KENDRIYA VIDYALAY SANGATHAN

GUWAHATI REGION
STUDY MATERIAL CLASS XII (2020-21)
SUBJECT: ECONOMICS

Chapter wise Question Bank

 Foreword
Preparation of study material for all the major subjects of class X and XII and presenting the same on
the hands of the students well on time is not anything new for the Kendriya Vidyalayas. However, this
time the backdrop of the Covid-19 pandemic looming large in front of all and the 9 months of
suspended physical classes have given an extra novel meaning and significance to this endeavor. On
all previous occasions, teachers sat together on a designated place face to face to discuss, to reject, to
select & modify and thereby gather together the best material for the students. This time, they could
not do so that way because of the limitations of gatherings in light of the pandemic. And therefore,
this time, there has been the endeavor to craft out a chapter-wise exhaustive question bank for all the
major subjects. The major chunk of the session has already played out in the most extraordinary way
during this most extraordinary time as we have all seen, with the syllabi having been covered only
through online classes with the teachers and the students never coming face to face inside the
classrooms.
Anyway, with our examination system the way it is, the role of intelligent and rigorous study of
question bank has been always enormous for success in all examinations. Having a sound grasp of
probable questions and the most pertinent ones, leads to better negotiation of the course material on
hand especially when the examination comes near.
It is hoped that the teachers of each school will bring the materials home to the needy students with
further necessary guidance from them during this extraordinary academic session and extraordinary
time as a whole.

It has been wonderful for KVS RO Guwahati to be involved in preparation of study material in the form
of chapter wise question banks. The enormous contribution of the Subject teachers and Principals for
making the project successful is highly praiseworthy.

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BOOK: INTRODUCTORY MACROECONOMICS

UNIT:1 NATIONAL INCOME AND RELATED AGGREGATE

Q.1 Output means……………unless stated otherwise

a) Gross output at MP b) Net output at MP
c) Gross output at FC d) None of these
Ans: Gross output at MP
Q.2 Which of the following is not a component of domestic income?
a) Operating surplus b) Compensation of employees
c) Net factor income from abroad d) Mixed income
Ans: Net factor income from abroad
Q.3 If factor cost is greater than marker price, it means that
a) Indirect taxes < subsidies b) Indirect taxes > subsidies
c) Indirect taxes = subsidies d) None of these
Ans: Indirect taxes < subsidies
Q.4 Q.5 An Indian farmer produces wheat without incurring cost of inputs and sells for Rs. 1,000 to a
miller who grinds wheat into flour and sells for Rs1,200 to baker. The baker sells bread to consumers
for Rs. 1,600. Total value added is Rs.
a) 1600 b) 2200
c) 1000 d) 1400
Ans: 1600
Q.5 Which of the following is not true about final goods?
(a) Final gods satisfy wants of ultimate consumers and producers.
(b) Final goods have direct demand as they satisfy the wants directly.
(c) Final goods are subject to further transformation in the process of production.
(d) Final goods are neither used up as raw-material nor for resale in the same year.
Ans: C
Q.6 Following is an example of final good:
(a) Flour used by a banker in making biscuits
(b) Unsold stock of goods lying with the sellers
(c) Tyres purchased by a transport company
 (d) Mobile sets purchased by a mobile dealer
Ans: Unsold stock of goods lying with the sellers.
Q.7 Which out of the following is not included in estimation of NI?
(a) Subsidized Lunch (b) Old-age Pension
(c) Free Medical facilities (d) Construction of a house
Ans: Old-age Pension
Q.8 Which of the following is included in compensation of employees?
(a) Dearness Allowance
(b) Tools given to employees to be used during work
(c) Payment by insurance company to an injured employee
(d) Contribution by employee to provident fund
Ans: Dearness Allowance
Q.9 ‘Commodity service method’ is another name for:
(a) Expenditure method (b) Income method
(c) Value – added Method (d) None of these
Ans: Value-added Method
Q.10 Which of the following statements is true?
(a) Bread is always a consumer good
(b) All producer goods are not capital goods
(c) Transfer income is received for providing a good or service in return
(d) Interest paid by a household on car loan from a bank is a factor payment
Ans: All producer goods are not capital goods
Q.11 When will GDP of an economy be equal to GNP?
Ans: GDP and GNP will be equal when the ‘net factor income from abroad’ is zero.
Q.12 When is the net domestic product at market price less than the net domestic product at factor
cost?
Ans: When net indirect taxes are negative i.e., subsidies are more than indirect taxes.

Q.13 If NDPFC is Rs 1,0000 crores and NFIA is (-) Rs 500 crores, how much will be the national
income?
Ans: National Income = 10000 + (-500)
= Rs 9500 Crore
Q.14 If the domestic factor income is Rs 50,000 crores and the national income is Rs 45,000 crores,
how much will be the net factor income from abroad?
Ans: Net factor income from abroad = 45,000 – 50,000 = (-) Rs 5000 Crore
Q.15 If compensation of employees in a firm constitutes 65% of net value added at factor cost of a
firm, find the proportion of operating surplus.
Ans: 100% – 65% = 35% (assuming mixed income is zero).

Q.16 14. What is the rationale for not taking into account the value of intermediate goods in the
measure of GDP?
Ans: To avoid the problem of double counting.
Q.17 When is the net domestic product at market price less than the net domestic product at factor
cost?
Ans: When net indirect taxes are negative i.e., subsidies are more than indirect taxes.
Q.18 What is Nominal GDP?
Ans: It is money value of final goods and services produced in a year at prices of the current year.
Q.19 What is GDP deflator?
Ans: It is measured as the ratio of nominal GDP to real GDP,multiplied by 100.
GDP Deflator=Nominal GDP/Real GDP*100.
Q.20 What is Green GNP?
Ans: It refers to estimation of GNP that accounts for or taken into consideration certain parameters
like environmental pollution and exploitation of natural resources.
Q.21 Explain how ‘externalities’ are a limitation of taking gross domestic product as an index of
welfare.
Ans:When the activities of somebody result in benefits or harms to others with no payment
received for the benefit and no payment made for the harm done, such benefits and harms are
called externalities.
Activities resulting in benefits to others are positive externalities and increase welfare; and those
resulting in harm to others are called negative externalities, and thus decrease welfare.
GDP does not take into account these externalities.

For example, construction of a flyover or a highway reduces transport cost and journey time of its
users who have not contributed anything towards its cost. Expenditure on construction is included
in GDP but not the positive externalities flowing from it. GDP and positive externalities both
increase welfare. Therefore, taking only GDP as an index of welfare understates welfare. It means
that welfare is much more than it is indicated by GDP.
Similarly, GDP also does not take into account negative externalities. For examples, factories
produce goods but at the same time create pollution of water and air. River Yamuna, now a drain,
is a living example. The pollution harms people. The factories are not required to pay anything for
harming people. Producing goods increases welfare but creating pollution reduces welfare.
Therefore, taking only GDP as an index of welfare overstates welfare. In this case, welfare is much
less than indicated by GDP.
Q.22 With reasons state whether the followings will be included in the estimation of National Income
of a country?
(a)Commission on sale of second-hand goods.
(b)Scholarship given by the government to the students.
(c)Income earned by an Indian resident working in Russian Embassy situated in India.
(d)Subsidized lunch served to workers in a factory.
Ans: (a)Yes, this will be included in the national income as it is a factor income
(b)No, it will not be included as it is transfer payments
(c)Yes, it will be included as the income is earned by Indian resident
(d)Yes, it will be included as it is a part of the compensation of employees

Q.23 Calculate National Income by Income and Expenditure method.

Items (Rs. In Crores)
(i) Gross fixed capital formation 300
(ii) Mixed income of self-employed 100
(iii) Net factor income from abroad 50
(iv) Private final consumption expenditure 900
(v) Net exports (-) 50
(vi) Subsidies 50
(vii) Government final consumption expenditure 150
(viii) Indirect taxes 250
(ix) Rent 60
(x) Interest 200
(xi) Change in stock 50
(xii) Profits 340
(xiii) Compensation of employees 400
(xiv) Consumption of fixed capital 50
Ans: Income Method:
NDPFC= Compensation of employees + Operating Surplus + Mixed income of self employed
NDPFC = xiii + (ix+x+xii) + ii
NDPFC = 400 + (60+200+340) +100
NDPFC = 1100 ------------------------------------------------- (i)
National Income or NNPFC = NDPFC + NFIA
= 1100 + 50
= 1150 ----------------------------------- (ii)
Expenditure Method:
GDPMP = C + I + G + (X-M)
GDPMP = iv + (i + xi) + vii + v
= 900+ (300+50) +150 -50
= 1350 ------------------------------------------------------ (iii)
National Income or NNPFC = GDPMP – CFC + NFIA – NIT
= 1350 – 50 + 50 – (250– 50)
= 1150 ---------------------------------- (iv)
∴The estimated National Income is Rs.1150 crores
Q.24 From the following data calculate GNP at FC by
(a) Income method (b) Expenditure method
ITEMS CRORE
(i) Net domestic capital formation 500
(ii) Compensation of employees 1850
(iii) Consumption of fixed capital 100
(iv) Govt. final consumption expenditure 1100
(v) PVT. final consumption expenditure 2600
(vi) Rent 400
(vii) Dividend 200
(viii) Interest 500
(ix) Net Exports (—) 100
(x) Profits 1100
(xi) NFIA (–) 50
(xi) Net Indirect taxes 250
Ans: GNPFC (a) Income Method :
 = (ii) + (vi) + (viii) + (x) + (xi)
NNPFC = 1850 + 400 + 500 + 1100 + (– 50) = 3800
GNPFC = 3800 + 100 = 3900 Crores
(b) Expd. Method = (i) + (iii) + (iv) + (v) + (ix) + (xi) – (xii)
500 + 100 + 1100 + 2600 + (– 100) + (– 50) – 250
= 3900 Crore
Q.25 Calculate (a) Gross domestic product at market price (GDPMP)
(b) Factor income from abroad.
Rs. (Crore)
(i) Profit 500
(ii) Export 40
(iii) Compensation of Employees 1500
(iv) Net current transfer from Row 2800
(v) Rent 90
(vi) Interest 300
(vii) Factor income to abroad 400
(viii) Net indirect tax 120
(ix) Gross fixed capital formation 250
(x) Net domestic capital formation 650
(xi) Gross fixed capital formation 700
(xii) Change in stock 50
Ans: (a) GDPMP :
NDPFC = (iii) + (v) + (vi) + (vii)
= 1500 + 500 + 300 + 400
= 2700 Crores
GDPMP = NDPFC + CFC + NIT
CFC = (GFCF + S) – 650
= (700 + 50) – 650= 100
NIT = 250
GDPMP = 2700 + 100 + 250= 3050
(b) FIFA
GNPFC = GDPMP + NFIA – NIT
2800 = 3050 + NFIA – 250
NFIA = 0
NFIA = FIFA – FIPA
0 = FIFA – 120
FIFA = 120 Crores
 UNIT 2: MONEY AND BANKING
Multiple Choice Question
Q1. Supply of money refers to quantity of money –

(a) As on 31st March

(b) During any specified period of time
(c) As on any point of time
(d) During a fiscal year

Q2. Money supply includes _________

(a) All deposits in bank
(b) Only demand deposits in banks
(c) Only time deposits in banks
(d) Currency with the banks

Q3. Who regulates money supply in India?

(a) Government of India
(b) Reserve Bank of India
(c) Planning Commission
(d) NITI Aayog

Q4. __________ is the main source of money supply in an economy.

(a) Central Bank
(b) Commercial Banks
(c) Government
(d) Both a and b

Q5. _______ is the primary function of money.

(a) transfer of value

(b) medium of exchange
(c) standard of deferred payment
(d) store of value

Q6. The creation of ________ is called credit creation.

(a) time deposits
(b) primary deposits
(c) secondary deposits
(d) none of these

Q7. Limitation of barter system of exchange

(a) lack of unit of value
(b) lack of store of value
(c) lack of standard of deferred payments
 (d) all of these

Q8. High powered money includes –

(a) currency and demand deposits

(b) demand deposits and saving deposits
(c) currency held by public and cash reserves with banks
(d) none of these

Q9. Money supply is a ________ concept.

(a) Flow
(b) Stock
(c) Variable
(d) All of these

Q10. _________ are called legal tenders.

(a) demand deposits
(b) time deposits
(c) inter-bank deposits
(d) currency notes and coins

Answer
Q1. – (c) Q2. – (b) Q3. – (b) Q4. – (d) Q5. – (b) Q6. – (c)
Q7. – (d) Q8. – (c) Q9. – (b) Q10. – (d)
Very Short Answer Questions

Q1. Name the System of Note-issue in India.

Ans. In India, the system of note issue is the Minimum Reserve System. The RBI is required to keep
minimum reserves of Rs 200 crores.
Q2. Define open Market operation.
Ans Open Market operations refer to the purchase or sale of government securities in the open
market by the central bank of the country.
Q3. Name the additional facility which the businessman gets in the current deposit account of the
bank.
Ans. The businessman gets the facility of overdraft (OD) in the current account of the bank.
Q4. What is margin requirement of loans?
Ans. Marginal requirement of loan means the difference in percentage between the amount of the
loan and market value of the security offered by the borrower against the loan.

HOTS and Value Based Questions

Q1. A curb on high powered money will lead to a curb on the creation of credit by the commercial
banks in the economy. Do you agree? (3)
Ans. Yes, the given statement is correct. This is because high powered money includes currency with
the public as well as cash reserves of the commercial banks with the RBI. It serves as a monetary base
for the creation of credit in the economy. A curb on high powered money will definitely lead to a
curb on the creation of credit by the commercial banks.
Q2. Do you agree with the view that the excess of money supply hinders the process of economic
growth? Give reasons. (4)
Ans. Yes, it is correct to say that the excess of money supply hinders the process of economic growth.
The
following reasons explain this point of view:
(i) Excess of money supply is a situation when purchasing power (also called liquidity) with
the people is more than the existing market value of the goods and services available in the
economy. Consequently, pressure of demand mounts up on the available supply of goods and
services. This leads to a rise in the general price level.
(ii) If excess supply of money continues to persist, the situation of rising price level also continues to
persist. This is called a situation of inflation-a situation of 'price spiral'.

(iii) Persistent inflation leads to a rise in the rate of interest. Implying that the cost of investment
tends to rise.
(iv) High cost of investment leads to a cut in the volume of investment.
(v) When investment declines, the GDP growth also declines.
Thus, excess supply of money tends to hinder the process of economic growth. It lowers the
growthrate of rea l GDP.

Q3. Commercial banks do not have the note issuing authority, but they do contribute to money
supply in the economy. Comment. (3)

Ans. Yes, the given statement is correct. The central bank is the sole authority of issuing notes in the
country. However, by advancing loans through credit creation, commercial banks contribute to
money supply in the economy.
Q4. Analyse the impact of demonetisation (of 500 and 1,000 rupee notes) on credit creation by the
commercial banks in the Indian economy. (3)
Ans. Demonetisation has led to huge deposits of cash i n the commercial banks. Primary deposits of
the banks have risen significantly. This enables them to keep higher CRR-deposits with the RBI
.Accordingly, credit creation capacity of the commercial banks is expected to rise.
Q5. If the commercial banks buy government securities, their capacity to create credit is reduced.
Do you agree? (3)
Ans. Yes, the given statement is correct. By allowing or inducing the commercial banks to buy
government securities, the central bank soaks cash balances of the commercial banks that they could
use to create credit. Accordingly, the credit creation capacity of the commercial banks is reduced.
Q6. If CRR is lowered, investment demand must rise. Defend or refute. (3)
Ans. Yes, the above statement is correct. If CRR is lowered, cred it creation capacity of the
commercial banks is enhanced . Higher availability of credit and at lower interest rate must lead to a
rise in investment demand.
Q7. Why do all the compensations in form of money than toys more convenient to an employee
working in a toy manufacturing factory? (3)
Ans: There is lack of general acceptability in case of toys, while in the case of money there is general
acceptability; so, he can purchase any goods and services with the help of money at any point of time
and he does not have to face any problem of lack of double coincidence of wants.

