Core Economics

By
S.K. Agarwala

Sample Question Paper: Term I (2021-22)

(CBSE Pattern)
ECONOMICS
CLASS XII
Time: 90 minutes Max. Marks: 40

General Instructions
1. There are total 60 questions in this question paper out of which 50 questions are to be
attempted.
2. The paper is divided into three sections-
a) Section A- contains 24 questions. Attempt any 20.
b) Section B- contains 24 questions. Attempt any 20.
c) Section C- contains 12 questions. Attempt any 10.
3. All questions carry equal marks.
4. There is no negative marking.

SECTION A

(20 questions out of 24 are to be attempted)

1. The principle role of money is that it facilitates:
a) Accounting
b) Pricing
c) Storing wealth
d) Exchange

2. IMF has recently suggested classification of Balance of Payments Account into:

a) Visible account , invisible and capital account
b) Current account, financial account and capital account
c) Current account, capital account and errors + omission account
d) Current account, financial account and change in reserves account

3. The impact of government budget will be there:

a) In the current year only
b) In the subsequent year only
c) In the subsequent years only
d) Both in the current year and the subsequent years

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4. The currency issued by the Reserve Bank of India is called the:

a) High powered money
b) Reserve money
c) Monetary base
d) all of the above

5. Stabilizing function of government budget refers to the intervention of government in:

a) Expanding aggregate demand
b) Reducing aggregate demand
c) Changing aggregate demand
d) Just maintaining aggregate demand

6. Dirty floating exchange rate is:

a) Same as fixed exchange rate
b) Same as floating exchange rate
c) Mixture of fixed and floating exchange rates
d) None of the above

7. The most liquid measure of money supply consists of:

a) Demand deposits in banks + Currency in circulation
b) Demand deposits in banks + Currency held by public
c) Demand deposits by public with bank + Currency held by public
d) Demand deposits + currency held by public

8. Current account of Balance of Payment records:

a) ‘Trade’ in goods
b) Transfer payment from and to abroad
c) ‘Trade’ in services
d) All of the above

9. Spot the capital receipt in government budget:

a) Sale of shares of a public sector undertaking
b) Custom duties
c) G.S.T
d) Interest received on lendings

10. Out of following named banks which one serves as apex bank of India.
a) Central Bank of India
b) United Bank of India
c) Union Bank of India
d) None of the above

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11. Which of the following government expenditures constitute capital expenditure:

a) On creation of physical assets only
b) On creation of financial assets only
c) On both A and B
d) On creation of liabilities

12. In balance of payment account which of the following is true:

a) Net current a/c inflow= 0
b) Net capital a/c inflow = 0
c) Net current a/c inflow + net capital account inflow = 0
d) Net current a/c inflow – net capital account inflow = 0

13. In November 2016, Government of India demonetized:

a) All currency notes
b) Rs. 500 notes
c) Rs. 500 and Rs. 1000 notes
d) RS. 1000 and Rs. 2000 notes

14. The slogan behind introduction of GST in July 2017 was:

a) One nation, one tax
b) One tax, one market
c) One nation, one tax, one market
d) One people, one tax, one market

15. Balance of trade refers to net inflow of foreign exchange on account of exports and
imports of:
a) Goods only
b) Services only
c) Both goods and services
d) Invisibles only

16. How much of the India’s population lived mostly in villages during the British rule?
a) 60%
b) 70%
c) 75%
d) 85%

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17. Which of the following is associated with estimation of national Income before
independence:
a) A.K. Sen
b) P.C. Mahalnobis
c) Findly Shiraz
d) Karve

18. The 1991 financial crises was the result of foreign exchange reserves which have declined
to a level that was not adequate to finance imports for more than:
a) One week
b) Two weeks
c) Three weeks
d) Four weeks

19. Who was the first to discuss the concept of poverty line in India?
a) Jawaharlal Nehru
b) Dadabhai Naroji
c) A.K. Sen
d) Planning Commission

20. Which one of the following is not a source of human capital formation?
a) Investment in education
b) Investment in machines
c) Investment in health
d) Investment in job training

21. Which type of medicine is expenditure on vaccination to fight covid?

a) Preventive
b) Curative
c) Social
d) All of the above

22. The institutional structure of rural banking in India today consists of:
a) Commercial banks
b) RRBs
c) Cooperatives
d) All of the above

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23. Diversification of rural economic actively relates to:

a) Change in cropping pattern
b) Animal husbandry
c) Non-agricultural occupations
d) All of the above

24. Poultry accounts for this much share in distribution of livestock in India:
a) 50%
b) More than 50%
c) Less than 50%
d) Less than 40%

SECTION B

20 questions out of 24 are to be attempted

25. Assertion (A): Facilitation of exchanges is considered to be the principle role of money.
Reason (R): It is difficult to express value of goods and services in the absence of money.
From the above statements A and R, Choose the correct alternatives:
a) Both A and R are true but R is not the correct explanation of A
b) Both A and R are true and R is the correct explanation of A
c) A is true but R is false
d) A is false but R is true

