INTERNAL ASSESSMENT 2 – ASSIGNMENT - 2022

ECONOMICS
Std. 12 (ISC)
Marks: 40
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This paper consists of 2 pages.

Answer the following questions:

1. Explain the Geometric Method of calculating Elasticity of Supply. [4]

2. How is the Exchange Rate determined under the Flexible Exchange Rate System? Explain with [4]
the help of a diagram.

3. Explain how does a producer attains equilibrium using TR-TC Approach. [4]

4. Discuss the relationship between Marginal cost and Average cost with the help of a diagram. [4]

5. Explain any four limitations of credit creation by the commercial banks. [4]

6. State the Law of Variable Proportions. Diagrammatically explain its three stages. [6]

7. Explain the working of Keynes’ Investment Multiplier mechanism using a numerical example [6]
and a suitable diagram.

8. Read the following passage carefully and answer the following questions:
The Budget 2022 which seeks to lay the blueprint for the next 25 years for the growth of India has been widely
recognized by the business community as a growth and infrastructure-focused budget that will put the country on
the right trajectory. In terms of performance, the government has done well in collecting tax revenues, keeping
spending tight, and is now taking steps towards long-term fiscal stability. The key areas of attention are future
income and employment-generating capex. Rs 317,643 crore will be allocated to grants-in-aid, including
MGNREGA.
As far as expenditure is concerned, the government proposes to spend Rs 39,44,909 crore in 2022-23, which is
4.6% higher than the updated estimate of 2021-22. The receipts (excluding borrowings) in 2022-23 are estimated
to be Rs 22,83,713 crore, an increase of 4.8% over the revised estimate of 2021-22. The expectation from tax
collections is higher than last year, which is expected to come in from direct taxes, both on personal and corporate
income.

1
Revenue Deficit in 2022-23 is estimated at 3.8% of GDP. The Fiscal Deficit in 2022-23 is targeted at 6.4% of
GDP, which is lower than the last year. Interest Expenditure at Rs 9,40,651 crore is estimated to be 43% of
Revenue Receipts.
(i) Enlist any two focused areas in the above budget. [1]
(ii) What is meant by Deficit Budget? Enlist the two types of budget deficits mentioned in the above case
study. [2]
(iii) State any two points of differences between Revenue Budget and Capital Budget. [2]
(iv) Distinguish between Direct Taxes and Indirect Taxes. [2]
(v) Explain any one importance of Public Expenditure on economic growth. [1]

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