12 Economics23 24sp01

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Class 12 - Economics
Sample Paper - 01 (2023-24)
Maximum Marks: 80
Time Allowed: : 3 hours
General Instructions:
1. This question paper contains two sections:

Section A – Macro Economics
Section B – Indian Economic Development
2. This paper contains 20 Multiple Choice Questions type questions of 1 mark each.
3. This paper contains 4 Short Answer Questions type questions of 3 marks each to be answered in 60 to 80 words.
4. This paper contains 6 Short Answer Questions type questions of 4 marks each to be answered in 80 to 100 words.
5. This paper contains 4 Long Answer Questions type questions of 6 marks each to be answered in 100 to 150 words.
SECTION A – MACRO ECONOMICS

1. Statement I: Current account is the record of trade in goods and services and transfer payments.
Statement II: Capital account records all international transactions of assets, e.g. money, stocks, bonds, government
debt.
a) Both the statements are false.
b) Both the statements are true.
c) Statement II is true and statement I is false.
d) Statement I is true and statement II is false.
2. What type of loan is advanced by Commercial Banks?
a) Loan and Advance
b) All of these
c) Cash Credit
d) Overdraft
3. According to the theory of Keynesian Economics, the value of Average Propensity to Consume can never be ________.
a) unity (1)
b) Less than one
c) More than one
d) zero
4. If there is an increase in income abroad the domestic currency will be ________.
a) Appreciating
b) Increasing
c) Depreciating
d) Decreasing
5. Which of the following is not a function of Central Bank?
a) AD, AS
b) Consumption, National Income
c) National income, personal income
d) Consumption, AD
6. In order to correct the situation of deficient demand
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a) cost of credit should be reduced
b) taxes to be raised
c) none of these
d) cost of credit should be raised
7. If Marginal Propensity to Save (MPS) is 0.25 and the initial change in investment is ₹ 250 crores, then the final change
in income would be ________.
a) ₹ 1,000 crores
b) ₹ 1,200 crores
c) ₹ 500 crores
d) ₹ 3,500 crores
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8. In intermediate goods
a) Values are already added
b) Value cannot be added anymore
c) Value is yet to be added
d) None of these
9. Deposit creation by banks comes to an end when ________.
a) money multiplier becomes zero
b) legal reserve ratio becomes zero
c) total reserves equal initial deposits
d) fresh deposits with banks become zero
10. When the value of a currency is fixed in terms of some other currency, it is called:
a) Money value
b) Parity value
c) Free value
d) None of these
11. Giving reason, explain the treatment assigned to the following while estimating national income:
i. Expenditure on the maintenance of an office building.
ii. Expenditure on adding a floor to the office building.
12. What does a Balance of Payments account show? Name the two parts of the Balance of Payments account.
OR
Giving two examples, explain the relation between the rise in the price of a foreign currency and its demand.
13. What is Fiscal Policy? What possible fiscal policy measures can be taken with respect to expenditure and income to
correct (i) Excess demand and (ii) Deficient demand in the economy.

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14. In the given figure, what does the gap KT represent? State and discuss any two fiscal measures to correct the situation.
OR
Complete the following table:

Level of Income Consumption Expenditure
Marginal Propensity to Consume Marginal Propensity to Save
(₹) (₹)
400 240 - -
500 320 - -
600 395 - -
700 465 - -
15. Explain the lender of last resort function of the Central Bank.
16. Answer the following questions:
1. i. How can estimates of GDP using income method and expenditure method be identical when households do not
spend their entire income on the purchase of goods and services, and a part of them remain unsold during an
accounting year?
ii. Calculate national income from the following:
(₹ in arab)
Private final consumption expenditure 600
Subsidies 20
Government final consumption expenditure 100
Indirect tax 120
Net imports 20
Consumption of fixed capital 35
Net change in stocks (-) 10
Net factor income to abroad 5
Net domestic capital formation 11
2. OR
i. Calculate Net Value Added at Factor Cost.
S.no. Contents (Rs. in Crores)
(i) Consumption of Fixed Capital 500
(ii) Import Duty 300
(iii) Output Sold (units) 3,000