26. Statement 1: Fiscal deficit is the difference between government’s total expenditure and
total receipts.
Statement 2: Fiscal deficit has to be financed through borrowing.
From the above statements, choose the correct alternative:
a) Both the statements are false.
b) Both the statements are true
c) Statement 1 is true and statement 2 is false
d) Statement 1 is false and statement 2 is true

27. Statement 1: Balance of Payment records inflows and outflows of foreign exchange
between residents of a country and the rest of the world.
Statements 2: Balance of Trade is based on visible exports and visible imports.
From the above statements, choose the correct alternatives:
a) Statement 1 is true and Statement 2 is false
b) Statement 1 is false and statement 2 is true
c) Both the statements are true
d) Both the statements are false

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28. In an economy fresh deposits are injected into the banking system with required reserve
ratio 100%. The new money creation would be:
a) Zero times
b) One time
c) Unlimited
d) Between zero and one time

29. Assertion (A): Primary deficit is measure of borrowing requirements over and above the
requirements on account of interest payments.
Reason (R): The main focus in government budget is on restricting primary deficit.
From the above statements A and R, choose the correct alternative:
a) A is correct but R is false
b) A is false but R is correct
c) Both A and R are correct
d) Both A and R are false

30. Statement 1: Autonomous transactions are dependent upon the state of balance of
payments.
Statement 2: Accommodating transactions are independent of the state of balance of
payments.
From the above statements, choose the correct alternatives:
a) Both the statements are true
b) Both the statements are false
c) Statement 1 is true and statement 2 is false
d) Statement 1 is false and statement 2 is true

31. Statement 1: There is direct relation between Repo Rate and credit creation.
Statement 2: There is inverse relation between Reverse Repo Rate and credit creation.
From the above statements, choose the correct alternative:
a) Both the statements are true
b) Both the statements are false
c) Statement 1 is true and statement 2 is false
d) Statement 1 is false and statement 2 is true

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32. Assertion (A): Government of India has expressed its intention to privatise two
nationalized bank during the fiscal year 2021-22.
Reason (R): Government of India wants to limit fiscal deficit.
From the above statements A and R, choose the correct alternatives:
a) A is correct but R is false
b) A is false but R is correct
c) Both A and R are correct
d) Both A and R are incorrect

33. Assertion (A): Import of machinery is recorded in the capital account of Balance of
Payments.
Reason (R): Import of machinery leads to increase in physical assets of the country.
From the above statements A and R, choose the correct alternatives:
a) Both A and R are correct
b) Both A and R are incorrect
c) A is correct but R is incorrect
d) A is incorrect but R is correct

34. Choose the correct pair of statements about India.

Column I Column II
A. Tata Iron and Steel Company a. Year 1850
B. Railways in India b. Year 1932
C. Second Stage of transition c. Year 1921
D. Tata Airlines d. Year 1907
a) A a
b) B b
c) C c
d) D d

35. Choose the current sequence of the following events taken place in India.
A) Second Industrial Policy Resolution
B) Karve Committee
C) Planning Commission
a) A, B, C
b) B, C, A
c) C, B, A
d) A, C, B

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36. The origin of the financial crises can be traced from the inefficient management of the
Indian economy in the decade:

a) 1960’s
b) 1970’s
c) 1980’s
d) 1990’s

37. The official data on poverty is made available to the public by Niti Ayog on the basis of
data collected by:
a) Central Statistical Office (formerly Central Statistical Organisation)
b) National Statistical Office (formerly National Sample Survey Office)
c) Both A and B
d) None of the above

38. From the following costs of migration which one is not human capital formation?
a) Transport cost of migration
b) Cost of living in the migrated place
c) Psychic costs of living in a strange social cultural set up
d) None of the above

39. Statement 1: Human capital and human development sound similar but there is clear
distinction between them.
Statement 2: Human capital raises human well being while human development raises
productivity.
From the above statements choose the correct alternative:
a) Both the statements are true
b) Both the statements are false
c) Statement 1 is correct and statement 2 is false
d) Statement1 is false and statement 2 in correct

40. Choose the correct sequence of the following events relating to rural development of
India:
A: Adoption of village by parliamentarians
B: Green Revolution
C: NABARD
a) A, B, C
b) C, B, A
c) B, A, C
d) B, C, A

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41. Horticulture sector contributes nearly this proportion of agricultural output in India.
a) One-third
b) One-fourth
c) One-fifth
d) One-sixth

42. Assertion (A): During the British rule in India, the agricultural sector experienced some
growth.
Reason (R): During the British rule in India, there was rise in agricultural productivity and also
the area under cultivation.
From the above statements A and R, choose the correct alternative:
a) Both A and R are correct but R is not the correct explanation of A
b) Both A and R are correct and R is the correct explanation of A
c) A is true and R is false
d) A is false and R is true

43. A small scale industry in India is defined with reference to:

a) Maximum value of output produced
b) Maximum number of workers employed
c) Maximum investment
d) Any one of the above

44. Real name of World Bank is:

a) IBRD
b) IMF
c) Federal Reserve Bureau
d) World Bank itself

45. Statement 1: Under the British rule India began to export food grains during 1870’s
onward.
Statement 2: Under the British rule 260 lakh people died in famines between 1875 and 1890.
On the basis of the above two statements answer the correct alternatives:
a) Both the statements are correct but not related to each other.
b) Both the statements are correct and related to each other.
c) Statement 1 is correct and statement 2 is incorrect.
d) Statement 1 is incorrect and statement 2 is correct.

