguised unemployment

Q.6 Lack of formal jobs in rural areas

Q.7 False

Q.8 1. Fall in primary sector, increase in secondary & tertiary sector give reasons by
calculation

Q.9 a) Ravi – Formal sector Arjun – Informal sector

b) 1. Job Security: Formal sector provides job security, informal does not.

2. Social Benefits: Formal sector offers benefits like pension and leave; informal lacks these.

Q.10 (A) 1. Gender disparity: Males have a significantly higher participation rate than
females in both rural and urban areas.

2. Regional variation: Rural female participation is higher than urban, indicating that rural
women are more likely to work due to necessity.

115
(B) Yes, the nature of unemployment in India is different from that of developed countries.

1. Disguised Unemployment: In India, many people work in agriculture where more workers
are employed than needed, leading to disguised unemployment. This is rare in developed
countries.

2. Informal Sector Dependence: A large portion of India's workforce is employed in the

informal sector without job security or regular income, unlike the formal sector dominance in
developed nations.

WORKSHEET-2 EMPLOYMENT CLASS- XII

NAME OF STUDENT-
ROLL NO-

TIME:- 35 MINUTES MAX MARKS:20

Q.N. QUESTIONS M

Read the following statements – Assertion (A) and Reason (R).

Choose the correct alternative from the options given below:

Options:

(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the
correct explanation of Assertion (A).

(C) Assertion (A) is true, but Reason (R) is false.

(D) Assertion (A) is false, but Reason (R) is true.

1 Assertion: Women have lower work participation rate. 1

Reason: Social norms and household responsibilities affect female

employment.

2 Assertion: Informalisation leads to better working conditions. 1

Reason: Informal workers do not get legal protection.

3 Which of the following helps reduce disguised unemployment? 1

116
 a) Encouraging migration b) Providing better agricultural
tools

c) Introducing rural job schemes d) Both b and c

4 Name a type of unemployment due to lack of skill match. 1

5 31. Match the following: 1

A B

1. Self-employed a. Factory worker

2. Regular salaried b. Street vendor

3. Casual worker c. Construction labourer

6 True / False 1

India has a higher share of employment in the organised sector.

7 ____ workers do not have social security benefits. 1

8 The government is planning to generate employment in rural areas by 3

promoting cottage industries. How can this move help reduce disguised
unemployment? Explain with an example.

9 4

A. Observe the image and explain what does it shows ?

B. What are disadvantages of casualization of workforce ?

10 (A) India has seen periods of high GDP growth without a corresponding rise 3+3
in employment. What is this phenomenon called ? Explain its implications
for income inequality and youth employment.

(B) Why is it important for India to promote Micro, Small and Medium
Enterprises (MSMEs) to tackle jobless growth?

Give two reasons to support your answer.

117
ANSWER KEY WORKSHEET-2 EMPLOYMENT

Q.1 (A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).

Q.2 (D) Assertion (A) is false, but Reason (R) is true.

Q.3 d) Both b and c Q.4 Structural unemployment

Q.5 1 → b, 2 → a, 3 → c Q.6 Informal

Q.7 False

Q.8 Promoting cottage industries can provide individual jobs to people who were earlier
working together on the same small farm, where all were not fully needed. For example, if 5
people were doing the work of 3 on a farm, 2 can shift to cottage industries and become fully
employed, reducing disguised unemployment.

Q.9 a. casualization b. low income ,job insecurity( any other relavant point )

Q.10 (A) 1. Income Inequality Increases

2. Youth Employment Crisis

(B) 1. Employment Generation

2. Inclusive Growth and Regional Balance

118
 SUSTAINABLE DEVELOPMENT

WORKSHEET-1

NAME OF THE STUDENT: ROLL NO.:

TIME:35 Minutes MM:20

Q QUESTION MARKS
NO

1 Assertion (A): Sustainable development ensures a better quality of life for 1

present and future generations.

Reason (R): It emphasizes meeting the needs of the present without

compromising the ability of future generations to meet their own needs.

Alternatives:

(A) Both A and R are true, and R is the correct explanation of A.

(B) Both A and R are true, but R is not the correct explanation of A.

(C) A is true, but R is false.

(D) A is false, but R is true.

2 Assertion (A): India has achieved full sustainability in its economic 1

growth.

Reason (R): India ranks high on the Environmental Performance Index.

Alternatives:

(A) Both A and R are true, and R is the correct explanation of A.

