CHENNAI SAHODAYA SCHOOLS COMPLEX

COMMON EXAMINATION
Class-12
ECONOMICS (030)
Time Allowed: 3 hours Maximum Marks: 80
Roll No.: Date:
SECTION – A
MACRO ECONOMICS
1. Read the following statements carefully. (1)
Statement 1: Car purchased by a hotel for the purpose of tourism facilitation
is capital good.
Statement 2: Refrigerator used at home is considered as non-durable consumer
good.
In the light of the given statements, choose the correct alternative:
(a) Statement 1 is true and statement 2 is false
(b) Statement 1 is false and statement 2 is true
(c) Both statements 1 and 2 are true
(d) Both statements 1 and 2 are false

2. Read the following statements carefully. (1)

Statement 1: 𝑀1 is the most liquid measure of money supply.
Statement 2: Government of India regulates and directs the entire monetary structure
(a) Statement 1 is true and statement 2 is false
(b) Statement 1 is false and statement 2 is true
(c) Both statements 1 and 2 are true
(d) Both statements 1 and 2 are false
3. is the primary function of money. (1)
a) a store of value b) a unit of value
c) Standard of deferred payments d) Transfer of value
(OR)
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 Which of the following statement is correct:
a) ₹1 note is issued by the RBI
b) Coins are issued by the Government of India.
c) Both statements are true
d) Both statements are false

4. An economy is at full employment and AD is greater than AS, what will be the impact on price
level in such an economy? (1)
a) Rise b) Fall
c) No change d) both rise and fall

5. Domestic Currency appreciation takes place when: (1)

(a) Domestic currency loses its value in relation to a foreign currency.
(b) There is an increase in the price of a foreign currency in terms of
the domestic currency.
(c) There is a decrease in the price of a foreign currency in terms of
the domestic currency.
(d) There is no change in the exchange rate.
(OR)
Foreign Exchange Transactions which are independent of other transactions in the Balance of
Payments Accounts are called:
a) Current transactions b) Capital transactions
c) Accommodating transactions d) Autonomous transactions

6. Suppose in a hypothetical economy, the income rises from ₹6,000 crores to ₹7,000 crores.
As a result, the consumption expenditure rises by 600 crores. Marginal Propensity to
Consume in such a case would be
(1)
a) 0.8 b) 1.6 c) 0.2 d) 0.6
(OR)
If the value of Average Propensity to Consume (APC) is 0.8 and National Income is
₹4,000 crores, the value of savings will be
a) ₹100 crores b) ₹200 crores c) ₹800 crores d) ₹500 crores

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7. Read the following statement – Assertion (A) and Reason (R). Choose one of the correct
alternatives given below: (1)
Assertion (A): There is an inverse relationship between the value of marginal
propensity to save and investment multiplier.
Reason (R): Saving is a leakage in the circular flow of income. Greater the
saving, greater the leakage and lower the value of investment multiplier.
(a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct
explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the
correct explanation of Assertion (A).
(c) Assertion (A) is true, but Reason (R) is false.
(d) Assertion (A) is false, but Reason (R) is true.

8. Identify which of the following statement is true? (1)

a) The flexible exchange rate system gives the government more flexibility to
maintain large stocks of foreign exchange reserves.
b) In the Managed floating exchange rate system, the government intervenes to
buy and sell foreign currencies.
c) In the Managed floating exchange rate system, the central bank intervenes
to moderate exchange rate fluctuations.
d) In the Fixed exchange rate system, market forces fix the exchange rate.

9. Read the following statements – Assertion (A) and Reason (R). Choose one of the correct
alternatives given below: (1)
Assertion (A): When income is zero, consumption is also zero.
Reason (R) :There is always some minimum level of consumption in the economy even when
income is zero.
(a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct
explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the
correct explanation of Assertion (A).
(c) Assertion (A) is true, but Reason (R) is false.
(d) Assertion (A) is false, but Reason (R) is true.

10. How will the devaluation of Indian Rupee affect the exports? (1)
a) Exports will fall. b) Exports will rise
c) Exports will remain same d) Exports will fall first and then rise

11. Calculate GVA fc from the following data. (3)

i) Intermediate cost - ₹ 12,000
ii) Closing stock - ₹ 12,000
iii) Output sold (units) - ₹ 600
iv) Opening stock - ₹ 2000
v) Price per unit - ₹ 20
vi) Corporate tax - ₹ 3000
vii) Consumption of fixed capital - ₹ 2000
viii) Subsidy - ₹ 160

12. What are official reserve transactions? Explain their importance in the Balance of (3)
Payments.
(OR)
Are the following entered; (i) On the credit side or debit side; and (ii) In the Current Account
or Capital Account in the Balance of Payments Account? Give reasons for your answer. (3)
(i) Investments from Abroad
(ii) Transfer of funds to relatives Abroad
(iii) Sale of machinery to abroad
13. Given consumption function is C = 80 + 0.75 Y(where C = consumption function,
Y = National income) and investment expenditure ₹ 200 crores. (4)
a) What will be equilibrium level of income?
b) What will be the new equilibrium level of income if investment increases by
₹50 crores?

