Economics Pre Term 1 QP

PRE-TERM – 2021-22
ECONOMICS (CLASS 12)

TERM 1
Time: 90 minutes Maximum Marks: 40
GENERAL INSTRUCTIONS:
1. There are a total 60 questions in this paper out of which 50 questions are to be
attempted.
2. This paper is divided into three Sections:
a. Section A – Contains 24 questions. Attempt any 20 questions.
b. Section B – Contains 24 questions. Attempt any 20 questions.
c. Section C – Contains 12 questions. Attempt any 10 questions.
3. All questions carry equal marks.
4. There is no negative marking.
Q.NO. QUESTIONS
SECTION A
(Consists of 24 questions. 20 questions are to be attempted)
The first 20 questions attempted will be evaluated
1 Policies of surplus budget during inflation and deficit budget during deflation helps
to maintain ____________ in the economy
A. Public enterprises
B. Economic stability
C. Resource allocation
D. Rationalisation of taxes
2 __________________ represents the price of one currency in terms of another

currency
A. foreign exchange rate

B. foreign exchange
C. dollar
D. euro
3 Which one of the following is not a function of the Reserve Bank of India?
A. To issue coins and one-rupee notes

B. To act as the banker to the Government of India.
C. To act as the custodian of the gold reserve of India
D. To act as the financial advisor to the Government of India
4 Identify which of the following is a part of Balance of Trade:
A. Air and sea transport
B. Postal and courier services
C. Education-related travel
D. Merchandise linked transactions
5 Read the following statements carefully and choose the correct alternative from the
following:
Statement 1 – Policies that aim at improving the efficiency and international

competitiveness in an economy are called structural reforms
Statement 2 – in 1991, the government initiated a variety of policies that fall under
three heads, viz. capitalism, socialism, and mixed economy
Alternatives:
A. Both the statements are true.
B. Both the statements are false.
C. Statement 1 is true, and Statement 2 is false
D. Statement 2 is true, and Statement 1 is false
6 Shikha, an Economics student, was studying the concept of ‘rate of interest paid by
the RBI to commercial banks, for the excess savings of commercial banks deposited
with RBI, as per norms and statute prevailing in the country’.
From the following, choose the correct alternative which specifies towards the
concept learnt by Shikha?
A. Reverse Repo Rate

B. Repo Rate
C. Cash Reserve Ratio
D. Statutory Liquidity Ratio
7 A change from 1$ = 71 INR to 72 INR takes place due to changes in market forces of
demand and supply of foreign currency ($). This represents
A. Depreciation of domestic currency

B. Devaluation of domestic currency
C. Appreciation of domestic currency
D. Revaluation of domestic currency
8 Read the following statements carefully and choose the correct alternative:
Statement 1 – Those goods and services that are collectively consumed by the
public are called Public Goods
Statement 2 – Street lighting and measures to reduce pollution are examples of
Public Goods
Alternatives:
9 Out of the transactions given below, identify those that are a part of the Current
account of Balance of Payments of a nation,
i. Trade of goods
ii. Trade of services
iii. Unilateral transactions
iv. Incomes
Identify the correct alternatives from the following:

Alternatives:
A. i and ii
B. i and iii
C. i, iii and iv
D. i, ii, iii and iv
10 Which of the following statements about demand deposits is incorrect?
A. The amount in these deposits is kept with the bank for a fixed period of time
B. These are deposits made by the general public with the commercial banks
C. The amount in these deposits can be withdrawn as and when the depositor
desires
D. The amount can be withdrawn using cheques
11 The common goals of five-year plans in India are growth, modernisation,
____________ and _____________
A. Urbanisation, industrial development

B. Self-sufficiency, education
C. Poverty eradication, communal harmony
D. Equity, self-reliance
12 The relative contribution made by different sectors of the economy in GDP of the
country is called:
A. occupational structure
B. sectoral composition
C. national income
D. population density
13 In India, subsidies in agricultural have always been a topic for debate. Which of the
following is an argument in favour of discontinuation of subsidies?
A. subsidies allow the farmers to overcome the uncertainty involved in farming