Q11. Money acts as a yardstick of standard measure of value to which all other things can be
compared. Discuss it.
Ans. Money serves as a measure of value in terms of unit of account. Measurement of value Was the
main difficulty of the barter system. Introduction of money has removed this difficulty. It acts as a
yardstick of standard measure of value to which all other things can be compared.” Money measures
the value of everything or the prices of all goods and services can be expressed in terms of money.
This function of money also enables the trading firms to ascertain their costs, revenues, profits and
losses.

Short Answer Type Questions

Q1. What is the high powered money?
Ans. High powered money is a sum of currency held by the public and cash reserve of the banks.
Q2. Explain the working of money multiplier with the help of a numerical example. (4)

Ans. Money multiplier refers to the process of creation of credit by the commercial banks, with the
help of initial deposits made by the public and legal reserve ratio (LRR).
1
Money Multiplier = 𝐿𝑅𝑅
Suppose there is initial deposit of Rs.1000 crores and LRR is 10%, then
1
Money Multiplier = 10% = 10
1
Total deposits = Initial deposits X 𝐿𝑅𝑅

Credit Creation = 1000 X 10 = Rs.10000 Crore.

Q3. Explain how introduction of money has led to the expansion of markets. (4)

Ans. Following observations may be noted in this regard :

(i) Introduction of money has led to the expansion of markets through the expansion of exchange.
Because, barter system of exchange requires 'double coincidence of wants' while the monetary
system does not.
(ii) Money has led to the emergence of financial market and financial intermediaries (banks
and other financial institutions). Availability of funds, both for purpose of consumption and
investment, has substantially increased. Consequently, markets have expanded.
Q4. Explain the ‘Bank of issuing currency’ function of central bank. (3)
Ans. Central Bank is the sole authority to issue currency in the country. Since no other authority is
allowed, this ensures uniformity in issue of currency with public is a part of money supply, it gives the
Central Bank some control over money supply in the economy.
Q5. Explain how repo rate can be helpful in controlling credit creation. (3)
Ans. Repo rate is the rate of interest at which Central Bank lends money to commercial banks for
short period. Raising repo rate makes borrowing by commercial banks costlier. So these banks are
forced to raise their lending rates. Since borrowing becomes costly for people, they borrow less.
Banks, therefore, create less credit.
Q6. Discuss how the central bank plays the role of controller of credit in an economy.
Ans. This is the most crucial function played by any central bank in the modern times. Central banks
are supposed to regulate and control the volume and direction of the credit by using –
Quantitative techniques are those techniques which influence the quantum of credit in the economy
like open market operations, bank rate policy, repo rate and reverse repo rate etc.
Qualitative techniques are the ones which influence the direction of credit in the economy like
margin requirement and moral suasion.
Q7.Calculate the value of money multiplier and total deposit created if the initial amount is Rs.700
crores and LRR is 10%.
1
Ans. Value of money multiplier = 𝐿𝑅𝑅
1
= 10% = 10

Thus total deposit = Initial deposit X money multiplier

= 700 X 10 = Rs. 7000 Crore
Q8. What is Barter system? What are its drawbacks? (3)
Ans: Barter system of exchange is a system in which goods are exchanged for goods.
It’s Drawbacks are:
Lack of double coincidence of wants.
Lack of divisibility.
Difficulty in storing wealth.
Absence of common measure of value.
Lack of standard of deferred payment.

Q9. Central bank performs the function of a clearing house. How?

Ans. Every bank keeps cash reserves with the central bank. The claims of banks against one another
can be easily and conveniently settled by simple transfers from and to their account. Supposing, Bank
A receives a cheque of Rs 10,000 drawn on Bank B and Bank B receives a cheque of Rs. 15000 drawn
on Bank A. The most convenient method of settling or clearing their mutual claims is that Bank A
should issue a cheque amounting to Rs 5000 in favour of Bank B, drawn on central Bank. As a result
of this transference, a sum of Rs 5000 will be debited to the account of Bank A and credited to the
account of B. There is not need of cash transactions between the banks concerned. It facilitates cash
transaction across the entire banking system, it also reduces requirement of cash reserves of the
commercial banks.
Q10. All the currency issued by the central bank is its monetary liability. How?
Ans. The Central Bank is obliged to back the currency with assets of equal value. These assets usually
consist of gold coin, gold bullion, foreign securities and the domestic government’s local currency
securities. The country’s Central government is usually authorised to borrow money from the central
bank. Government does this, by selling local currency securities to the central bank. When the central
bank acquires these securities, it issues currency. Putting and withdrawing currency into and from
circulation is also the job of the central bank.

Long Question Answer (6 Marks)

Q1. What are the alternative definitions of money supply in India?[3-4 Marks]
Ans: The alternative definitions of money supply in India can be the four measures of money supply.
They are explained as under:
Measures of M1 include:
Currency notes and coins with the public (excluding cash in hand of all commercial banks) [C]
Demand deposits of all commercial and co-operative banks excluding inter-bank deposits. (DD),
Where demand deposits are those deposits which can be withdrawn by the depositor at any time by
means of cheque. No interest is paid on such deposits.
Other deposits with RBI [O.D]
M1 = C + DD + OD Where, Other deposits are the deposits held by the RBI of all economic units
except the government and banks. OD includes demand deposits of semi-government public financial
institutions (like IDBI, IFCI, etc.), foreign central banks and governments, the International Monetaiy
Fund, the World Bank, etc.
Measures of M2
M1[C + DD + OD]
Post office saving deposits
Measures of M3
M1
Time deposits of all commercial and co-operative banks.
Where, Time deposits are the deposits that cannot be withdrawn before the expiry of the stipulated
time for which deposits are made. Fixed deposit is an example of time deposit.
Measures of M4
M3
Total deposits with the post office saving organization (excluding national savings certificates).
Q2. What are the instruments of monetary policy of RBI? How does RBI stabilize money supply
against exogenous shocks? (6)
Ans. (a) Quantitative Instruments,
(i) Bank Rate
(ii) Repo rate
(iii) Reverse Repo rate
(iv) Open Market Operations (OMO)
(b)Qualitative Instruments
(i) Margin requirement
(ii) Moral Suasion
 UNIT 3: DETERMINATION OF INCOME AND EMPLOYMENT

Q.1 Why can the value of MPC be not greater than 1?

Ans. It is because change in consumption can never be greater than change in income.

Q.2 Does an excess of AD over AS always imply a situation of inflationary gap?

Ans. No. Inflationary gap occurs only when AD>AS corresponding to full employment level of
employment.

Q.3 What happens if AD>AS prior to full employment level of employment?

Ans. It is a state of disequilibrium in economics. When AD>AS , producers have to cater to demand out
of their existing stock of goods , implying that the desired level of stocks will decrease. It implies greater
production & therefore there is increase in AS .This process continues till equilibrium is struck between
AD and AS.

Q.4 In poor countries like India , people spend a high percentage of their income so that APC and
MPC are high . Yet , value of multiplier is low . Why?

Ans. Working of the multiplier process is based on one fundamental assumption: that there exists,
excess capacity in the economy , so that whenever consumption expenditure rises (implying increase
in demand ) there is a corresponding increase in production (implying increase in income ) . But poor
countries like India, lack in production capacity. Accordingly, whenever demand increases (in terms of
increase in consumption expenditure), there is increasing pressure of demand on the existing output
(implying inflation or rise in prices) rather than the increase in output or income.

Q.5 Show a point on the consumption curve at which APC= 1.

Ans. APC = C/Y =1 is possible if C=Y, i.e. Consumption is equal to Income.

Q.6 In what respect foreign trade will be useful in removing the adverse economic effects of deficient
demand?

Ans. Export increases the demand for goods and services produced in the domestic territory and is
helpful to reduce deficient demand.

Q.7 What happens in an economy, when credit availability is restricted and credit is made costlier?

Ans. Aggregate demands falls.

(Some important HOTS Questions with hint)

Q.1 Draw a diagram of straight line saving curve for an economy? From it derive the consumption
curve explaining the method of derivation. Show a point of the consumption curve at which average
propensity is equal to one.
Hint (Explain the process of drawing consumption curve from saving curve, APC is equal to one at
break even points)

Q.2 Due to situation of COVID-19 economy is facing the problem of unemployment. Suggest any
three ways to remove this problem from the economy
Hint ( write measures to control defilation in an economy, fiscal and monetary measures)
Q.3 what will be the value of investment multiplier if entire additional income is converted into
additional consumption?
Ans: Hint (Infinity, use example to prove)

Q.4 Find out the level of ex-ante aggregate demand from the following information
Autonomous investment 25 crore
Autonomous consumption expenditure 25 crore, MPS 0.2 Level of income 5,000 crore
State whether the economy is in equilibrium or not .Give reason for your answer.

Ans: Hint (AD=4050. AD is less than AS so economy is not in equilibrium)

 Q.5 If MPC and MPS are equal what is the value of multiplier.
Or
"If MPC and MPS are equal, increase in income will be two times the increase in investment
"explain.
Ans: Hint (MPS and MPC both will be 0.5)
Q.6 In an economy 20% of increase in income is saved if 500 crores are invested find out increase
in income and consumption.
Ans: Hint (Income 2500cr& consumption2000cr)

Q7 Name the situation under which equilibrium level of expenditure exceeds planned
aggregate expenditure.
Ans: Hint (Deficient demand)
Q.8 State the treatment of following measures by Central Bank during deficient demand
i) CRR
ii) Bank rate
iii) Open market operations
iv)Margin requirements.
Ans: Hint i)CRR will decrease,
ii) bank rate will decrease,
iii) Central bank starts purchasing the securities in the open market.
IV) Margin requirement will be decreased

Q.9 ) State whether the following statements are true or false give reasons for your answer
i) Inflation is always harmful for economy
ii) Low and stable rate of inflation may be beneficial to an economy
iii) Inflation or deflation can be caused only by natural factors
iv) During deficient demand the central bank aims at increasing the cost of borrowing money.
Ans: Hint i) False ii) True iii) False iv) False

Q.10The consumption function of an economy is given as C=120+0.7Y. Derive saving function from
consumption function and calculate saving at the income level of Rs.5000 crores
Ans Hint (Saving function S= -120+0.3Y: Saving 1380 crores)
11)In an economy C=500+0.75Y and I=800. Calculate the following
i) Equilibrium level of Income
ii) Consumption Expenditure at equilibrium level of income
Ans Hint( Y=C+I, C=500+0.75Y+800 , Y=5200 ,comp exp=4400)

11) In an economy expenditure is increased by 400 cr MPC is 0.8 . calculate total increase in income
and saving.
Ans Hint( K=5 ,change in investment=400,change in Y 2000, Increase in saving=400cr)
 UNIT 4: GOVERNMENT BUDGET AND THE ECONOMY
1.Find primary deficit from the following data:(3)

Items (₹ in crore)

(i) Revenue deficit 8,800

(ii)Fiscal deficit 11,600

(iii) Interest payment by the government 1,600

Ans. Primary Deficit= Fiscal deficit - Interest payment by the government

2.Calculate Revenue Deficit. Fiscal Deficit and Primary Deficit from the following data(3)

Items (₹ in crore)

(i)Revenue expenditure 22,250

(ii)Capital expenditure 28,000
(iii)Revenue receipts 17,750
(iv) Capital receipts (net of borrowing) 20,000
(v )Interest payments 5,000
(vi) Borrowings 12,500

Ans. Revenue Deficit = Revenue expenditure - Revenue receipts

Fiscal deficit =Revenue expenditure+Capital expenditure - Revenue receipts -

Capital receipts (net of borrowing)
=Borrowings

Primary Deficit= fiscal deficit - Interest payments

3.Find borrowing by the government of payment of interest is estimated to be of ₹15,000

crore which is 25 % of primary deficit.(3)

Ans. Here, Primary Deficit =Fiscal deficit- interest payment

Or, Focal Deficit= Primary deficit + interestpayment

Borrowing =Fiscal Deficit

4. Revenue deficit is estimated to be ₹ 20,000 crore, and borrowing is estimated to be

15,000 crore. expenditure on interest payment is estimated to be 50% of the revenue
deficit, findfiscal deficit andprimary deficit.(3)
 Ans. Fiscal Deficit = Borrowing

Primary Deficit = Fiscal deficit - Interest payment

5. Comment on the following statements as true or false, with a reason. (6)

(i) Construction of school-building is a revenue expenditure of the government.

(ii) Gift tax is a capital receipt.
(iii) Dividends on investment made by government is a revenue receipt.

ans. (i) capital expenditure

(ii) revenue receipt.

(iii) revenue receipt

6. Categorise the following government receipts into revenue and capital receipts. Give
reasons for your answer. (6)

(i) Receipt from sale of shares of a public sector undertaking,

(ii) Borrowing from public.
(iii) Profit of public sector undertakings.
(iv) Income tax received by government.

Ans.

(i)capital receipt

(ii) capital receipt

(iii) revenue receipt.

(iv)revenue receipt.

7. Why should revenue deficit be curbed?(6)

Ans. Revenue deficit often occurs when unproductive expenditure of the government is in
excess of the tax and non-tat revenue receipts.

8. Finance Minister has announced that steps would be taken to rationalise dominate the
economy of the nation.What is the economic value of this statement?(6)

Ans. Expenditure on subsidies is mostly unproductive.

 9. How the decline in the price of crude oil in the international market helped the
government to reduce fiscal deficit?(6)

Ans. It has raised tax revenue of the government. Accordingly, fiscal deficit has reduced.

EVALUATION (VALUE-BASED QUESTIONS)

1. How can the government impact allocation of resources through its budgetary policy? (6)

Ans. Following observations highlight how the government can impact allocation of resources
though its policy:

(a) The government can offer subsidies on such goods like coarse cloth the production of which
is essential for poorer sections of the society. So that, the resources are shifted from the
production of ‘goods for the rich to the production of goods for the poor’.

(b) The government can grant tax holiday

(c) The government can impact allocation of resources by shifting its own investments from
inefficient toefficient units of production.

(d) High taxation can be imposed on such goods ,the production of which is harmful to the
society.

(e) The government can make larger budgetary allocations for its ‘Support Price Policy’ in
favour of food crops .

2.Do you approve of disinvestment as a prudent means of financing budgetary deficit?(6)

Ans. Disinvestment occurs when the government chooses to sell its stake in public sector or joint
enterprises .To remember-

(i)it should unload shares of only inefficient enterprises.

(ii) Money received through disinvestment should be for productive investment.

3. How would you distinguish between development and non-development expenditure?(6)

Ans. Development expenditure is related to investment expenditure or productive expenditure.

Non-development expenditure is related to consumption expenditure by the government.

 UNIT 5: BALANCE OF PAYMENT

Objective Type Questions:-

(A) Multiple Choice Questions
Q.1 The balance of trade shows a surplus of 10000 Crore and the import of merchandise is half of
the export of merchandise. Find the value of export.
(i) 20000 (ii) 10000 (iii) 5000 (iv) 1000
Ans. (ii)
Hint. Balance of trade = Export – Import
Q.2 Statement I: Unilateral transfers made by way of gifts, grants and remittances are treated as
current transfers.
Statement II: Expenditure by tourists is included in balance of trade.
(i) Both statements are incorrect
(ii) Both statements are correct
(iii) Statement I is correct and statement II is incorrect
(iv) Statement I is Incorrect and statement II is correct

Ans. (iv)
Q.3 Foreign exchange transactions which are independent of other transactions in the balance of
payments account are called :( Choose the correct alternative)
(a) Current transactions (b) Capital transactions
(c) Autonomous transactions (d) Accommodating transactions
Ans. (c)
(B) Matching
Q.4From the set of statements given in Column I and Column II , choose the correct pair of
statement:

Column I
A External commercial borrowing
B Real assets
C Autonomous Item
D Exports of goods and services
E Deposits held by NRIs
Ans. (D)-(IV)
(E) VERY SHORT ANSWER TYPE QUESTIONS (1 MARK)
Q.1.What is meant by balance of trade?
Q.2.Define balance of payment.
Column II
I Available at the concessional rate of
interest
Ii Stocks and Bonds
Iii Classified as ‘below the lines’
Iv Recorded as positive items in BoP account
V A component of current account
Q.3. When is there a deficit in the balance of trade.
Q.4.The balance of trade shows a deficit of Rs. 300 cr. and the value of exports is Rs. 500 cr. What is
the value of imports?
5. List two items included in the balance of trade account.
6. List two items of the capital accounts of balance of payment.
7. Give meaning of managed floating exchange rate.
8. What is meant by invisible items?
9. What is meant by unilateral transfer?
10. What is meant by Autonomous transactions?
11. Write the name of those economic transactions which are made by the government to make
equilibrium in balance of payment.
12. What do you mean by Fixed Exchange Rate?
13. Define Flexible Exchange rate?
14. State two merits of Flexible Exchange Rate.
15. State two demerits of Flexible Exchange Rate.
16. State two merits of fixed exchange rate.
17. State two demerits of fixed exchange rate.
18. What is the slope of demand curve of foreign exchange?
19. What is the slope of supply curve of Foreign Exchange?
20. What will be the effect on exports, if foreign exchange rate increases?
21. What will be the effect on imports if foreign exchange rate increases.
22. Define Devaluation of Domestic Currency.
23. What is meant by Depreciation of Domestic Currency?
24. What is meant by Appreciation of Domestic Currency?
SHORT ANSWER TYPE QUESTIONS (3/4 MARKS )
Q. 1. Indian investors lend abroad.
Answer the following questions –
(i)In which sub-account and on which side of Balance of Payments Account such lending is recorded?
Give reasons.
(ii) Explain the impact of these lending on Market Exchange Rate.
Ans. (i) Indians lending abroad is recorded in Capital Account of BOP Account because it leads to
creation of foreign exchange assets. It is recorded on the debit side because it leads to outflow of
foreign exchange.
(ii) Lending abroad increases demand for foreign exchange. Supply of foreign exchange remains
unchanged, exchange rate may rise.