(B) Both A and R are true, but R is not the correct explanation of A.

(C) A is true, but R is false.

(D) A is false, but R is true.

3 Assertion (A): Use of non-renewable resources is encouraged in 1

sustainable development.

Reason (R): Non-renewable resources are unlimited in supply.

Alternatives:

(A) Both A and R are true, and R is the correct explanation of A.

119
 (B) Both A and R are true, but R is not the correct explanation of A.

(C) A is true, but R is false.

(D) A is false, but R is true.

4 Statement I: Sustainable development involves optimal use of natural 1

resources.

Statement II: Sustainable development ignores the needs of future

generations.

Alternatives:

(A) Only Statement I is correct

(B) Only Statement II is correct

(C) Both Statement I and II are correct

(D) Neither Statement I nor II is correct

5 Statement I: Solar and wind energy are examples of renewable resources. 1

Statement II: Coal and petroleum can be renewed within one year.

Alternatives:

(A) Only Statement I is correct

(B) Only Statement II is correct

(C) Both Statement I and II are correct

(D) Neither Statement I nor II is correct

6 Statement I: The carrying capacity of the environment is infinite. 1

Statement II: Overuse of resources leads to environmental degradation.

Alternatives:

(A) Only Statement I is correct

(B) Only Statement II is correct

(C) Both Statement I and II are correct

(D) Neither Statement I nor II is correct

120
7 A village replaces diesel pumps with solar-powered pumps for irrigation. 1
Which principle of sustainable development is being applied here?

a) Wasteful use of energyb) Use of renewable resources

c) Promotion of fossil fuelsd) Increasing carbon footprint

8 Ramesh lives in a city where the air quality index remains in the 3
'hazardous' range. Identify two challenges to sustainable development
reflected here.

Suggest one measure the government can take.

9 A company decides to recycle its industrial waste and uses solar energy 3
in its factories. What does this indicate about its development approach?
Mention any three indicators of sustainable development reflected here.

10 Aman reads about a city facing severe water shortage and pollution due 3
to rapid industrialization. As a student of economics, suggest sustainable
development strategies that could help solve these challenges. Also,
explain how indicators like HDI and Carbon Footprint can assess the
effectiveness of these strategies.

11 2+2=4

Look at the image and answer:

a) Identify any two environmental challenges shown.

b) Suggest any two sustainable development actions that could improve

this situation.

ANSWERS(worksheet-1)

121
Q NO QUESTION MARKS

1 (A) Both A and R are true, and R is the correct explanation of A. 1

2 (D) A is false, but R is true. 1

3 (D) A is false, but R is true. 1

4 (A) Only Statement I is correct 1

5 (A) Only Statement I is correct 1

6 (B) Only Statement II is correct 1

7 (b) Reduction in biodiversity 1

8 Challenges: Air pollution and health risk 3

Measure: Promote use of electric public transport or reduce industrial

emissions

9 Approach: Eco-friendly and responsible industrial practices 3

Indicators: Low carbon footprint, conservation of non-renewable

energy resources

10 Strategies: 3

Use of water-saving technologiesRecycling and reuse of water in

industries

Pollution control regulationsRainwater harvesting and afforestation

Promoting green industrial practices

Indicators:

HDI (Human Development Index) shows overall improvement in

health, education, and living standards.

Carbon Footprint measures reduction in pollution and harmful

emissions, showing environmental improvement.

11 a) Air pollution, Water pollution 4

b) Use of pollution control devices, treatment of industrial waste

before discharge

SUSTAINABLE DEVELOPMENT

WORKSHEET-2

122
NAME OF THE STUDENT: ROLL NO.:

TIME:30 Minutes MM:20

Q QUESTION MARKS
NO

1 Assertion (A): Afforestation is a measure to promote sustainable 1

development.

Reason (R): Trees help reduce carbon dioxide levels and enhance
ecological balance.

Alternatives:

(A) Both A and R are true, and R is the correct explanation of A.

(B) Both A and R are true, but R is not the correct explanation of A.

(C) A is true, but R is false.

(D) A is false, but R is true.

2 Assertion (A): Rapid industrialization always promotes sustainable 1

development.

Reason (R): Industrialization reduces environmental degradation.

Alternatives:

(A) Both A and R are true, and R is the correct explanation of A.

(B) Both A and R are true, but R is not the correct explanation of A.

(C) A is true, but R is false.

(D) A is false, but R is true.

