Bright Day School, Vadodara

CBSE Unit – Vasna

Academic Year: 2021 – 22
Term Test - I
Subject: Economics (030)
Date: 18/09/2021 Std: XII
Time: 3 Hours Marks: 80
General Instructions
1. This question paper contains two parts:
Part A: Macro Economics (40 marks)
Part B: Indian Economic Development (40 marks).
2. All questions in both sections are compulsory Marks for questions are indicated against
eachquestion
3. Question No. 1-10 and 18-27 (including two Case Based Questions) are very short
answer questions carrying 1 mark each. They are required to be answered in one word
or one sentence each or choose the correct alternative.
4. Case Based Questions (CBQ's) are Question No. 7-10 and Question No. 25-27.
5. Question No. 11-12 and 28-29 are short answer questions carrying 3 marks each.
Answers to themshould not normally exceed 60-80 words each.
6. Question No. 13-15 and 30-32 are also short answer questions carrying 4 marks each.
Answers tothem should not normally exceed 80-100 words each.
7. Question No. 16-17 and 33-34 are long answer questions carrying 6 marks each.
Answers to themshould not normally exceed 100-150 words each.
8. Answers should be brief and to the point and the above word limit be adhered to as far
as possible
9. There is no overall choice. However, an internal choice has been provided in 1 questions
of onemark, 2 questions of three marks, 2 questions of four marks and 2 questions of six
marks. Only oneof the questions have to be attempted.
10. In addition to this, separate instructions are given with each section and question,
wherevernecessary
SECTION - A
Q1) Suppose in an economy, the initial deposits of Rs. 400 crores lead to the
creation of total deposits worth Rs. 4000 crores. 1
Under the given situation the value of reserve requirements would be ____
(Fill up the blank with correct alternative)
a) 0.01 b) 1 c) 0.1 d) 0.4
Q2) Identify which of the following is not a function of the Reserve Bank of India?
“(Choose the correct alternative) 1
a) To act as the banker to the Government of India.
b) To act as the custodian of the gold reserve of India
c) To act as the financial advisor to the Government of India
d) To issue coins and one rupee note
Q3) The Monetary Policy generally targets to ensure ____. 1
a) Price stability in the economy
b) Employment generation in the country.
c) Stable foreign relations
d) Greater tax collections for the Govt.
Q4) ___________, which a commercial bank holds in other commercial banks, are
not regarded as part of money supply. 1
Q5) _________ is the main source of money supply in an economy. 1
i) Central Bank ii) Commercial Banks iii) Both i) and ii) iv) Government
Q6) The Government of India has decided to vaccinate the adult population of
India (with Covaxin/Covishield), without any charge. This would be categorized
as _________ (Fill in the blank with correct alternative) 1
a) revenue nature income b) capital nature expenditure
b) revenue nature expenditure c) capital nature income
Read the following news report and answer Questions 7-10 on the basis of
the same.
MUMBAI: Investors were relieved as the finance minister NirmalaSitharaman avoided
an increase in the long-term capital gains tax on equity investments and
securities transaction tax in the Union Budget for 2021-22 announced today.
Heading into the Budget, most investors were concerned that the government
may look at increasing the long-term capital gains tax or the securities
transaction tax in order to boost its revenues, especially as the stock market
has witnessed a breakneck rally since the beginning of April.
In her Budget speech in July 2019, the finance minister had reintroduced the
long-term capital gains tax after 15 years. Currently, individuals who make
capital gains of more than 1 lakh on their equity investment after a holding
period of more than one year have to pay a tax of 10 per cent on the capital
gains.
However, the capital gains tax for individuals in the highest bracket of
earnings comes around 15 per cent inclusive of a cess.
Money managers had said that the government needed to bring out an equity
friendly Budget, implying no changes in taxations related to the stock market,
in order to ensure that its divestment plans went smoothly in the next fiscal
year.
- “Budget 2021: Investors breathe a sigh of relief as FM skips LTCG, STT hike"
- The Economic Times – February 1st, 2021
Q7) What type of tax is the Capital Gains Tax? 1
i) Direct Tax ii) Indirect Tax iii) It is a cess iv) It is a fine
Q8) What is the reason for the government to increase taxes? 1
i) To extract money from the people
ii) To use the money for themselves
iii) To achieve the objective of equality in income distribution
iv) To get their salary.
Q9) Why didn't the government say anything about the capitals gain tax? 1
i) To stabilize the economic growth
ii) To help the economy for economic growth
iii) To rectify the losses that happened due to Covid-19
iv) All of the above
Q10) The capital gains come in the highest bracket of earning comes around ___.
(10%/15%/20%) 1
Q11) Discuss briefly the ‘Lender of last resort function of a Central Bank. 3
Q12) Giving reasons, classify the following into revenue receipts and capital
receipts. 3
i) Recovery of loans ii) Profits of public sector undertakings iii) Borrowings
Q13) Illustrate with the help of a hypothetical numerical example the process of
credit creation. 4
Q14) Explain how Government budget can be used to influence distribution of
Income? 4
OR
‘Through its budgetary policy govt allocates resources in accordance with the
requirements of the country. Do you agree with the given statement?
Justify your answer with valid reason.
Q15) How are capital expenditure different from revenue expenditure? Discuss
briefly. 4
Q16) a) Explain the Bank of issue’ function of the Central Bank. 3
b) Discuss briefly the “Credit controller function of central Bank “ 3
Q17) Explain the meaning of the following:- 6
i) Revenue Deficit ii) Fiscal Deficit iii) Primary Deficit
 OR
Giving reasons, classify the following as Revenue Expenditure & Capital
Expenditure.
i) Subsidies ii) Repayment of loans
iii) Expenditure on collection on taxes i) Expenditure on building a bridge

