KENDRIYA VIDYALAYA SANGATHAN, VARANASI REGION

ANSWER KEY FOR SAMPLE PAPER 8,2023 -24, CLASS – XII

ECONOMICS (030)
Q.NO MARKS
1. (a). STOCK. 1
2. (c) zero 1
3. C. Both A and R are true and R is the correct explanation of A. 1
4. (c) All the three 1
5. (c) 1 and 3 Only 1
6. (a) 1 only 1
7. (b) KT 1
8. 1
(b) 2 only
9. (d) C=100Crore+0.8Y 1
10. (b) 2 and 3 Only 1
11. Indian rupee plunged to all time low of 80.87₹ against US Dollar ($). It is 3
known as depreciation in the value of Indian Rupee resultant: - -----------1
 It may lead to fall in imports as foreign goods will become
costlier. Fall in imports less out flow of foreign exchange from
the country. -----------1
 Due to depreciation of rupee cause increase in exports as
competitiveness of Indian goods will become better. Increase in
exports net inflow of foreign exchange increases. -----------1
Which has favorable effect on the Balance of Payments position.
12. Answer: Change in stock = (ii) +(vi)+(v)-(iii)-(i) 1
= 200+100+40-10-400 1
= (-) ₹70 Crores. 1
13. Given, Autonomous Consumption (C ) ₹100, MPC 0.6, Equilibrium level of 1
Income (Y) = ₹ 2,000
We know that at equilibrium level, Y = C + I
Y = C + MPC(Y) + I 1
2,000 = 100+ 0-6 (2,000) + I
2,000 = 1,300+ I 1
I = 2,000 – 1,300 = ₹700.
Thus, it is proved that the given statement is false. Because the correct value of 1
Autonomous Investment is ₹700.
14. a) When ex-ante Aggregate Supply is more than ex-ante Aggregate 4
Demand, it means that households are planning to save more than what
the firms expect them to. This will lead to Recession In the Economy
this create Unsold stock with producers resultant Producers cut down
the production Reduce the level of Income lastly again Equilibrium
restored in the economy.
As a result, there may be a decrease in the level of output, employment and
income in the economy.

Or
b) The given statement is not true. When planned savings are less than the
planned investments it means households are planning to consume
more than what the firms expected. As a result, planned inventory
would fall below the desired level. To bring back the inventories at the
desired level, producers may expand production raising the employment
and income level.
15.  The rate of interest paid by the Central Bank on deposits made by 4
commercial banks is called Reverse Repo Rate. When Reverse Repo
Rate is raised, it encourages the commercial banks to park their funds
with the central bank. This has the negative effect on the lending
capability of the commercial banks, which leads to decrease in money
supply in the economy.
 Open Market Operations refers to buying and selling of government
securities by the Central Bank from/to the general public. By selling
government securities the Central Bank soaks liquidity from the
economy because those who buy make payments by cheques to the
Central Bank. This reduces the reserves of commercial banks and
adversely affects bank's ability to create credit and thus, reduces the
money supply in the economy.

16. a) The given Statement-Is refuted as the fiscal deficit can exist without 6
revenue deficit, if:

(i) Capital Budget is in deficit (CE>CR) with

balanced Revenue Budget (RE=RR). (ii) Capital Budget is in deficit (CE> CR)
in greater proportion to Surplus Revenue Budget (RR>RE)

b) The given Statement-Is appropriate. The government may impose

higher taxes (both direct and indirect taxes) on the richer class, reducing their
purchasing power, Government may use the same tax revenue to provide goods
and services (free or at subsidized price) to the poorer section of society to
support them.
17. a) Ans. Circular Flow of income refers to the unending flow of the 3
activities of production, income generation and expenditure involving
different sectors of the economy.
The three phases of circular flow:
a. Production of goods and services causes generation (or distribution)
of income.
b. Income causes expenditure (or disposition.)
c. By generating demand, expenditure once again causes production.
The flows of production, income and expenditure form a circularity
with no beginning or no end. Which is why it is called circular.
b) The given statement is refuted, as national income is the factor income
earned by the normal residents of a country, irrespective of whether
earned within or outside the domestic territory. 3
SECTION – B (Indian Economic Development)
खंड - बी (भारतीय आर्थिक विकास)
18. (d) all of these 1
19. (d) Statement 2 is true, but statement 1 is false. 1
20. 1
(d) Statement 2 is true, Statement-1 is false.
21. 1
b) There will be more elderly people in proportion to young people.
22. a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct 1
explanation of Assertion (A).
23. c) Both statements 1 and 2 are true 1
24. c) Statement I is correct, but Statement II is incorrect 1
25. D. Both A and R are true but R is not the correct explanation of A. 1
26. C. Both A and R are true and R is the correct explanation of A. 1
27. c) Statement-I is true, Statement-II is false. 1
28. a) The given statement is correct; in the early post- independence period 3
the aim of the government's policy was to reduce the dependence on the
foreign countries for goods, services, technology and capital. It stressed
on the use of domestic resources to avoid foreign interference, as it was
feared that the dependence on the imported food supplies, foreign
technology and foreign capital may increase foreign interference in the
policies of our country.
Similarly, the main thrust of the 'Atmanirbhar Bharat' is also to make
India an economy that is self-reliant and self-sufficient.