B. benefits of subsidies are often reaped by the fertilizer industry
C. farmers purchase expensive technology for production
D. it allows to bridge the gap of inequality
14 Read the following statements carefully and choose the correct alternatives given
below:
Statement 1 –Expenditure on education by individuals is similar to expenditure on

capital goods by producers
Statement 2 – Expenditure on education does not contribute to Human Capital
Formation
Alternatives:
15 Read the following statements carefully and choose the correct alternative given
below:
Statement 1 – During the reform period, growth of agriculture sector increased while
that of services sector declined
Statement 2 – Reform-led growth generated sufficient employment opportunities in
the country
Alternatives:
16 Sale of part of the equity of PSEs to the public is known as ______________
A. Capital formation
B. Modernisation
C. Outsourcing
D. Disinvestment
17 From the following given sets of statements in column I and II, choose the correct
pair of statements.
Column I Column II
a Current account of BOP i Excess of Exports of goods over

the Imports of goods
b Foreign direct ii Recorded on credit side of

investment inflow capital account
c Current Transfers to rest iii Recorded as a positive item in
of the world the BOP account
d Portfolio Investments iv Visible item of trade
Alternatives:
A. a-i
B. b - ii
C. c - iii
D. d - iv
18 National Bank for Agricultural and Rural Development was set up in 1982 as a/the
____________ body to coordinate the activities of all institutions involved in the rural
financing system.
A. apex
B. micro credit
C. private credit
D. cooperative
19 The Government of India has decided to set up 500 Multi Skill Training Institutes in
the country. Trainers and office staff will be required for the running of these
institutes. In the Government`s Budget, salaries of the employees of the institutes
would be categorized as ____________
A. revenue income
B. capital expenditure
C. revenue expenditure
D. capital income
20 Which one of the following Poverty Alleviation Programs would be helpful for a poor
person living in an urban area?
A. Sapoorna Gramin Yojna

B. MGNREGA
C. Pradhan Mantri Gramodaya Yojna
D. Swarnjayanti Shahri Rozgar Yojna
21 What type of relation exists between Legal Reserve Ratio and total deposits created in
an economy?
A. Direct
B. Inverse
C. Either direct or inverse
D. No relation
22 Mark the correct statement
A. On the eve of independence, India had well developed capital goods industries
B. India generated surplus from its foreign trade during the British rule
C. India witnessed balanced growth during the British rule
D. On the eve of independence, mortality rates in the country were low
below:
Statement 1 – In India, farming community uses mixed crop-livestock farming system

Statement 2 – Maintaining livestock along with crop farming is a drain on the farmers`
limited resources
Alternatives:
24 India entered the ______________ stage of Demographic Transition in the year 1921
A. 1st
B. 2nd
C. 3rd
D. Last
SECTION B
25 Read the following statements - Assertion (A) and Reason (R):

(A) – purchase of Industrial machinery is recorded on the credit side of capital
account of Balance of Payments
(R) – machinery is a visible item of trade
From the given alternatives choose the correct one:

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
C. Assertion (A) is true, but Reason (R) is false.
D. Assertion (A) is false, but Reason (R) is true.
26 When total deposits created in an economy are Rs 50,000, with value of LRR given to
be10%, the amount of initial deposits is Rs ____________
A. 2000
B. 5000
C. 10,000
D. 20,000
Assertion (A) – Excessive regulation by the government results in creating industrial
competitiveness
Reason (R) – Licencing policy helped the government to monitor and control industrial
production
Alternatives:
28 Identify the incorrect statement about role of Information Technology (IT) in Rural
Development from the following:
A. IT can play a critical role in achieving sustainable development and food

security in the 21t century
B. IT can help predict areas of food insecurity so that emergency situations can be
prevented
C. IT is, by itself, a major catalyst of change in rural development
D. IT also has potential for employment generation in rural areas
Assertion (A) – There is a clear distinction between Human Capital and Human
Development
Reason (R) – Human Capital treats human beings as a means increase productivity
whereas Human Development treats education and health as integral to human
wellbeing.
Alternatives:
A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the
correct explanation of Assertion (A).
30 From the set of statements given in Column I (Name of the Scheme) and Column II
(Objective of Poverty Alleviation Program), choose the correct pair of statements:
Column II
Column I
(Objective of Poverty Alleviation
(Name of the Scheme)
Program)
a. Pradhan Mantri Jan Dhan i) developing infrastructure and housing

Yojna conditions
b. Integrated Child Development ii) guaranteed wage employment to rural