(iv) Price Per Unit of Output 10

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(v) Net Change in Stocks (-) 100
(vi) Intermediate Cost 20,000
(vii) Subsidy 300

ii. Why are (a) net exports and (b) net change is stocks included in national income? Explain.
1. Is the following a revenue receipt or a capital receipt in the context of government budget and why?
i. Tax receipts
ii. Disinvestment
2. Distinguish between revenue receipts and capital receipts in a government budget. Give Examples.
SECTION B – INDIAN ECONOMIC DEVELOPMENT
18. After the workers lost their jobs in 1980's, which city experienced an economy recession and communal riots?
a) Bangalore
b) Bombay
c) Allahabad
d) Ahmedabad
19. In China how much percentage of workforce is engaged in agriculture
a) 54
b) 55
c) 51
d) 53
20. The common goals of the five year plans in India are: growth, modernisation, self-reliance and ________.
a) Industrial development
b) Westernisation
c) Equity
d) Economic development
21. Farmers need credit for consumption purposes for marriage, birth or death etc. This is called:
a) None of these
b) Unproductive credit
c) Productive credit
d) Productive scheme
22. Assertion (A): Globalization in India emerged significantly as a new phenomenon post-1991.
Reason (R): By 1990 the share of agriculture was more than that of the share of service.
a) Both A and R are true and R is the correct explanation of A.
b) Both A and R are true but R is not 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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23. The ________ Amendment of the Constitution of India made Free and compulsory education a fundamental right for all
children in the age group of 6-14 years.
a) 86th
b) 70th
c) 42th
d) 75th
24. ________ performance in providing sanitation is better in comparison to ________.
a) China’s, India
b) Pakistan’s, India
c) China’s, Pakistan
d) India’s, Pakistan
25. The _______ emphasises on protecting the future generation.
a) Herman Daly Commission
b) Brundtland Commission
c) Kothari Commission
d) UNCED Commission
26. Statement I: Commercialisation of agriculture was coercively introduced by the Britishers.
Statement II: The aim of commercialisation of agriculture was to support the British industries.
a) Both the statements are true.
b) Both the statements are false.
c) Statement II is true, but statement I is false.
d) Statement I is true, but statement II is false.
27. Match the following. Options are as below
a. Intermediaries i. Bringing together all plots of land into one block
b. Tenancy reforms ii. Take cultivated land on rent

c. Consolidation of land holdings iii. Exploitative agrarian relations
a) a(i),b(ii),c(iii)
b) a(iii),b(i),c(ii)
c) a(iii),b(ii),c(i)
d) a(ii),b(iii),c(i)
28. How do the Rising population factor contribute to the environmental crisis in India? What problem do they pose for the
government?
OR
How do the Water contamination factor contribute to the environmental crisis in India? What problem do they pose for
the government?
29. Explain the concepts of labour force, workforce and unemployment and the relationship among the three.
30. Discuss briefly the rationale behind choosing Self-reliance as a planning objective for the Indian economy.
31. Explain briefly the meaning of economic reforms. What are the main economic reforms?
OR
Was it necessary to introduce economic reforms at the behest of World Bank and International Monetary Fund? Was
there no alternative to solve the problem of balance of payment crisis? Suggest any other alternative.
32. Identify how Human Development Index is calculated? What is the position of India in the World Human Development
Index?