Q. 2. (i) In which sub-account and on which side of Balance of Payments Account will foreign
investments in India be recorded ? Give reasons.
(ii) What will be the effect of foreign investments in India on exchange rate? Explain.
Ans. (i) Foreign investments will be recorded in the Capital Account of the BOP Account because
these give rise to foreign exchange liabilities. Foreign investment will be recorded on the credit side
because these bring in foreign exchange to the economy.
(ii) Foreign investment adds to supply of foreign exchange. Demand remaining unchanged, it brings
downward influence on exchange rate.
Q. 3. Indian investors borrow from abroad. Answer the following

(i) In which sub-account and on which side of the Balance of Payments Account will this borrowing
be recorded ? Give reason.
(ii) Explain what is the impact of this borrowing on exchange rate.
Ans. (i) Borrowings from abroad are recorded in the Capital Account of the BOP because these give
rise to foreign exchange liabilities. These are recorded on the credit side because these bring foreign
exchange into the country.
(ii) Borrowing from abroad raise supply of foreign exchange. Demand for foreign exchange
remaining unchanged, exchange rate is likely to fall.
Q. 4. What is meant by 'Official Reserve Transactions'? Discuss their importance in Balance of
Payments. Ans. Transactions by a Central Bank that cause changes in its official reserves. These are
usually purchases or sales of its own currency in the exchange market in exchange for foreign
currencies or other foreign-currency-denominated assets. 2 They may be Autonomous Receipts and
Autonomous Payments, disequilibrium between which may occur as deficit/surplus in Balance of
payments.
Q. 5. Distinguish between trade account and current account of balance of payments account.

Ans. In trade account import and export of goods are recorded.

In current account import and export of goods and services are recorded. Factor income and transfer
payment are also recorded.
Q. 6. State the effect of the following on the balance of payments situation.
(i) Increase in import duty of gold.
(ii) Rise in the price of foreign currency.

Ans. (i) This will reduce import of gold and thus will have a favourable effect on BOP situation, as
demand for foreign exchange will fall.

(ii) Rise in price of foreign currency will make imports costlier, so import will fall and it will be
favorable for BOP, as demand for foreign exchange will fall.
Q. 7. What will be the effect of the following on the balance of payments ?
(i) 'Make in India' programmed.
(ii) import of pulses.

Ans. (i) 'Make in India' will increase supply (inflow) of foreign exchange in India causing improvement
in the balance of payments position.

(ii) Import of pulses will lead to outflow of foreign exchange from the country causing adverse effect
on balance of payment position.
Q. 8. Are the following entered
(a) On the credit side or debit side and
(b) In the Current Account or Capital Account in the Balance of Payments Account?
You must give reason for your answer.

(i) Investment from Abroad.

(ii) Transfer of funds to relatives abroad.

Ans. (a) (i) Investment from abroad-It is entered to credit side.

(ii) Transfer of Funds to relatives abroad: It is entered to debit side.
(b) (i) Investment from abroad-Capital Account because Capital Account records capital
transfers between one country and rest of the world.
Q. 9. In the context of Balance of Payments Account, state whether the following statements are true
or false. Give reasons for your answer.
(i) Profits received from investments abroad is recorded in Capital Account.
(ii) Import of machines is recorded in Current Account.
Ans. (i) False, it is recorded in current account as it neither affects foreign exchange assets nor
foreign exchange liabilities.
Ii True, all imports and exports of goods are recorded in trade account which is a part of current
account, because it is simply import/export of a good.
Q.10. State whether the following statements are true or false. Give reasons for your answer:
(i) Difference between value of exports and imports of goods and services is called Trade Balance.
(ii) External assistance is not recorded in Balance of Payments Account.

Ans. (i) False. Difference between the value of exports and imports of goods and services is called
Balance of Payment not Balance of Trade.
(ii) False. It is a part of Balance of Payments or external assistance is recorded in Balance of
Payments Account.
Q. 10. Giving reasons state whether the following:-
(i) Excess of foreign exchange receipts over foreign exchange payments on account of
accommodating transactions equals deficit in Balance of Payments.
(ii) Export and Import of machines are recorded in Capital Account of the Balance of Payments
Account.
Ans. (i) False. As Accommodating Transactions remove both surplus and deficit of Balance of
Payments Account.
(ii) False. As export and import of machines are recorded in Current Account of Balance of Payments
Account.
Q. 10. Giving reasons state whether the following statements are true or false:

(i) Current Account of Balance of Payments Account records only exports and imports of
goods and services.
(ii) Foreign investments are recorded in Capital Account of Balance of Payments.

Ans. (i) False. As Current Account of Balance of Payments Account also records unilateral
transfers. (ii) True. As all kind of foreign investments (Foreign Direct Investments and Port Folio
Investments) are included in the Capital Account of Balance of Payments.
Q.11. What is ‘appreciation’ of domestic currency? What is its likely effects an exports and how?
or
Explain the effect of appreciation of domestic currency on imports.

Ans. Domestic currency appreciates when there is a fall in foreign exchange rate, the domestic
economy can now buy more quantity of goods and services from foreign countries with the same
amount of domestic currency. As a result imports rise. e.g. When Rs. / $ exchange rate falls from
55 to 50, it leads to currency appreciation and this will help in buying more and more units of
foreign goods as a result demand for foreign goods will rise. i.e. imports will rise.
Q.12.Explain the effect of depreciation of domestic currency on exports.

Ans. Domestic currency depreciates when there is a rise in foreign exchange rate. Depreciation
has an expansionary effect on Aggregate Demand and output. Depreciation increases the
demand for domestically produced goods by reducing their relative price. This will lead to
increase in exports and hence fall in imports, as now foreign country can buy greater units in the
domestic country with same amount of their currency.
Q.13. . How can increase in foreiqn direct investment affect the price of foreign exchange?
Ans. Increase in foreign direct investment will result in more supply of foreign exchange
therefore, due to excess supply, price of foreign exchange will fall. i.e. exchange rate falls which
leads to appreciation of domestic currency.
Q.14 Explain the Different Concepts of Foreign Exchange Rate
 (i) Nominal exchange rate It refers to the number of units of domestic currency, one must give
up to get an unit of foreign currency. In simple term, it refers to the price of foreign currency in
terms of domestic currency.
(ii) Real exchange rate The real exchange rate is the ratio of foreign to domestic prices, measured
in the same currency. It is defined as

(iii) Nominal Effective Exchange Rate (NEER) It is that type of effective exchange rate which
does not account for change in price level while measuring average strength of one
currency in relation to the other.
(iv) Real Effective Exchange Rate (REER) It is that type of effective exchange rate which
accounts for changes in the price level across different countries of the world.

Q.15 Do you think that a surplus in capital account BoP reflects prosperity of the nation?
Ans. No, it is incorrect to say because surplus in capital account balance of payments may have
been achieved through loan which are a financial obligation to rest of the world.

Q.16 How would you argue for and against foreign investment?
Ans. Arguments against foreign investment:
Leads to rise in claims by foreigners against assets in the domestic economy.
Arguments in favour of foreign investment:
Overall investment in the domestic economy is expanded.

----------------------------------------
BOOK: INDIAN ECONOMIC DEVELOPMENT

UNIT-I DEVELOPMENT POLICIES AND EXPERIENCE (1947-1990)

CHAPTER -1
1. The traditional handicrafts industries were ruined under the British rule.” Do you agree
with this view? Give reasons in support of your answer.
Ans: India was well-known for its handcraft industries in the fields of cotton and silk textiles,
metal and precious stone works etc. These products enjoyed a worldwide market because of (1)
reputation of the fine quality of material used and; (2) high standards of craftsmanship seen in all
imports from India.
However, during the British rule, the country’s worldfamous handicraft industries were ruined, which
not only created massive unemployment in India but also a new demand in the Indian consumer
market-increasing imports of cheap manufactured goods for Britain.
Hello how are you hello I am hello I am Nicole would stop dictating
2. Critically appraise some of the shortfalls of the industrial policy pursued by the British
colonial administration.
Ans: 1) De-industrialisation
2) Adverse effects of decline of Handicraft Industries
3) Lack of Capital Industries
4) Limited Role of Public Sector
3. “There was huge ‘Drain of Wealth'during British rule.”Do you agree with the given statement?
Ans: Yes, I agree with the given statement. During the British rule, India became an exporter of
primary products and there was huge export surplus due to excess exports. However, this export
surplus, that is wealth was used:
 To makepayments for expenses incurred by an office setup by colonial government in Britain.
 To meet expenses on war fought by the British government.
 To import invisible items.
4 “Indian agricultural did not suffer due to partition.” Defend or Refute?
Ans: The given statement is refuted. India’s agricultural production received a set back due to the
countries partition at the time of independence.
 A sizable portion of undivided country’s highly irrigated and fertile land went to Pakistan.
 Almost, the whole of jute producing area became part of East Pakistan. India’s jute goods
industry, which had enjoyed a world monopoly, suffered heavily for Lack of raw material.
5. Underscore some of India’s most crucial economic challenges at the time of independence.
Ans: Some of India’s most crucial economic challenges at the time of independence work.
 Increasing dependence of population on agriculture.
 Traditional methods of cultivation.
 Inadequate industrialization.
 Destruction of Indian handicrafts.
 High level of unemployment and underemployment.
 High infant mortality rate, Low life expectancy and literacy rate.
 Worldwide mass poverty.
6. Indicate the volume and direction of trade at the time of independence.
Ans: The volume and direction of trade at the time of independence is discussed as under.
 Exporter of primary products and importer of finished goods.
 Monopoly control of British rule.
7. What was the real motive of the British behind industrial development in India?
 Ans: The real motive of the British behind infrastructure development in India was tosubserve
various colonial interests and not to provide basic amenities to the people.
8. “During the British colonial rule, despite being the occupation of about 85% of India’s
population, the agriculture sector continued to experience stagnation and not in infrequently
unusual deterioration. Agriculture productivity becamelow.”
Do you agree with the above statement? Give valid reason in support of your answer.
Answer: The given statement is correct.
During the British colonial rule India’s agricultural sector continue to experience stagnation
agricultural productivity became Low though, in absolute terms, the agricultural sector experience
some growth due to the expansion of the aggregate area under cultivation. The main cause of India’s
agricultural stagnation and low productivity are:
 Various system of land settlement introduced by colonial government, particularly the
zamindari system.
 Low levels of technology, lack of irrigation facility and negligible use of fertilizers.
 Absence of adequate infrastructure.
 Even commercialization of agricultural couldn’t help farmers in improving their economic
condition.
9.“India’s could not develop a sound industrial base under the British colonial rule. Even as the
country’s world famous handicraft industries declined, no corresponding modern industrial base
was allowed to come up to take pride of place so long enjoyed by the farmer.”
In the light of the above statement, critically appraise some of the shortfalls of the industrial policy
pursued by the British Colonial Administration.
Answer: Some shortfalls of the industrial policy pursued by the British Colonial Administration are as
follows.
 Industrial development remained very slow.
 There was hardly any capital goods industry to help.
 Low growth rate.
 Very limited area of operation of the public sector.
10. “Under the colonial regime, basic infrastructure such as railways, ports, water transport, posts
and telegraph develop. However, the real motive behind infrastructure development was not to
provide basic amenities to the people but to serve various colonial interests.”
What objectives did the British intend to achieve through their policies of infrastructure developed
in India?
Answer:
 The roads that were build primarily served the purposes of mobilising the Army within India
and drawing out raw materials from the country side to the nearest railway station or the
port to send these to England or other foreign destinations.
 The introduction of railways by the British in 1850 fostered commercialization of Indian
agriculture which adversely affected the self sufficiency of the village economies in India.
 The inland waterways, at times, proved uneconomical, as in the case of the coast canal on the
Orissa coast, which had to be ultimately abandoned.
 The introduction of the expensive system of electric telegraph in India served the purpose of
maintaining law and order by the British colonial government.
 The Postal services, despite serving a useful public purpose, reminded all through inadequate.
11.“The social and economic challenges before India at the time of independence were enormous.”
Do you agree with the statement? Give reasons.
Answer: The given statement is correct.
 Low level of economic growth and development.
 Cultural sector was already saddled with surplus labour. And extremely low productivity.
  The industrial sector was crying for modernisation, diversification, capacity building and
increased public investment.
 Foreign trade was oriented to feed the Industrial Revolution in Britain. Britain maintained a
monopoly control over India’s exports and imports.
 Infrastructure facilities such as railway network, roads, water transport, post and Telegraph
etc. Needed upgradation expansion and public orientation.
 Prevalence of rampant poverty and unemployment required welfare orientation. Of public
economic policy.
12. Do you agree with the view That zameendar system brought. Stability to cultivation during the
British rule in India. Give reason for your answer.
Answer: The zamindari system during the British rule did not bring stability. Instead, it brought
instability to Indian cultivation due to the following reasons.
 This system led to frequent ejection of the tillers of the soil. They lost their permanent rights
of cultivation and accordingly lost permanent interest in cultivation.
 Under zamindari system, the tillers of the soil lacked ownership rights. As a result, they had
no interest in improving the agriculture.
 CHAPTER 2: INDIAN ECONOMY (1950-1990)