3 Assertion (A): Pollution control is essential for sustainable development. 1

Reason (R): Environmental degradation affects the quality of life.

Alternatives:

(A) Both A and R are true, and R is the correct explanation of A.

(B) Both A and R are true, but R is not the correct explanation of A.

(C) A is true, but R is false.

(D) A is false, but R is true.

123
4 Statement I: Sustainable development is only concerned with economic 1
growth.

Statement II: Sustainable development considers ecological, economic,

and social dimensions.

Alternatives:

(A) Only Statement I is correct

(B) Only Statement II is correct

(C) Both Statement I and II are correct

(D) Neither Statement I nor II is correct

5 Statement I: Sustainable development ensures intergenerational equity. 1

Statement II: It encourages excessive use of exhaustible resources.

Alternatives:

(A) Only Statement I is correct

(B) Only Statement II is correct

(C) Both Statement I and II are correct

(D) Neither Statement I nor II is correct

6 Statement I: Use of cleaner technologies helps reduce pollution. 1

Statement II: Adoption of clean energy sources is a step towards

sustainability.

Alternatives:

(A) Only Statement I is correct

(B) Only Statement II is correct

(C) Both Statement I and II are correct

(D) Neither Statement I nor II is correct

7 Which of the following is not an economic indicator of sustainable 1

development?

a) GDP growthb) Per capita income

c) Air quality indexd) Employment rate

124
8 Case Study:India is facing multiple environmental challenges, such as 1+1+1=3
air and water pollution, deforestation, and declining groundwater levels.
In recent years, the government has launched initiatives like Swachh
Bharat Abhiyan and the International Solar Alliance to tackle these
issues. Despite these efforts, rapid urbanization and industrial growth
continue to strain the country’s natural resources.

Based on the above case, answer the following questions:

a) Identify two environmental issues mentioned in the case.

b) Mention any two government initiatives to promote sustainability.

c) Suggest two ways how individuals can contribute to sustainable

development.

9 "Economic growth alone is not sufficient for sustainable development." 3

Justify the statement.

10 What role does technology play in promoting sustainable development? 3

Give examples.

11 2+2=4

Look at the image above.

How does the use of solar panels contribute to sustainable development?

Explain with two benefits.

ANSWERS(worksheet-2)

Q NO QUESTION MARKS

125
1 (A) Both A and R are true, and R is the correct explanation of A. 1

2 (D) A is false, but R is true.. 1

3 ((A) Both A and R are true, and R is the correct explanation of A. 1

4 (B) Only Statement II is correct 1

5 (A) Only Statement I is correct 1

6 (C) Both Statement I and II are correct 1

7 (c) Air quality index 1

8 a) Air and water pollution; deforestation 3

b) Swachh Bharat Abhiyan

International Solar Alliance

c) Reducing the use of plastic and switching to reusable items.

Conserving water and electricity at home.

9 Sustainable development requires a balance between economic 3

growth, environmental protection, and social equity.

If economic growth leads to environmental degradation (e.g.,

pollution, deforestation), it may harm future generations.

Hence, economic policies must ensure long-term ecological balance

along with income growth.

10 Technology promotes sustainable development by improving 3

efficiency and reducing environmental harm.

Examples:

Drip irrigation saves water in agriculture.

Electric vehicles reduce fossil fuel consumption.

Waste-to-energy plants convert waste into usable energy.

11 Solar panels help in: 2+2=4

Reducing dependence on non-renewable energy sources like coal or

oil.

Lowering greenhouse gas emissions and air pollution, thus preserving

environmental quality.

126
 UNIT 8- DEVELOPMENT EXPERIENCE OF INDIA –
A COMPARISON WITH NEIGHBOURS
WORK SHEET-1
Name of Student ………… Roll No……….
Time: 30 Min Max Marks: 20
S.N Questions M
.

1. Which of the following is a common feature in the early development strategies 1

of India and Pakistan?
A. Collectivization of agriculture B. Mixed economy model
C. Capitalist economy D. Export-oriented policy

2. China’s Human Development Index (HDI) is higher than that of India and 1
Pakistan because of:
A. Higher agricultural growth B. Better health and education
indicators
C. Higher military expenditure D. Larger population

3. 1

This image is related to ………………………….policy that is adopted by China.