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1. i. Mention some obstacles that hinder the mechanism of agricultural marketing.
ii. Briefly explain the role of buffer stocks in the context of agricultural marketing.
2. OR
i. Explain the importance of self help groups (SHGS) in rural areas.
ii. Write a short note on-
a. MSP (Minimum Support Price)
b. Buffer Stock
c. PDS (Public Distribution System)
34. Read the following text carefully and answer the questions given below:
The Impact of COVID-19 on South Asian Economies - Pakistan
EARLY IMPACT OF THE PANDEMIC On February 26, 2020, Pakistan confirmed its first two cases of COVID-
19. The pandemic could not have come at a worse time: the economy was growing at a tepid rate, jobs were hard to
come by, and high inflation continued to erode the purchasing power of millions of households. As the case count grew,
fear that the virus would spread rapidly across the country led to a vociferous “lockdown versus livelihoods” debate.
Khan made a public case for protecting livelihoods and argued against a countrywide lockdown. Nevertheless, provincial
governments began to issue their own lockdown orders, shutting down all nonessential businesses. The enforcement of
these orders brought Pakistan’s economy to a standstill by the end of March.
Early estimates predicted that the economy would lose between 12 and 18 million jobs during the lockdown. The World
Bank predicted that the country would enter its first recession in decades. Consequently, on March 24, 2020, Khan
announced a stimulus package to prop up the economy and pave the way for a quick recovery. Totaling Rs.1.2 trillion
(about 3 percent of GDP), the stimulus included an Rs.200 billion fund to protect laborers, Rs.150 billion to expand the
country’s existing cash transfer program to poor families, and another Rs. 100 billion for pandemic-related emergencies.
The biggest success of the stimulus was the rapid expansion of the country’s cash transfer mechanism. More than 15
million families received funds through the program, ensuring that millions of citizens did not fall into extreme
poverty. The State Bank also played a key role in supporting the economy, extending credit to small- and medium-sized
businesses and protecting millions of jobs in the formal economy. The cumulative support provided by the central bank
reached Rs. 1.3 trillion by October 2020. It also sharply cut interest rates from 13.25 percent to 9 percent in April 2020
and pushed them down to 7 percent by the end of June.
As its domestic economy struggled, Pakistan had to pause its USD 6 billion fiscal stabilization program (which had
started in 2019) and seek emergency relief from the IMF. By mid-April, the IMF also approved a USD 1.39 billion loans
to alleviate the economic pain from the pandemic. In the following months, the World Bank provided USD 505 million
in low-interest, soft loans; the Asian Development Bank approved a USD 500 million emergency loan; and the Asian
Infrastructure Investment Bank approved a USD 250 million loans. Nevertheless, by December 2020, debt relief
program talks with the IMF stalled as the Khan government resisted the demands and restrictions posed by the IMF.
These included demands to increase energy tariffs and to sustainably reduce debt in the power sector, among others.
Questions:
i. Discuss the projected impact of the countrywide lockdown on Pakistan’s economy.
ii. Analyse the implications of the pandemic on the domestic economy of Pakistan.

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Class 12 - Economics
Sample Paper - 01 (2023-24)
Solution
SECTION A – MACRO ECONOMICS

1. (b) Both the statements are true.
Explanation: Both the statements are true.
2. (b) All of these
Explanation: All the options are the type of loan is advanced by Commercial Banks.
3. (d) zero
Explanation: APC can never be zero.
4. (a) Appreciating
Explanation: Appreciating
5. (b) Consumption, National Income
Explanation: Consumption, National Income
6. (a) cost of credit should be reduced
Explanation: cost of credit should be reduced
7. (a) ₹ 1,000 crores
Explanation: Change in income₹ 1,000 crores
= 1000
250
0.25
8. (c) Value is yet to be added
Explanation: Their value is computed when they become final goods in order to avoid double counting.
9. (c) total reserves equal initial deposits
Explanation: total reserves equal initial deposits
10. (b) Parity value
Explanation: When the value of a currency is fixed in terms of some other currency, it is called Parity value.
11. i. Expenditure on the maintenance of an office building is not included in national income, as it is a part of intermediate
consumption.
ii. Expenditure on adding a floor to the office building is included in national income because it is a part of investment
expenditure or capital formation.
12. The Balance of Payment (BoP) of a country is a systematic record of all economic transactions between its residents and
residents of foreign countries during an accounting year. It summarises the exports and imports and other international
transactions of a country with other countries. It can also be put as ''Balance of payment is an accounting statement that
provides a systematic record of all the economic transactions between the residents of a country and the rest of the world,
in a given period of time.
The two parts of Balance of Payments account are as follows :
i. Current account - Current account refers to an account which records all the transactions relating to export and
import of goods and services and unilateral transfers during a given period of time.
ii. Capital account - Capital account records all those transactions, between the residents of a country and rest of the
world, which cause a change in the assets or liabilities of the residents of the country or its government. Capital
account is used to finance deficit in current account or absorb surplus of current account.