1. Why, despite the implementation of Green Revolution, 65% of our population continued to
being aged in the agriculture sector till 1990.
Answer – The reason is that the industrial sector and the service sector did not absorb the people
working in the agricultural sector.
2. Why was it necessary for a developing Country like India to follow Self reliance as a planning
objective.
Answer. Self reliance as a common goal of 5 year plans means avoiding imports of those goods which
could be produced in India itself. It was necessary to follow self reliance as a planning objective during
the first seven5year plans in order to reduce our dependence on foreign countries especially for food.
Since we were recently freed from foreign domination it was essential to give importance to self
reliance.
Further, it was feared that dependence on imported food supplies, foreign technology and foreign
capital make India’s sovereignty vulnerable to foreign interference in our policies.
3. Explain the need and types of land reforms/Institutional reforms implemented in the
agriculture sector in India.
Answer. Need for land reforms in India:
At the time of independence, the land tenure system was characterised by intermediaries called
zamindars, jagirdars, etc. Who merely collected rent from the actual tillers of the soil without
contributing towards improvements on farm. The low productivity of agricultural sector forced India
to import food from USA. To promote equity in the agricultural sectors, land reforms were
implemented.
Types of institutional reforms in the agricultural sector:
 Change in the ownership of the land Holdings- The idea behind this move was that ownership
of land would give incentives to the tillers to invest in making improvements, provided
sufficient capital was made available to them.
 Land ceiling - This means fixing the maximum size of land which could be owned by an
individual. The purpose of land ceiling was to reduce the concentration of land ownership in a
few hands.
 Abolition of intermediaries- About 200 lakh tenants were freed from being exploited by the
zamindars .
4. What is the role of small scale industries in industrial development in India? Why and how
has Government shielded small scale industries from the large firms.
Answer. Role of small scale industries.
 Small scale industries are more Labour intensive, that is they use more labour than the large
scale industries and therefore generate more employment.
 Small scale industries help in promoting rural development. In 1955, the village and small Scale
Industries Committee also called the Karve Committee, noted the possibility of using small scale
industries for promoting rural development.
Steps taken by the government.
 The Production of a number of products was reserved for the small scale industries.
 They were also given concessions such as lower excise duty and bank loans at lower interest
rates.
5. The goal of equity was fully served by ‘Abolition of Intermediaries'. Comment.
Answer. The given statement is incorrect. The goal of equity was not fully served by abolition of
intermediaries because of the following reasons:
 In some areas, the former zamindars continued to own large areas of land by making use of
some loopholes in the legislation.
  In some cases, tenants were evicted and zamindars claimed to be self cultivators.
 Even after getting the ownership of land, the poorest of the agricultural labourers did not
benefit from land reforms.
6. Green revolution enabled the government to maintain buffer stock of food grains. Do you
agree?
Answer. Yes, I agree with the given statement. Green revolution raised agricultural yield per acre to
incredible heights. It enabled the government to procure sufficient amount of food grains to build a
stock which could be used in times of food shortage.
7. “Subsidies put a huge burdens on government’s finances, but are necessary for poor and
marginal farmers.” Do you agree that granting subsidies justify the objective of social justice?
Answer. Yes, I agree with the given statement. Subsidy means that the farmers get inputs at prices
lower than the market prices. Indian government has always provided massive subsidies to farmers.
Subsidies are essential because.
 Majority of the farmers are very poor and will not be able to afford the required inputs without
the subsidies. Subsidies provide them the equality of opportunities to use the inputs as used
by rich farmers.
 Subsidies help to reduce the income inequality gap between rich and poor farmers and help to
achieve the ultimate goal of equity.
So, the government should continue the agricultural subsidies as farming in India continues to be a
risky business.
8. How do small scale industries promote rural development?
Answer.
 These industries are labour intensive, which generate more employment.
 They reduce the dependence of people on agriculture for living.
 These industries require less capital, which is deficient in India.
9. What is import substitution policy? Why it was introduced in India?
Answer.
 import substitution policy aimed at replacing or substituting Imports with domestic
production. For example, instead of importing vehicles from abroad, the industries were
encouraged to produced them in India itself.
 It was introduced in India because the government wanted to protect the domestic industries
from the foreign competition. It was assumed that if domestic industries are protected, they
will learn to compete in the course of time.
10. Why was public sector given a leading role in industrial development during the planning
period? Explain any 2 reasons.
Answer.
 At the time of independence, as the size of market was small to lure industrialist, to invest
their capital. So, the government had to play an extensive role in promoting the industrial
sector.
 Secondly, to develop Indian economy on socialist lines lead to the policy of the state
controlling the commanding Heights of the economy.
 Private sector was to be complementary to the public sector, with the latter leading the way.
11. Explain ‘Growth, Equity and Self-reliance' as long-term objectives of planning.
Answer. The long-term objectives of planning are:
 Growth- It refers to increase in the country’s capacity to produce the output of goods and
services within the country. GDP is a good indicator of growth.
 Equity- It refers to the benefits of economic prosperity reaching the poor sections as well, not
just being enjoyed by the few rich. Everyone should be able to meet the basis needs.
 Self-reliance- It refers to avoiding imports of those commodities which could be domestically
produced, that is in India itself. In the first seven five-year plans, self-reliance was considered
 a necessity in order to reduce our dependence on imported food supplies, foreign technology
and foreign capital. It was presumed it may make India vulnerable to foreign interference in
our policies.
12. How did Green Revolution benefit the farmers?
Answer.
 Timely and adequate credit facilities to farmers helped them in procuring the package of
inputs required for use on the fields, resulting in increased agricultural production.
 This increased the farmers' earnings as the agriculture now became commercial.
 It increased the productivity of land.
 India attained self-sufficiency in food grains and reduced its dependence on imports.
 The new agricultural strategy implied use of better and improved inputs of agriculture which
required more capital.
 Green Revolution would have benefited only the rich farmers if the government had not
played an important role in ensuring that the small farmers also gains from the new
technology. The government provided loans at low rate of interest. The fertilisers and HYV
seeds were subsidised.
13. Critically explain the economic policy prior to 1991, with its achievements and failures.
Answer. Silent features of the economic policy were as follow.
 Economic growth to be achieved during five-year plans.
 Public enterprises to play an important role.
 Import substitution to be the centre of the process of industrialisation.
 Domestic industries to be protected from foreign competition.
 Large scale industries to be developed along with small scale industries, etc.
Achievements:
 Economic growth, got a push due to increased agricultural production. Industrial production
also increased.
 Growth of large-scale industry projected an infrastructural shift in the Indian economy.
 Growth of small-scale industries made a substantial contribution in achieving the objectives
of growth with social justice.
Failures:
 Public sector industries, by incurring huge losses, caused a drain on the nations scarce
resources.
 Domestic industries failed to achieve international standard of product quality.
 Foreign exchange reserves depleted to a very low level.
Briefly the growth process started showing sign of stagnation across all sectors of the economy,
industry in particular. Thus, the government had to shift to new economic policy of 1991.
 UNIT-II ECONOMIC REFORMS SINCE 1991

CHAPTER-3

Q.1 What are the major factors responsible for the high growth of the service sector?

ANSWER- The major factors responsible for the high growth of the service sector are as follows:

• Rise in income - Rise in income of the people increase the demand of the services which can
make their lives more comfortable.

• Outsourcing- India is looked upon as a great destination to outsource various business

processes such as call centres, accounting services etc.

• Globalization- It has increased the demand for courier, shipping ,travel and information
services.

• Cheap labor and reasonable degree of skill in India- Due to the availability of cheap labor and
reasonable degree of skilled manpower in India, developed countries found outsourcing to
India feasible and profitable.

Q.2 “Agriculture sector appears to be adversely affected by the economic reform process”
Explain the given statement.

ANSWER- The agriculture sector was adversely affected by the reform process in the following
manner-

• Public investment in agriculture sector especially in infrastructure like irrigation ,power

etc,has been reduced in the reform period.

• Removal of fertilizer subsidy has incre4ased the cost of production affecting thereby the
small and marginal farmers.

• Increased international comepetitiveness due to liberalistion and reduction of import

duties.

• Shift from food crops to cash crops due to export-oriented policy in agriculture.
Q.3 India is often called the OUTSOURCING DESTINATION of the World. Discuss the prime
reasons for this name given to India.

ANSWER- Reasons for India as outsourcing destination-

• Availability of skilled manpower- India has vast skilled manpower which enhances the
faith of MNCs.

• Favourable Government Policies – MNCs get various types of lucrative offers from the
Indian government such as tax holidays , tax concessions etc.

• Low wages- The wage rate in India is low comparative to European and other countries.

Q.4 Why has the industrial sector performed poorly in the reform period?

ANSWER- The causes of the poor performance of the industrial sector are as follows:

• More dependence of foreign loan.

• Competition with foreign developed countries.

• Comparison of the products of Indian industries with foreign industries.

• Exploitation of consumers due to privatization.

• Challenge of prices from industrial sector of China.

Q.5 Do you think the navaratna policy of the government helps in improving the
performance of public sector undertakings in India? How?

ANSWER- The government identifies PSUs and declare them as maharatnas, navratnas and
miniratnas. They are given greater managerial and operational autonomy, in taking various
decisions to run the company efficiently and thus increase their profits’

• Maharatnas - a) Indian OIL corporation Ltd(IOC),b) Coal India Ltd(CIL) , c) National

Thermal Power Corporation(NTPC) , d) Steel Authority of India Ltd(SAIL).

• Navratna – a) Hindustan Aeronautics Ltd.,b) Mahanagar Telephone Nigam Ltd(MTNL)

 • Miniratnas- a) Bharat Sanchar Nigam Ltd (BSNL) ,b) Air Authority of India and ,c) Indian
Railway Catering and Tourism Corporation Ltd.

The granting of status resulted in better performance of these companies

Q .6 Is it necessary to become a member of WTO ? Why?

ANSWER- Yes it is important for any country to become a member of WTO for the following
reasons:

• WTO provides equal opportunities to all its member countries to trade in the
international market.

• The countries of similar economic conditions being members of WTO can raise their voice
to safeguard their common interests.

• It provides its member countries with larger scope to produces at large scale to cater for
the needs of people across the international boundaries.

• It advocates for the removal of tariff and non tariff barriers ,thereby promoting healthier
and fairer competition among different countries.

Q.7 Why has the industrial sector performed poorly in the reform period?

ANSWER – Just like the agriculture sector ,industrial sector’s performance was also poor. The
poor performance of industrial sector may be attributable to the following reasons:

• Cheaper Imports – The demand for industrial output reduced due to the cheaper imports.
the imports from developed countries were cheaper due to the removal of import
tariffs. These cheaper and quality foreign imports led to the fall in the demand of
domestic goods.

• Lack of investment- Due to the lack of investment in infrastructure facilities, the domestic
firms could not compete with their developed foreign counterparts in terms of cost of
production and quality of goods.
• High non tariffs barriers by the developed countries: It was very difficult to gain access to
the developed countries market due to high non-tariff barriers maintained by the
developed countries..

• Competition from MNCs - During the pre-liberalized period, the domestic industries were
provided a protective environment to grow and expand. But at the time of liberalization,
the domestic industries were still not developed up to the extent it was thought and
consequently they could not compete with the multinational companies.
 UNIT-III CURRENT CHALLENGES FACING INDIAN ECONOMY
CHAPTER-4 POVERTY
Q. 6 What ii your opinion, is the lasting solution to the problem of poverty in India?

Ans. The lasting solution to the problem of poverty in India is to generate more and more opportunities of gainful
employment in the economy. It is only when the people are gainful employed for longer periods of time that they
are able to break the shackles (chain) of poverty. Measures such as food security for the people below poverty line
or cash grants to the poor people will bring only short period relief from poverty; thjese measures cannot eradicate
poverty.

Q. 7 Explain the three-dimensional approaches adopted by government to alleviate poverty in India?

Ans. Hint:
1. Growth-Oriented approach
2. Poverty Alleviation Programmes
3. Meeting Minimum Needs of the Poor

Q. 8 Illustrate the difference between rural and urban poverty. Is it correct to say that poverty has shifted from
rural to urban areas? Use the trend in poverty ratio to support your answer?

Ans. The Rural Poor – these include landless agricultural workers, marginal holders and tenants-at-will.
The Urban Poor—these include migrants from the rural areas in search of employment, casual factory
workers and self-employed serving largely at street vendors.
Yes, it’s correct that poverty shifted from rural to urban areas, because the urban poor are largely the overflow of
the rural poor who had migrated to urban areas in search of alternative employment and livelihood. Rural poor
people always move towards urban areas whenever they didn’t find any job or work in any season in agriculture
fields.
Shows poverty trends in different years related to poverty.
 CHAPTER-5 HUMAN CAPITAL FORMATION IN INDIA

Q1. What are the indicators of educational achievement in a country .

Answer :
Adult and female education :

in order to eradicate illiteracy among the adults, special arrangements have been made for adult
education . Importantly National literacy mission was set up in 1988 . Since 1976 formal education
program has been launched it AIMS at providing meaningful education to the youth of the age group
of 15 to 25 years. In order to provide technical education to the women many womens polytechnics
have also been established. ‘Women education council’ is a significant step to promote education
among women
Elementary education:
Elementary education covers students from class 12 8 in the age group of 6 to 14 years. The number
of primary and middle schools has considerably increased.
Total literacy campaign:

National literacy mission was launched to render everybody literate in the country. Please
programme has been recast as ' saakshar Bharat ' videshi Central focus on female education. The
program cover all those in the age group of 15 and above .
Question 2
Bring out the differences between human capital and human development.
Answer: While human capital focuses on investment in education and health sector to increase
productivity and efficiency of workforce on the other hand, human development focuses on
investment in education and health sector to increase the general well-being and standard and
quality of living of human capital.

Q3. how is human capital formation helpful in reducing inequality of income .

Answer : human capital formation is an important means of reducing inequality of income. Higher
the rate of human capital formation greater would be the rate of participation. Increase in the rate of
participation would lead to increase in the share of wages in national income. Accordingly inequality
would reduce.

Q4. Education is considered to be an important input for the development of a nation how.
Answer :
1. Education produces responsible citizens.
2. It develops science and technology
3. It facilitates the use of natural and human resources of all regions of the country.
4. It explains mental horizon of the people.
5. It helps economic development through greater participation of the people in the process of
growth and development.
6. It develops cultural standards of the citizens.
7. It develops human personality

Q5. Explain how educational planning is necessary for human capital formation.
Answer :
1. Education produces responsible citizens.
2. It develops science and technology
3. It facilitates the use of natural and human resources of all regions of the country.
4. It explains mental horizon of the people.
5. It helps economic development through greater participation of the people in the process of
growth and development.
6. It develops cultural standards of the citizens.
7. It develops human personality.

QUESTION 6
How is health a source of human capital formation.
Answer :

Expenditure on health: “ a sound mind in a sound body “ is an old saying . expenditure on health
makes a man more efficient and therefore more productive. Is contribution to the production
process tends to rise. He adds more to GDP of the nation then a sick person . Expenditure on health
and therefore is an important determinant of human capital formation .
Q7. Do you agree with the statement that human resource has developed into the main economic
factor?
Answer : Yes I agree with the statement because of followings reason :

1. Change in emotional and material environment of growth: human capital formation and
generates a change in emotional and material environment of growth. A) emotional environment
becomes conducive to growth as people tend to to acquire growth-oriented attitude and aspirations
. B) material environment becomes helpful to growth as the society now possesses higher number of
skilled and trained workers to implement the plans and programmes of economic growth .
2. Higher productivity of physical capital: human capital formation increases productivity of
physical capital. Specialised engineers skilled workers can certainly handle machines better than the
others .
3. Innovative skills: human capital formation facilitates innovations the undercurrent of growth
and development. Larger the number of skilled and trained personnel, greater the possibilities of
innovations in the area of production and related activities. Innovation is the lifeline of growth.
4. Higher rate of participation and equality: by enhancing productive capacities the labour force,
human capital formation induces greater employment. This increased the rate of participation.

Q8. What is your opinion should be the principle of objectives of education in India?

Answer :
1. Education produces responsible citizens.
2. It develops science and technology
3. It facilitates the use of natural and human resources of all regions of the country.
4. It explains mental horizon of the people.

5. It helps economic development through greater participation of the people in the process of
growth and development.
6. It develops cultural standards of the citizens.
7. It develops human personality
CHAPTER-6 RURAL DEVELOPMENT
Short answer type questions

1. What is rural development?

Ans. Rural development is an action plan for the economic and social upliftment of rural areas.

2. What is meant by agricultural diversification?

Ans. Agricultural Diversification means a major proportion of the increasing labour force in the
agricultural sector needs to find alternate employment opportunities in other nonfarm sectors.

3. What is TANWA?
Ans. TANWA (Tamil Nadu Women in Agriculture) is a project initiated in Tamil Nadu where rural
women find employment in nonfarm jobs, as well as they are trained in latest agricultural
techniques.

4. What is ‘Golden Revolution’?

Ans. The period between 19912003 is called ‘Golden Revolution’ because during this period the
named investment in horticulture became highly productions and the sector emerged as a
sustainable livelihood option.

5. Write two instruments to safeguard the interests of farmers by the government.

Ans. Two instruments are fixation of minimum support price (MSP) buffer stock.

6. What is cooperative marketing?

Ans. Cooperative marketing is a measure to ensure a fair price ot farmers. Member farmers sell their
surplus to the cooperative society which substitutes collective bargaining in place of individual
bargaining and hence provides best advantages to the farmers.

7. What do you mean by ‘Operation Flood’?

Ans. From 1966 onwards operation flood is a system whereby all the farmers can pool their milk
produce according to different grading (based on quality) and the same is processed and marketed to
urban centers through cooperatives.

8. What do you mean by micro credit programmer.

Ans. Credit provisions made by self help groups (SHG) to its different members is known as micro
credit programme.

9. Define no institutional sources of agricultural credit.

Ans. Noninstitutional sources include money lenders, traders, commission agents, landlords,
relations and friends.

