(a) K = 1/LRR

(b) K = 1/SLR
(c) K = 1/Bank Rate
(d) K = 1/ Repo Rate
Ans. K = 1/LRR
6. During deflation, it is advisable to Applying

(a) Lower the bank rate and purchase of

securities in the open market

(b) Increase the bank rate and purchase of

securities in the open market

(c) Decrease in bank rate and sale of securities in

the open market

(d) Increase in bank rate and sale of securities in

the open market
Ans. Lower the bank rate and purchase of
securities in the open market
7. Which of the following will increase the supply of Applying
money?

(a) Fall in bank rate

(b) Sale of securities in open market
(c) Increase in the cash reserve ratio
(d) Increase in Repo rate
Ans. Fall in bank rate
8. When the central act as a banker to the Applying

government, what does it do?

(a) It carries out government transactions (b) It

advises on monetary and financial matters
(c) It keeps accounts of the government (d) It
carries out government transactions, advises on
monetary and financial matters and keeps
accounts of the government
Government Budget and the Economy 6 MARKS
9. Budget deficit means: Remembering and
understanding
a) budget expenditure – budget receipts
b) capital expenditure – capital receipts
c) total expenditure – total receipts (excluding
borrowings)
d) total expenditure – revenue receipts
ans. – [a]

10. Disinvestment by Government means: Remembering and

understanding
a) selling of its fixed capital assets
b) selling of share of public enterprises held by it
c) selling of its buildings
d) selling of its buildings & shares
ans. – [b]
11. Fiscal Deficit – Interest Payment equals to : Remembering and
understanding
a) primary deficit
b) revenue deficit
c) budget deficit
d) gross fiscal deficit
ans. – [a]
12. Which of the following item Either creates a Applying

liability Or reduces any asset :

a) capital receipts b) revenue receipts
c) revenue expenditure d) capital
expenditure
ans. – [a]

13. The government has increased the rate of income Remembering and
understanding
tax. the objective of government is to:
a) maintain balanced regional development
b) redistribute income & wealth
c) reallocate resources
d) ensure economic stability
ans. – [b]
14. In a government budget, if revenue receipts are Rs. Evaluating and
Analysing
100 lakh, capital receipts are Rs. 50 lakh and
revenue deficit is Rs. 25 lakh, how much is the
revenue expenditure?
 a) 100 lakh
b) 125 lakh
c) 50 lakh
d)75 lakh
ans. – [b]

15. Which one of the following statement is incorrect? Evaluating and

Analysing
a) Revenue receipts are regular in nature
b) there is no future obligation to return the
amount in case of revenue receipts.
c) capital receipts either create an asset or
cause a reduction in the liabilities of the
government.
d) borrowings are treated as capital receipts as
they lead to an increase in liability.
ans. – [c]
16. Which of the following statement is not true for Evaluating and
Analysing
fiscal deficit? A Fiscal deficit :
a) represents the borrowing of the government
b) is the difference between total expenditure &
total receipts of the government
c) is the difference between total expenditure &
total receipts other that borrowing
d) increases the future liability of the
government.
ans. – [a]
Balance of Payments 6 marks

17. Identify the following types of taxes from the given Evaluating and
Analysing
options:
1. It is a type of tax, which impact and incidence
lie on the same person (a) GST
2. it is a type of tax, which impact and incidence
lie on the different persons (b) capital gain tax
3. Tax that imposed on property and income of
an individual (c) indirect tax
4. Tax that is proportionate in nature (d) direct
tax Answer: 1 b, 2 a, 3 d, 4 c
18. classify the following as expenditure and receipts: Evaluating and
Analysing
1. Purchase of metro coaches from Japan
(a) revenue expenditure

2. Dividend received by government from a

company
(b) capital receipts
3. Sale of 40% shares of a PSU to a private
company
(c) capital expenditure
4. Pension paid to retired Government
employees
(d) revenue receipts Answer: 1c,2d,3b,4a

19. Identify the following types of receipts: Evaluating and

Analysing
1. Revenue receipts
(a) neither create any asset nor reduces any
liability
2. Capital receipts
(b) either creates a liability or reduces an asset
(c) either creates asset or reduces liability
(d) neither creates a liability or reduces any asset
Answer: 1d,2b

