ISC -2023

Practice Paper 3
Class – XII Maximum Marks – 80
Subject-ECONOMICS Time – 3 HOURS
Candidates are allowed additional 15 minutes for only reading the paper.
They must NOT start writing during this time.
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Answer all questions in Section A, Section B and Section C.
Section A consists of objective/very short answer type
questions
Section B consists of short answer questions.
Section C consists of long answer questions.
The intended marks for questions or parts of questions are given in brackets[ ]
The question paper consists of six printed pages.
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SECTION A – 16 MARKS
Question 1
Choose the correct answer and write the correct option.
(i) How do we calculate marginal utility? [1]
(a) ∆TU/∆Q
(b) ∆MU/∆Q
(c) ∆Q/∆TU
(d) ∆Q/∆MU

(ii) The supply curve for market period is: [1]

(a) parallel to the ‘x’ axis
(b) parallel to the ‘y’ axis
(c)upward sloping
(d) downward sloping

(iii) While reading the newspaper, Rajiv finds a headline “Prices of petrol and
diesel has been cut by ₹ 3 per litre as international oil prices slumped to a
four-year low.” Analyse the impact on demand of cars by identifying the
movement/shift in the demand curve. [1]
(a) Contraction in demand
(b) Extension in demand
(c) Increase in demand
(d) Decrease in demand

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(iv) If two goods X and Y are complements, then [1]
(a) the cross-elasticity of demand will be negative.
(b) the cross-elasticity of demand will be zero.
(c) the cross-elasticity of demand will be positive.
(d) the cross-elasticity of demand will be one.

(v) Which one of these is a revenue expenditure? [1]

(a) Purchase of shares
(b) Loans advanced
(c)Subsidies
(d) Expenditure on acquisition of land

(vi) Which of the following is not an element of final consumption [1]

expenditure?
(a) Household expenditure on education
(b) Household expenditure on food
(c) Government final consumption expenditure
(d) Expenditure on raw materials

[1]
(vii) How does the government tackle the problem of excess demand?
(a)Rationing
(b) First come first serve
(c) Seller’s preference
(d) All the above

(viii) The short-run supply curve of a perfectly competitive firm: [1]

(a) is equal to that portion of the short-run marginal cost curve that is
above the average variable cost curve.
(b) is equal to that portion of the short-run marginal cost curve that is
above the average total cost curve.
(c)is equal to that portion of the short-run average total cost curve that is
above the average variable cost curve.
(d) None of the above is correct.

(ix) Why should the value of MPC be positive and less than one? [1]
(x) As a result of an increase in autonomous investment(ΔI), national income
rises by Rs.600 crores. If MPS = 0.25. Calculate ΔI. [1]
(x) What do you mean by revenue deficit? [1]
(xi) State whether the following statement is true or false. Give reason. [1]
‘Investment on the purchase of shares is a part of net capital formation’.
(xiii) What is a monopsony market? Give an example. [1]
(xiv) Mention the nature of AR and MR curves under imperfect competition.
[1]

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(xv) What is the relation between APC and APS? [1]
(xvi) What do you mean by deficient demand? [1]

SECTION B – 32 MARKS

Answer the following questions briefly.

Question 2

(i) ‘The supply curve of labour is an exception to the law of supply’. Justify
the statement. [2]
(ii) Price elasticity of demand for a product is unity. A household buys 50
units when the price is ₹10 per unit. If the price rises to ₹12 per unit, how
much will be bought by the household? [2]

Question 3

(i) What do you mean by deficit financing? State any two methods of Debt
redemption. [3]
(ii) How is GST different from income tax? [1]

Question 4

(i)What do you mean by implicit cost? [1]

(ii) Give reasons: [3]
(a) TC and TVC do not start from the same point.
(b) ATC and AVC do not touch each other.

Question 5

(i) Explain any two features of the monopoly market. [2]

(ii) What do you mean by ‘product differentiation’? [2]

OR

(i) With the help of a diagram, explain the concept of shut down point. [4]

Question 6

(i) Discuss Profit maximisation condition of a perfectly competitive firm when

additional cost incurred on producing an unit of output equals additional
revenue generated from its sale. [4]

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Question 7

(i) What do you mean by high-powered money? [2]

(ii) Discuss any two limitations of credit creation by commercial banks. [2]

Question 8

(i) How does Central Bank use Bank Rate and Open Market
Operations to control credit? [4]

OR
(ii) Discuss any two contingent functions of money. [4]

Question 9

Explain how equilibrium level of income can be determined with the help of
Saving-Investment approach. [4]

SECTION C – 32 MARKS

Question 10

(i) State the law of equi-marginal utility. [2]

(ii) Explain the Law of Variable Proportion. . [6]

Question 11

(i) Give any two reasons for the leftward shift of supply curve. [2]
(ii) How does a consumer attain equilibrium under Indifference Curve
analysis? [6]

Question 12

(i) What is personal disposable income? How can it be derived from personal
income? [2]

(ii) Calculate GNP mp and NDP fc from the given data. [6]
Items ₹ [crores]
Private final consumption expenditure 1500
NFIA (-)200
Indirect Taxes 250
Consumption of fixed capital 150
Private fixed investment(gross) 750
Subsidies 200

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 Change in stock 400
Government final consumption expenditure 500

OR
(i) Explain the problem of double counting in the estimation of national
income. [2]
(ii) Calculate National Income and NDP fc by income and product method
from the given data. [6]
Items ₹ [crores]
Gross value of output 5000
NFIA 2000
Rent 1500
Value of intermediate consumption 500
Profit 100
Indirect Taxes 100
Subsidies 50
Interest 800
Depreciation 500
Mixed Income 50
Wages & Salaries 1000
Employer’s contribution to social security scheme 500

Question 13

Read the passage given below and answer the questions that follow.

Economic Times November 09, 2022

India’s balance of payments is likely to slip into a $45-50 billion deficit in the
current fiscal year, according to an internal assessment by the finance
ministry. This order of forex outflow may keep the rupee under pressure, but
the Centre is confident the deficit can be managed comfortably with foreign
exchange reserves at a healthy $531 billion.
The BoP is likely to be in deficit because of the yawning goods trade
imbalance that may not get bridged by the invisibles’ surplus – largely
software exports and inward remittances – and capital inflows, which are
also expected to be muted in the current fiscal year. “This is a challenging
year globally and we will have our own shocks,” the person said.
“The rupee will be under strain. However, by mid-December there will be more
stability,” the official said. The rupee touched a lifetime low of 83.29 against
the dollar on October 20. It ended at 82.38 on Monday

(i) What are the two kinds of transactions involved in BOP? [1]

(ii) State any two remedies of adverse BOP. [2]

(iii) What do you mean by flexible exchange rate? [2]

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 (iv) How is depreciation different from devaluation? [2]

(v) What is meant by a deficit in BOP? [1]

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