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OR
The relation between the rise in price of foreign currency and its demand is explained by the following reasons :
i. The imports become costlier when the price of a foreign currency rises. So, the value of imports will fall with time,
hence the demand for foreign exchange will fall.
ii. A resident of a country finds it costlier to travel abroad when the price of foreign currency rises. So, the number of
foreign travellers decrease, and consequently, the demand for foreign currency also decreases.
13. Fiscal policy is the revenue and expenditure policy of the government with a view to combat the situation of inflationary
and deflationary gap in the economy.
(i) Fiscal measures to correct excess demand:
1. Reduction in government expenditure on public works, public walker and defense etc.
2. Reduction in public expenditure on transfer payments and subsidies.
3. Increase in taxes to lower the disposable income with the people.
4. Restricted deficit financing to check the flow of money in the economy.
5. Reduction in purchasing power through greater public borrowings.
(ii) Fiscal measures to correct deficient demand.
1. Increase in government expenditure and investment.
2. Increase in transfer payments and subsidies.
3. Reduction in taxes to increase the disposable income of the people.
4. More use of deficit financing to increase the flow of money.
5. Repayment of public debts.
14. KT represents the inflationary gap.
The extent to which actual AD becomes higher than of actual AD required for full employment level of income.
Two fiscal measures are:
i. Increase in Taxes- To curb the inflationary gap the government may increase the taxes. This may reduce the
purchasing power in the hands of the public which in turn may reduce the Aggregate Demand in the economy to
bring it equal to the Aggregate Supply.
ii. Reduction in Government Expenditure- To curb the inflationary gap the government may reduce its non-
developmental expenditure. This may reduce the purchasing power in the hands of the people which in turn will
reduce the Aggregate Demand in the economy to bring it equal to the Aggregate Supply.
OR
Level of Income Consumption Expenditure Marginal Propensity to Marginal Propensity to

Savings
(₹) (₹) Consume Save
400 240 - 160 -

500 320 0.80 180 0.20
600 395 0.75 205 0.25
700 465 0.70 235 0.30

Formulae used:
Δ Consumption
i. Marginal Propensity to Consume =
Δ Income
ii. Savings = Income - Consumption

Δ Savings
iii. Marginal Propensity to Save = Δ Income
Alternatively, MPS = 1 - MPC

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15. When commercial banks have exhausted all resources to supplement their funds at times of liquidity crisis, they
approach central bank as a last resort. As lender of last resort, central bank guarantees solvency and provides financial
accommodation to commercial banks (i) by rediscounting their eligible securities and bills of exchange and (ii) by
providing loans against their securities. This saves banks from possible failure and banking system from a possible
breakdown.
1. i. Goods which remain unsold during the year are treated as a part of the change in stock during the year. These
goods become a part of the inventory investment of the producers and added while calculating GDP by
Expenditure Method. Accordingly, the income method and expenditure method must yield identical estimates of
GDP.
ii. By using expenditure method,
National Income(NNPFC)
= Private final consumption expenditure + Government final consumption expenditure - Net imports + Net
domestic capital formation - Net factor income to abroad - Indirect tax + Subsidies
= 600 + 100 - 20 + 110 - 5 - 120 + 20
= 830 - 145
= ₹ 685 arab
2. OR
i. Sales = Output Sold ( units) X Price Per Unit of Output sold
= Rs. 3,000 × 10 = Rs. 30,000 crores
Now, Value of Output = Sales + Change in Stock
= Rs. 30,000+ (-100)
= Rs. 29,900 crores
Gross Value Added at Market Price (GVAMP)
= Value of Output - Intermediate Cost
= Rs. 29,900 - 20,000 = Rs. 9,900 crores
Hence, Net Value Added at Factor Cost (NVAfc) =GVAmp - Consumption of Fixed Capital - Net Indirect Tax
= 9,900 - 500 - (300 - 300) = Rs. 9,400 crores
[Where, Net Indirect Tax = Import Duty - Subsidy]
[As import duty is an indirect tax]
ii. a. National income by expenditure method includes net exports (= exports - imports) because it is an item of
final expenditure. Exports, though purchased by non-residents, are produced within our domestic territory, and
therefore, a part of domestic product and hence included in national income. Imports are deducted because
goods and services imported are not produced within the domestic territory of the country.
b. The net change in stocks, i.e. net addition to stocks during a year is included in national income because it is a
component of final investment expenditure since Gross investment = Net change in stocks + Fixed business
investment + Residential investment.
Net change in stock= Closing Stock- Opening Stock
1. i. Tax receipts neither create a liability nor lead to the reduction of assets, therefore they are revenue receipts
because we know that all those receipts which neither create a liability nor reduce the assets of the government
are termed as revenue receipts.
ii. Disinvestment refers to the withdrawal of existing investment, eg. the government of India is undertaking
disinvestment by selling its shares in Maruti Udyog Ltd. It is a capital receipt for the government as it reduces the
assets of the government.

