eee ete Sample Paper-3. Lb) 29 3 @) 4. (d) 5. (d) OR (b) 6. (b) OR (@) 7.) 8. (d) 9 (e) 10. (c) OR (d) LI. The basic measure of money supply (M;) has «wo components — Currency with public and demand deposits of the public in commercial banks, @ Currency held by the public (CU): Money supply consists of currency notes and coins held by the public outside the banks ‘The Resérve Bank of India (RBI) is the only institution whieh can iste currency in India, Currené¥notés aré ised by the RBI. However, oolns are issued! by the Government of India (DD): Demand deposits are the deposits which can be withdrawn en demand by the depositors from banks, eg, eurreit account and savings account deposits OR Deposit multiplier (or Money sult multiples) = L/Reserve ratio ~ 120% Credit creation (or Money creation or Deposit creation) = Primary Deposits x 1/Reserve ratio = 2100 x ‘Total lending by the banking system = 500-100 = 8400 If the RBI increases the Reserve Ratio 10 25%, oral ‘money creation = 2100 x 1/0.25 =8 100 x 4 = 2400 Thus, the banking system would now be able to loan 7300 only (2400 ~ £100). Tt would have: to call back some loans to meet the iicreased teserve requirements. Hence, money supply would fall 12, Government budget can be used as an effective tool in the process of employment generation in various ways Investment in infrastructural projects like construction of flyovers, bridges, expansion of roads etc. creates jobs for different sections of the workloree. In rural/urbaty areas ‘government can provide jobs through various employment generation schemes like MGNREGA, SJSRY, PMRY etc: 13, (@)_ Percentage change in Real GDP GDP/Real GDP x 100 = (9.2 ~7.3)/7.3 « 100 = 26.02 % (b) Two economic variables which have shown positive sign after the pandemic period are: () India's real GDP is estimated t grow by 9.2 % in 2021-22 as compared to the ccomresponding figure of 7.39 in 2020-21. (i) Private consumption has alo improved to recover approximately 97% of the ccomresponding pre-pandemic level and stands fully recovered in the second half of the financial year 2021-22 14, 15. 16, ee eater) (6) Real Gross Domestic Product (GDP) is defined as the money value of all the final goods and services produced within the domestic territory of an economy, measured at base year prices. Reduction in the bank rate (by the Central Bank), may lead to a fall in the lending rates by the commercial banks. Consequently loans available at lower rates may encourage the general public to borrow more. This may result in an increase in the demand for credit in the OR “Fwo monetary measures to correct the inflationary gap in the economy ate: (@) “Anctease in_tepo rate may force the commercial banks t inicease their lending rates which may ake borrowing costlier to the general public. Consequently, the Aggrepate Demand may fall (2) Increase in_reverse teposrate may encourage the commercial banks t0 park their surplus funds swith the Central Bank AS a result, credie creating capacity of the commercial banks may be reduced. ‘Consequently, Aggregate Demand may fll G@)- The given statement is tefitted as the Current ‘Account Deficit (CAD) isa brouser concept. CAD ‘oceuss when the foreign exchange payments on account of visible, invisibles and current transfers ‘re In excess over the receipts of visible, invisibles anal current transfers. ‘A country may face a situation of CAD, even if the counny has trade surplus, with greater negative balances om account of services and unilateral transfer (b) ‘The demand for dosestic goods and. services is the sum toral of demand for goods and services by both the domesticand foreign countries; whereas, clomestic demand for goods and services isthe sum total of domestic demand for domestic as well as foreign goods Thcome Method NNP y= (iv) + (il) + i) + (9) = 1,400 + 740+ 1,000-+40 Expenditure Method = % 3,180 crores NINPpc = (x) + (xl) + [Coil + vit] + 0) + %) — @) = 2,000 + 1,000 + [500 + (-100)] « (-60) + 40 = 150= 8 3,230 crores No, National income is not same by Income method and expenditure method. There must be some error(s) in estimating the figure(s) of the given items. OR @) A rise in Gross Domestic Product (GDP) may not benefit all the sections of the society in the same dimension. This is because a given rise in GDP may be concentrated in the hands of very few individuals7 18, 20. 22. 28, 29. eee ete ‘or firms. For the rest, the income may not vary or may have fallen. In such a case, the welfare of the ‘entire country may not increase despite the increase inGDP, (b) Compensation of Employees (COB) = (i) + (is) = 60,000 + 30,000 + 7,500 = 8 97,500 crore G@) In the given situation of deficient demand, an Increase in the exemption limit by the Government would lead to decrease in the tax burden on the households, resulting an increase in disposable Thus, Aggregate Demand (AD) will increase and deficient demand will be managed accordingly () Given, MPS = 0:2; ¥ = C = 10,000 (7 At Break Even Point YQ) ‘As we know, MPCs MP’ MPC -1-0.2= 08 C=C4 bY 10,000 = € + 0.8(10,000) Autonomous Consumption (C) = & 2,000 crores (b) OR 19.) @ 21. (b) @ 23. (a) @ OR 25. (b) OR @) } 27. @) ‘The given statement is correct. + Tnvesementin human capital formation (investment in ‘education nd health) enhanceseffciency/productviy, skills, capabilides implying esonomic growth. + Technical skills aoguired through sources of human capital formation such as education, training, and sound health etc: provides opportunity co lsbour supply to make better use of piven resources + Investment in education-creates ability to adopt newer technologies, facilitates invention and innovation since educated “workforce generally adapts to modern technologies and innovation: Casualisition of workforce has become a perennial problem for India because of + Slower growth rate of employment in the organised + Rapidly expanding construction and allied services have led to increase in demand for casual labour. © Selfemployed small and marginal farmers are becoming casual workers due to lower eamings in agriculeural activities. OR Out of 30 million formal sector workers in India, only about 21% are women found in regular salaried employment because of following reasons: (@ Lack of mobility among women due to social constralnss 30. 