14. 'Central Bank acts as the banker and as an agent to the government'. Elaborate the
given statement. (4)

15. What is deflationary gap? Represent with a neat diagram. Discuss any one fiscal measure to
correct the situation of deflationary gap. (4)
(OR)

Describe the adjustment mechanism if in an economy, the ex-ante savings are lesser than ex-
ante investments. (4)
16. a) The Government has different slabs of tax rate for different income group.
What is the objective behind this? (3)
b) Explain the components of capital Receipts. (3)

17. (a) Given the following data, find the missing value of 'Private Final Consumption Expenditure'.
(3)

S. No. Particulars Amount (in crores)

(i) National Income 50,000
(ii) Net Indirect Taxes 1,000
(iii) Private Final Consumption Expenditure ?
(iv) Gross Domestic Capital Formation 17,000
(v) Profits 1,000
(vi) Government Final Consumption Expenditure 12,500
(vii) Wages & salaries 20,000
(viii) Consumption of Fixed Capital 700
(ix) Mixed Income of Self-employed 13,000
(x) Net Factor Income from Abroad 500
(xi) Net Exports 2,000

(b) Explain how 'externalities' are a limitation of taking Gross Domestic Product as an index of
welfare. (3)
(OR)

a) Find out Net National Product at Market Price. (3)

S No Particulars ₹
(i) Net current transfers from abroad (-) 10
(ii) Wages and Salaries 1,000
(iii) Net factor income to abroad (-)20
(iv) Social security contributions by employers 100
(v) Net Indirect tax 80
(vi) Rent 300
(vii) Consumption of fixed capital 120
(viii) Corporate Tax 50
(ix) Dividend 200
(x) Undistributed Profits 60
(xi) Interest 400
(xii) Social security contributions by employees 600

b) State and discuss any three precautions to be considered while estimating

national income by Expenditure method. (3)
 SECTION – B
INDIAN ECONOMIC DEVELOPMENT

18. Which was not the objective of demonetisation 2016: (1)

(a) To curb corruption
(b) To curb counterfeit currency
(c) To stop the use of low denomination notes for terrorists activities
(d) To discourage the accumulation of "black money"
(OR)

Read the following statements carefully:

Statement 1 - Navaratna Policy of the government helped in improving the performance of
public sector undertakings in India.
Statement 2 - Navaratna Policy boosted the public sector industries and helped them to produce
more efficiently and also made them competitive in the market

In the light of the given statements, choose the correct alternative from the following:
(a) Statement 1 is true and statement 2 is false
(b) Statement 1 is false and statement 2 is true
(c) Both statements 1 and 2 are true
(d) Both statements 1 and 2 are false

19. From the set of statements given in Column A and Column B, choose the correct pair of
statement: (1)
Column A Column B
i). Railway services in India (a) 1897
ii). First Indian Census (b) 1880
iii). Second stage of Demographic Transition (c) 1883
iv). Planning Commission in India (d) 1950
(a) i. (a) (b) ii. (b) (c) iii. (c) (d) iv. (d)

20 Identify the correctly matched pair of Column A to that of Column B: (1)

Column A
i) Open Unemployment
ii) Disguised Unemployment
iii) Frictional Unemployment
iv) Seasonal Unemployment
Column B
(a) Arises due to change in demand pattern
and supply structure
(b) Not working by choice
(c) It arises due to movement from one
industry to another
(d) It is invisible in nature

(a) i-(a) (b) ii - (b) (c) iii - (c) (d) iv - (d)

21. Which Five Year Plan recognised the importance of human capital? (1)
(a) Tenth (b)Seventh (c) Ninth (d) Sixth

(OR)
Which of the following is not used as a strategy for Sustainable Development?
a) Use of bio-gas b) Use of thermal power
c) Use of solar power d) Use of hydel power

22. Read the following statements carefully and choose the correct alternative from the following:
(1)

Statement 1: Both education and health increase the income generating capacity
of an individual.
 Statement 2: Spread of education plays no role in controlling the
population growth rate:
Alternatives:
a) Statement 1 is true and Statement 2 is false.
b) Statement 2 is true and Statement 1 is false
c) Both the statements are true
d) Both the statements are false

23. Read the following statements - Assertion (A) and Reason (R). Choose one of the correct
alternatives given below: (1)
Assertion (A) : Absorptive capacity means the ability of the environment to
absorb degradation.
Reason (R) : Many resources have become extinct and the wastes
generated are beyond the absorptive capacity of the
environment.
Alternatives:
(a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the
correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the
correct explanation of Assertion (A).
(c) Assertion (A) is true, but Reason (R) is false.
(d) Assertion (A) is false, but Reason (R) is true.