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2. Government receipts are divided into two groups-revenue receipts and capital receipts. Differences between
these two are given below:
Basis Revenue Receipts Capital Receipts
Government receipts which neither create Government receipts which either create liabilities for the
Meaning liabilities nor reduce assets are called government or reduce assets of the government are termed
revenue receipts. as capital receipts.
Nature Revenue receipts are recurring in nature. Capital receipts are non-recurring in nature.
Tax receipts and non-tax receipts, i.e. fees, Loans taken by the government and disinvestment of PSUs
Example
grants, donations etc. etc.
SECTION B – INDIAN ECONOMIC DEVELOPMENT
18. (d) Ahmedabad
Explanation: Ahmedabad
19. (a) 54
Explanation: In the late 1980s, China remained a predominantly agricultural country. As of 1985 about 63 percent of
the population lived in rural areas, and nearly 63 percent of the national labor force was engaged in agriculture.
20. (c) Equity
Explanation: Equity
21. (b) Unproductive credit
Explanation: Unproductive credit requirements related to consumption activity. Credit required to meet consumption
expenditures for social and religious purposes is known as unproductive credit. Agricultural credit can be categorized on
the basis of both purpose of credit and objective of the credit provider.
22. (a) Both A and R are true and R is the correct explanation of A.
Explanation: Both A and R are true and R is the correct explanation of A.
23. (a) 86th
Explanation: The 86th Amendment to The Constitution of India provides for free and compulsory education for
children aged 6 to 14 years.
24. (c) China’s, Pakistan
Explanation: China’s, Pakistan
25. (b) Brundtland Commission
Explanation: The Brundtland Commission emphasises on protecting the future generation. This is in line with the
argument of the environmentalists who emphasise that we have a moral obligation to hand over the planet earth in good
order to the future generation; that is, the present generation should bequeath a better environment to the future
generation. At least we should leave to the next generation a stock of ‘quality of life’ assets no less than what we have
inherited.
26. (a) Both the statements are true.
Explanation: Both the statements are true.
27. (c) a(iii),b(ii),c(i)
Explanation: Intermediaries refers to people between the tiller and the state. they should be abolished as they bring
stagnation in the Indian agricultural sector. The tenancy reforms laws provide the provisions for registration of tenants,
or giving ownership rights to the former tenants to bring them directly under the state. Consolidation of land holdings
refers to bringing together all plots of land into one block.
28. (i) Rising population
(ii) Air pollution
(iii) Water contamination
(iv) Affluent consumption standard

