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12 Economics sp01
12 Economics sp01
Class 12 - Economics
Sample Paper 01
Maximum Marks: 40
Time Allowed: 90 minutes
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.
Section A
1. One of the other two components of government Revenue in the budget are:
a. Revenue Expenditure
b. Expenditure receipts
c. Capital receipts
d. Budget receipts
2. One of the functions of commercial banks among the following is:
a. Advancing issues
b. Advancing foreign exchange
c. Advancing Loans
d. Advancing securities
3. Deficit financing is
a. Taking loans
b. Printing more currency notes
c. Not paying interest on loans
d. None of them
4. Fiscal deficit is equal to borrowings. It is:
a. False
b. True
c. Can’t say
d. Insufficient information
5. Disequilibrium in the balance of payments leads to:
a. decrease in official reserves with RBI
b. none of these
c. increase in official reserves with RBI
d. both increase and decrease in official reserves with RBI
6. When did the modern postal system start in India?
a. 1937
b. 1881
c. 1941
d. 1854.
7. The starting of land reforms programmes was set up in the right direction but it could not be successful
because of
a. inadequate proof of tenancy
b. malafide transfers
c. lack of political will
d. All of the these
8. Which concept is related to the disposal of equity of public sector units in the market for covering the
fiscal deficit of the central government?
a. Disinvestment
b. Liberalisation
c. Privatisation
d. Denationalisation
9. When we talk of poverty in a country we mean:
a. Absolute poverty
b. None of these
c. Relative poverty
d. Both absolute and relative poverty
10. Which of the following is not a source of human capital formation?
a. Expenditure on education
b. Import of machinery
c. On the job training
d. Migration
11. Fish production from inland sources contributes about ________ percent to the total fish production and
the balance ________ percent from the main sector.
a. 51, 49
b. 25, 75
c. 75, 25
d. 49, 51
12. What is the fiscal year in India for which government budget is prepared?
a. None of these
b. January-December
c. July-June
d. April-March
13. RBI announced the guidelines to issue licenses to new banks of the private sector on:
a. None of these
b. April 1, 1999
c. January 22, 1993
d. March 15, 1995
To practice more questions & prepare well for exams, download myCBSEguide App. It provides
complete study material for CBSE, NCERT, JEE (main), NEET-UG and NDA exams.
14. Fiscal deficit equals ________.
a. None of these
b. Primary deficit + Interest payments
c. Primary deficit - Interest payments
d. Total budget expenditure - Total budget receipts
a. 1999
b. 2015
c. 1991
d. 2005
32. Which of the following is not a non-tax revenue receipt?
a. Disinvestment
b. Goods and Services tax
c. Dividends and profits
d. External grants
33. Assertion (A): Power groups in villages started exercising control over the delivery mechanism of the
poverty alleviation programmes.
Reason (R): There was a large-scale leakage in the delivery package and the poor received only a
fragment of the said earmarked for them.
a. Both A and R are true and R is the correct explanation of A.
b. Both A and R are true but R is not the correct explanation of A.
c. A is true but R is false.
d. A is false but R is true.
34. Indicator/s of growth in the educational sector
a. All of these
b. Gross Enrolment Ratio
c. Literacy rate
d. Number of educational institutes
35. Operation flood is related to:
a. Cereals co-operatives
b. Pulses co-operatives
c. None of these
d. Milk co-operatives
36. Strategic industries were under the control of _______________ under IPR, 1956.
a. Public Sector
b. None of the above
c. Joint Sector
d. Private Sector
37. Assertion (A): Products are widely responding to the consumer's choice and preference.
Reason (R): Large variety of goods and services from the diverse global markets are now easy to access
to the buyers.
a. Both A and R are true and R is the correct explanation of A.
b. Both A and R are true but R is not the correct explanation of A.
c. A is true but R is false.
d. A is false but R is true.