10. What is agricultural marketing?

Ans. Agricultural marketing is a process of marketing in which farm produce are distributed through
wholesalers and stockiest to ultimate consumers.

11. Mention two limitations of rural banking.

Ans. Two limitations of rural banking are inadequate finance and large amount of over dues and
default rate.

12. Name two institutional sources of agricultural credit.

Ans. Two institutional sources of agricultural credit are cooperative credit societies and commercial
banks.

13. Which state has an efficient implementation of milk cooperatives?

Ans. Gujarat state has the efficient implementation of milk cooperatives.

14. When was NABARD established?

Ans. NABARD (National Bank for Agriculture and Rural Development) was established in 1982

15. What is sustainable development?

Ans. Sustainable development is a system of a long period sustainable process along with an eco-
friendly environment.

Long Answer type questions

Q.1 Explain the steps taken by the government in developing rural markets.

ANSWER: The following are the various steps initiated by the Indian government to develop the rural
markets:

1. Regulated Markets: The government came up with the concept of regulated market where the sale
and purchase of the products are monitored by the Market Committee. This Market Committee
consists of farmers, government agents and traders. This practice infuses greater transparency in the
marketing system through the use of proper scales and weights. Such committees ensure the farmers
and the consumers in receiving fair price in exchange of their products

2. Infrastructure Development: The present infrastructure is not sufficient to meet the growing
demands of the farmers. Indian government provided cold storages and warehouses that help the
farmers to sell their product at the time when the price is attractive. Also, railways offer subsidised
transport facilities to the farmers. This enables the farmers to bring their product to urban areas
where they can earn huge profits.

3. Co-operative Agricultural Marketing Societies: The government also started co-operative

marketing under which the farmers get access to fair prices. This is due to the better and enhanced
bargaining power of the farmers via collective sale in the market.

4. MSP Policy: Minimum Support Price is a minimum legislated price that a farmer may charge in
exchange for his products. This enables them to sell their products in the open market at a higher
price. The MSP insulates the farmers in case of price fall as this is the minimum price that they can
receive. The need of such assurance to the farmers is of immense importance as farming in India is
subject to many uncertainties.

Q2. What do you mean by agricultural marketing?

Answer: agriculture marketing is a process that involves the assembling storage, processing,
transportation, packaging, grading and distribution of different agricultural commodities across the
country.

Q.3 Bring out the importance of animal husbandry, fisheries and horticulture as a source of
diversification.

ANSWER:

1. Importance of Animal Husbandry

Animal husbandry is the most important non-farm employment in India. It is also known as Livestock
Farming. Poultry, cattle and goats/sheep are the important components of livestock farming in India.
Most of the rural families carry out livestock farming together with crop farming in order to increase
their income. The share of livestock farming is comparatively higher in the semi arid and arid areas
than the irrigated areas. This is because the arid areas have lesser access to irrigation facilitiesand
thereby, crop farming is less feasible. Thus, in other words, it can be said that livestock farming
provides sustainable livelihood to the people in the semi arid and arid regions where farming can’t be
performed well. Further, capital investment in livestock farming is comparatively less than that in
crop farming. In addition, livestock farming is an important source of employment for rural women.
Presently, animal husbandry is the most important source of alternative employment, employing
approximately 70 million small and marginal farmers. Besides providing employment, livestock
farming has resulted in increased production of milk, eggs, meat, wool and other by-products,
enhancing the consumption bundle qualitatively and nutritionally.

2. Importance of Fisheries

‘Fisheries’ are an important source of livelihood in the coastal states such as Kerala, Maharashtra,
Gujarat and Tamil Nadu. The fishing community in India depends on water bodies- both inland and
marine water bodies. Inland sources include rivers, lakes, ponds, and streams, while, the marine
sources include seas and oceans. The increasing efforts by the state governments have attracted
funds in this sector, boosting the production. But this community remains one of the backward
communities in the country due to low per capita earnings, lack of labour mobility to other sectors,
illiteracy and indebtedness. Despite a significant segment engaged, this sector contributes only 1.4%
to India’s total GDP.

3. Importance of Horticulture

Horticulture is emerging as an important source of livelihood in the rural areas. Horticultural crops
include fruits, vegetables, medicinal and aromatic plants and flowers. Presently, India is the second
largest producer of fruits and vegetables that includes mangoes, bananas, coconuts, cashew nuts and
variety of species. There has been a considerable rise in the income levels of families engaged in
horticultural production. The increase in horticultural production has lowered the vulnerability of
small and marginal farmers. This has provided a gateway of opportunities for employment for
women. It generates employment for 19% of India’s total labour force. In contrast to fishing,
Horticulture does not suffer from ecological and environmental problem. Hence, horticulture must
be promoted with sufficient investment and infrastructure.
 CHAPTER-7 EMPLOYMENT, GROWTH, INFORMALIZATION AND OTHER ISSUES
1) What is in formalisation of workforce?
Ans. In formalisation of work force refers to a situation whereby the proportion of workforce in the
informal sector to total workforce increases.
2) Why is self-employed workforce higher in rural areas?

Ans. In case of rural areas, self-employed workers are greater as majority of rural people are engaged
in farming on their own plots of land.
3) Who is casual wage labourer?
Ans. Workers who are not hired by their employers on a regular or permanent basis (i.e. don’t have
job security) and do not get social security benefits, are formed as casual wage labour.
4) Why do we differentiate between economic activity and production activity?

Ans. We differentiate to calculate the number of workers. People engaged only in production
economic activities are to be included in the category of workless.

5) Differentiate between worker, non-worker and unemployed. 3

A person who is actually engaged in some economic activity is a worker;
a person who is neither looking for a work nor working is a non-worker.
A person who is looking for a suitable job as per his abilities but is not finding one is unemployed.

6) Define worker population ratio. (3)

Worker population ratio is defined as the ratio between the total number of workers in a country and
the population in the country. It is also termed as Workforce Participation Rate (Ratio).
Symbolically, it can be represented as:
Worker Population Ratio = Total Number of Workers Total Population ×100
7) Compared to urban women, more rural women are found working. Why? (3)

Answer.Participation rate for women is higher in rural areas compared with urban areas. It is
because in rural areas, poverty forces women to seek employment. Without education, women in
rural areas find only less productive jobs and get low wages.
In urban areas, men are able to earn high incomes. So they discourage female members from taking
up jobs.
8) Meena is a housewife. Besides taking care of household chores, she works in the cloth
shop which is owned and operated by her husband. Can she be considered as a worker?
Why?
Answer. Meena is a self-employed worker. She is working in her husband’s cloth shop. She
will not get salary but in same time she is contributing to her family income. she is also
 engaged in a economic activity which contribute production to national income of an
economy.

9) Give three sources that collect data on unemployment.

Ans. (a) Reports of census of India.
(b) National sample survey organization reports of employment and unemployment situation and.
(c) Directorate general of employment and training date of registration with employment exchange.

10) Do you think that in the last 50 years, employment generated in the country is commensurate
with the growth of GDP in India? How?
Answer. Jobless growth is defined as a situation in which there is an overall acceleration in the
growth rate of GDP in the economy which is not accompanied by a commensurate expansion in
employment opportunities. This means that in an economy, without generating additional
employment we have been able to produce more goods and services.

Since the starting of economic reforms in 1991, our economy is experiencing a gap between GDP
growth rate and employment growth rate that is, jobless growth.
11) Explain different types of unemployment prevails in urban regions.
a) Frictional unemployment is defined as the unemployment that occurs because of people
moving or changing occupations.
b) Structural unemployment is defined as unemployment arising from technical change such as
automation, or from changes in the composition of output due to variations in the types of
products people demand. For example, a decline in the demand for typewriters would lead to
structurally unemployed workers in the typewriter industry.
c) Cyclical unemployment is defined as workers losing their jobs due to business cycle
fluctuations in output, i.e. the normal up and down movements in the economy as it cycles
through booms and recessions over time.
d) Open Unemployment refers to that situation wherein the worker is willing to work and has
the necessary ability to work yet he does not get work and remains unemployed for full time.
e) Technological Unemployment:- A somewhat structural unemployment may take place in an
economy as a result of technological improvement. Such unemployment may be described as
technological unemployment. Due to the introduction of new machinery, improvement in
methods of production, labour-saving devices etc., some workers tend to be replaced by
machines. Their unemployment is termed as “technological unemployment.”
f) Educated Unemployment:- Among the educated people, apart from open unemployment,
many are underemployed because their qualification does not match the job. Faulty
education system, mass output, preference for white collar jobs, lack of employable skills and
dwindling formal salaried jobs are mainly responsible for unemployment among educated
youths in India. Educated unemployment may be either open or underemployment.

12) What are different aspects of quality of employment? (6)

There are certain criteria on the basis of which we can check quality of employment such as
productivity of employment; proportion of workers engaged in regular and casual labour; and
proportion of workers in organized and unorganized sectors.
Productivity of employment: Only the status of being employed does not itself necessarily ensure a
decent level of living in India. In 1999-2000, of the total employed persons about 23.87% are the
working poor.
This means that the major problem relates to that of the working poor as the productivity of
employment is very low. Low educational and skill levels of the workers are main causes of the low
productivity of employment.
Proportion of workers in organized and unorganized sector: If the share of unorganized
employment increases, it means an overall deterioration in the quality of employment. The quality of
employment can be considered low if the size of unorganized sector is larger than the organized
sector. It was only about 7% of the total employment in 1999-2000 and over the years the share of
the organized sector employment has been shrinking.
We may note that manufacturing construction, trade and transport are sectors where there is large
concentration of unorganized workers. The share of the unorganized sector employment which was
estimated to be around 93% before 1997 should have gone up and may further increase over the
coming years as there was an increase in the absolute numbers.
Many studies at micro level show that flexibility in the labour market increased after the introduction
of economic reforms in the country.
Despite the existence of restrictive labour laws, the firms have been able to retrench a large number
of permanent workers while many units were closed leading to unemployment of thousands of
workers during the reform period.
Proportion of workers engaged as regular and causal labour: At present, low earning, poor
condition of work, lack of social protection vulnerability to the risks, hazards, irregularity and
uncertainty of work availability .Such problems in the economy has been felt due to the increase in
the casualization of the workforce .

This is also a dimension of deterioration in the quality of employment. Those in regular wage paid or
salaried jobs continue to constitute around 14% of all workers for over two decades from 1977-78 to
1999-2000. The category of casual employment has steadily increased from 27% in 1977-78 to 32% in
19993 -1994 and rose further to 33% in 1999-2000.

Estimation of Estimated
Region Population Workers Population Workers
( in crores) (in crores)
 (71.88/100)x41.9
Rural 71.88 41.99
= 30.12

Urban 28.52 33.7 ?

Total 100.40 39.5 ?

13) The following table shows the population and worker population ratio for India in 1999-2000.
Can you estimate the workforce (urban and total) for India?

Answer. Estimated number of workers (in crores) for urban =28.52100 x 33.7 = 9.61 crores
Total workforce = 30.12 + 9.61 = 39.73 crores

14) Analyse the recent trends in sectoral distribution of workforce in India.(6)

Answer. The data in occupational structure is as follows (for the year 1999-2000):
(a) Industry wise the distribution is:
(i) 37.1% of workforce is engaged in primary sector.
(ii) 18.7% of workforce is engaged in secondary sector.
(iii) 44.2% of workforce is engaged in tertiary sector.
(b) Area wise the data is:
(i) In rural areas:
77% of workforce is in primary sector.
11% of workforce is in secondary sector.
12% of workforce is in tertiary sector.
(ii) In urban areas:
10% of workforce is in primary sector.
31% of workforce is in secondary sector.
59% of workforce is in tertiary sector.
2. The data reveals that:
(a) Economic backwardness in the country as 60% of workforce is engaged in agricultural activities. A
large proportion of population depend on agriculture for their livelihood.
(b) In urban area, tertiary sector account for 59% of workforce. It shows development and growth in
the tertiary sector and the fact that this sector is able to generate sustainable employment and
provide livelihood to 59% of the workforce.
3. It can be concluded that in the urban areas, tertiary sector is the main source of livelihood for
majority of workforce.
15) Compared to urban women, more rural women are found working. Why? (4)
The percentage of female workforce in the rural areas is nearly 30 % while it is only 14 % in the urban
areas. This depicts that as compared to the urban women more rural women accounts for higher
share in the female workforce. While on the one hand, the rural women are less educated, unskilled
and low productive, on the other hand, urban women being more educated and more skilled and
productive have higher probability to get employment. Ironically, the urban female accounts for
lesser share in the female workforce as compared to their rural counterparts. The following are the
reasons for low share of urban females in the total female workforce:

1. As in the agricultural and allied activities, high degree of skills and specializations is not
required, so, rural women engage themselves to support their family on farms.
2. As poverty in the rural areas is more widespread than in the urban areas, so, the rural women
engage themselves in low productive jobs just to support the livelihood of their families.
3. As the urban families usually earn comparatively higher income than the rural families and,
further, poverty in the urban areas is not as widespread as that of in the rural areas, so, there
is lesser need for female members to get themselves employed.
4. The decision to take up jobs by the female members rests on the family’s decision rather than
her individual decision.
5. Although female literacy in India is improving, yet it has to get much better before urban
female accounts for higher share in the total female workforce.
 CHAPTER-8 INFRASTRUCTURE
A. Very short answer questions 1m
1. Read the following statement Assertion(A) and Reason (R). Choose one of the correct
alternatives given below.
Assertion (A) Infrastructure is a support system on which the efficient working of a
modern industrial economy depends.
Reason(R) The quality of transport and communication can affect access to health care.
a. Both Assertion and Reason 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
2. What is global burden of diseases?
Hint: an indicator used by experts to gauge the number of people dying prematurely
due to particular disease and the number of years spent by them in state of disability.
3. What is morbidity?
Hint: The condition of suffering from a disease or medical condition.
4. What is infant mortality rate?
Hint: The number of infant deaths for every 1000 live births.
5. What is infrastructure?
Hint: It is the basic physical and organisational structures and facilities needed for the
operation of a society.

B. ANSWER THE FOLLOWING QUESTION 3M

1. ‘Regional inequality exists in health infrastructure’. Comment.
Hint: Unequal distribution of health care services, unaffordable medical care etc. ( valid
data can be used)
2. ‘Medical tourism is a growing sector in India’. support your answer with valid argument.
Hint: medical tourism is a growing sector in India. many foreign nationals visit India for
surgeries, transplants, dental and other health care. India offers latest medical
technologies with qualified professionals at a lesser cost compared to similar health care
services in other countries
3. Infrastructural development in India has been a responsibility of government sector only.
Private sector has not been actively involved in infrastructural development. Comment
with valid reasons.
Hint: Huge investment cost, less profitability, long gestation period etc. ( explanation)
4. Medicines are playing an important role in providing health care to large section of
population, especially on developing countries and also increasing in developed countries.
Comment on the working of Indian system of medicine.
Hint: ayurvedic, yoga and naturopathy, unani, siddha and homeopathy.

C. Long answer type questions 6m

1. Is infrastructure a supporting structure? How does it contribute to economic
development?
Hint: yes.
Ensures easier movement of goods and raw material, makes agriculture and industry
complimentary for each other, widens size of market, impact on productivity etc. (
explanation)
2. ‘Medicinal plants based traditional system of medicine are playing an important role in
providing health care to large section of population , especially in developing countries
and creating interest in developed countries as well’. Explain how the India system of
medicine works.
Hint: ayurvedic, yoga and naturopathy, unani, siddha and homeopathy
3. ‘Given the current pandemic the world is facing, the first impact would be on health
sector. Countries need to now ponder and allocate budgets in investing in health care and
the infrastructure’. Suggest measures to create effective health care programs
Hint: Education on health and hygiene, effective health infrastructure, private- public
partnership to improve quality and affordability etc.
 CHAPTER-9 ENVIRONMENT AND SUSTAINABLE DEVELOPMENT

Q1. Correction for environmental damages involves opportunity costs. Explain.

Hints: opportunity cost of correcting the environmental damages is the total monetary
and non-monetary sacrifices that an economy has to make. Give any one example and
explain.
Q2. Explain the supply-demand reversal of environment resources.

Hints: Prior to industrialization, demand for natural resources did not exceed their supply.
Owing to industrial growth there has been experiencing the overuse as well as misuse of
natural resources.
Supply of resources has suffered a reversal from abundance to paucity.
Demand on the other hand has reversed from manageable to unmanageable limits.
Q3. Sustainable development is a process to be adopted as a daily life activity. Write your
observation.