A. One child policy B. Great

Leap Forward

C. Commune System D. SEZ

127
4. From the set of events/systems given in column I and the corresponding relevant 1
fact given in column II, about China, choose the correct pair of statements:

Column I Column II

A. Great Leap Forward i. Cultivating land Collectively

B. Commune System ii. Opening of the Industries in their

homes

C. Proletarian Cultural Revolution iii. Students were sent to work and

learn from the countryside

D. Economic Reforms in China iv. 1988

Alternatives:
a) A – I b) B – ii c) C – iii
d) D – iv
5. Imagine you are an economic advisor to India. Based on the comparison with 3
China and Pakistan, suggest two key policy areas India should prioritize to
improve its Human Development Index.
6. Suppose Pakistan improves its education and healthcare systems significantly. 3
How might that affect its long-term economic development?
7. Read the table below showing economic indicators of India, China, and Pakistan 4
(data is indicative).

Country GDP Growth Literacy Rate Infant HDI Rank

Rate (%) (%) Mortality Rate
(per 1000)

India 6.5 77 28 132

China 8.0 96 7 79

Pakistan 5.3 59 56 161

Based on the table above, answer the following:

(a) Which country has the highest human development index (HDI) and why?
(2)
(b) Compare the infant mortality rates of the three countries. What does it suggest
about their healthcare systems?
(2)
OR

128
 Despite a lower GDP growth rate than China, can India be considered better in
any indicator?
8. Read the case study and answer the questions below: 6

Case Study:
In 1978, China introduced sweeping economic reforms by shifting to a market-
oriented economy under state control, starting with agriculture and gradually
expanding to industry and trade. It encouraged Special Economic Zones (SEZs)
and Foreign Direct Investment (FDI), resulting in rapid industrialisation and
poverty reduction.
India, facing a severe Balance of Payments crisis in 1991, liberalised its economy
through reduced import tariffs, deregulation, and opening to foreign investment.
This led to strong GDP growth, especially in the services sector. However,
challenges remain in healthcare, education, and employment generation.
Pakistan started economic reforms in 1988 with support from the IMF and World
Bank, but political instability, low public spending on health and education, and
security issues have hampered consistent development. Its agricultural
dependence and weak industrial base remain concerns.
Despite all three nations beginning as low-income countries, China has moved
rapidly into the upper-middle-income group, while India and Pakistan are still
lower-middle-income economies.
---
Answer the following questions:
a) What specific reforms helped China accelerate its economic growth?
(1 )
b) Why did India adopt liberalisation policies in 1991?
(1 )
c) Mention one major strength and one weakness of India’s economic
development model. (2)
d) Based on the case, explain why Pakistan has lagged in comparison to India
and China. (2)

129
 Answer of Worksheet
1. B. Mixed economy model
2. B. Better health and education indicators
3. C. Commune System
4. a) A – I
5. India should prioritize:
- Investment in health and education
- Reducing income inequality and improving basic services
6. Improving education and healthcare in Pakistan can lead to:
- Better human capital
- Enhanced productivity and long-term economic growth
7. (a) China has the highest HDI due to better literacy, healthcare, and infant mortality rates.
(b) Infant Mortality Rates:
- India: 28
- China: 7
- Pakistan: 56
This suggests China has the best healthcare system, followed by India, with Pakistan lagging.
OR
India has a better literacy rate (77%) than Pakistan and a lower infant mortality rate, despite lower
GDP growth than China.
8. (a) Agriculture reforms, FDI, and SEZs
(b) India faced a Balance of Payments crisis in 1991.
(c) Strength: Growth in service sector; Weakness: Healthcare and employment challenges
(d) Pakistan lagged due to political instability, low spending on health/education, and security
issues.

UNIT 8- DEVELOPMENT EXPERIENCE OF INDIA –

A COMPARISON WITH NEIGHBOURS
WORK SHEET-2

130
 UNIT 8- DEVELOPMENT EXPERIENCE OF INDIA –
A COMPARISON WITH NEIGHBOURS
WORK SHEET-1
Name of Student ………… Roll No……….
Time: 30 Min Max Marks: 20
S.No. Questions Marks

1. Read the following statements carefully. 1

Statement 1: Both India and Pakistan initiated their economic reforms

without any external pressures.
Statement 2: Pakistan has successfully implemented the SEZ policy and
reaped its benefits using the Export Promotion policy.
In the light of the given statements, choose the correct alternative:
a) Statement 1 is true and statement 2 is false
b) Statement 1 is false and statement 2 is true
c) Both statements 1 and 2 are true
d) Both statements 1 and 2 are false
2. The understanding of the economy of neighboring country is essential 1
because …………………..
(Fill in the blank with correct alternative)
a) It allows countries to better comprehend their own strengths and
weaknesses
b) It helps countries to identify their competitors
c) For overall human development
d) All of the above
3. From the set of the events given in column I and corresponding facts given 1
in Column II, choose the correct pair of statement:

COLUMN- I COLUMN- II

A. Dual pricing I. Economic Reforms of 1991

B. Setting up of Special Economic II. To attract Direct foreign

Zones in China Investment

C. Commune System III. Backyard based Industrial pro-

duction units

131
 D. Great Proletarian Cultural IV. Collective Farming
Revolution

Alternatives:
a) A – I b) B – II c) C – III
d) D – IV
4. Read the following statements - Assertion (A) and Reason (R). Choose one 1
of the correct alternatives given below:

Assertion (A): In the late 1970s, China's population growth rate had sharply
declined.
Reason (R): China has witnessed an increase in the proportion of elderly
people owing to stringent family planning programs.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the
correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the
correct explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.
5. In the late 1970s, China introduced the One Child Policy that led to arrest 3
in the population coupled with skewed sex ratio."
Justify the given statement with valid arguments in support of your answer.

6. Read the extract given below and answer the questions on the basis of the 3
same:
Though India, Pakistan and China have totally different political systems,
but all of them have followed plans for their economic and social
development. India and Pakistan have followed the path of mixed
economy. China, on the other hand, had command economy. All the three
countries launched their economic development programme almost
simultaneously in the early part of the decade of 1950s. While India and
Pakistan depended heavily on the public sector for giving a big push to the
economy, China was absolutely the state controlled economy. Till the early
1980s, the major development indicators of all the three nations such as
growth rate, sectorial distribution of output/income and employment and
human development were more or less similar. The level of development
was also low in all these three countries. But with the introduction of
economic reforms, changes in their level of development became visible.
As a result of various policy measures in three countries, China has
surpassed both India and Pakistan in terms of social and economic
development.

132
 Q1. What is peculiar about the structural transformation process in context
of Indian and Pakistan economy?
Q2. Which factor is not considered while constructing the HDI Index?
Q3. State any one difference between Mixed economy and Command
economy.
7. 4

‘The reform process implemented in the late 1970s, commonly known as

China’s open door policy, encompassed a wide range of reforms across
sectors like agriculture, investment, industry etc. These reforms played a
pivotal role in driving the rapid growth of the Chinese economy over
subsequent decades.’
In the light of the given text, discuss any two reforms responsible for the
rapid economic growth of China.
8. Case Study: 6
India, China, and Pakistan started with similar levels of
development. Today, China is ahead of both in terms of industrial output,
while India leads in service sector exports. Pakistan, however, is still
agriculture-dependent.
a) Identify one strength and one weakness of each country’s pectoral
composition.
b) How does this affect their economic growth?
c) Suggest a strategy for Pakistan to improve its growth.

Answer of Worksheet 2
1. a) Statement 1 is true and statement 2 is false

133
 2. d) All of the above
3. b) B – II
4. (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A)
5 .The One Child Policy controlled population growth, reducing dependency but led to an
imbalanced sex ratio and aging population, creating future economic burdens.
6. Q1. Structural transformation in India and Pakistan saw slow shift from agriculture to
industry/services.
Q2. Military strength or political system is not considered in HDI Index.
7. Two reforms:
- Introduction of Special Economic Zones (SEZs)
- Opening up to Foreign Direct Investment (FDI)
8. a) India: Strength – Services; Weakness – Manufacturing
China: Strength – Manufacturing; Weakness – Aging population
Pakistan: Strength – Agriculture; Weakness – Industrial development
b) China’s industrial strength boosted exports; India’s service sector drives GDP; Pakistan lags in
growth.
c) Pakistan should invest in education, industrialization, and attract FDI to diversify its economy.

UNIT 8- DEVELOPMENT EXPERIENCE OF INDIA –

A COMPARISON WITH NEIGHBOURS
WORK SHEET- 3
Name of Student ………… Roll No……….