24. Identify the correctly matched pair in Column A and Column B from the following. (1)

Column A Column B
i. India a) Economic reforms in 1997
ii. Pakistan b) Economic reforms in 1991
iii. China c) Economic Reforms in 1978
iv. India d) GST rolled out in 1999

a) i – a b) ii – b c) iii – c d) iv - d

25. Read the following statements carefully and choose the correct alternative from the following:
Statement 1: India and Pakistan adopted the mixed economy model. (1)
Statement 2: All the countries in the world were adopting mixed economy model.
Alternatives:
(a) Statement 1 is true and statement 2 is false
(b) Statement 1 is false and statement 2 is true
(c) Both statements 1 and 2 are true
(d) Both statements 1 and 2 are false

26. Special Economic Zones were set upby China to:

a) Attract foreign investors c) To develop the backward regions
b) To maintain economic equality d) To promote private sector

27. The Great Proletarian Cultural Revolution led to (1)

a) collective cultivation of land.
b) growth of students and professionals.
c) increase in small scale industries.
d) massive industrialization.
(OR)
India is not a member of which of the following regional/global economic grouping:
a) SAARC b)BRICS c) G – 7 d) G - 20

28. 'The present generation should bequeath a better environment to the future generation'.
According to Herman Daly, a leading environmental economist, how can we achieve
 sustainable development? (any three) (3)

29. At the time of independence, moneylenders and traders exploited small and marginal farmers
and landless labourers by lending to them on high interest rates and by manipulating the
accounts to keep them in a debt-trap. A major change occurred after 1969 when India adopted
social banking and multi-agency approach to adequately meet the needs of rural credit. Can
you highlight and explain the major institutional sources of rural credit? (3)
(OR)

"Agricultural marketing plays an important role not only in stimulating production and (3)
consumption, but in accelerating the pace of economic development". Discuss some of the
measures initiated by the government to improve agricultural marketing. (any three points)

30. Discuss briefly the rationale behind choosing 'self - reliance' and modernization as planning
objectives. (4)

31. ‘Globalization is turning the world into one whole or creating a borderless world’ Justify the
rationale of the given statement. (4)
(OR)
‘Membership of WTO is optional or required in the context of Indian Economy’. Explain. (4)

32. Compare the development of countries India, China and Pakistan giving emphasis to
demographic indicators. (4)

33. a) ‘Education and Health care service create both private and social benefits’. (2)
State the institutions that come under the Education and Health sector in India.
b) Mention the various forms of health expenditures. (2)
c) What initiatives have been taken by the government to provide equal access to education
for all? (any 2) (2)
(OR)
a) When does jobless growth take place? (2)
b) What is casualisation of workforce? (2)
c) Mention the sources that provide data on unemployment. (2)

34. Read the following hypothetical text and answer the questions that follow:
The performance of Indian economy during the period of first seven five-year plans (1950 –
1990) was satisfactory if not very impressive. On the eve of independence, India was an
industrially backward country, but during this period of first seven plans our industries
became far more diversified, with the stress being laid on the public investments in the
industrial sector. The policy of import substitution led to protection of the domestic industries
against the foreign producers, but we failed to promote a strong export surplus. Although public
sector expanded to a large extent but it could not bring desired level of improvement in the
secondary sector.
Excessive government regulations prevented the natural trajectory of growth of
entrepreneurship as there was no competition, no innovation and no modernization on the front
of the industrial sector. Many Public Sector Undertakings (PSUs) incurred huge losses due to
operational inefficiencies, red-tapism, poor technology and other similar reasons. These PSUs
continued to function because it was difficult to close a government undertaking even it is a
drain on country’s limited resources. Government aimed at social welfare. On the
Agricultural front, due to the measures taken under the Green Revolution, India more or less
became self- sufficient in the production of good grains.
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So the needs for reform of economic policy was widely felt in the context of changing
global economic scenario to achieve desired growth in the country.

1. ‘The policy of import substitution led to protection of the domestic industries against the
foreign producers’ (3)
Explain the two forms by which imports were protected.

2. ‘Many public sector undertakings incur huge losses and are a drain on the economy’s
resources’. However public sector is very essential. Discuss the reasons for the public sector
to play a major role in the initial phase of Indian Economic Planning. (3)

***All the Best***

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