Hint: stop littering

Minimize the emission of smoke
Use public transport
Recycling the waste
Refrain from tree- felling
Not to build house on un authorized areas
Avoid overuse and misuse of resources you have etc.
Q4. Challenge of poverty must be addressed prior to the challenge of environmental
degradation. State your views.

Hints: poverty leads to tree-felling

Poverty causes the mushrooming of slums
Poverty pushes the population growth rate high etc.
 UNIT IV : DEVELOPMENT EXPERIENCES OF INDIA : A COMPARISON WITH NEIGHBOURS
CHAPTER-10 COMPARATIVE DEVELOPMENT EXPERIENCES OF INDIA AND ITS NEIGHBOURS

Case Based Questions (Each for 1 Mark):-

“India’s economic growth suffered its worst fall on record in the April-June quarter, with the GDP
contracting 23.9%. The coronavirus-related lockdowns mainly weighed on the already declining
consumer demand and investment. The numbers are the worst since India started reporting
quarterly data in 1996.
Barring China, the world’s second-largest economy, all other major economies have felt the
negative impact of coronavirus pandemic. In the April-June quarter of 2020, Chinese economy grew
by 3.2 per cent.” ------ Tuesday, September 1, 2020, Business Today

On the basis of the above paragraph, answer the following questions: -

Q.1) What kind of difference we can observe regarding the GDP growth rate between India and China
during present Pandemic situation?
Q.2) Why Indian Economy had to face such a great decline in GDP growth rate due to lockdowns
while China’s economy is still growing?
Q.3) As a student of Economics what suggestion you would like to give to boost up the economy of
our country? (Write one specific suggestion)
Q.4) Do you think Pakistan also facing the same situation like India or it is growing like China?
Ans:- [ Hints: India suffered a lot than any other country regarding the decline in GDP growth due to
sudden lock-down declaration all over the country, while partial lock-down policy was followed by
most other countries of the world.]

Part:B:- Short Answer Type Questions:- (3 Marks for each)

Q.1. Although China is the most indebted country in the world, its position is highly satisfactory.
Why?

Ans: [Hint: - China’s total debt service rate is one of the lowest in the world due to its massive foreign
trade surplus. China’s total debt service rate, that is, percentage of export of goods, service and
primary income was nearly 7.62% as against 10.07% for India and as high as 22.8% for Pakistan.]

Q.2) Do you agree with the statement that India has failed to grow as fast as China, because it has
failed to check the growth rate of its population? Write your views in brief.

Ans:-[Hint:- Owing to unbridled growth of population, the government in India has failed to reduce
the BPL population. This has led to a huge expenditure by way of food subsidy, besides the
expenditure related to health, housing and education of the BPL population.]
Part:C:- Short-Answer type questions:- (4 Marks for each)

Q.1) China’s rapid industrial growth can be traced back to its reforms in 1978. Do you agree?
Elucidate.

Ans:-[Hint:-China’s rapid industrial growth is an aggregate outcome of the various economic reforms
that were introduced in phases since 1978. In the initial phase, reforms were initiated in agriculture,
foreign trade and investment sectors like Commune System, Dual Pricing system, Setting of SEZ etc.]

Q.2) Do you agree with the opinion that structure of growth is more complementary with the GDP
growth in China than India?

Ans:-[Hint:- Historically, the structure of growth has shown a shift from the predominance of
agriculture to the predominance of industry in GDP growth of the country. This is very effective of
absorption of surplus labour. While, China’s growth story reveals the process of transformation from
Agriculture to industrial sector, India’s structure of growth has been transformed from Agriculture to
tertiary sector.]

Q.3) How will you prove that human development is more progressed in China than in India or
Pakistan?
Ans:- [Hint:- Analyse a recent years’ dataset of various human development indicators of India,
China and Pakistan and compare the progress. In 2020 Human Development Report, HDI Ranking for
India is 131, for China is 85 and for Pakistan is 154]

Q.4) Suggest some lessons that India can learn from China.
Ans:-[Hint: Learning about promoting agricultural sector, adopting one-child policy, anti-corruption
measures, dual pricing system, export promotion policies etc.]

Q.5) Scholars find son preference as a common phenomenon in many developing countries including
India, China and Pakistan. Do you find this phenomenon in your family and neighbourhood? Why do
people practice discrimination between male and female children? What do you think?
Ans:- [ Hint:- Yes, because of insecurity for the females, marriage at early ages and dowry system,
religious background etc.]

Part-D:- Long Answer Questions:- ( 6 marks for each)

Q.1) Give reasons for the slow growth and re-emergence of poverty in Pakistan.

Ans:- [Hints: Greater dependency on the public sector enterprises, traditional agricultural practices,
underdeveloped manufacturing sector, increasing dependence on foreign loan, lack of political
stability, insufficient foreign investment etc. are some main causes for the slow growth and re-
emergence of poverty in Pakistan.]

Q.2) The infrastructural reforms introduced by China proved to be successful while Pakistan lagged
far behind. Do you agree? Give reasons in support of your answer.

Ans:-[Hint:- China has promoted commune system for equitable distribution, decentralized planning
for effective implementation of reforms, developed small enterprises along with health, education
and infrastructure while Pakistan is suffering from lack of uniform reforms and its ineffective
implementation, low rate of savings and investment which made it dependent on other countries.]

Question 3:

Mention the salient demographic indicators of China, Pakistan and India.

Ans:- [Hint:-
Demographic Indicators, 2017-18

Estimated Annual Growth Density

Sex Fertility
Country Population Rate of Population (per sq. Urbanisation
Ratio Rate
(in millions) (1990-2003) km)
India 1352 1.03 455 924 2.2 34
China 1393 0.46 148 949 1.7 59
Pakistan 212 2.05 275 943 3.6 37
Source: World Development Indicators 2019, www.worldbank.org

From the current data set comparing among the important demographic indicators liketotal
population, annual growth rate of population, density of population, sex ratio, fertility rate,
urbanization it can be said that although China is the largest populated country but its other
demographic indicators are stronger than those of both India and Pakistan.]

Q.4) Evaluate the various factors that led to the rapid growth in economic development in China.

Answer: [Hint: China’s rapid economic development is an aggregate outcome of the introduction of
the reforms in phases since 1978. Various factors like reform in agriculture, foreign trade and
investment, commune system, introducing dual pricing system, SEZs etc. led to the rapid growth in
the economic development in China]

Q5. Critically appraise the development strategies of Pakistan.

Answer: [Hint: - Discussion on advantages and limitations of different development strategies of
Pakistan, like mixed economic system, import substitution, green revolution etc.]
Reference:

1) Indian Economic Development by Sandeep Garg (Edition: 2019-20)

2) Indian Economic Development by T.R. Jain & V.K. Ohri (Edition:2020-21)
3) Indian Economic Development by Radha Bahuguna (Edition:2018-19)
4) Together with- Economics (class 12) by Rachna Sagar (Edition:2018-19)
5) MBD Sure Shot CBSE Question Bank Chapter wise Solved 10-year papers (2010-2019) for class
XII (Edition: - 2019-2020)
6) Indian Economic Development for class XII (CBSE)- N.C.E.R.T. (Edition:-2018-2019)
7) https://www.studiestoday.com/solution/ncert-solutions-class-11-economics-comparative-
development-experiences-india-and-its
8) https://ncert.nic.in/textbook/pdf/keec110.pdf
9) https://coolgyan.org/cbse/important-questions-class-12-indian-economics-development-
chapter-development-experiences-india-neighbours/
10) https://www.vedantu.com/cbse/important-questions-class-11-economics-indian-economic-
development-chapter-10
11) https://www.meritnation.com/cbse-class-12-commerce/economics/indian-economic-
development-ncert-solutions-2018/unit-iv-comparative-development-experiences-of-india-
and-its-neighbours/ncert-solutions/59_16_1355_2492_195_15755
12) https://www.learncbse.in/comparative-development-experience-india-itsneighbours-ncert-
solutions-class-11-indian-economic-development/
13) https://mycbseguide.com/blog/important-questions-for-class-12-economics-development-
experiences-india-neighbours/
14) https://byjus.com/commerce/important-questions-class-11-economics-chapter-10/
15) https://www.careerlauncher.com/cbse-ncert/class-12/Economics/CBSE-
Development:Indiaanditsneighbours-ImportantQuestions.html
16) https://www.learncbse.in/rd-sharma/
 MCQ QUESTION BANK
CLASS: XII SUBJECT: ECONOMICS

BOOK: INDIAN ECONOMIC DEVELOPMENT

UNIT-I DEVELOPMENT POLICIES AND EXPERIENCE (1947-1990)

CHAPTER -1
1.what was the growth rate of GDP during British Rule?
A)2%
B)3%
C)4%
D)5%
Ans:A
2.What was the growth rate of per capita income during British rule?
A)2%
B)3%
C)4%
D)0.5%
Ans:D
3.What percentage of India lived in villages at the time of independence?
A)80%
B)70%
C)85%
D)75%
Ans:C
4.What percentage of India was literate at the time of independence?
A)12%
B)7%
C)40%
D)16%
Ans D
5.What percentage of India was dependent on agriculture at the time of independence?
A) 60%
B)80%
C)70%
D)90%
Ans:C
6.When was TISCO incorporated in India?
A) 1907
B) 1850
C)1853
D)1921
Ans:A
7.When was railways introduced in India?
A) 1907
B) 1850
C)1853
D)1921
Ans:B
8. When was first census operation conducted in India?
A) 1907
B) 1881
C)1853
D)1941
Ans:B
9.Which year is regarded as defining year to mark demographic transition from one to another?
A) 1921
B) 1881
C)1853
D)1941
Ans:A
10.What was life expectancy of India at the time of independence.
A) 32 yrs
B) 52yrs
C) 63yrs
D) 28yrs
Ans:A
11.What was Infant Mortality rate of India at the time of Independence.
A) 214 per thousand
B) 218 per thousand
C) 216 per thousand
D) 260 per thousand
Ans:B

12. What was the literacy rate for women of India at the time of independence?
a) 12 %
(b) 7%
(c) 40%
d) 16%
Ans:B
13.When did the first cotton mill, jute mill, coal mine started in India.
a) 1855-60
(b) 1850-55
(c) 1940-45
d) 1900-1907
Ans:B
14.Which of the following is an Indicator of economic development in an economy?
a) Increase in National Income
(b) Increase in per-capita Income
(c) Increase in population
d) All the above
Ans:B
15.Which of the following sentences gives best description of the Indian economy during British rule.
a) India was an agrarian economy
(b) India was stagnant economy
(c) India was an agrarian economy with rapidly growing population in mass poverty and illiteracy.
d) India was a poor economy.
Ans:C
15.When British left India, it was:
a) A flourishing economy
(b) Having a strong Industrial base
(c) Having a strong infrastructure
d) Suffering from massive poverty.
Ans:D
16.When did Bengal famine take place?
a) 1927
(b) 1861
(c) 1943
d) 1941
Ans: C
 CHAPTER-2
19. In which year was the Planning Commission was set up in India?
a) 1947
(b) 1948
(c) 1949
d) 1950
Ans:D
20.Strategic Industries were under the control of ……….under IPR 1956.
a) Public sector
(b) Private sector
(c) producing sector
d) None of these
Ans:A

21.In India What type of economic system is being followed?

a) Capitalism
(b) Socialism
(c) Mixed
d) Monarchy
Ans:C
22.Who is considered to be the architect of Indian Planning?
a) William Digby
(b) P.C Mahalanobis
(c) DadabhaiNaroji
d) R.C Desai.
Ans:B
23.What is meant by GDP?
a) It refers to total value of Investment made in a year.
(b) it is sum of all final goods and services produced in an economy in a financial year.
(c) It is national Income divided by population.
d) it is foreign investment made in a year.
Ans:B
24.Which economic system is based upon the market forces of demand and supply.
a) Capitalism
(b) Socialism
(c) Mixed
d) Monarchy
Ans :A
25.When was the ,'Village and Small scale Industries Committee,'set up.
a) 1955
(b) 1958
(c) 1949
d) 1950
Ans:A
26. In which of the following state did land reforms succeed the most?
a) Punjab
(b) Haryana
(c) Tamil Nadu
d) West Bengal
Ans:D
27.Who was the first chairperson of the Planning commission of India.
a) Jawahar Lal Nehru
(b) Rajendra Prasad
(c) DadabhaiNaroji
d) R.C Desai.
Ans:A
28.What is per capita Income.
a) It refers to total value of Investment made in a year.
(b) it is sum of all final goods and services produced in an economy in a financial year.
c) It is national Income divided by population.
d) it is foreign investment made in a year.
Ans:C
29.Schedule B of IPR 1956 includes:
a) Those industries which are reserved for public sector.
(b)Those industries which are open for both public and private sectors.
(c) Residual industries
d) Industries in which only Small Scale Industries can enter.
Ans:B
30 Schedule A of IPR 1956 includes:
a) Those industries which are reserved for public sector.
(b) Those industries which are open for both public and private sectors.
(c) Residual industries
Ans:A

30. Read the following statements - Assertion (A) and Reason (R). Choose one of the correct
alternatives
given below:

Assertion (A) : India became an exporter of primary products and an importer of finished consumer
and
capital goods produced in Britain.
Reason(R) :Restrictivepoliciesof commodityproduction, trade and tariff pursuedby the colonial
government adversely affected the structure, composition and volume of India’s foreign trade.
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.
AnsA.

31.Read the following statements : Assertion (A) and Reason (R). Choose one of the correct
alternatives
given below:
Assertion (A) : The major policy initiatives i.e. land reforms and green revolution helped India to
becomeself-sufficient in food grains production.
Reason (R) : The proportion of people depending on agriculture did not decline as expected
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.
Ans:B

32.Read the following statements - Assertion (A) and Reason (R). Choose one of the correct
alternatives given below:
Assertion (A) : Every year government fixes a target for disinvestment of Public Sector Enterprises
(PSEs).