38. The primary deficit is the borrowing requirements of the government for making ________. (choose the
correct alternative)
a. Some specific payments
b. All types of payments
c. Other than interest payments
d. Interest payments
39. Assertion (A): Statutory liquidity ratio is reduced to increase the flow of credit in the economy.
Reason (R): The rate of statutory liquidity ratio is fixed by the central bank which is a fixed percentage
Question No. 49 to 54 are based on the given text. Read the text carefully and answer the
questions:
Functions of money are basically classified into two categories: primary functions ad secondary
functions. Primary functions include the medium of exchange and measure of value. Secondary
functions include the standard of deferred payments, store of value, and transfer of value.
W.R.L. Coulborn and Paul Einzig have classified all the functions of money into two broad categories,
static functions, and dynamic functions. The static functions of money refer to conventional functions
of money. These basically include the primary ad secondary functions of money: medium of
exchange, a measure of value, the standard of deferred payments, store of value, and transfer of value.
Dynamic functions of money refer to the functions of money which impart stability to the economy ad
push an economy to a higher level of growth and development.
49. Introduction of money has separated the act of sale and purchase is a ________ function of money.
a. secondary
b. all of these
c. primary
d. teritary
50. ________ functions helps to regulate the economic system.
a. demand
b. static
c. dynamic
d. None of these
51. Rupees in India, dollars in USA, euro in Europe all these dictates ________ function of money.
a. unit of value
b. Store of Value
c. medium of exchange
d. Standard of Deferred Payments
52. Government all over the world have tried to control the recession is ________ function of money.
a. demand
b. dynamic
c. static
d. all of these
53. Money also acts as a convenient unit of account. Which function of money can be inferred in this
statement?
a. Secondary
b. Static
c. Primary
d. Dynamic
54. A company gives gifts cards to its employees every Diwali instead of bonuses. What function of money
does a gift card perform here?
a. primary
b. dynamic
c. secondary
d. static
Question No. 55 to 60 are based on the given text. Read the text carefully and answer the
questions:
It is through the sale and purchase of foreign currency in the international money market. When the
exchange rate (say of US) needs to be reduced, the central bank releases the supply of US in the foreign
exchange market. Other things remaining constant, higher supply of US would lower the price of US, as
desired. This would lead to an appreciation of the domestic currency. On the other hand, when the
exchange rate needs to be raised, the central bank increases its demand for the US in the foreign
exchange market. Other things remaining constant, higher demand for the US would raise the price of
US $, as desired. This would lead to the depreciation of the domestic currency. Briefly, managed
floating is an exercise of sale and purchase of foreign currency by the central bank, so that the
exchange rate is managed within the desired limits.
c. Speculative
d. Regular
59. Managed floating exchange rate system is a mixture of a ________ exchange rate system and a ________
rate system.
a. flexible; rigid
b. rigid; flexible
c. fixed; flexible
d. flexible; fixed
60. The system was the gold standard is an example of ________.
a. rigid exchange rate system
b. fixed exchange rate system
c. mixed exchange rate system
d. flexible exchange rate system
Class 12 - Economics
Sample Paper 01
Solution
Section A
1. (c) Capital receipts
Explanation: Government revenue is classified as revenue receipts and capital receipts.
Capital receipts are further classified as:
i. recovery of loans
ii. borrowings and other liabilities
iii. other receipts
Capital receipts either create liability or cause a reduction in the assets of the government.
2. (c) Advancing Loans
Explanation: The primary functions of a commercial bank are accepting deposits and also give loan
facilities.
3. (b) Printing more currency notes
Explanation: Deficit financing is a budgetary situation where expenditure is higher than the revenue.
The expenditure revenue gap is financed either by printing currency notes or through borrowing.
4. (b) True
Explanation: Fiscal deficit indicates the excess of government expenditure over receipts except for
borrowings. For eg. if total expenditure = Rs 100 crores and total receipts = Rs. 100 crores(including
borrowing of Rs. 20 crores)
then fiscal deficit = 100 - (100 -20) = 20
so, we see that fiscal deficit = borrowings.
5. (d) both increase and decrease in official reserves with RBI
Explanation: Disequilibrium in the balance of payments leads to both increase and decrease in official
reserves with RBI.
6. (d) 1854.
Explanation: The first postal stamp in India was introduced on 1 July 1852 in the Scinde district. In
1854 the introduction of uniform postage rates led to the development of the first postage stamps valid
for use throughout India.
