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2021-22

Economics
Sample Paper
Term -
1 XII

Paper by
Prof. S.K. Agarwala
Author of
Core Economics
Published by
Goyal Brothers Prakashan, Delhi
ItJtheclimb.i
Sample Question Paper: Term 1
(2021- 222)
CBSE Pattern Economics Class XII

Time: 90 minutes Max. Marks: 40

Genera/ 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.

Core Ec onomics by S. K. Agarwal a

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Economics XII Term 1Sample Paper - 01

1. The principle role of money is that it facilitates:


a) Accounting
b) Pricing
c) Storing wealth
@
Exchange
d) thectimb,in

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

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

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 @‹theclimb.in

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

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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

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 thectimb,in
d) Net current a/c inflow — net capital account inflow = 0
13. In November 2016, Government of India demonetized:
a) All currency notes
b) Z500 notes
c) Z500 and Z1,000 notes
d) Z1,000 and Z 2,000 notes

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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 t
d) lnvisibles only @lhectimb,in
16. How much of the India’s population lived mostly in villages during the British
rule? a) 60%
b) 70%
c) 75%
d) 85%
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 Wlheclimb,in
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 iob trainino

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Economics XII Term 1S ample Paper - 01

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 lheclimb,in
d) All of the above
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%

Se ct ion B
(20 q ues tions ou t of 24 ore to he ottemp ted)

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

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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 m
true Ntheclimb.in
d) Both the statements are
false
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
Core Ec onomics by S. K. Agarw ala 6|Pa
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Econoniics XII Term 1Sample Paper - 01
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
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 !thectimb,in
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 M ›
d) Statement1 is false and statement 2 in correct hectimb.in

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, i lheztimb,in
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 2thectimb.in

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
Real name of World Bank is:
a) IBRD
b) IMF
c) Federal Reserve Bureau
d) World Bank itsel
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. theclimb,in

46. Which of the following program is implemented by the Xhadi and Village Industries
Commission*
a) Rural Employment Generation Programme (REGP)
b) Prime Minister’s Rozgar Yojana (PMRY)
c) Swam Jayanti Gram Swarozgar Yojana (SJGSY)

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d) Swam Jayanti Shahri Rozgar Yojana (SJSRY)

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Economics XII Term 1Sample Paper - 01

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

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 Z1.5 trillion and Z50,000 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.

49. The currency issued by the central bank is called


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

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Economics XII Tei m 1Sample Papei - 01

51. Spot the government’s capital expenditure.


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

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
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 thectimb,in
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

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.

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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
56. In which field P.C. Mahalanobis’ contribution is considered significant:
a)Rural development
b) Banking
c) Planning
d) All of the above thectimb,in

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
58. Karve Committee is associated with:
a) Cooperatives
b) Small scale units
c) Large scale units
d) Rural development
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
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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Answer Key

1. d 2. b 3. d 4. d 5. c 6. c 7. c

8. d 9. 10. d 11. c 12. c 13. c 14. c

15. a 16. d 17. c 18. b 19. b 20. b 21. a

22. d 23. d 24. b 25. a 26. d 27. c 28. b

29. a 30. b 31. d 32. c 33. d 34. c 35. c

36. c 37. b 38. b 39. c 40. d 41. a 42. b

43. c 44. a 45. b 46. b 47. c 48. c 49. d

50. c 51. a 52. c 53. b 54. c 55. c 56. c

57. a 58. b 59. a 60. c

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