134
Time: 30 Min Max Marks: 20
S.N Questions Mark
o. s

1. Identify the correctly matched pair in Column A and Column B from the 1
following:

COLUMN- A COLUMN- B

1. India (a) Economic reforms in 1997

2. Pakistan (b) Economic reforms in 1991

3. China (c) Economic Reforms in 1978

4. India (d) GST rolled out in 1999

(a) 1-(b), 2-(c), 3-(d), 4-(a) (b) 1-(c), 2-

(b), 3-(a), 4-(d)
(c) 1-(a), 2-(b), 3-(c), 4-(d) (d) 1- (d), 2-
(b), 3-(a), 4-(c)
2. Read the following statements - Assertion (A) and Reason (R). Choose one 1
of the correct alternatives given below:

Assertion (A): In the late 1970s, China's population growth rate had sharply
declined.
Reason (R): China has witnessed an increase in the proportion of elderly
people owing to stringent family planning programs.
(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
3. Read the following statement carefully: 1

Statement 1: China introduced structural economic reforms on its own,

without any pressure.
Statement 2: Scholars argue that in India, the economic reforms process led
to the worsening of all the economic indicators.
In the light of the given statements, choose the correct alternatives from the
following:

135
 (a) Statement 1 is true and Statement 2 is false
(b) Statement 1 is false and Statement 2 is true
(c) Both Statements 1 and 2 are true.
(d) Both Statements 1 and 2 are false.
4. Arrange the following events of China in chronological order and choose the 1
correct alternative:
1. Great Proletarian Cultural Revolution 2. Great Leap Forward
campaign
3. Introduction of Economic Reforms 4. First five-year plan
Choose the correct alternative:
a) 2, 4, 3, 1 b) 4, 2, 1, 3 c) 2, 4, 1, 3
d) 4, 1, 2, 3
5. Observe the bar graph below and answer the following questions: 3

a) Arrange the countries in descending order of literacy rates.

b) Give two reasons why Pakistan lags behind in literacy compared to China
and India.
c) How does a high literacy rate contribute to overall human development?
6. Study the data table below carefully and answer the questions. 3

Country Total Population Population Population

(in crores, 2023) Growth Rate (%) Density (per sq.
km)

India 141 0.9% 464

China 142 -0.2% 153

136
 Pakistan 24 1.9% 287

a) Which country has the highest population density and why is this a
concern for resource management?
b) Why is China’s growth rate negative despite having the highest
population?
c) Suggest one economic implication of Pakistan’s high population growth
rate.
7. Case Study: India, Pakistan, and China started their economic planning 4
around the same time. However, China adopted market reforms in 1978,
whereas India and Pakistan liberalized much later in the 1990s. China's
emphasis on manufacturing and export-led growth gave it an edge in
development indicators.
Answer the following:
a. Identify two factors that contributed to China’s economic success post-
1978.
b. What can India learn from China’s development experience?
c. Highlight two difference in the approach between India and Pakistan’s
economic reforms.
8. (A) Study the data table below carefully and answer the questions. 6
(3)

Country Total Population Population Population

(in crores, 2023) Growth Rate (%) Density (per sq.
km)

India 141 0.9% 464

China 142 -0.2% 153

Pakistan 24 1.9% 287

Answer the following:

a) Which country has the highest population density and why is this a
concern for resource management?
(1)
b) Why is China’s growth rate negative despite having the highest
population? (1)
c) Suggest one economic implication of Pakistan’s high population growth
rate. (1)

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(B) Study the table below and answer the questions: (3)

Country Literacy Rate (%) Life Expectancy

(Years)

India 77.7 70.8

China 96.8 78.2

Pakistan 58.0 67.3

a) Which country performs the best in both indicators?

(1)
b) What could be the reason for low life expectancy in Pakistan?
(1)
c) Why is literacy important for human development?
(1)

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 Answer-Worksheet 3
1. (a) 1-(b), 2-(c), 3-(d), 4-(a)
2. (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A)
3. (a) Statement 1 is true and Statement 2 is false
4. b) 4, 2, 1, 3
5.a) China > India > Pakistan
b) Pakistan invests less in education and has political instability.
c) High literacy improves employment, innovation, and health awareness.
6. a) India – 464 per sq. km, which strains resources like water, housing, and jobs.
b) China’s low birth rate and aging population from one-child policy causes negative growth.
c) High population growth in Pakistan leads to unemployment, poverty, and pressure on services.
7. a) Reforms like FDI and SEZs
b) India can learn to focus on manufacturing and infrastructure
c) India’s reforms were externally pressured, Pakistan’s reforms faced political hurdles
8A:
a) India – highest density; concern due to limited resources and infrastructure strain.
b) China's population decline is due to low birth rate from earlier strict family planning.
c) Pakistan's high growth may lead to increased dependency ratio, straining economy.