20. identify the different types of deficits: Evaluating and

Analysing
1. fiscal deficit (a) total expenditure - total
receipts
2. Primary deficit (b) revenue expenditure -
revenue receipts
3. Revenue deficit (c) total expenditure - total
receipts excluding borrowings
(d) fiscal deficit - interest payment Answer
1c,2d,3b
21. Match the following statements with objectives of Evaluating and
Analysing
government budget:
1. Government increases taxes on super rich
people
(a) reallocation of resources
 2. government increases its own expenditure
during deflation to increase aggregate demand
(b) reducing inequalities in income and wealth
Answer: 1a,2b
22. Which one of these is revenue expenditure? UNDERSTANDING

a) purchase of shares
c) subsidies
b) expenditure on acquisition of land
d) loan advanced
ans. – [c]

23. Which of the following is a non- tax revenue UNDERSTANDING

receipts?
a) GST
b) Import duty
c) Escheat
d) wealth tax
ans. – [c]
24. Identify the tax whose burden can’t be shifted: UNDERSTANDING

a) GST
b) Income – Tax
c) Sales tax
d) VAT
ans. – [b]
25. Borrowing in government budget is: UNDERSTANDING

a) revenue deficit
b) fiscal deficit
c) primary deficit
d)deficit in taxes
ans. – [b]
Development Experience (1947-90) and Economic 12

Reforms since 1991: ● Indian Economy on the eve of

Independence ● Indian Economy (1950-90) ●
Liberalisation, Privatisation and Globalisation : An
Appraisal
26. Who takes the decisions regarding production and Applying

distribution of commodities in a mixed economy?

 a) Government
b) Market forces of demand and supply
c) God
d) Both Market forces of demand and supply and
Government

27. What was literacy rate for women of India at the Remembering

time of independence?
a) 7 per cent
b) 40 per cent
c) 12 per cent
d) 16 per cent
28. In India exports are encouraged through Applying

a) Subsidies
b) Any one of these
c) Relief in taxes
d) Concessional bank credit
29. Cotton textile mills were dominated by Understanding

a) Foreigners
b) Britishers
c) None
d) Indians
30. During major part of British period Remembering

a) Imports were more than exports

b) Exports were equal to imports
c) None of these
d) Exports were more than imports
31. When was TISCO incorporated in India? Remembering

a) 1921
b) 1907
c) 1850
d) 1853
32. Major contribution to the GDP of the country on Understanding

the eve of independence was from

a) modern industries
 b) agriculture
c) None of these
d) trade
33. What does the export surplus mean? Applying

a) Total export of a country b) When export

of current year of a country is more than previous
year export
c) When export of a country is more than
import
d) When import of a country is more than
export
34. 27. What is meant by commercialisation of Applying

agriculture?
a) Both
b) None
c) Production of crop for sale in the market
d) Production of crop for self-consumption
35. When was the 'Village and Small-Scale Industries Remembering

Committee' set up?

a) 1950
b) 1958
c) 1955
d) 1949
36. Strategic industries were under the control of Remembering

under IPR, 1956.

a) Public Sector
b) None of the above
c) Joint Sector
d) Private Sector
37. A:- Under IPR 1956, even an existing industry had Evaluating and
Analysing
to obtain a license for expanding output or for
diversifying production.
R:- This was meant to ensure that the quantity of
goods produced was not more than what the
economy required.
a)A is true, R is false.
 b)All of these
c)A is false, R is false.
d)A is true, R is true
38. 25. A:- The removal of barriers to trade is known as Evaluating and
Analysing
liberalization.
R:- Federalization of trade allows businesses to
freely decide which goods to import and export.
A is False, R is true
39. A:- Privatization means giving greater role to the Evaluating and
Analysing
private sector in the nation building process and a
reduced role
to the public sector.
R:- The government has also made attempts to
improve the efficiency of PSU’s by giving them
autonomy in
taking managerial decisions.
Both A and R are true but R is not the correct
explanation of A
Current challenges facing Indian Economy ● Poverty ● 10 marks