b) Two-fold motive behind systematic destabilisation of indigenous Indian

industries in the British era was.
 To get raw material from India at cheaper rates to be used for
upcoming modern industries in Britain.
 To sell finished product produced by the British industries in
Indian market at higher prices.
29. The given statement is correct.

 Investment in human capital formation (investment in education and 1

health) enhances efficiency/productivity, skills, capabilities implying
economic growth.
 Technical skills acquired through sources of human capital formation
such as education, training and sound health etc. provides opportunity 1
to labour supply to make better use of given resources.
 Investment in education creates ability to adopt newer technologies, 1
facilitates invention and innovation since educated workforce generally
adapts to modern technologies and innovation.
30. The Great Leap Forward (GLF) campaign was initiated in China in 1958, 4
which aimed at industrialising the country on a massive scale.
 People were encouraged to set up industries in their backyards.
 In rural areas, communes were started. Under the Commune system,
people collectively cultivated lands. In 1958, there were 26,000
communes covering almost all the farm population.

However, GLF campaign met with many problems:

I. A severe drought caused havoc in China killing about 30 million people.
II. When Russia had conflicts with China, it withdrew its professionals who
had earlier been sent to China to help in the industrialisation process.
31. 'Rural development' essentially focuses on action for the development of areas 4
that are lagging behind in the overall development of the village economy.
Mahatma Gandhi had always maintained that the real growth of India does not
mean simply the growth and expansion of industrial urban countries but
mainly the growth and development of the villages. The importance of rural
development in India lies in the fact that 2/3rd of the population still (directly
or indirectly) depends on agriculture and 1/3rd of the rural population still
lives in abject poverty.
Some of the prime /key areas for the development of the rural India are: -
 Infrastructure development
 Alleviation of poverty
 Development of human Capital
32. Government is strategically promoting labor-intensive manufacturing and 4
expanding employment opportunities in tourism and agro-based industries. A
labor-intensive industry requires large amounts of manual labor to produce its
goods or services. The National Manufacturing Policy identifies employment
intensive industries like textiles and garments, leather and footwear, gems and
jewelry and food processing, etc. as special focus attention sectors. The policy
provides special attention for Small Scale Industries as they offer employment
opportunities both for self-employment and jobs across diverse geographies.
33. 1. Monkomb Sambasivan Swaminathan is the the Father of the Green 2
Revolution in India a legendary agricultural scientist, who passed away
on Thursday 28 Sept 2023.
2. Objectives of Green Revolution in India are: - 2
 Short Term: The revolution was launched to address India’s
hunger crisis during the second Five Year Plan.
 Long Term: The long-term objectives included overall
agriculture modernization based on rural development,
industrial development; infrastructure, raw material etc.
 Employment: To provide employment to both agricultural and
industrial workers.
 Scientific Studies: Producing stronger plants which could
withstand extreme climates and diseases.
 Globalization of the Agricultural World: By spreading
technology to non-industrialized nations and setting up many
corporations in major agricultural areas.
3. Major benefits that accrue to green revolution are:
Increase in Agricultural Production
Prosperity of Farmers
Reduction in import of food-grains 2
Capitalistic Farming
Ploughing back of profit
Industrial Growth
Rural Employment
34. According to the United Nations Conference on Environment and 6
Development (UNCED), sustainable development is defined as “Development
that meets the need of the present generation without compromising the ability
of the future generation to meet their own needs”. The use of the concept of
‘needs’ in the definition is linked to the distribution of resources.
India is using tourism to achieve sustainable development goals

Indian villages are getting global recognition for rural tourism. For example,
Pochampli village in Telangana has been declared one of the best tourism
villages by the United Nations World Tourism Organisation.
— Tourism has the potential to generate the maximum number of
employments with minimum investment and thus tourism can be a positive
force for economic transformation, rural development and community well-
being.
— Tourism could be used to enable sales of local products and services, youth
to become entrepreneurs; provides a channel for employment of women and
non-advantaged communities like tribals and thus leads to community
empowerment and poverty alleviation.