GENESIS GLOBAL SCHOOL , NOIDA

UT 1 EXAMINATION 2021-22
ECONOMICS [030]
CLASS XII

TIME : 1 hr MARKS: 30

1. The components of Money supply are: [1]

a. Paper currency c. Coins
b. Demand Deposits d. All of the above
OR
Calculate LRR, if the initial deposit of ₹. 500 crores lead to the establishment
of total deposits of ₹. 4,000 crores.
2. Identify the correct pair from the given Column I and Column Il: (Choose the [1]
correct alternative)

Column 1 Column II
[A] Corporation Tax [i] Indirect Tax
[B] Subsidies [ii] Revenue Expenditure
[C] Borrowings [iii] Revenue Deficit
[D] Social Welfare [iv] Non-Developmental
Expenditure

ALTERNATIVES:
(a) [A] [i] (b) [B] [ii]
(c ) [C] [iii] (d) [D] [iv]
3. If the saving function of an economy is given as : [1]
S=-100+0.40Y, then MPC is:

a. 1 b. 0.40 c. 0.60 d. None of these

Read the following news report and answer questions 4-7 on the basis of the
same:
India's fiscal deficit touched a record $ 88.5 billion in the April-June quarter,
83.2% of the target for the whole of the current fiscal year, reflecting the
impact of the coronavirus pandemic on tax collections and as the government
front-loaded its spending. The deficit is predicted by private economists to
cross 7.5% of GDP in the 2020-21 fiscal year beginning April, from initial
government estimates of 3.5%, due to a sharp economic contraction caused
by the COVID-19 outbreak. The economy is forecast to shrink 5.1% in the
current fiscal year, and 9.1% under a worst-case scenario, according to analysts
in a Reuters poll, its weakest performance since 1979.Government data

1
 released on Friday showed total net tax receipts in three months through June
declined more than 46% year-on-year to 1.35 lakh crore ($ 18.05 billion),
compared with 2.51 lakh crore a year ago, even though taxes on fuel products
have been increased.
The Times of India; July 31st, 2020
4. High fiscal deficit means: (Choose the correct alternative) [1]
(a) Excess of Capital Expenditure over the sum of Revenue Receipts and
Non-debt Capital Receipts
(b) Excess of Total Revenue Expenditure over Total Revenue Receipts
(c) Primary Deficit — Interest Payments
(d) Excess of Imports over Exports
5. “Change in government spending “ is a part of __________ [Monetary/ [1]
Fiscal] policy of the government.(Choose the correct alternative)
6. _______________________ (Goods and Services Tax/Dividend and Profit) is [1]
not a non-tax revenue receipt. (Choose the correct alternative)
7. Identify induced investment from the following [1]

i. Government has set up public health centres in rural areas.

ii. Airtel has invested Rs. 1,000 crore to improve its services.
iii. Government has decided to invest Rs. 1,000 crore to save Sunder ban
Forests.
8. Giving reasons, state whether the following statements are true or false: [3]
(a) Average Propensity to Save (APS) cannot be negative.
(b) Value of Marginal Propensity to Consume (MPC) can be greater than
one.
9. Outline the steps required to be taken in deriving the consumption curve [4]
from the given savings curve. Use diagram

OR

From the following data about an economy, calculate its equilibrium level of
income:
(i) Marginal propensity to save 0.25
(ii) Autonomous Consumption ₹ 100
(iii) Investment Rs.. 6000
10. “The government on Tuesday said high food inflation is adversely affecting the [4]
common man and it intends to employ various measures to tackle the
situation, including schemes that will facilitate opening up farmers’ mandis
and mobile bazaars. Through changes in its expenditure and taxes , the
government brings economic stability. State governments would be urged to
consider waiving mandi tax, octroi and other local levies, as well as reduce

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 commission agent charges, while encouraging investment in supply chains”
. Financial Express , 30th Nov 2020.
Which objective of Government Budget is discussed here Explain
11. Explain the determination of equilibrium level of income using Saving and [6]
Investment approach. Also explain the impact if planned investments and
planned savings are not equal.
12. a. Explain ‘Bank of Issue ‘ as a function of Central Bank [3]

b. “The RBI announced a host of measures today aimed at change liquidity

in the economy. As a consequence, individuals may see banks change
their margins on interest rates charged on loans. However, fixed income
earners should be aware that these steps might exert downward [3]
pressure on interest rates offered on fixed deposits by banks, as per
some experts.”
Economic Times April 17, 2020
In the light of above news report analysis how the liquidity in the
economy is control by RBI under credit control measure.