Class 12 SAMPLE PAPER 02

Section01 Economics
1. What is considered under the underdeveloped economy?
a. High level of inequalities
b. Low level of capital productivity
c. A relatively closed economy
d. All the above
Ans. d
Explanation: In addition to the above characteristics, there is
also a high incidence of poverty, rapid population growth and
technological backwardness.

2. Who develop the concept of PQLI?

a. UNO
b. Morris D Morris
c. UNDP
d. Oxford Poverty and Human Development Initiative
Ans. b)

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3. Who popularized the concept of HDI?
a. Morris D Morris
b. Keynes
c. Adam Smith
d. Mahbub Ul Haq
Ans. d)

4. Under which business activity, output and income

increase at high level?
(a) Recession
(b) Boom
(c) Recovery
(d) Depression
Ans. b
Explanation:
Boom, recession, depression and recovery are phases of a
business cycle.

5. The sum total of gross value added of all the firms in the
country minus the depreciation is.

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a) Net National product
b) Gross National Product
c) Net Domestic Product
d) Gross Domestic Product
Ans. C)
Explanation: According to the World Bank classification, low
income economies have $1035 or less than that. There are 36
such countries.

6. The GDP deflator is calculated as under:

Nominal GDP
a)
Real GDP

b) Nominal GDP  Real GDP

c) Nominal GDP  Real GDP

Real GDP
d)
Nominal GDP

Ans. a
Explanation:
The GDP deflator is calculated as under:
Nominal GDP
GDP deflator 
Real GDP

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7. The global rank of India in terms of its nominal GDP is.
a) 8th
b) 10th
c) 3rd
d) 12th
Ans. b)

8. Identify the market in which there are only 2 sellers of a

good
a) Perfectly competitive
b) Monopsony
c) Duopoly
d) Monopoly
Ans. c)

9. The author of ancient book on economics, Arthashastr is.

a) Sushrut
b) Chanakya
c) Kautilya

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d) Bhattacharya
Ans. b

10. ____________ method/s is/are used to calculate national

income in India?
a. Expenditure method
b. Production method
c. Income method
d. All the above
Ans. d)
Explanation: Due to non-availability of the data, no single
method can solely be used in India. We use a mixture of all the
three.

11. What do you mean by the term “Liberalization”?

(A) Reduce the number of reserved industries from 17 to 8
(B) Make free determination of interest rate
(C) Liberate industry, trade and economy from unwanted
restriction
(D) Opening-up economy to the world by attaining international
competitiveness
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Ans. (D)
Explanation: Liberalization refers to the opening-up economy
to the world by attaining international competitiveness.

12. The World Bank is known as

(A) IDA
(B) IFC
(C) IBRD
(D) IMF
Ans. (D)
Explanation: The World Bank is known as International
Monetary Fund (IMF).

13. Which one of the following is not a reason for the failure
of new products?
(A) Good idea but overestimated market size
(B) Development costs are lower than or equal to estimated or
expected cost
(C) Correctly positioned new product, not promoted effectively
or overpriced
(D) Competitors fight back harder than expected
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Ans. (B)
Explanation: Development costs are lower than or equal to
estimated or expected. This is not a reason for the failure of new
products.

14. Which one of the following equates the present value of

cash outflows and the present value of expected cash inflows
from a project?
(A) Net present value (NPV)
(B) Internal rate of return (IRR)
(C) Payback period (PBP)
(D) Accounting Rate of Return (ARR)
Ans. (B)
Explanation: Internal rate of return (IRR) equates the present
value of cash outflows and the present value of expected cash
inflows from a project.
15. On which basic assumption/premise, pluralistic
approach of industrial conflict is based?
(A) Industrial conflict is a part of the broader social conflict
between classes.
(B) No consensus is possible, in case of conflicts, because
people are with different sociocultural backgrounds.
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(C) Conflict occurs when the tendency of industrial society is to
treat worker as an isolated individual and deprive him of all
control over his environment.
(D) An enterprise contains people with coalition of different
interests.
Ans. (D)
Explanation: Pluralistic approach of industrial conflict is based
on the assumption that an enterprise contains people with
coalition of different interests.