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46. Which of the following programmes is implemented by the Khadi and Village Industries
Commission?
a) Rural Employment Generation Programme (REGP)
b) Prime Minister’s Rozgar Yojana (PMRY)
c) Swarn Jayanti Gram Swarozgar Yojana (SJGSY)
d) Swarn Jayanti Shahri Rozgar Yojana (SJSRY)

47. Which one is the dynamic sub-sector of the non-farm activity in rural sector in India?
a) Fisheries
b) Agro-processing
c) Both (a) and (b)
d) None of the above

48. Assuming Rs. 100 crore worth of new deposits injected into the banking system. What
should be the Legal Reserve Ratio for creating Rs. 800 crore of money.
a) 8%
b) 10%
c) 12.5%
d) Some other

SECTION C

(10 questions out of 12 questions are to be attempted)

Q. 49-54 are to be answered on the basis of the following para:

Government budget and central bank are the two institutions which are crucial to the
functioning of any economy. Money, a strong medium of exchange, valuation and accounting,
is another institution. Banking system exists because money exists. Trade flourishes because
money enables exchanges smoothly. Economy grows because banking system creates money
need to finance investments. Central Bank regulates money creation and money supply. The
example of the same is the recent news (The Hindustan Times dated 29th Oct 2021) which
reads “The RBI will conduct reverse repo auctions worth Rs. 1.5 trillion and Rs. 50,000 crore
on November 2, 2021”. Not only domestic money, Central Bank also manages foreign money
and keeps on account of the same in the form of balance of Payments account. Government
regulates economy, both on economic and social fronts, through taxes, subsidies, income
transfers, public undertakings etc. Thus understanding the fundamentals of government
budget, banking system and balance of payments is crucial for the understanding the
complexities of functioning of an economy.

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Q.49. The currency issued by the central bank is called

a) Bank money
b) Broad money
c) Money supply
d) None of the above

Q.50. The transactions through the Reverse Repo Rate lead to:
a) Rise in credit availability
b) Rise in money supply
c) Fall in money supply
d) No effect on money supply

Q.51 Spot the government’s capital expenditure.

a) On improving roads
b) On interest payments
c) On vaccination
d) On grain distribution to poor

Q. 52. Reducing government expenditure substantially is related to this function of

government.
a) Allocation function
b) Redistribution function
c) Stabilization function
d) Public provision function

Q.53. Which item in Balance of Payments account helps RBI to exercise managed floating
exchange rate?
a) External Assistance
b) Reserves of exchange
c) Foreign investment
d) Borrowing from IMF

Q.54. Rise in foreign exchange rate in terms of domestic currency leads to:
a) Rise in domestic imports
b) Fall in domestic exports
c) Rise in imports by foreign countries
d) Fall in imports by foreign countries

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Q.55 to 60 are to be answered on the basis of the following para:

During the study of development experiences of the Indian economy before and after
Independence we came across prominent economists and organizations who made notable
contributions to the process of development. Their works, thoughts, and recommendations
proved milestones. Some of the names are P.C. Mahalnobis, Dr V.K.R.V. Rao, A.K. Sen and
Dadabhai Naroji. Some of the organizations are Planning Commission (NITI Ayog), Karve
Committee and Education Commission. Besides there have been many historic policy
declarations by Government of India like Industrial Policy Resolutions, New Agricultural
Strategy, New Economic Policy etc. Along with there are milestone dates. Some examples are
the years 1850, 1907, 1921, 1951, 1982, and 1991. These are the dates associated with
economic happenings and will always remain as milestone in the history of economic
development of India.

Q.55. Who was the economist whose estimate of national income during the colonial period
was considered most significant?
a) Dadabhai Naroji
b) A.K. Sen
c) V.K.R.V. Rao
d) R.C. Desai

Q.56. In which field P.C. Mahalnobis’ contribution is considered significant:

a) Rural development
b) Banking
c) Planning
d) All of the above

Q.57. The year 1907 is associated as:

a) Establishment of capital goods industry
b) Year of Great Divide
c) Famine year
d) Establishment of jute industry

Q.58. Karve Committee is associated with:

a) Cooperatives
b) Small scale units
c) Large scale units
d) Rural development

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Q.59. The year 1982 is known for the establishment of:

a) Apex bank in rural credit
b) Regional Rural Banks
c) Land development Banks
d) Commercial banks in rural areas

Q.60. Education Commission (1964-66) had recommended at-least this much percent of GDP
on education:
a) 4%
b) 5%
c) 6%
d) 6.5%

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