7. (d) All of the these
Explanation: On account of low productivity, dependence on imported food grains, and the intense
poverty of a large section of the land reforms programmes were introduced.
The starting of land reforms programmes was set up in the right direction but it could not be successful
because of:
Lack of political will.
Malafide transfers.
Inadequate proof of tenancy.
To practice more questions & prepare well for exams, download myCBSEguide App. It provides
complete study material for CBSE, NCERT, JEE (main), NEET-UG and NDA exams.
8. (a) Disinvestment
Explanation: Disinvestment is the concept which is related to the disposal of equity of public sector
units in the market for covering the fiscal deficit of the central government.
9. (a) Absolute poverty
Explanation: Absolute poverty refers to a condition characterised by severe deprivation of basic
human needs such as food, safe drinking water, shelter, clothing, health facilities, education and health
care.
10. (b) Import of machinery
Explanation: Import of machinery is a component of physical capital. Physical capital refers to the
produced means of production.
11. (d) 49, 51
Explanation: India is a major supplier of fish in the world. Fish production from inland sources
contributes about 49 percent to the total fish production and the balance 51 percent from the main
sector.
12. (d) April-March
Explanation: The financial year in India begins from April 1 and ends on March 31. This period of
accounting income is called the financial year or a fiscal year.
13. (c) January 22, 1993
Explanation: RBI announced the guidelines to issue licenses to new banks of the private sector
on January 22, 1993.
14. (b) Primary deficit + Interest payments
Explanation: Primary deficit is the difference between fiscal deficit and interest payment. Fiscal deficit
shows the borrowing requirement of the government inclusive of interest payment on the past loans.
15. (a) Owned by government
Explanation: The public sector is that portion of an economic system that is owned and controlled by
national, state or provincial, and local governments.
16. (c) autonomous items
Explanation: The cause of BoP imbalance relates to autonomous items.
17. (d) Jute
Explanation: Jute industry suffered heavily due to a lack of raw material after partition.
18. (d) Monopolies and Restrictive Trade Practices Act
Explanation: Monopolies and Restrictive Trade Practices Act aims to prevent concentration of
economic power, provide for control of monopolies, and protect consumer interest.
19. (c) Financial
Explanation: Financial Institutions by engaging in mobilisation and allocation of savings, act as a
channel between the savers and borrowers of funds.
20. (a) all of these
Explanation: As per the United Nations, “poverty is fundamentally a denial of choices and
opportunities, and a violation of human dignity. It means lack of basic capacity to participate
effectively in society. Poverty is not only a social or an economic problem but it is a social, economic as
well as a political problem for a country.
21. (a) Human development is based on the idea that education and health are integral to human well-
being.
Explanation: Human capital considers education and health as a means to increase labour
productivity. Human development is based on the idea that education and health are integral to human
well-being because when people have the ability to read and write and the ability to lead a long and
healthy life, they will be able to make other choices they value.
22. (c) Chennai
Explanation: It is a non-profit NGO trust based in Chennai. It develops and promotes strategies for
economic growth that directly targets the increased employment of poor women in rural areas.
23. (d) Acceleration of economic growth
Explanation: It encompasses many other elements such as the equitable distribution of the fruits of
economic growth, elimination of poverty, maintenance of reasonable price stability, the participation
of all sections of the society in the growth process, and improvements in indicators of human
development, particularly health and education.
24. (d) Education Commission 1964-66
Explanation: Education commission recommended that at least 6% of GDP should be spent on
education.
Section B
25. (c) A is true but R is false.
Explanation: Export and import of services such as banking, insurance, shipping are not included in
the balance of trade. Expenditure by tourists is not included in the balance of trade.
26. (c) Jawaharlal Nehru
Explanation: The first Indian Prime Minister, Jawaharlal Nehru presented the First Five-Year Plan to
the Parliament of India and needed urgent attention. The First Five-year Plan was launched in 1951
which mainly focused in development of the primary sector.
27. (b) Both A and R are true but R is not the correct explanation of A.