Reason (R) : Disinvestment is an excellent tool for discarding the loss incurring Public Sector
Enterprises (PSEs).
Alternatives :
(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.
Ans B

19.It is an economy in which means of production are used in a manner such that social welfare
ismaximised. (Choose the correct alternative)
(a) Capitalist economy
b) Socialist economy
(c) Mixed economy
d) Free economy
Ans.B
33. Read the following statements - Assertion (A) and Reason (R). Choose one of the correct
alternatives given below:
Assertion (A): Five year plans gave a big push to the basic and capital goods industries.
Reason (R): Indian economy is now ranked as the eleventh largest industrial economy in the world.
Alternatives:

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

34 Read the following statements - Assertion (A) and Reason (R). Choose one of the correct
alternatives given
below:
Assertion (A): Economic and social equality was considered as the principal goal of planning.
Reason (R): Real income of the people decreased due to high rate of inflation.
Alternatives:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion
(A).
(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of
Assertion A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.
Ans:B
35. The main causes behind poverty are.
(a) Social inequality
(b) Indebtedness
(c) Unequal wealth distribution
(d) Both (a) and (c)
Ans D
36..Read the followingstatementsAssertion (A) andReason(R). Choose one of correct
alternativesgiven below:’
Assertion (A) : India could not develop a sound industrial base under the colonial rule.
Reason (R) : The colonial government reduced India to the status of a mere exporter of important
rawmaterials for the upcoming modern industries in Britain.
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.
Ans:A

37.Read the followingstatementsAssertion (A) and Reason(R). Choose one of correct alternatives
given below:’
Assertion (A) : Under thecolonial regime, basic infrastructure such as railways, ports,watertransport,
posts and telegraphs did develop.
Reason(R):Roads constructed in Indiaprior to the advent of the British rule werenotfit
formoderntransport.
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.
Ans:A
38.Refers to increase in the country’s capacity to produce the output of goods and serviceswithin the
country. (Choose the correct alternative)
(a) Modernisation
(b) Production
(c) Development
(d) Growth
Ans :D
39.Means fixing the maximum size of land which could be owned by an individual.
(Choose the correct alternative)
(a) Land reforms
(b) Land ceiling
(c) Zamindari
(d) Land holdings
Ans:B
40.Which of the following is a goal of five years plan?
(a) Growth
(b) Modernisation
(c) self-reliance
(d) All of these
Ans:D

Choose one of correct alternatives given below:

41 Assertion (A) : The policy of ‘land to the tiller’ is based on the idea that the cultivators will take
more interest they will have more incentive in increasing output if they are the owners of the land.
Reason(R) : Ownership of land enables the tiller to make profit from the increased output.
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.
AnsA
 UNIT-II
ECONOMIC REFORMS SINCE 1991
CHAPTER-3
1. Which of the organization replaced General Agreement on Trade and Tariff
b) International Monetary Fund
c) United Nations Organization
d) World Trade Organization
e) World Health Organization
2. When was the New Economic Policy announced?
a) June 1991
b) July 1991
c) May 1991
d) None of these
3. ----- refers to disposal of equity of public sector units in the market
a) Globalization
b) Privatization
c) Liberalization
d) Disinvestment
4. Which of the following is not a policy initiated under New Economic Policy?
a) Liberalization
b) Privatization
c) Globalization
d) Licensing
5. Quantitative restrictions on imports of manufactured consumer goods and agricultural
products were also fully removed from
a) 1980
b) 1991
c) 2001
d) 1995
6. On which date did PM Narendra Modi address the Indian people announcing the
demonetization of RS 5OO AND RS 1000
a) 8 Oct 2017
b) 8 Nov 2016
c) 8 Nov 2017
d) 8 Oct 2016
7. The highest GST rate applicable now is
a) 28%
b) 12%
c) 18%
d) None of these
8. GST was introduced in India with effect from
a) 1/7/2017
b) 1/7/2016
c) 1/7/2018
d) 1/7/2019
9. What is the other name of World Bank?
a) World Health Organization
b) World Trade Organization
c) International Monetary Fund
d) International Bank for Reconstruction and Development
10. At present how many industries are exclusively reserved for the public sector in India?
a) 2
b) 3
c) 4
d) 5
11. When was WTO founded?
a) 1948
b) 1951
c) 1991
d) 1995
12. Which Act has been enacted in place of MRTP Act ?
a) Competition Act
b) Monopoly Act
c) Licensing Act
d) Foreign Exchange Act
13. At present how many member countries WTO has?
a) 150
b) 164
c) 159
d) 190
14. ---refers to the transfer of assets or services function from public to private ownership?
a) Globalization
b) Privatization
c) Disinvestment
d) Liberalization
15. Outsourcing is good for India because
a) It provides employment to large number of unemployed
b) It provides excellence in a particular field
c) Both a and b
d) Neither a nor b
16. It refers to contracting out some of its activities to a third party which were earlier performed
by the organization
a) Globalization
b) Outsourcing
c) Privatization
d) Liberalization
17. Trade between two countries is known as
a) Bilateral Trade
 b) Multi lateral Trade
c) Both a and b
d) Neither a nor b
18. GATT was established in the year:
a) 1958
b) 1948
c) 1968
d) 1995
19. Financial sector reforms mainly relate to :
a) Banking sector
b) Foreign Exchange Market
c) Both a and b
d) Insurance sector
20. Reforms have not been able to benefit agriculture because of
a) Public investment in agriculture sector especially in infrastructure has fallen
b) Rise in subsidy
c) Rise in import duties on agriculture products
d) Shift from production of cash crops to food crops

ANSWER - 1.c, 2.b, 3.d, 4.d, 5.c, 6.b, 7.a, 8.a, 9.d, 10.b, 11.d, 12.a, 13.b, 14.b, 15.c, 16.b,
17.a, 18.b, 19.c, 20.a
 UNIT-3 CURRENT CHALLENGES FACING INDIAN ECONOMY
CHAPTER-4 POVERTY
Q.1 The people who never move above the poverty line are known as:
A. Churning poor
B. Occasionally poor
C. Chronic poor
D. Non-poor
Ans: C
Q.2 Poverty continues to persist in India, because of
A. Rising prices
B. Rising population
C. Lack of opportunities of employment
D. All of these
Ans: D
Q.3 Who was the person in India who discuss the concept of poverty line?
A. William Digby
B. Findlay Shirras
C. Dadabhai Naoroji
D. R.C. Desai
Ans: C
Q.4 Who introduced the concept of 'Jail Cost of Living' ?
A. William Digby
B. Findlay Shirras
C. Dadabhai Naoroji
D. Dr. VKRV Rao
Ans: C
Q.5 MPCE stands for
A. Minimum Per Capita Expenditure
B, Monthaly Per Capita Expenditure
C. Maximum Per Capita Expenditure
D. None of the above
Ans: B
Q.6 Which of the following factors make casual labourers the most vulnerable section in society.
A. They have no job security
B. They are not skilled
C. They don't generate enough surplus to sustain themselves
D. All of the above
Ans: D
Q.7 Amartya Sen, noted Nobel Laureate, has developed an index to estimate poverty which is known
------------ index.
Ans: Sen Index
Q.8 ------------ programme intend to improve the food and nutritional staus of the poor.
A. Midday Meal Scheme
B. Public Distribution System
C. Integrated Child Development Scheme
D. All of these
Ans: A

Q.9 Math the following

A. Chronic poor 1. Compare the income of different people for identify poverty
B. Churning poor 2. People who are always poor
C. Absolute poverty 3. People who are regularly in and out of poverty
D. Relative poverty 4. Compare the income with minimum consumption requirements
Ans: A-2, B-3, C-4, D-1
Q.10 When was 'Expert Group' was constituted by planning commission?
A. 2002
B. 1989
C. 2005
D. B and C both
Ans: D
 CHAPTER-5 HUMAN CAPITAL FORMATION IN INDIA
1. The ability to read and write is known as:
A. Education
B. Literacy
C. Human capital
D. Human development
Answer ( B ) ( 1 )

2. The stock of ' skill and expertise' office at a point of time is known as:
A. social infrastructure
B. Human capital
C. Physical capital
D. None of these
Answer ( B ) (1 )
3. which of the following is the problem of human capital formation in India:
A. Brain drain
B. Low academic standards
C. Rising population
D. All of these
Answer ( D ) (1 )
4. which of the following organisations is engaged in designing text material up to the senior
secondary level :

A. UGC
B. AICTE
C. ICMR
D. NCERT
Answer ( D ) (1)
5. the responsibility of direction and control of higher education is with:
A. Government of India
B. Department of higher education
C. University grants commission
D. None of these
Answer ( D ) (1)
6. who is responsible for the implementation of rules and regulation for technical education in
the country :
A. National council of educational research and training
B. University grants commission
C. All India council of technical education
D. Indian council for medical research
Answer ( C ) (1)
7. human capital formation leads to :
A. Efficient utilisation of inputs
B. Increases in the stock of physical capital
C. Increase in GDP growth
D. Both ( A ) and ( C )
Answer ( D ) (1)
8. Overall literacy rate ( census 2011 ) in India is :

A. 74%
B. 70%
C. 76%
D. 68%
Answer ( A ). (1)
9. what is female literacy rate in India :
A. 68%
B. 65.5 %
C. 74%
D. None of these
Answer ( B ). (1)
10. As per census 2011 the literacy rate in rural India is:

A. 74%
B. 68.9 %
C. 60%
D. None of these
Answer ( B ). (1)
11. Male literacy rate in India according to census 2011 :
A. 80%
B. 85%
C. 82.1 %
D. None of these
Answer : (C)
 CHAPTER-6 RURAL DEVELOPMENT

Multiple choice questions

Q.1 The population dependent on agriculture in India is:
(a) Two - third population
(b) One - third population
(C) both a and b
(d) Nor of these Answer: (a)

Q.2 The real progress of India refers not to the development of urban industrial centers but mainly to
the development of the village:
(A) JavaharLal Nehru
( B) Mahatma Gandhi
( C) Sardar Patel
(D) None of these. Answer: (B)

Q.3 Rural development means:

( A) Rural education department
( B) Rural health facilities development
(C ) Rural Infrastructure development
(D) All the above Answer: D

Q.4 Non-agriculturdoal productive activities are required for rural development:

( A) Education department activities
( B) Food Processing activities
( C) Health development activities
( D) All of the above. Answer: (D)

Q.5 The reason for India's prosperity rate to decrease to 3% between 1991 and 2012 is:
( A) Decline in public investment
( B) Insufficient infrastructure
(C) Lack of alternative employment opportunities in industry and service sector
( D) All of the above. Answer: (D)

Q. 6 What percentage of agricultural production increased from 2007 to 2012?

(A) 2 %. ( B) 3.2 %
( C) 5%. ( D) 6%. Answer: (B)

Q.7 What is the reason that farmers need to take loan:

(A) Seeds purchase
( B) Fertiliser purchase
(C) Other social work
( D) All the above. Answer: (D)

Q.8 When was the National Bank for Agriculture and Rural Development established in India:
(A) 1991 (B) 1982
(C) 1986 (D) 1990 Answer: (B)
Q.9 Which institutions are working in the institutional structure of rural Banking :
(A) Commercial Banks
( B ) Regional rural banks
( C ) Cooperatives and land development Banks
( D) All the above Answer: (D)

Q.10 In the rural area, small institutions collect small savings and give credit to their members:
(A) Self Help Group
( B) Saving Help Group
( C) Short time Help Group
(D) All the above. Answer: (A)

Q.11 What is another name for Self Help Group Program:

(A) Mini Bank program
( B ) Micro-credit programmes
( C) Both A and B
( D ) None of these Answer: (B)

Q.12 Activities are included in agricultural marketing system:

( A) Assembling and storage of agriculture commodities
( B) Processing and transportation and packaging of agriculture commodities
(C) Grading and distribution of agriculture commodities
(D) All the above. Answer: (D)

Q.13 Measures adopted to improve the agricultural marketing system are:

(A) Regulation of markets
( B) of infrastructure facilities provided
( C) Minimum Support Price
( D) All the above Answer: (D)

Q.14 Name the state where Kudumshree was started.

(A) Kerala. (B) Uttar Pradesh
(C) Assam (D) Tamil Nadu
Answer: (A)

Q.15 Non-institutional sources of agriculture credit are?

(a) Commercial Bank (b) NABARD
(c) Regional Bank (d) Traders
Answer: (d)

Q.16 The state related to Tanwa project is:

(A) Kerala (B) Tamil Nadu
(C ) Rajasthan. (D) Assam
Answer: (B)

Q.17 Program have been made by MPs in India to identify and develop a village in their constituency:
(A) SansadAdarsh Gram Yojna
(B) Pradhan MantriYojna
( C) both A and B
( D) None of the above. Answer: (A)

Q.18 Examples of diversification of productive activities are:

(A) Animal husbandry
(B) Fisheries
(C) Horticulture
( D) All the above. Answer: (D)

Q.19 Rural population require long-term loans because:

(A) For buying Fertilizers
(B) Buying agricultural machinery
(C) Buy seeds
(D) To make minor improvements on land
Answer: (B)

True and False questions

Q.1 The main function of regional rural banks is to provide financial assistance to big farmers.
( True / False)
Answer: False

Q.2 NABARD was established in 1982. ( True/ False).

Answer: True

Q.3 Food corporation of India is the principal government agency storing foodgrains. ( False/True)
Answer: True

Q.4 chemical fertilizers sustain soil fertility.

( False/True)
Answer: False

Q.5 Long - term loans are generally availed by the lenders farmers.
( False/True)
Answer: False

Very Short Answer Questions

Q.1 what do you mean by rural development?

Answer: Rural development means an 'action - plan' for the social and economic growth of
the rural areas.
Q.3 What are Micro Credit Programmes?
Answer: Micro Credit Programmes refer to the credit provisions made by the self help-groups.

Q.4 What do you mean by diversification of crop production?

Answer: diversification of crops production implies production of multiple crops rather then
one specialised crop.

Q.5 What do you mean by diversification of production activity?

Answer: diversification of production activity implies a shift from crop farming to other areas
of production activity. It raises income as well as stabilises it.
 CHAPTER -7
EMPLOYMENT, GROWTH, INFORMALIZATION AND OTHER ISSUES
1) The unemployment rate for ______ are found to be higher than for _____
a) Males, Females
b) Urban .rural
c) Females, Males
d) Both a and b

2) You are a factory owner and have given employment to 400 workers. If 10 workers are
dismissed by you without loss of production then this situation will be described as
a) structural unemployment
b) disguised unemployment
c) seasonal unemployment
d) casual unemployment

3) Over the 7 years period from 2004-2005 to 2010-2011 inflation rate has been ____ percent
per annum
a) 6
b) 7
c) 5
d) 4
4) Why did the government shift its strategy from long term to short term programmes to
remove unemployment?
a) Large Scale Corruption
b) Long term programmes takes a long time to implement
c) Lack of funds
d) Lukewarm response from the state governments

5) Define Jobless Growth.

Jobless growth is defined as an economic phenomenon in which an economy experiences growth
while maintaining or decreasing its level of employment.

6) Which of the following is not the measures of employment and unemployment?

a) Usual Principal Status (UPS),
b) Usual Principal and Subsidiary Status (UPSS),
c) Current Monthly Status (CMS)
d) Current Daily Status (CDS).
8) The job security that a worker enjoys is in which sector?
a) Unorganized Sector
b) Agriculture Sector
c) Organized Sector
d) Private Sector
9) In rural area unemployment is
 1) Disguised Unemployment
2) Industrial Unemployment
3) Seasonal Unemployment
4) 1&3
10) When does underemployment occur?

a) When people do not want to work

b) When people are not skilled
c) When people are not paid for their work
d) When people are working less than they are capable of
11) What type of unemployment does urban area suffer from?

a) Open Unemployment
b) Disguised Unemployment
c) Seasonal Unemployment
d) None
12) An establishment with four hired workers is known as which sector establishment.

a) Informal
b) Formal
c) Both
d) None
13) Which of the following is false regarding disguised unemployment

a) The mounting pressure of population in rural areas with no alternative employment

b) The marginal productivity of a worker is high
c) A feature of the agrarian economy
d) None
14) The newly emerging jobs are found mostly in the_________ sector (service/manufacturing).
Answer. Service.
15).An establishment with four hired workers is known as (formal/informal) ______sector
establishment.
Answer. Informal.
16) Find the odd man out (i) owner of a saloon with more than 10 employees (ii) a cobbler
(iii) a cashier in Mother Dairy (iv) a tuition master (v) transport operator (vi) construction worker.
Answer.Owner of a saloon, self-employed and formal sector
 CHAPTER-8 INFRASTRUCTURE
Multiple choice questions.
1. Which of the following is not a part of AYUSH ?
a. Yoga c. Ayurvedic
b. Homeopathy d. Autopsy
2. India’s health infrastructure and health care is
a. Two-tier
b. Three-tier
c. Four-tier
d. Six-tier
3. Which of the following is an example of social infrastructure?
a. Electricity
b. Sanitation
c. Transport
d. communication
4. Indian system of medicine comprises of….. system
a. Four
b. Five
c. Six
d. Seven
5. National Rural Health Mission was launched in
a. 2005
b. 2006
c. 2007
d. 2008
6. An indicator used by experts to measure the number of people prematurely due to particular
disease and the number of years spend by them in the state of disability is called….
a. Morbidity
b. Global burden of disease
c. Mortality rate
d. Infant mortality rate
7. GDP growth and infrastructure are ……… ( directly / indirectly) proportionate.
a. Directly
b. Indirectly
c. Not
d. None of the above

answers
1.d 2.b 3.b 4.c 5.a 6.b 7. a
 CHAPTER-9 ENVIRONMENT AND SUSTAINABLE DEVELOPMENT
1. Which of the following is a component of environment?
(a) Living elements only (b) Non-living elements only
(c) Both (a) and (b) (d) None of these
2. Which of the following is not considered as an element of environment?
(a) Air (b) Land (c) Weather (d) Electricity
3. Which of the following is a reason of noise pollution?
(a) Domestic sewerage (b) Industrial waste
(c) Industrial machines (d) Emission of gases
4. Which of the following is a cause of environmental degradation?
(a) Population explosion (b) Increasing urbanisation
(c) Rapid industrialisation (d) All of these
5. Sustainable development is that development which satisfies the need of:
(a) present generation only (b) future generation only
(c) both (a) and (b) (d) none of these
6. Which of the following is a necessary condition of sustainable development?
(a) Increase in the quality of life (b) Reduction in the level of pollution
(c) Conservation of the stock of natural capital (d) All of these
7. An increase in real income along with equitable distribution is called:
(a) economic growth (b) economic development
(c) sustainable development (d) none of these
8. Which of the following statements highlight the significance of environment?
(a) It offers resources for production (b) It enhances quality of life
(c) It sustains life (d) All of these
9. The basic problem related to environment is:
(a) problem of pollution
(b) problem of excessive exploitation of natural resources
(c) problem of degeneration
(d) both (a) and (b)
10. Which of the following factors contribute to air pollution?
(a) Smoke emitted by industries
(b) Poisonous gases emitted in the process of chemical treatment of the materia ls
(c) Emission of gases by motor vehicles
(d) All of these
11. Industrial waste streaming into the rivers contributes to:
(a) air pollution (b) water pollution
(c) land pollution (d) noise pollution
12. Principal cause of environmental pollution is:
(a) population explosion (b) rapid industrialisation
(c) increased urbanisation (d) all of these
13. Which of the following is the strategy for sustainable development?
(a) Integrated rural development (b) Shift to organic farming
(c) Output-efficient technology (d) Both (a) and (b)
14. Which of the following statements is correct:
a) Global Warming is entirely a natural phenomenon
b) Global warming is simply an another term form green house effect
c) Global warming is the rise in average temperature at the earth surface
d) Global warming is caused ozone depletion
15. Absorptive capacity is defined as :
a) Ability of the environment to absorb degradation
b) Resource generation within the assimilating capacity of the environment
c) Average number of organisms living in a given environment
d) The minimum population surviving in the world as a whole
Answers
1. (c) 2.(d) 3.(c) 4. (d)
5. (c) 6.(d) 7. (b) 8. (d)
9. (d) 10. (d) 11. (b) 12. (d)
13. (d) 14. (c) 15.( a)
 UNIT-IV DEVELOPMENT EXPERIENCES OF INDIA : A COMPARISON WITH NEIGHBOURS
CHAPTER-10 COMPARATIVE DEVELOPMENT EXPERIENCES OF INDIA AND ITS NEIGHBOURS

Part: A:- Very Short Answer Type Questions:- (1 Mark Each)

SECTION:A: Multiple-Choice Questions:-

Q.1) The Great Leap Forward campaign in China focused on___________.