Scheme unskilled worker
c. National Social Assistance iii) helping specific groups – elderly

Programme people, poor destitute women
d. Valmiki Ambedkar Awas iv) improving food and nutritional status

Yojana of the poor
Alternatives:
A. a - i
B. b - ii
C. c - iii
D. d - iv
31
On the basis of the given Bar Diagram, which one of the following has the
highest share of people below poverty line as a percentage of total rural
population?
a) Tamil Nadu
b) Rajasthan
c) Jharkhand
d) Odisha
32
On the basis of the above-mentioned information, answer the following question:
The Real Per Capita Income of India increased by ____________ (approximately)

between 1951 and 1991.
A. 106 %
B. 96 %
C. 116 %
D. 54 %
Assertion (A) – Land Reforms in India aimed at bringing equity in agriculture

Reason(R) – Big landlords challenged the land ceiling legislation, delaying the
implementation, and subsequently escaping from the legislation

Alternatives:
below:
Statement 1 – Self-Help Groups (SHGs) promote thrift in small proportions

Statement 2 – SHGs played a role in the empowerment of women
Alternatives:
below:
Statement 1 – Commercial banks do not contribute to the money supply as they do

not have note issuing authority
Statement 2 – The two components of money supply are coins and currency notes
Alternatives:
36 Arrange the following event in the correct chronological order:
i. The 1st population census of British India

ii. Establishment of Tata Iron and Steel Company (TISCO)
iii. Introduction of Railways in India by the British
iv. Opening of Suez Canal
From the given alternatives choose the correct order:
Alternatives:
A. iv, ii, i, iii

B. i, iv, iii, ii
C. ii, iii, iv, i
D. iii, iv, i, ii
37 Read the following statements -Assertion (A) and Reason(R), choose one of the
correct alternatives given below:
Assertion (A): Autonomous transactions take place due to some economic motive and
are independent of the state of BOP account
Reason(R): Autonomous transactions are `below the line items`
Alternatives:
explanation of Assertion (A)
38 As a `banker to the government` the RBI performs the functions of ___________

and _________________
i. agent
ii. financial advisor
iii. custodian of cash reserves
iv. issue of currency
(fill up the blanks with the correct alternative)
Alternatives:
A. i and ii
B. ii and iii
C. i and iii
D. i and iv
39 Read the following statements -Assertion (A) and Reason(R), Choose one of the correct
alternatives given below:
Assertion (A): The expansion and promotion of rural banking sector has taken a
backseat after reforms
Reason(R): High paying capacity of the farmers resulted in smooth functioning of the
banking system and low bank default rates
Alternatives:
A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the
correct explanation of Assertion (A).
Assertion (A): alternate marketing channels like Apni Mandi, Hadaspur Mandi, Rythu
Bazar are being promoted in the country
Reason(R): It has been realised that if farmers directly sell their produce to
consumers, it increases their income
Alternatives:
Assertion (A): All currency issued by the Central Bank is its monetary liability
Reason (R): Central Bank is obliged to back the currency with assets of equal value to
enhance public confidence in paper currency
Alternatives:
42 Choose the correct alternatives to be filled in given blanks A and B.
A. Low government expenditure, Low tax revenue

B. Low level of investment, Low level of human capital
C. Low mobilization of savings, Low level of investment
D. Low level of human capital, Low income
43 Dr Renuka, a gynaecologist based in Bhopal, plans to migrate to Canada. She intends

to spend a huge amount of money for shifting to another country of her choice. This
exhibits a step in the direction of Human Capital Formation.
Spot which of the following directly contributes to the process of human capital
formation by Dr Renuka:-
A. Higher cost of living