Section 02 Business Studies

16. What was the profession of Sir Henry Fayol?
(a) Hardware Engineer
(b) Mining Engineer
(c) Software Engineer
(d) Production Engineer
Ans. b
Explanation:
Henry Fayol was a mining engineer by profession and a great
management theorist also.

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17. What do you understand by the term “Liberalisation”?
(a) Government controls and restrictions
(b) Integrating among economies reduced
(c) Policy of planned disinvestments
(d) None of these
Ans. a
Explanation:
Liberalisation refers to the end of license, quota and reduction of
government controls and restrictions.

18. Which one of the following is not considered as a

function of insurance?
(a) Assist in capital formation (b) Risk sharing
(c) Lending of funds (d) None of these
Ans. c
Explanation:
The functions of insurance include providing certainty, security,
risk sharing and assistance in capital formation. Thus, lending of
funds does not come under insurance activity.

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19. To make the delegation more effective it is mandatory as
well as optional to be responsible along with
(a) Incentives
(b) Promotions
(c) Authority
(d) Manpower
Ans. c
Explanation:
Authority refers to the right of a person to order his
subordinates. Thus, it is necessary that the responsibility rests
with the necessary authority.

20. By which process the message is utilised to convert into a

symbol for making the conversation between two people
more profitable?
(a) Feedback
(b) Encoding
(c) Media
(d) Decoding
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Ans. b
Explanation:
The process of converting message into a symbol is called
Encoding.

21. What is the main aim of management audit?

(a) To review the efficiency and effectiveness of company
(b) To review the efficiency and effectiveness of management of
the company
(c) To review the efficiency and effectiveness of shareholders
(d) To review the efficiency and effectiveness of customers
Ans. b
Explanation:
The aim of management audit is to review the efficiency and
effectiveness of management of the company.

22. Which one of the following factors is/are not applied to

responsibility accounting?
(a) Profit
(b) Cost

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(c) Accounting
(d) Investment
Ans. (C)
Explanation:
Accounting is a factor that is not applicable to responsibility.

23. What is likely to be managed with higher growth

potential of a company?
(a) Dividend affected by growth
(b) Pay higher dividends
(c) Pay lower dividends
(d) None of these
Ans. (C)
Explanation:
Companies with higher growth potential are likely to pay lower
dividends.

24. Through _________a fixed asset should be financed

(a) a short term liability
(b) a long term liability
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(c) Mix of long and short term liabilities
(d) None of the above
Ans. B
Explanation: Fixed assets financed through long term
liabilities.

25. Which factor is associated with Treasury bill?

(a) Short-term funds (b) Long-term funds
(c) Capital market (d) None of these
Ans. (A)
Explanation:
Treasury bills are a means of borrowing short-term funds. These
are issued by the RBI on behalf of the Government of India.
26. Which one of the following channel is represented by the
below process?
(a) One-level channel (b) Two-level channel
(c) Three-level channel (d) None of these
Ans. (A)

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27. Which one of the following attitude is not possessed by a
successful entrepreneur?
(a) Live your business day-by-day
(b) Produce as per customers’ requirements
(c) Innovate and improvise continuously
(d) Investing in Research and Development
Ans. (A)
Explanation:
Live your business day-by-day is not the attitude associated with
a successful entrepreneur.

28. Status comes under____________types of barriers

(a) organisational barrier
(b) Semantic barrier
(c) Non semantic barrier
(d) Psychological barrier
Ans. A
Explanation: Status related to organisation, thus, it is an
organisational barrier.

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29. Which of the following software company is promoted by
Narayan Murthy
(a) Wipro
(b) infosys
(c) Satyam
(d) HCL
Ans. B
Explanation: Narayana Murthy promoted Infosys.

30. For promoting sales, advertising endeavors may be made

as per
I. Competitive parity II. Objective and task
III. Tied sales IV. All-one-can-Afford
Codes:
(A) I, II, and IV only (B) II, III and IV only
(C) I and II only (D) III and IV only
Ans. (A)
Explanation: For promoting sales, advertising endeavors may
be made as per competitive parity, objective and task, and all-
one-can-Afford.

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Section03 Accountancy
31. Which of the following statements are correct
regarding to profit
a. It is payment for the service by entrepreneur
b. It is payment for the services by labour
c. It is payment for the services by land
d. All of these
Ans. a)
Explanation:
Profit can define the income of the factors input is called
entrepreneurship for organizing production and undertaking
attendant risks. He hires the other three factor land, labour and
capital bring, and them together organizes and coordinates them
so as to earn maximum profit.

