Test

Economics

Time: 2 hours

Marks: 40

Instructions

1. There are 12 questions in the question paper. All questions are compulsory.
2. Question no.1-3 are Case Based MCQ’s.Each question carries 1 mark.
3. Question no.4-6 and 9 are Short Answer Type Questions. Each question carries 3 marks.
4. Question no.7-8 and 10-12 are Long Answer Type Questions. Each question carries 5 marks.
5. There is no overall choice. However, internal choices have been provided in some questions.
Students have to attempt only one of the alternatives in such question.

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Part I Macroeconomics
Case Based MCQ’s (1x3=3 Marks)

Due to Covid-19 situation, there has been a fall in the savings of the people, and they are spending
the savings. This has led to the consumption to be done by the reduction of the savings. In order to
control the situation, the government has announced various stimulus packages to revive the
economy and providing employment through road and railway building projects. Still the desired
savings or ex-ante savings that is required for the functioning of the economy has reduced. It is seen
that the private consumption expenditure, private investment expenditure and desired savings has
reduced the aggregate demand in the economy.

1. Due to the Covid-19 situation what has happened?

(a) Desired saving has increased

(b) Ex-post or Actual saving has increased

(c) Desired or Ex-ante saving has reduced

(d) Ex-post or Actual saving has reduced.

2. The fall in the savings is due to:

a) Decrease in income

b) Increase in consumption
c) Increase in government expenditure

d) Using savings for consumption

3. Which options did the government use to increase the savings and consumption in the economy?

i) Giving stimulus packages

ii) Reducing investment in infrastructure

iii) Open Market Operations

iv) Providing employment

Choose the correct options:

a) (i) and (ii)

b) (i),(iii) and (iii)
c) (i) and (iv)
d) (i),(ii) and (iv)

Short Answer Type Questions (3 Marks)

4. Giving reasons, state whether the following statements are true of or false.

i) When MPC is zero, the value of investment multiplier will also be zero...

ii) Value of Average Propensity to Consumer can never be less than zero.

Or

An economy is in equilibrium. Calculate Marginal Propensity to Consume:

National Income =1000

Autonomous Consumption Expenditure =200

Investment Expenditure=100

5. An economy is in equilibrium. Find ‘autonomous consumption ‘from the following:

National Income =1,000

Marginal propensity to consume =0.8

Investment expenditure =100

Or

Explain ‘non-monetary exchanges’ as a limitation of using gross domestic product as an index of

welfare of a country.
6. Find investment from the following:

National Income = 600

Autonomous consumption =150

Marginal Propensity to Consume=0

Or

“Gross Domestic Product (GDP) does not give us a clear indication of economic welfare of a
country”. Defend or refute the given statement with valid reason.

Long Answer Type Questions (5 Marks)

7. (i) Calculate sales from the following data

S.No. Contents Rs. (in lakh)

(a) Net Value Added at Factor Cost 560
(b) Depreciation 60
(c) Change in Stock (-)30
(d) Intermediate Cost 1,000
(e) Exports 200
(f) Indirect Taxes 60

(ii) Giving reason, classify the following into intermediate products and final products.
(a) Computers installed in an office. (b) Mobile sets purchased by a mobile dealer.

Or
Explain the meaning of inflationary gap and deflationary gap. Explain any two measures by which
these gaps can be reduced.

8. Calculate Gross National Product at Market Price by production production method and income method.
S.No Contents Rs.(in crore
1. Value of Output by Primary Sector 1000
2. Indirect Tax 200
3. Compensation of Employees 780
4. Net Factor Income to Abroad 100
5. Intermediate Purchases by all Sectors 2,900
6. Value of Output by Secondary Sector 2000
7. Rent 300
8. Subsidy 50
9. Interest 600
10. Consumption of Fixed Capital 120
11 Value of Output by Tertiary Sector 3000
12. Profits 320
13. Mixed Income of Sell-employed 830
Give reason and identify whether the following are final expenditures or intermediate expenditures.

(i) Expenditure on maintenance of an office building.

(ii) Expenditure on improvement of machine in a factory.

Or

Explain determination of equilibrium level of national income using aggregate demand and
aggregate supply approach. Use diagram. Also explain the effect when aggregate demand is less
than aggregate supply.

Part-II Indian Economic Development

Short Answer Type Question (3 Marks)

9. Give two instances of

(i) Overuse of environmental resources.

(ii) Misuse of environmental resources.

Or

You are residing in highly populated area of Kolkata. Due to over population your locality harms the
environment; suggest any four measures to your neighbors to protect environment.

Long Answer Type Questions (5 marks)

10. keeping in view your locality, describe any four strategies of sustainable development.

Or

Explain the measures to solve unemployment problems.

11. Write a brief note on the state of infrastructure in India in general and of rural areas in particular.

Or

Explain the relationship between environment and the economic development.

12. (i) Enumerate the areas in which Pakistan has an edge over India.

(ii) Explain the Great Leap Forward (GLF) campaign of China initiated in 1958.

Or

Explain the relevance of intergenerational equity in the definition of sustainable development.

Or

Explain the six systems of Indian medicine.