B. High cost of transportation
C. Higher salary
D. Psychological costs of adjusting in a strange socio-cultural environment
44 Balance of Trade (BOT) of a nation, exhibits a deficit of ₹ 4000 crores. The value of
import of goods is twice that of the exports of goods to the rest of the world.
The value of imports would be ₹ ______ crores
A. 2000
B. 4000
C. 8000
D. 10,000
below:
Statement 1 – Government of India adopted the `Growth-oriented Approach` to

alleviate poverty.
Statement 2 – Growth-oriented Approach, based on trickle-down theory, did not yield
desired results in India.
Alternatives:
46 Read the following statements -Assertion (A) and Reason (R) and choose one of the
correct alternatives given below:
Assertion (A): If the receipts and payments on the current account are not equal to
each other, it always depicts a situation of Current Account Surplus.
Reason(R): A surplus current account means that the nation is a lender to other
countries and a deficit current account means that the nation is a borrower from other
countries.
Alternatives:
47 Identify the correct statement from the following:
A. The policies of the British government led to the collapse of India`s world-
famous handicraft industries, without significantly contributing to its
replacement by a modern industrial base
B. The policies of the British government led to the building-up of India`s world-
famous handicraft industries, without significantly contributing to its
replacement by a modern industrial base
C. The policies of the British government led to the collapse of India`s world-
famous handicraft industries, and contributed significantly to its replacement
by a modern industrial base
D. The policies of the British government led to the setting-up of India`s world-
famous handicraft industries, and contributed significantly to its replacement
by a modern industrial base
48 Match the items given in Column I with those given in Column II:
Column I Column II
a Animal husbandry i. considers rivers, lakes, seas and
oceans as `provider`
b Dairy ii. Involves cultivating fruits, spices,
flowers etc
c Fisheries iii. Poultry accounts for its largest share
d Horticulture iv. Operation Flood and White

Revolution
(Choose the correct alternative)
A. a - ii; b - iii; c - iv; d - i

B. a - iii; b - iv; c - i; d - ii
C. a - i; b - ii; c - iii; d - iv
D. a - ii; b - iv, c - i; d - iii
SECTION C
Q.No. 49 – 54 are to be answered on the basis of the following news report:
10 MAJOR HIGHLIGHTS OF BUDGET 2020
1. Empowering people to create wealth and boost purchasing power

2. Ensuring strong fundamentals of the economy
3. Three pillars of Union Budget 2020- Aspirational India; Economic
Development; Caring Society
4. GST to bring in 60 lakh new taxpayers
5. Promoting Education – Rs 99,300 crores allocated to Education Sector
6. National Infrastructure Policy to spend Es 100 lakh crores over the next
5 years
7. Building Data Centre Parks and National Quantum Tech Plan
8. Developing structure of Tourism
9. Fiscal Deficit targeted at about 9% of GDP
10. Empowering the scheduled castes and scheduled tribes - Rs 85,000
crores allocated for scheduled and other backward classes, and Rs
53,700 crores for scheduled tribes
49 Goods and Services Tax is a ______________ tax
A. Direct
B. Indirect
C. Paper
D. Both a) and b)
50 ` GST brings 60 lakh new taxpayers`. What will be its likely effect on
revenue deficit?
A. increase
B. decrease
C. no effect
D. becomes zero
51 ` National Infrastructure Policy to spend Rs 100 lakh crores over the next 5 years``
Building infrastructure facilities is an example of
A. revenue receipt
B. revenue expenditure
C. capital receipt
D. capital expenditure
52 Identify the correct formula to calculate Fiscal Deficit

A. Total expenditure - Total Receipt (other than borrowings)
B. Revenue Expenditure - Revenue Receipt
C. Capital Expenditure - Capital Receipt
D. Revenue Expenditure + Capital expenditure - Revenue Receipt
below:
Statement 1 – Government Budget is an important Monetary Policy instrument
Statement 2 – Government Budget is an annual financial statement of anticipated
receipts and expenditure of the Govt
54 The Government has allocated funds for empowerment of schedule castes and
scheduled tribes. What objective of the budget is being fulfilled?
A. Reallocation of resources
B. Price stability
C. Regional inequality
D. Reduction in income inequalities
Q.No. 55-60 are to be answered on the basis of the following text:
Indian Economy (1950-1990)
The performance of Indian economy during the period of first seven five-year plans
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 emphasis 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 develop a strong
export sector. Although public sector expanded to a large extent, 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 seen in the
industrial sector. Many Public Sector Undertakings (PSUs) incurred huge losses due
to operational inefficiencies, red-tapism, poor technology and other similar
reasons. These PSUs continued to function because it was difficult to close a
government undertaking even if it was a drain on the 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 need for reform of economic policy was widely felt in the context of
changing global economic scenario, to achieve the desired level of growth in the
country
55 Which of the following was not a reason for the public sector to play a major role
in the initial phase of Indian Economic Planning?
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.
below:
Statement 1 – Import Substitution is also known as Inward looking trade strategy
Statement 2 - Import Substitution aimed at replacing imports with domestic
production
Alternatives:

Assertion (A): By the 1980s, several public sector undertakings were not allowed to
function and were shut down by the Government.
Reason (R): Several PSUs incurred huge losses due to operational inefficiencies,
red-tapism etc
Alternatives:
58 In the light of the given text and common knowledge, identify the incorrect
statement : -
A. Industries became far more diversified compared to the situation at
independence
B. India became self-sufficient in food grain production
C. Implementation of Land Reforms resulted in emergence of zamindari system
D. Excessive government regulation prevented the growth of entrepreneurship
59 Read the following statements about India`s foreign trade in 1950-1990. Choose
the correct alternatives given below:
Statement 1 – India failed to promote a strong export sector
Statement 2 – There was a need to protect domestic industries from foreign
competition
Alternatives:
60 Green Revolution in India was introduced in
A. the 1940s
B. the 1950s
C. the 1960s
D. the 1970s

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PRE-TERM – 2021-22

ECONOMICS (CLASS 12)

Time: 90 minutes Maximum Marks: 40

2 __________________ represents the price of one currency in terms of another

A. foreign exchange rate

A. To issue coins and one-rupee notes

Statement 1 – Policies that aim at improving the efficiency and international

A. Reverse Repo Rate

A. Depreciation of domestic currency

Identify the correct alternatives from the following:

10 Which of the following statements about demand deposits is incorrect?

A. Urbanisation, industrial development

A. subsidies allow the farmers to overcome the uncertainty involved in farming

Statement 1 –Expenditure on education by individuals is similar to expenditure on

16 Sale of part of the equity of PSEs to the public is known as ______________

a Current account of BOP i Excess of Exports of goods over

b Foreign direct ii Recorded on credit side of

d Portfolio Investments iv Visible item of trade

A. Sapoorna Gramin Yojna

22 Mark the correct statement

Statement 1 – In India, farming community uses mixed crop-livestock farming system

25 Read the following statements - Assertion (A) and Reason (R):

From the given alternatives choose the correct one:

From the given alternatives choose the correct one:

A. IT can play a critical role in achieving sustainable development and food

D. IT also has potential for employment generation in rural areas

29 Read the following statements - Assertion (A) and Reason (R):

From the given alternatives choose the correct one:

a. Pradhan Mantri Jan Dhan i) developing infrastructure and housing

b. Integrated Child Development ii) guaranteed wage employment to rural

c. National Social Assistance iii) helping specific groups – elderly

d. Valmiki Ambedkar Awas iv) improving food and nutritional status

On the basis of the above-mentioned information, answer the following question:

The Real Per Capita Income of India increased by ____________ (approximately)

33 Read the following statements - Assertion (A) and Reason (R):

Assertion (A) – Land Reforms in India aimed at bringing equity in agriculture

From the given alternatives choose the correct one:

Statement 1 – Self-Help Groups (SHGs) promote thrift in small proportions

Statement 1 – Commercial banks do not contribute to the money supply as they do

36 Arrange the following event in the correct chronological order:

i. The 1st population census of British India

From the given alternatives choose the correct order:

A. iv, ii, i, iii

38 As a `banker to the government` the RBI performs the functions of ___________

(fill up the blanks with the correct alternative)

A. Low government expenditure, Low tax revenue

43 Dr Renuka, a gynaecologist based in Bhopal, plans to migrate to Canada. She intends

A. Higher cost of living

Statement 1 – Government of India adopted the `Growth-oriented Approach` to

47 Identify the correct statement from the following:

d Horticulture iv. Operation Flood and White

(Choose the correct alternative)

A. a - ii; b - iii; c - iv; d - i

Q.No. 49 – 54 are to be answered on the basis of the following news report:

10 MAJOR HIGHLIGHTS OF BUDGET 2020

1. Empowering people to create wealth and boost purchasing power

52 Identify the correct formula to calculate Fiscal Deficit

Q.No. 55-60 are to be answered on the basis of the following text:

Indian Economy (1950-1990)

A. Private entrepreneurs lacked sufficient capital for investment.

57 Read the following statements - Assertion (A) and Reason (R):

60 Green Revolution in India was introduced in

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