Human Capital Formation ● Rural development

40. CASE STUDY Evaluating and
Analysing
The performance of Indian economy during the
period of first seven five year plans (1950-1990)
was satisfactory if not very
impressive. On the eve of independence, India was
an industrially backward country, but during this
period of first seven
plans our industries became far more diversified,
with the stress being laid on the public investments
in the industrial sector.
The policy of import substitution led to protection
of the domestic industries against the foreign
producers but we failed to
promote a strong export surplus. Although public
sector expanded to a large extent but it could not
bring desired level of
improvement in the secondary sector. Excessive
government regulations prevented the natural
trajectory of growth of
entrepreneurship as there was no competition, no
innovation and no modernization on the front of
the industrial sector.
Many Public Sector Undertakings (PSU’s) incurred
huge losses due to operational inefficiencies, red-
tapism, poor
technology and other similar reasons. These PSU’s
continued to function because it was difficult to
close a government
undertaking even it is a drain on country’s limited
resources.
On the Agricultural front, due to the measures
taken under the Green Revolution, India more or
less became self-sufficient
in the production of food grains.
So the needs for reform of economic policy was
widely felt in the context of changing global
economic scenario to achieve
desired growth in the country.
Q-1 Which of the followingwas not a reason for the
public sector to play a major role in the initial
phase of Indian Economic
Planning? (choose the correct alternative)
a) Private entrepreneurs lacked sufficient capital
for investment.
b) Government aimed at social welfare.
c) The market was big enough to encourage private
industrialists for investment.
d) The government wanted to protect the
indigenous producers from the foreign
competition.
Q-2 Inward looking trade strategy aimed at
_________ (fill up the blank with correct answer)
Q-3 State whether the given statement is true or
false:
 Mechanization of the Indian agriculture was one of
thecause of Green Revolution in India.
Q-4 Read the following statements - Assertion (A)
and Reason ( R)
Assertion (A): Many public sector undertakings
incurred huge losses due to operational
inefficiencies.
Reason (R): Red-tapism was one of the reasons for
continuation of such enterprises.
Select the correct alternative from the following:
a) Both Assertion (A) and Reason (R) are true.
b) Both Assertion (A) and Reason (R) are false.
ANSWERS
Q-1 c) The market was big enough to encourage
private industrialists for investment.
Q-2 protecting domestic industries from
international competition. (or any other valid
answer)
Q-3 True
Q-4 a) Both Assertion (A) and Reason (R) are true.
41. A:- The excessive regulation of what came to be Evaluating and
Analysing
called the Permit license raj prevented certain
firms from
becoming more efficient.
R:- More time was spent by industrialists in trying
to obtain license or lobby with concerned ministers
rather than or thinking about how to improve their
products.
Both are true. R is the correct explanation of A
42. A:- Even with expanded employment Evaluating and
Analysing
opportunities, the poor will not be able to buy for
themselves all the
essential goods and services.
R:- Three major programmes that aim at improving
the food and nutritional status of the poor are
Public
Distribution System, Integrated Child Development
Scheme and Midday Meal Scheme.
 A is False, R is true
43. A:-Reena works five days a week , receives her Evaluating and
Analysing
income on the last day of each month and gets
medical
facilities from her firm.
R:- Reena is working in organized sector.
Both are true. R is the correct explanation of A
44. A:- ‘Kudumbashree’ is a women –oriented Evaluating and
Analysing
community-based poverty reduction programme
being implemented
in kerala.
R:- The SHGs promote thrift in small proportions by
a minimum contribution from each member.
Both are true. R is the correct explanation of A
45. A:- As agriculture is already overcrowded, a major Evaluating and
Analysing
proportion of the increasing labour force needs to
find
alternative employment opportunities in other
non-farm sectors.
R:- Non-farm economy has several segments in it;
some possess dynamic linkages that permit healthy
growth
while others are in subsistence, low productivity
propositions.
Both A and R are true but R is not the correct
explanation of A
46. A:- A state has per capita income of 25,000 per Evaluating and
Analysing
annum. The infant mortality rate of state is 2%. So
the state
cannot be considered as developed state.
R:- There are medical facilities in the state , but
people fail to take their children to hospital in time.
A is False, R is true
47. . A:- If India, is to solve the problem of poverty, it Evaluating and
Analysing
has to find viable and sustainable strategies to
address the
causes of poverty.
 R:- To identify poor government has to design
schemes and also have to help poor the poor to
come out of their
situation.
Both A and R are true but R is not the correct
explanation of A
48. A:- High growth alone is not sufficient to reduce Evaluating and
Analysing
poverty.
R:- Government policies have failed to address the
vast majority of vulnerable people who are living
on or just
above the poverty line.
Both A and R are true but R is not the correct
explanation of A
49. A:- Even with expanded employment Evaluating and
Analysing
opportunities, the poor will not be able to buy for
themselves all the
essential goods and services.
R:- Three major programmes that aim at improving
the food and nutritional status of the poor are
Public
Distribution System, Integrated Child Development
Scheme and Midday Meal Scheme.
A is False, R is true
36. A:- Pradhan Mantri Jan-Dhan Yojana
encourages people in India to open bank accounts.
R:- Besides promoting saving habits, this scheme
tends to transfer all the benefits of government
schemes and
subsidies to account holders directly.
Both are true. R is the correct explanation of A
50. A:- Many of the services such as voice-based Evaluating and
Analysing
business processes, record keeping, accountancy
are being
outsourced by multinational companies to India.
R:- The low wage rates and availability of skilled
manpower in India have made it a destination for
global
outsourcing in the post-reform period.
Both are true. R is the correct explanation of A