8B:
a) China performs best in both.
b) Poor healthcare, low literacy, and underinvestment
c) Literacy enhances skills, job opportunities, and economic participation

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 Worksheet TOPIC: COMPARATIVE DEVELOPMENT
EXPERIENCES: INDIA & ITS NEIGHBOURS
Name_______________ Roll No. _____________

Time:35 Minutes Marks: 20

1. Which of the following correctly represents the structural transformation in 1
China’s economy after reforms?

A. Increase in primary sector share

B. Shift from agriculture to industry and services

C. Dominance of public sector in all areas

D. High dependence on foreign aid

2. 1

The bar graph shows GDP growth rates of India, China, and Pakistan for
2022.

Which of the following statements is correct?

A. Pakistan had a higher growth rate than China.

B. India had the lowest growth rate among the three.

C. China had the highest growth rate among the three.

D. India had the highest growth rate among the three.

3. Assertion (A): India adopted a mixed economy model after independence. 1

Reason (R): India wanted both the public and private sector to co-exist.

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 Options:

A. Both A and R are true, and R is the correct explanation of A.

B. Both A and R are true, but R is not the correct explanation of A.

C. A is true, R is false.

D. A is false, R is true.

4. Assertion (A): Pakistan’s economic growth in the 1960s was higher than 1
India’s.

Reason (R): Pakistan received huge military and economic support from
western countries during that period.

Options:

A. Both A and R are true, and R is the correct explanation of A.

B. Both A and R are true, but R is not the correct explanation of A.

C. A is true, R is false.

D. A is false, R is true.

5. Statement I: China implemented economic reforms in 1978. 1

Statement II: China followed a capitalist economy model post-reforms.

Options:

A. Both statements are correct

B. Statement I is correct, Statement II is incorrect

C. Statement I is incorrect, Statement II is correct

D. Both statements are incorrect

6. Statement I: India’s life expectancy is higher than that of Pakistan. 1

Statement II: Life expectancy indicates the quality of health and sanitation.

Options:

A. Both statements are correct

B. Statement I is correct, Statement II is incorrect

C. Statement I is incorrect, Statement II is correct

141
 D. Both statements are incorrect

7. Why is China referred to as a ‘command economy’? 1

a) It depends on foreign trade

b) Private sector dominates

c) State controls major production and planning

d) It follows democratic planning

8. How did the role of the government in economic planning differ in China and 3
Pakistan? What impact did this have on their growth and development
indicators?

9. Case Study: 4

China implemented economic reforms in 1978 that allowed foreign direct

investment, decentralized decision-making, and promoted private
entrepreneurship. The government invested heavily in infrastructure and
export-led manufacturing. As a result, it witnessed double-digit growth for
several years. Meanwhile, India initiated economic reforms in 1991,
liberalizing trade, reducing government control, and opening up to foreign
investment. However, India’s democratic structure often slowed the pace of
implementation.

Questions

a)Compare and evaluate how the nature of political systems in India and
China influenced the pace and outcomes of economic reforms in both
countries.

b)Identify two key strategies adopted by China post-1978 to boost economic

growth.

10. Data Interpretation Question: 6

The table below shows selected economic indicators for the year 2020:

142
 Country GDP (Trillion USD) Life Expectancy Literacy Rate (%)
(Years)

India 2.87 70.80 74.4

Pakistan 0.27 67.3 58.0

China 14.72 77.4 96.8

Questions:

(a) Which country has the highest GDP and what does it indicate about its global
economic status?

(b) Arrange the countries in descending order based on life expectancy. What does
this reflect about their healthcare development?

ANSWERS 1

1 B. Shift from agriculture to industry and services 1

2 India had the highest growth rate among the three. 1

3 A. Both A and R are true, and R is the correct explanation of A. 1

4 A. Both A and R are true, and R is the correct explanation of A. 1

5 B. Statement I is correct, Statement II is incorrect 1

6 A. Both statements are correct 1

7 c) State controls major 1

143
8 The strong, consistent role of the Chinese government in planning and 3
implementing long-term policies helped it achieve sustained growth and
improve human development indicators. In contrast, Pakistan’s weak and
unstable planning structure led to lower socio-economic outcomes despite
occasional periods of growth.