(a) widespread industrialisation (b) new agricultural strategy
(c) privatisation (d) economic reforms
Ans: (a)

Q.2) Growth rate of population is highest in which of the following country?

(a) India (b) China (c) Pakistan (d) None of these
Ans: (c)

Q.3) Reform process was started in China in ___________.

(a) 1968 (b) 1978 (c) 1988 (d) 1991
Ans:- (b)

Q.4) With which of the following concepts is commune system associated?

(a) Industrialisation (b) Human rights (c) SEZs (d) Equal distribution of land
Ans:- (d)

Q.5) Which of the following is not an indicator of human development?

(a) Density of population (b) GDP per capita (c) Literacy rate (d) Life expectancy at birth
Ans:- (a)

Q.6) When did China announce its first five-year plan?

(a) 1951 (b) 1956 (c) 1953 (d) 1961
Ans:- (c)

Q.7) Which of the following countries ranks first in the development experience?
(a) India (b) China (c) Pakistan (d) None of these
Ans:- (b)

Q.8) Which of the following countries has introduced one-child norm?

(a) China (b) India (c) Pakistan (d) Bangladesh
Ans:- (a)

Q.9) Pakistan became independent in

(a) 1946 (b) 1944 (c) 1947 (d) 1945
Ans:- (c)

Q.10) Great leap forward campaign was initiated in China in______

(a) 1978 (b) 1968 (c) 1948 (d) 1958
Ans:- (d)

SECTION:B:- Fill in the blanks:-

Q.1) After independence, Pakistan adopted _____________model of growth. (mixed-
economy/socialist-economy)
Ans:- Mixed-economy

Q.2) China has recently started moving towards a _________ (Democratic/Dictatorship).

Ans:- Democratic

Q.3) People’s Republic of China was established in__________ (1948/1949)

Ans:- 1949

Q.4) In India and Pakistan, the service sector accounts for more than _______(50/25) per cent of
GDP.
Ans:- 50

Q.5) In order to attract foreign investors___________ (ACJs/ SEZs) were set up.
Ans:- SEZs

Q.6) India announced its First Five Year Plan in________ (1951/1956).
Ans:- 1951

Q.7) (a) First Five Year Plan of ________________ commenced in the year 1956. (Pakistan/China)
Ans:- Pakistan

Q.8) Maternal mortality rate is high in _____________. (China/Pakistan)

Ans:- Pakistan

Q.9) Proportion of people below poverty line is more in __________.(India/Pakistan)

Ans:- India

Q.10) Reforms in ______________ were introduced in 1978. (China/Pakistan)

Ans:- China

SECTION:C:- Write True/False

Q.1) The Great Leap Forward campaign was launched in Pakistan.

Ans:- False. The Great Leap Forward campaign was launched in China.

Q.2) China has the highest life expectancy.

Ans:- True. China has the highest life expectancy of 71.6 years.

Q.3) In both India and Pakistan, the service sector is emerging as a major player of development.
Ans:- True.
In the 1980s, India, China and Pakistan employed 17,12 and 27 percent of its workforce in the service
sector respectively.

Q.4) All the three countries China, India and Pakistan relied on public sector as the core sector of the
economy.
Ans:- True. They all relied on Public Sector

Q.5) China received financial support from western nations.

Ans:- False.

Q.6) In all the three economies, the industry and service sectors have less proportion of workforce
but contribute more in terms of output.
Ans:- True.

Q.7) Economic reforms in Pakistan were different from those undertaken in India.
Ans:- False

Q.8) Availability of cheap labour force has given China a comparative cost advantage.
Ans:- True

Q.9) India and Pakistan adopted similar strategies for social and economic development.
Ans:- True

Q.10) China’s growth is mainly contributed by the industrial sector and India’s growth by service
sector.
Ans:- True

SECTION:D:- Answer the following questions:-

1. Mention some examples of regional and economic groupings.

Ans. SAARC, ASEAN, European Union (EU), G8 etc.

2. When were reforms introduced in all the three economies?

Ans. Reforms in China were introduced in 1978, in Pakistan in 1988 and India in 1991.

3. In which country, the Great Proletarian Cultural Revolution was introduced?

Ans. China

4. Name any two indicators of human development.

Ans. i) Life expectancy at birth
ii) Per Capita GDP (PPP) in US $

5. Name any two indicators of comparative development.

Ans. i) Growth
ii) Human Development
Part: A: - Very Short Answer Type Questions: - (1 Mark Each)

SECTION: A: Multiple-Choice Questions: -

Q.1) Which of the following is a feature pertaining to the Indian economy?

(a) One child norm (b) Growth due to manufacturing sector
(c) High degree of urbanisation (d) Life expectancy at birth
Ans: - (d)

Q.2) What was the fertility rate in Pakistan as in 2015?

(a) 1.6 (b) 2.6 (c) 3.7 (d) 3.6
Ans: - (c)
Q.3) Which of the following country was faster in shifting its workforce from agriculture to service
sector?
(a) India (b) Pakistan (c) China (d) Both (a) and (b)
Ans: - (b)

Q.4) Which of the following is not an indicator of human development?

(a) Density of population (b) GDP per capita (c) Life expectancy at birth (d) Literacy rate
Ans: (a)

Q.5) With which of the following concepts is commune system associated?

(a) Industrialisation (b) Human rights (c) Equal distribution of land (d) Special Economic Zones
Ans: - (c)

Q.6) How many people died in the devastating earthquake that took place in Pakistan in 2005?
(a) 45000 (b) 55000 (c) 65000 (d) 75000
Ans:- (d)

Q.7) First five- year plan of __________commenced in the year 1956.

(a) Pakistan (b) India (c) China (d) None of these
Ans:- (a)

Q.8) Reforms were introduced in 1978 in_________.

(a) China (b) Pakistan (c) India (d) All of these
Ans:- (a)

Q.9) One child norm is featured of ______country.

(a) France (b) India (c) Pakistan (d) China
Ans:- (d)

Q.10) ________has the highest life expectancy.

(a) India (b) China (c) Pakistan (d) both (a) and (c)
Ans:- (b)

SECTION: B: - Fill in the blanks: -

1) In the strategy of growth of India and Pakistan, _________sector was assigned the secondary
role of pushing the process of growth. (public/private)
Ans: - Private

2) ____________ has established a substantial lead over India in terms of GDP growth and
structural transformation. (China/Pakistan)
Ans: - China

3) The trade-GDP ratio of India is _______ than that of Pakistan (greater/lesser).

Ans: - Greater

4) _________has shown brighter signs of urbanisation. (India/Pakistan)

Ans: - Pakistan

5) One child policy was adopted in China in the year_______(1978/1979)

 Ans: - 1979

Q.6) Pakistan’s five-year plan is now called the ______Development Plan. (Long-term/Medium-term).
Ans: - Medium-term

Q.7) _________ introduced the Great Proletarian Cultural Revolution in 1695 in China. (Mao/Sun-jat-
sen)
Ans: - Mao

Q.8) In the 1970s, nationalisation of capital goods industries took place in_________ (India/Pakistan)
Ans: - Pakistan

Q.9) Lack of _______ (economical/political) freedom and its implications for human rights are major
concerns in China.
Ans: - Political

Q.10) In 1978 _______ (Economic Reforms/ The Great Leap Forward) were initiated in China.
Ans: - Economic Reforms

SECTION:C: - Write True/False

State whether the following statements are True or False:

Q.1) China relied on ‘outward-looking’ strategy of growth.

Ans:- False

Q.2) Chinese government is battling with the problem of environment degradation.

Ans:- True

Q.3) In China, commune system is related to industry. (True/False)

Ans:- False

Q.4) In India, agricultural reforms have been far less effective than in China.
Ans:- True

Q.5) In terms of sectoral contribution to GDP, Chinese economy is relying more on secondary sector.
Ans:- True

Q.6) With a significant jump in the growth of GDP, the structure of growth has failed to show
structural transformation in China.
Ans:- False

Q.7) Regional and global economic groupings are formed to protest against free flow of goods and
services between nations.
Ans:- False

Q.8) Pakistan introduced a variety of regulated policy framework for import substitution
industrialisation.
Ans:- True
SECTION:D:-Matching

Q) Form the set of statements given in Column I and Column II, chose the correct pair of
statements:
Column I Column II
(a) One child policy (i) Pakistan
(b) Jobless growth process (ii) China
(c)Availability of cheap labour force (iii) Comparative cost
advantage to China
(d) Problem of environment (iv) Pakistan
degradation

Answers: (c) Availability of cheap labour force- (iii) Comparative cost advantage to China

SECTION: E: - Answer the following questions: -

Q.1) What type of economic system is followed in China?

Ans. Command economy model. In this model all critical areas of production were brought under
state ownership in China.

Q.2) Give the meaning of infant mortality rate.

Ans. Infant mortality rate refers to number of infants dying before reaching one year of age per 1000
live birth in a year.

Q.3) Between India and China, which country has higher value of Human Development Index?
Ans. China
Q.4) Mention the major reason for the low population growth in China.
Ans. Introduction of ‘One Child Policy’

Q.5) Name the programme started in China with the aim of industrialization.
Ans. Great leap forward programme.

Q.6) Out of China, Pakistan and India, which country has the largest contribution of the service
sector to the GDP?
Ans. Pakistan.

Q.7) Out of India, China and Pakistan, Which country has the highest workforce engaged in
agriculture?
Ans. India has the highest workforce (60%) engaged in agriculture.

Q.8) Name the two areas of development where Pakistan has topped India.
Ans. i) Less percentage of population below poverty line.
ii) Percentage of population having access to improved water sources

Q.9) Name the two areas of development where India has an edge over Pakistan.
Ans. i) Skilled manpower
ii) Per Capita GDP (PPP) in US $.

Q.10) Define Special Economic Zone (SEZ)?

Ans. It is a geographical region that has economic laws different from a country’s typical economic
laws. Usually, the goal is to increase foreign investment.

Q.1) A campaign in China in 1958 where people were encouraged to set up industries in their
backyard was named as:
(a) Great leap forward (b) Great proletarian cultural revolution
(c) Anti-rightist movement (d) Four pests campaign
Ans:- (a)

Q.2) In which of the following areas, Pakistan has an edge over India?
(a) Export of software after economic reforms
(b) Number of Ph.D.’s produced in science and engineering every year
(c) Reducing the proportion of population below poverty line
(d)All the above
Ans:- (c)

Q.3) According to demographic parameters, the density of population is lowest in:

(a) China (b) India (c) Pakistan (d) Both (b) and (c)
Ans:- (a)

Q.4) China moving ahead of India and Pakistan is true for which indicator?
(a) GDP per capita (b) Proportion of population below poverty line
(c) HDI ranking (d) All the above
Ans:- (d)

Q.5) Which of the following observations highlight the common success story of India and Pakistan?
(a) Both have succeeded in more than doubling their per capita incomes
(b) Food production has failed to keep pace with the rise in population
(c) Food sufficiency has been accompanied with improved nutritional status
(d) Both (a) and (c)
Ans:- (d)

Q.6) To analyse a comparative performance of the economies of India, China and Pakistan, which of
the following is the correct?
(a) China achieved a breakthrough in GDP growth in early 1980s.
(b) With New Economic Policy (NEP) in place, India experienced a rebound in its GDP growth.
(c) Economic reforms in Pakistan were almost similar to that in India
(d) All of these 
Ans:- (d)

Q.7) With respect to ‘Statism’ as a model of growth adopted by China, choose the correct statement.
(a) Ownership of all resources vested with the state
(b) The private sector was the deciding authority with respect to what to produce, how to produce
and for whom to produce
(c) State was to maintain the population
(d) None of these
Ans:- (a)

Q.8) Public sector was assigned a key role in the process of growth in India and Pakistan because:
(a) both the economies needed a big push of investment
(b) partition of the country had rendered both of them as laggard economies
(c) both (a) and (b)
(d) none of these
Ans:- (c)

Q.9) After independence, both India and Pakistan relied upon:

(a) ‘mixed-economy’ as the strategy of growth
(b) ‘capitalism’ as the strategy of growth
(c) ‘socialism’ as the strategy of growth
(d) ‘free economy’ as the strategy of growth
Answer: (a) ‘mixed-economy’ as the strategy of growth

Q.10) What is the infant mortality rate as per thousand in China compared with per thousand in
India?
1) 30,60
2) 30,35
3) 35,65
4) 24,45
Answer: 2) 30,35

Q.11) What is the percentage of the workforce engaged in agriculture in China?

1) 55
2) 54
3) 60
4) 53
Answer: 54 % workforce is engaged in agriculture in China

Q.12) Per capita income is highest in

1) India
2) Pakistan
3) China
4) None
Answer: 1) India has the highest per capita income

Q.13) In an economy, Human Development Index measures

1) Birth rate
2) Death rate
3) Quality of life
4) Quality of education
Answer: 3) Quality of life

Q.14) Full form of UNDP

1) United Nation Development Policy
2) United Nation Development Programme
3) Union Nation Development Programme
4) None of the above
Answer: 2) United Nation Development Programme

Q.15) UNDP prepares quality life index for how many countries
1) 186
2) 187
3) 188
4) 185
Answer: 2) 187

SECTION:B:- Fill in the blanks:-

6) China adopted __________as a model of growth. (statism/socialism)

Ans:- Statism

7) High GDP growth has led to a serious challenge of sustainable development due to the
problem of environmental degradation in_______ (China/Pakistan).
Ans:- China

8) Owing to slow GDP growth , and consequently the low level of income,_________economy
has moved into a ‘low-income-low-growth’ trap. (India’s/Pakistan’s)
Ans:- Pakistan’s

9) The relative success of China is credited to ________stability in China. (social/political)

Ans:- Political

SECTION:C:-Chronological Arrangement

Q.) Choose the correct alternative showing chronological order of the following events:
(i) One child policy in China
(ii) Economic reforms in Pakistan
(iii) New Economic Policy (NEP) in India
(iv)Commune system in agriculture in China
Alternatives:
(a) (ii), (iv), (iii), (i) (b) (iv), (ii), (i), (iii)
(c) (ii), (iv), (i), (iii) (d) (iv), (i), (ii), (iii)
Answer: (d)—(iv), (i), (ii), (iii)