32. Regarding to correcting adverse balance of payment,

which of the following method is used
a. Export promotions
b. revenue import and promotions
c. fiscal policy
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d. production of export substitutes and expenditures
Ans. c)
Explanation: fiscal policy corrects the balance of payment by
reducing the total expenditure.

33. The capital account record all transaction relating to

a. Change in asset
b. Unilateral transfers
c. Goods and services
d. All of these
Ans. a)
Explanation: capital account is considered about changing
asset and liabilities.

34. Choose the incorrect statement from given below?

(a) At the time of deficit, for availing loan, international
agencies expected India to liberalize.
(b) At the time of deficit, for availing loan, international
agencies expected India to reduce the role of government in
many areas.

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(c) At the time of deficit, for availing loan, international
agencies expected India to put trade restrictions between India
and other countries.
(d) At the time of deficit, for availing loan, international
agencies expected India to remove restrictions on the private
sectors
Ans. c)
Explanation: At the time of deficit, for availing loan,
international agencies expected India to put trade restrictions
between India and other countries.

35. A train fare was for Rs.5 in my dad’s time. Now it is

worth Rs.500. My dad’s first salary for the month was
Rs.12000 and over the years it has now become Rs.85, 000.
This example states
(a) Inflation
(b) Deflation
(c) Depression
(d) Interest
Ans. a)

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Explanation: At the time of deficit, for availing loan,
international agencies expected India to put trade restrictions
between India and other countries.

36. For which type of pricing, cost plus pricing is considered

appropriate tool?
I. Product tailoring II. Public pricing
III. Refusal pricing IV. Monopoly pricing
Codes:
(a) II, III and IV only
(b) I, II and III only
(c) I and II only
(d) III and IV only
Ans. (b)
Explanation: Cost plus pricing is considered appropriate tool
for product tailoring, public pricing and refusal pricing.

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37. The total purchases of XYZ Ltd. is Rs.60,000. If the
gross profit of the company is 10% on sales and the closing
stock is more than the opening stock by Rs.10,000, the cost of
goods sold will be
A. Rs.25,000
B. Rs.42,500
C. Rs.50,000
D. Rs.57,500
Ans c)
Explanation: Cost of goods sold = Purchases + Opening stock –
Closing stock
= Purchases – (Closing stock – Opening stock)
= Rs.60,000 – (Rs.10,000) = Rs.50,000
Since, the closing stock has been increased by Rs.10,000

38. Interest on debentures issued as a collateral security is

paid on
(a) Nominal value of debentures
(b) No interest is paid
(c) Face value of debentures
(d) Paid up value of debentures
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(e) None of these
Ans. b)
Explanation: No Interest is paid on debentures issued as a
collateral security.

39. Read the following statements about Debentures

1. Debenture is form of public borrowing.
2. It is customary to prefix debentures with agreed rate of
interest.
3. Debentures interest is a charge against profits
4. The issue price and redemption value of dentures
cannot differ.
Select correct options from given codes below
(A) Only 1, 2, 3 (B) Only 2, 3
(C) Only 3, 4 (D) Only 2
(E) Only 1, 3, 4
Ans. d)

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Explanation: It is customary to prefix debentures with agreed
rate of interest.

40. The “law of diminishing returns” applies to:

a. The short run, but not the long run.
b. the long run, but not the short run
c. both the short run and the long run
d. Neither the short run nor the long run.
Ans. a)
Explanation:
Law of diminishing return is short run production not a long run
production because short run production factor is a means of
time in which we can’t change scale of operation. The
proportion between variable factor and fixed factors change. The
law usually operates in short period.

41. Read the following statements of Assertion (A) and

Reason (R).
Assertion (A): The financial statements prepared on
historical cost basis result into an evolution of capital in the
long run.

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Reason (R): Maintaining the books of accounts as per
current purchasing power technique only may contain the
inflationary pressure.
In the context of above two statements, which one of the
following is correct one?
(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 false, but (R) is true.
(D) (A) is true, but (R) is false.
Ans. (A)
Explanation: In the context of above two statements both (A)
and (R) are true, but (R) is not the correct explanation of (A).