9 a) China’s centralized system allowed for faster decision-making, while 2+2

India’s democratic system led to slower but more inclusive growth.

b) Establishment of Special Economic Zones (SEZs)

Encouragement of Foreign Direct Investment (FDI)

10 a) China has the highest GDP at 14.72 trillion USD. It reflects China’s large- 3+3
scale industrialization, high productivity, export-led growth strategy, and
significant global trade influence.

b) Descending order of life expectancy:

China – 77.4 years

India – 70.8 years

Pakistan – 67.3 years

This reflects that China has better healthcare infrastructure and public health
policies, resulting in higher life expectancy. India has made progress, but still
lags behind China. Pakistan’s lower life expectancy suggests comparatively
weaker healthcare services and public health systems.

144
 COMPARATIVE DEVELOPMENT EXPERIENCES: INDIA & IT’S
NEIGHBOURS

WORKSHEET-5

NAME OF THE STUDENT: ROLL NO.:

TIME: 30 MINUTES MM: 20

Q QUESTION MAR
N KS
O
1 ASSERTION (A): Great Leap Forward (GLF) campaign 1
initiated in China brought a new era of industrialisation and
agricultural development.
REASON (R): Students and professionals were sent to
countryside under the Great Leap Forward (GLF) campaign.
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R)
is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true and Reason (R)
is not the correct explanation of Assertion (A)
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.
2 Arrange the following events in chronological order and choose 1
the correct answer from the given alternatives:
(i) Establishment of People’s Republic of China
(ii) Creation of Pakistan
(iii) First Five-Year Plan of India
(iv) (iv) First Five-Year Plan of China
Alternatives :
(A) (i), (iv), (ii), iii)
(B) (iii), (ii), (i), iv)

145
 (C) (ii), (i), (iii),(iv)
(D) (iv), (iii), (ii), (i)
3 In which year the economic reforms introduced in India? 1
(a) 1978 (b)1980
(c) 1988 (d)1991
4 Which country has the highest Human Development Index 1
(HDI)?
a) India b) China
c) Pakistan d) All are equal

5 3
100
90
80
70
60
50
40
30
20
10
0
Literacy Rate (%) Infant Mortality Rate
(per 1000)

a) Study the following bar graph and answer the questions:

(i) Which country performs best on these social indicators?

(ii) Which country has lowest Literacy Rate?
(iii) Arrange the countries in ascending order to Infant Mortality
Rate.

146
 b) What are the key challenges facing Pakistan's economy today? 3
6 Despite having similar historical and geographical contexts, 4
China has outpaced India and Pakistan in many developmental
indicators. Critically analyze the factors that led to China’s rapid
growth.
7 Study the following table and answer the questions: 6

Indicator India China Pakistan

(2022) (2022) (2022)
GDP (in trillion US$) 3.73 17.96 0.38
Per Capita Income 2601 12720 1680
(US$)
Population (in 1.41 1.42 0.24
billions)
Life Expectancy 70.9 78.2 66.8
(years)
Literacy Rate (%) 77.7 96.8 58.0
HDI (2022) 0.633 0.788 0.544
Infant Mortality Rate 27 6 55
(per 1000)
Access to Sanitation 70 80 60
(%)

Questions:
(i) Which country has the highest per capita income?
1
(ii) Compare the literacy rates of the three countries.
1
(iii) Arrange the countries in ascending order of HDI.
1
(iv) What can you infer from the sanitation access percentages?
1
(v) Why is infant mortality rate considered an important indicator
of development? 2

147
 Q ANSWERS
NO
1 (c) Assertion (A) is true but Reason (R) is false.
2 (C) (ii), (i), (iii),(iv)
3 (d)1991
4 (b) China
5 a) Study the following bar graph and answer the
questions:
(i) China
(ii) Pakistan (iii) China, Inia and Pakistan
b) Political instability
Low investment in education & health
High fiscal deficits
6 China adopted aggressive economic reforms in 1978, moving
from a centrally planned economy to a market-oriented one.

Key factors include:

• Massive investment in infrastructure and

manufacturing.
• Export-led growth strategy.
• One-child policy helped control population pressure.
• Heavy state control ensured efficiency in execution.
• Rapid urbanization and SEZs boosted FDI.
7 (i)China 1
(ii)China>India>Pakistan 1
(iii)Pakistan<India<China 1
(iv)Better sanitation access reflects better public health
infrastructure 1
(v) Shows healthcare qualityIndicates overall well-being of
infants & mothers 2

148