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(v) Illiteracy
(vi) Industrialization
(vii) Urbanization
(viii) Global warming
(ix) Poaching
(x) Reduction of forest coverage.
OR
Water Contamination : Life depends to a great extent on water. However, increase in population, waste disposal from
factories etc., contaminate water. The development process has also polluted water and is responsible for the decreasing
level of water that is harmful for animals living in water. The government has taken many steps to solve the problem of
water contamination but it had failed to achieve desired success.
29. Labour force refers to the number of persons usually employed or willing to be employed for a major part of the year. In
other words, the labour force includes the persons who can (or should) produce goods and services. It refers to the sum
of all persons of working age who are employed and those who are unemployed.
Workforce refers to a number of persons who are actually employed in productive activities. In other words, the
employed labour force is known as the workforce.
Unemployment occurs when people who are available and looking for work are unable to find
employment. Unemployment refers to an excess of the labour force over the workforce. Thus,
Unemployment = Labour force - Workforce
30. The rationale behind choosing Self-reliance as a planning objective for the Indian economy are as follows:-
i. To reduce foreign dependence: Planning objective of Self-reliance targeted to promote economic growth and
modernization, the Indian five-year plans in the early years of the post-independence era stressed the use of domestic
resources in order to reduce our dependence on foreign countries.
ii. To avoid foreign interference: In the post-independence era, it was feared that the dependence on imported food
supplies, foreign technology, and foreign capital may increase foreign interference in the policies of our country.
31. Economic reforms refer to the changes made in the economy with a view to deregulate it and to solve the prevailing
economic problems of the country. In India, economic reforms were introduced in 1991, with the implementation of New
Economic Policy. These reforms can be categorised as
i. Stabilisation Reforms: These reforms were short-term measures which intended to correct disequilibrium in BoP
and to check inflation.
ii. Structural Reforms: These are long-term measures which intend to bring efficiency in the working of the economy.
These reforms can be categorised as liberalisation, privatisation and globalisation.
These economic reforms in India are structurally classified as liberalization, globalization, and privatization.
Liberalisation: Liberalization was brought up with the fact that any restrictions which became a hindrance to
development and growth will be put to an end.
Privatisation: Privatization largely refers to giving more opportunities to the private sector, such that the role of the
public sector is reduced.
Globalisation: Globalization in simpler terms is to connect with the world. In this context, globalization means the
integration of the economy of India with that of the world.
OR
I think it was necessary to introduce economic reforms at the behest of World Bank and International Monetary Fund
although there were a few other alternatives. Since Indian economy was in a very bad position. The foreign reserves
were short, BOP was negative and there was urgent need of funds. Considering the situation, the best option for India
was to accept the conditions laid down by IMF. Also the economic reforms -LPG were very important for the Indian

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economy. The domestic industries were performing poorly, the quality of goods was going down, so many PSUs going
into losses. It was important to lift the import quotas and liberalise the economy. Flow of better technology, foreign
investment, competition from foreign markets, privatisation were all important to lift the condition of Indian Industries
and sick PSUs. However we could think of a few other alternatives to solve the problem of BOP crisis.
One such alternative could be to raise funds from Indian public. Government could raise funds by taking loans from
Indians by issuing treasury bills. By making use of these funds in some employment generating printable ventures, we
could take the lead further. Reforms could be introduced later on our own terms and conditions. In that case, it would
have proved more fruitful.
32. The Human Development Index (HDI) is a composite statistic (composite index) of life expectancy , education, and per
capita income indicators, which are used to rank countries into four tiers of human development . A country scores
higher HDI when the lifespan is higher, the education level is higher, and the GDP per capita is higher. For calculating
Human Development Index, three indices are used:
a. Longevity: It is indicated by life expectancy at birth.
b. Knowledge: It is measured by adult literacy rate (two third weightage) and gross enrollment ratio (GER) (one third
weightage) of primary, secondary and tertiary levels taken together.
c. Standard of Living: It is measured by real GDP per capita.
India ranks 131 out of 182 countries which show poor human development of the country. Value of India's HDI is 0.624.
1. i. Some obstacles that hinder the mechanism of agricultural marketing are:
i. Faulty weighing and manipulation of accounts by traders which results in exploitation of farmers when they
sell their products to traders.
ii. Presence of a large number of middlemen(kuchcha areas, pucca areas, brokers, wholesalers, retailers,
moneylenders, etc.)
iii. Farmers do not have proper storage facilities to store their produce for selling later at a better price. Hence,
they are forced to sell even at a lower price to save the produce from decaying.
iv. Lack of grading system.
v. Due to lack of knowledge about the prices prevailing in the markets, farmers are forced to sell their produce at
unreasonable prices and at the improper time due to lack of proper marketing facilities.
ii. The Government of India has adopted the policy of buffer stocks to minimise the fluctuations in the food prices.
Buffer stocks serve as shock absorbers in the economy and provide a defense mechanism against the widely
fluctuating price levels.
Under the buffer stock policy, the government fixes the minimum support price (MSP) and builds up stocks of
food through direct purchases from the farmers and releases these stocks for sale in the domestic market where
prices are increasing. Also, buffer stock operations aim at eliminating unduly low prices consequent to bumper
crops. Buffer stocks of rice and wheat are maintained by the Food Corporation of India. The government
safeguards the interest of farmers and supplies these buffer stock through fair price shops.
2. OR
i. In order to change the face of socio-economic scenario, micro enterprises and SHGs are playing significant role in
the self-employment by raising the level of income and standard of living rural people. In this framework, one of
the most vital aspects of rural self employment is the formation of SHGs which is a valuable investment in human
capital through training and capacity building measures. From dairy to mechanised farming, weaving, poultry,
food processing units, mushroom cultivation; Rural India has been busy setting up micro-enterprises by forming
SHGs. The group members use collective wisdom and peer pressure to ensure appropriate use of fund and its