SECTION B
Q18) Read the following statement Assertion (A) and Reason (R) choose one of the
correct alternatives given below. 1
Assertion (A): Small-scale industries face shortage of capital.
Reason (R): The Government is reluctant in providing them any assistance & loans.
(a) (A) and (R) both are true and (R) is the correct explanation of (A).
(b) (A) and (R) both are true but, Reason (R) is not the correct explanation of (A).
(c) (A) is true but reason (R) is false.
(d) (A) is False but reason (R) is True.
Q19) After Independence the number of Industrial policies declared till now are: 1
i) 5 ii) 7 iii) 6 iv) 8
Q20) In 1955, Karve committee was constituted for aiming the development of
____________ Industries. 1
Q21) Estimation of poverty in rural economies is at per day consumption of calories: 1
i) Less than 2200 ii) Less than 2100
iii) Less than 2000 iv) Less than 2400
Q22) Read the following statement Assertion (A) and Reason (R) choose one of the
correct alternatives given below. 1
Assertion (A): Poverty and unemployment are interdependent on each other.
Reason (R): Unemployment leads to poverty.
(a) (A) and (R) both are true and (R) is the correct explanation of (A).
(b) (A) and (R) both are true but, Reason (R) is not the correct explanation of (A)
(c) (A) is true but reason (R) is false.
(d) (A) is False but reason (R) is True.
Q23) State whether the following statement is true or false. 1
I) Physical capital helps in formation of human capital.
Read the following hypothetical Case Study, carefully and answer the
question numbers 24 - 27 on the basis of the same.
Since ages, farmers in India have taken recourse to debt. In the earlier times the
same was from informal sources. Since independence with the efforts of the
government, formal sector has actively come into picture. Farmers borrow not
only to meet their investment needs but also to satisfy their personal needs.
Uncertainty of income caused by factors likes crop failure caused by irregular
rainfall, reduction in ground water table, locust/other pest attack, etc. These
reasons push them into the clutches of the private moneylenders, who charge
exorbitant rates of interest, which add to their miseries.

Various governments in India, at different times for different reasons, introduced

debt relief/waiver schemes. These schemes are used by governments as a quick
means to extricate farmers from their indebtedness, helping to restore their
capacity to invest and produce, in short to lessen the miseries of the farmers
across India. The costs and benefits of such debt relief schemes are, however, a
widely debated topic among economists.

Some economists argue that such schemes are extremely beneficial to the poor
and marginalized farmers while others argue that these schemes add to the fiscal
burden of the government, others believe that these schemes may develop the
expectation of repeated bailouts among farmers, which may spoil the credit
culture among farmers.
Q24) Uncertainty of income for farmers in India is majorly caused by (irregular
rainfall/ unavailability of loans). 1
Q25) Some economists argue that debt waiver schemes are extremely beneficial to
the poor and marginalized farmers, as these schemes reduce the burden of
(indebtedness/ personal expenditures) 1
Q26) The rural banking structure in India consist of a set of multi-agency
institutions_________ (Regional Rural Banks / Small Industries Development
Bank of India) is expected to dispense credit at cheaper rates for agricultural
purposes to farmers. 1
Q27) ___________ is the most prominent body responsible for providing Loans for
long term Land development. 1
Q28) Indicate the volume and direction of trade at the time of independence. 3
Q29) Explain how import substitution can protect domestic industry? 3
OR
What were the two main land reforms undertaken in India?
Q30) Give a quantitative appraisal of India ‘demographic profile during the colonial
period? 4
Q31) The three-dimensional attack on poverty adopted by the government has not
succeeded in poverty alleviation in India. Comment. 4
Q32) What are the main problems of human capital formation in India? 4
OR
What is the impact of health and medical facilities in India?
Q33)
Sector 1950-1951 1990-1991
Agriculture 72.1 66.8
Industry 10.7 12.7
service 17.2 20.5
a) What information do we get from the table? 1
b) What does it mean by the shift in the work force. 1
c) Critically appraise the need for subsidy in agriculture. 2
d) Give arguments against subsidy in Agriculture. 2
Q34) a) “Mention some obstacles that hinder the mechanism of agricultural
marketing. 4
b) Define rural development. 2
OR
Write about the government efforts to improve agricultural marketing? 6