Explanation: Human capital is a means in the sense that it consists of 'skills' as used in the process of
production. Thus, we want to achieve higher and higher levels of output through extensive and
intensive application of human capital.
28. (c) Pro-private sector policy
Explanation: The industrial policy of 1991 dereserved many of the industries which were previously
reserved only for the public sector allowing the entry of the private sector. There are only 3 industries
which are now reserved for the public sector.
29. (a) Both A and R are true and R is the correct explanation of A.
Explanation: Forced commercialization of agriculture under British rule exposed the subsistence
farmers to uncertainties of the market. True, but it also led to a gradual change in the outlook of the
farmers. The farmers started considering the market price of the product as an important determinant
of their production decisions.
30. (d) All of these
Explanation: The major reason for the failure of land reforms were lack of political support, benami
transfers and lots of flaws in the land reforms legislation.
31. (b) 2015
Explanation: To provide refinance facilities to micro-units, an agency named MUDRA was established
by the government. In the year 2015, this agency was set up.
32. (b) Goods and Services tax
Explanation: Goods and Services tax. Non-Tax Revenue is the recurring income that is earned from the
sources other than taxes by the government. They are the revenue receipts that are not generated by
taxing the public.
33. (a) Both A and R are true and R is the correct explanation of A.
Explanation: Power groups in villages started exercising control over the delivery mechanism of the
poverty alleviation programs. As a result, there was a large-scale leakage in the delivery package and
the poor received only a fragment of the said earmarked for them.
34. (a) All of these
Explanation: Growth in education includes parameters like literacy rate, number of educational
institutions and the student enrolment.
35. (d) Milk co-operatives
Explanation: The objective of this programme was to create a nationwide milk grid.
36. (a) Public Sector
Explanation: Under IPR 1956 the private sector was kept under state control through a system of
licenses. Hence it was under the control of Public Sector.
37. (b) Both A and R are true but R is not the correct explanation of A.
Explanation: Products are widely responding to the consumer's choice and preference. Consequently,
the overall level of expenditure of the households has tended to rise.
38. (c) Other than interest payments
Explanation: Primary deficit shows the borrowing requirement of the government exclusive of
interest payment.
39. (b) Both A and R are true but R is not the correct explanation of A.
Explanation: The statutory liquidity ratio is reduced to increase the flow of credit in the economy. The
rate of statutory liquidity ratio is fixed by the central bank which is a fixed percentage of assets in the
form of cash or other liquid assets.
40. (d) A is false but R is true.
Explanation: The government makes revenues out of Escheat. There are no claimants of such
properties under escheat.
41. (d) A is false but R is true.
Explanation: The most developed countries today are industrialized countries. The growth process
and industrialization are so intimately related to each other that industrialization is often taken as a
sine-qua-non of growth. Implying that growth occurs as and when industrialization spreads.
42. (b) Tax
Explanation: Methods of credit control adopted by Central Bank are bank rate, repo rate, open market
operations, reverse repo rate, cash reserve ratio and statutory liquidity ratio.
43. (a) AAY
Explanation: Antyodaya Anna Yojana (AAY) is a Government of India sponsored scheme to provide
highly subsidised food to millions of the poorest families. It was launched by the [NDA] government on
25 December 2000 and first implemented in the Indian state of Rajasthan.
44. (a) Capital Expenditure
Explanation: When the govt repays its loans, it reduces the liability of the govt. So, repayment of loan
is a capital expenditure.
45. (c) 1907
Explanation: Tata Iron and Steel Company was founded and established on 26 August 1907.
46. (c) A is true but R is false.
Explanation: Diversification of crop production minimizes the market risk arising due to price
fluctuations. In areas where subsistence farming still predominates diversification crop production
would mean a shift from subsistence to commercial farming.
47. (d) Disinvestment
Explanation: Disinvestment is not a feature of globalisation.
48. (c) Both i and iii
Explanation: Balance of payments balances when current account + capital account = zero and official
reserves account is a part of capital account.
Section C
49. (c) primary
Explanation: primary
50. (b) static
Explanation: static
51. (a) unit of value
Explanation: unit of value