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timely repayment. These are informal groups in nature where members come together towards collective action
for common cause. The common need is meeting their emergent economic needs without depending on external
help. SHG movement is supposed to build economic self reliance of rural poor, overcome misuse and create
confidence predominantly among women who are mostly unseen in the social structure.
ii. 1) Minimum Support Price is the price at which government purchases crops from the farmers, whatever may be
the price for the crops. Minimum Support Price is an important part of India’s agricultural price policy.
The MSP helps to incentivize the framers and thus ensure adequate food grains production in the country. I gives
sufficient remuneration to the farmers, provides food grains supply to buffer stocks and supports the food security
programme through PDS and other programmes.
2) Buffer stock is the stock of food grains (e.g., wheat,rice etc.) procured by the government through Food
Corporation of India (FCI). It is created in order to distribute food grains in deficit areas and among poorer
section of society at an affordable price.
Government has created buffer stock for the following reason
(i) Food grains like wheat and rice and procured by the government through FCI from surplus states. This food
grains is then stored in granaries.
(ii) Government has created buffer stock to distribute these food grains in deficit areas and among the poor
section of society at much lower price than market price.
(iii) It helps to resolve the problem of shortage of food during adverse weather condition.
3) Public distribution system (PDS) is an Indian food security system. Established by the Government of India
under Ministry of Consumer Affairs, Food, and Public Distribution and managed jointly with state governments
in India, it distributes subsidized food and non-food items to India's poor. Major commodities distributed include
staple food grains, such as wheat, rice, sugar, and kerosene, through a network of public distribution shops (also
known as ration shops) established in several states across the country. Food Corporation of India, a Government-
owned corporation, procures and maintains the PDS.
34.
i. The pandemic hit Pakistan at a worse time when it was already struggling with a slow economic growth rate, low
jobs, and high inflation. The government issued lockdown orders of shutting down all nonessential businesses when
the cases began to grow rapidly. This led to a vociferous “lockdown versus livelihoods” debate. The enforcement of
these orders brought Pakistan’s economy to a standstill by the end of March. Early estimates predicted that the
economy would lose between 12 and 18 million jobs during the lockdown. The World Bank predicted that the
country would enter its first recession in decades. Consequently, the economy was in bad shape and the government
had to rope in the stimulus package for its recovery.
ii. The internal economic condition of Pakistan was grappled with a cash crush which compelled the government
to pause its USD 6 billion fiscal stabilization program (which had started in 2019) and seek emergency relief from
the IMF. By mid-April, the IMF also approved a USD 1.39 billion loan to alleviate the economic pain from the
pandemic. Later, other loans were accrued from various other sources, for instance, the World Bank provided USD
505 million in low-interest, soft loans; the Asian Development Bank approved a USD 500 million emergency loan,
and the Asian Infrastructure Investment Bank approved a USD 250 million loans.

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1. This question paper contains two sections:

SECTION A – MACRO ECONOMICS

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Complete the following table:

(ii) Import Duty 300

(iii) Output Sold (units) 3,000

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(vii) Subsidy 300

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b. Tenancy reforms ii. Take cultivated land on rent

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SECTION A – MACRO ECONOMICS

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Level of Income Consumption Expenditure Marginal Propensity to Marginal Propensity to

400 240 - 160 -

700 465 0.70 235 0.30

ii. Savings = Income - Consumption

Alternatively, MPS = 1 - MPC

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