42. In which analysis, financial statements of the current

year is compared with the performance of previous years of
the same firm?
(A) Trend analysis
(B) Horizontal analysis
(C) Intra-firm comparison analysis

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(D) All of the above
Ans. (D)
Explanation: All the statements whether it is trend, horizontal
or intra-firm analyses are compared with the current year as well
as previous one.

43. For the following two statements of Assertions (A) and

Reasoning (R), indicate the correct code:
Assertion (A): All firms under perfect competition in long
run earn only normal profit.
Reason (R): All firms under perfect competition in long run
operate at the minimum average cost level.
(A) Both (A) and (R) are correct.
(B) (A) is correct but (R) is not correct.
(C) (A) is not correct but (R) is correct.
(D) Both (A) and (R) are incorrect.
Ans. (A)
Explanation: All the firms under perfect competition in long
run earn only normal profit because they operate at the
minimum average cost level. Hence both statements (A) and (R)
are correct.

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44. Read the following statements and answer as code:
Statement I: Capital adequacy norms help banks in the
strengthening of their capital base.
Statement II: Capital adequacy norms help banks in the
sanctioning more loans.
Code:
(A) Both the Statements (I) and (II) are correct.
(B) Statement (I) is correct, but (II) is incorrect.
(C) Both the Statements (I) and (II) are incorrect.
(D) Statement (I) is incorrect, but (II) is correct.
Ans. (B)
Explanation: The correct option is (B) because statement I is
correct while statement II is wrong.

45. Which one of the following is not an international

financial institution?
(A) IMF
(B) ADB
(C) IBRD

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(D) IFRS
Ans. (D)
Explanation: IFRS is not an international economic institution.

Achiever Section
46. The Job Description Index (JDI) technique is used to
measure
(A) Job attitudes (B) Job descriptions
(C) Job analysis records (D) Job skill
requirements
Ans. (A)
Explanation: The Job Description Index (JDI) Technique is
used to measure job attitudes.

47. Which one of the following is not true?

(A) Material resources are subject to laws of mechanics and they
cannot have an output greater than the input.
(B) Human resources are capable of exponential growth and
development.
(C) In current scenario, gradually the emphasis has shifted from
muscle power to the use of mind power.
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(D) Human resources cannot yield an output that may be far
greater than what the value of their input warrants.
Ans. (D)
Explanation: Human resources cannot yield an output that may
be far greater than what the value of their input warrants.

48. From the following two statements of Assertion (A) and

Reasoning (R) indicate the correct code:
Assertion (A): Development in human resource management
(HRM) is a short-term educational process with temporary
intervention.
Reason (R): It is an educational process utilizing a
systematic and organized procedure for development of
operative employee’s performance in current jobs.
Code:
(A) (A) is correct and (R) is correct explanation of (A).
(B) Both (A) and (R) are not correct.
(C) (A) is not correct, but (R) is correct.
(D) (A) is correct, but (R) is not correct explanation of (A).
Ans. (B)
Explanation: Both (A) and (R) are not correct.

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49. Match items of List-I with those in List-II relating to
methods of performance appraisal and indicate the correct
code of matching:
List-I List-II
(a) Paired comparison method (i) Reviewing employee
records and holding interview
on definite test questions.
(b) Forced choice description (ii) set of pair phrases or
method descriptive statements
(c) Critical incidents method (iii) Differentiating between
effective and non- effective
performance on basis of
achievements.
(d) Field review method (iv) Relative ranking method
Code:
(a) (b) (c) (d)
(A) (iv) (ii) (iii) (i)
(B) (ii) (iii) (iv) (i)
(C) (iii) (i) (iv) (ii)
(D) (ii) (iv) (i) (iii)
Ans. (A)
Explanation: Correct option is (A) (iv) (ii) (iii) (i).

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50. ABC Ltd. Sold a depreciable asset for Rs. 40,000
payable in cash. The accumulated depreciation amounted to
Rs. 60,000 and a loss of Rs. 20,000 was recognized on the
sale. The original cost of the asset was
(a) Rs.120,000
(b) Rs.70,000
(c) Rs.60,000
(d) Rs.40,000
Ans. a)
Explanation: Original cost = 40,000 + 60,000 +20,000
= 120,000

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