31. ee eater) (i) Regular salaried employment requires job skill. i) Low level of education amongst women. Foreign wade policy pursued by the British colonial ‘government adversely affected the structure, composition () India became an exporter of primary products such as raw silk, cotton, wool, sugar, indigo, jute, etc and an importer of finished consumer goods like cotton, silk, and woollen clothes and capital goods Tike light machinery produced in the factories of Britain. (Composition of foreign made) Britain maintained a monopoly control over India’s exports and imports. As a result more than 50% of India's foreign trade was restricted to Briain while the remaining was allowed with a few other ‘countries like China, Ceylon (Srilanka) and Persia san). (Volume and diresion of foreign trade) OR The railways: affected the structure of the Indian ‘economy in two important ways ‘On the one hand, it enabled people to undertake long distance travel and thereby ‘break. geographical. and cultural bartirs On the other hand, ix fostered commercialisation of Indian agriculture, which adversely affected the selfsuillciency of the village economies in India Undoubtedly, the volume of Indias exports expanded but its benefits rarely accrued to the Indian people. ‘Thussthe social benefits, which the Indian people gained due to the introduction of the sailways, were outweighed by the country’s huge economic. loss. (HD LGalues}: Human Development Indes (HDD) is an important indicator of socio-economic development. Higher value of HDI shows higher level of growth and development of a nation. As per the given feport, HDI for India is 0.609, which is lesser than that of China (0.727), FIDL (rank): Human Development Index (HDD) values are used to create ranking of different countries. China is placed at 90th position in the ‘world whereas, India sandsar 130th position, Higher rank indicates lower socio-economic development. Life Expectancy at Birth (in year): A country which provides berter health and civic facilities secure 2 higher life expectancy for its citizens. China hhas higher life expectancy than India by an extra margin of approximately 8 years. GDP per-capita (PPP $ US): Higher GDP per capita ensures higher ranking of China in. Human Development Index (HDI) . Chin's GDP per capita (PPP $ US ) is approximately more than ‘vice than that of India. Higher level of income of people in the councry isthe direct result of greater ‘economic activities in the country. (any two) ai) a (ai) Ww)32. (i) eee etd Ae Lt ee eee) Till the late 197s, all the three countries were maintaining the same level of low development. ii) Over the last three decades, the three countries have taken different levels of development + India has performed moderately over the years. Majority of its people still depend on agriculture. Infrastructure is licking and more than one fourth of its population live below poverty line. + Pakistan performed low becuse of political instability, overdependence on remittances and foreign aid along with volatile performance of agriculture * China has used the marketogySem 1 stcs58d es ofigtoweh in Konomy wish ion of poverty sing suess on allevi 33. @)_The given statemenylpappropriares Medesnisiioay implies use of adyahee! cechnology'te enhance productivity at ahfaster pace! With application of modern technology. higher output is obtained at « relatively lowencost. However, in alabonr abundant country like India modemnisition may [ead to.an increase fnyifiemployment as aoderi techi¥Glogy requires lesset labour pe unit ofeutput, (&) The use of modem, technology and YW Seeds together fortied the! Green Revolution, which led ‘wan impressive ssein food geains production. The agricultural productivity ineteased considerably This enabled the governmefte € procure sufficient food grains to build the buffer stock to be wsed:in times of shortages die 16 Seaniy rainfall, delayed monsoon, drought and difhee matufal calamities. (c) The given. statemetit is appropriatelas the policy aimed at (Protecting the’ domestic indlstries from foreign competition by substituting imports ‘with domestic proditction exchange by restricting (i) Savings seatce for the volume of in in the early postindependence era the ual objectives helped India to move towards the goal of selferliance, OR ‘The varlous land reforms implemented in the agricultural sector in India were: + Abolition of intermediaries; + Change in ownership of landholdings (land 10 riers}; and, + Land ceiling (The abolition of intermediaries meant that some 200 lakh tenants came into direct contact with the government ~ they were thus freed from being exploited by the zamindars, 34, (a) Teoysteps involved in NITY Aay However, in some areas the former zamindars continued to own large areas of land by making use of some loopholes in the legislation. Thus, the goal of equity was nor fully served by abolition of intermediaries (i) The ownership conferred on tenants gave them the jcentive to increase outputs and this contributed to grovith in agriculture. However, there were cases where tenants were evicted and the landowners claimed to be the actual tillers, claiming ownership of the land, And even when the tills gor ownership of the Jand.the poorest of the agricultural labourers (such ag sharecroppers and landless labourers) did not bent fiom land reforms. The land! célling, legislation also faced hurdles The'big landlons\ehallenged the legislation in the ‘courts, delaying Wi iiplementation. They used this elayyto.regiticr theipfands in the name of close selatives, thereby escapifSifiom the legislation. The Tegislation also had a lt of loopholes which were exploited Byithe big, lifdhiblders to retain their land, THY Cand reforms were successful in Kerala and West Bangal Besaise these scares had governments Fommitted t0 the policy OF “nd to the tiller. Unforcunatel, other stats did not have the same level of eommitment and vast inequality in Jandholding continues to this day. (aly index are as follows (ip) Loeilisdion of Sustainable Development Gi) monixoring prog Developmental Goals at al possible levels Ubi areas are tanked on the scale of 0-100. Ranking system ‘adopted by NITI Aayog is as follows: (The are been ranked, as aspirants Gi) Those with 50-64 are termed as performers, {66-99 are called front runner (lit) Score of 100 implies the urban area has achieved the target set for 2030. b) with ranking between 0-49 have