KENDRIYA VIDYALAYA SANGATHAN,JAMMU REGION

SAMPLE PAPER SET: 10

CLASS: XII SUBJECT :Economics(030)
TIME ALLOWED-3 HOURS M.M.-80

S.N ANSWER KEY Marks

O.

1 c. -0.5 1

2 d. Both a. and c. 1

3 b. Fiduciary 1
Or
c. On the basis of their cash deposits

4 c. Dirty floating 1

5 a.Both (A) and (R) are true and (R ) is the correct explanation of (A). 1
or
Externality is the cost or benefit caused by a producer that is not financially
incurred or received by the producer. For eg: Negative: smoke emitted by an
industry.
Positive: plantation of trees

6 c. AD<AS 1
or
When actual aggregate demand is greater than planned aggregate demand it
leads to inflationary gap.

7 b. Mobilize 1

8 b. 40,000 1

9 a.increases 1

10 d. (A) is false and (R) is true. 1

11 a. Social security contributions by employees are not separately included in 3

the estimation of national income as these are paid out of compensation of
employees.
b. Pension paid after retirement is included in the estimation of national
income because this is a kind of deferred beach payment.
c. Expenditure on maintenance of a building is not included in national
 income as it is a part of intermediate consumption.

12 Yes there can be a deficit in balance of trade without a deficit in Balance of 3

payments. BOT is only a component of current account of BOP which includes
only exports and imports of goods. However, BOP includes both current as
well as capital account, hencethere is a much wider scope.
OR
Managed floating system is a mixture of two systems of exchange: fixed
exchange rate system and flexible exchange rate system. In this system the
central bank can intervene to purchase or Sell foreign currencies in an effort
to moderate exchange rate movements when ever they feel such actions are
appropriate.

13 The problem of excess demand can be solved by reducing aggregate demand 4

as:-
a. The public expenditure is to be reduced
b. increase in taxes
c. increase in bank rate
d. sale of security by RBI in the open market
e. increase in imports

14 Under employment equilibrium occurs when AS=AD, short of their full 4

employment level.
Measures to correct under employment equilibrium
a. Bank rate: central bank should decrease the bank rate. A decrease in
bank rate lowers the rate of interest and credit becomes cheap.
Accordingly the demand of for credit expands and aggregate demand
increases.
b. Open market operations:By buying the government securities the
central bank injects additional purchasing power in the system which
results in the expansion of credit as a result aggregatement increased.

15 Cash reserve ratio is the fraction of total deposites that each commercial 4
bank must keep with the central bank of the country as a part of fractional
reserve system.
CRR is an important tool in control in the credit creation in the economy .
When the central bank wants to decrease the level of credit creation in the
economy it increases the CRR as the CRR increases the low level amounts left
with the commercial bank decreases. This reduces the landing powers of the
bank and as a result the process of credit creation Falls full stop on the other
hand the central bank wants to increase the level of creation on me its lowers
the CRR.
OR
Money is a dynamic factor because:
 I. It has facilitated exchange beyond limits.
II. It has facilitated accumulation of wealth for the purpose of
investment.
III. It has facilitated floor of capital from one place to other and from
developed countries to do last developed countries in the world .
Briefly, money is a dynamic factor because it hurts economic stability
and promotes the process of growth and development.

16 The counting of the value of commodity more than once is god double 6
counting full stop this leads to over estimation of the value of goods and
services produced . That's the importance of avoiding double counting lies in
avoiding over estimating the value of domestic product. For example a farmer
produces 11 tons of wheat and sales it for Rs. 400 in the market of a flour
mill.
The Floor mills sales it for rupees 600 to the Baker. The Baker cells the bread
to the shopkeeper for Rs. 800. The shopkeeper cells the entire bread to the
final consumers for Rs. 900 .Thus,
value of output = Rs( 400+600+800+900)
=Rs. 2,700

17 (a) Progressive tax system is the one which puts greater burden on higher 3,3
income group and lesser burden on lower income group. In other
words, the rate of tax increases with increase in income. It is an
effective tool to reduce inequality as lower income groups are
required to pay less tax and vice versa.
(b) The basis of classifying taxes into direct and indirect taxes is shifting
the impact of tax.
Direct taxes are those taxes for which the incidence and impact of tax 2,2,2
falls on the same person i. e.actual burden of taxes cannot be shifted
for example Income Tax, Corporation tax etc. Whereas indirect taxes
are those taxes which the incidence and impact fall on separate
persons i. e. burden of this text can be shifted on others for example
service tax, entertainment tax etc.
OR
I. Revenue receipt as neither impacts assets or liabilities of the
government.
II. Capital receipt as it reduces assets of the government.
III. Revenue receipt as if was no impact on assets and liabilities.

18 b. Present monetary system in India was introduced by colonial government. 1

OR
d. The overall literacy rate during British period was 16%.

19 c. Schedule C of IPR 1956 comprised of companies which were cooperated by 1

 private and government sector.
OR
c.(A) is true and (R) is false.

20 c. Industries 1
Or
Number of years a person is expected to live.

21 c. Use of thermal power 1

22 d. All of the above 1

23 d. Intervention of the government is most essential. 1

24 b. SEZ 1

25 b. regular salaried worker 1

or
Organised sector : they hire more than 10 employees
Unorganised sector : They employee less than 10 employees

26 c. (A) is true and (R) is false. 1

27 c. Statement I is true and Statement II is false. 1

28 The given image indicates towards the environmental challenge of making 3

our planet green and pollution free. It shows that we have to plant more
trees, protect our environment and valuable resources and make the use of
renewable resources like solar energy and wind energy to meet our
requirements and thus saving the precious non renewable resources which
would eventually help in sustainable development.

29 Trade unions are voluntary organisations of workers formed to promote and 3

protect the interest of workers through collective action.
Workers use trade unions as their representative voice to demand their rights
and improve their living and working conditions.
The formation of trade unions was a reaction against the mechanism of
pauperisation, low pay, long working hours, child labour and generally
appalling working conditions.
OR
The problems faced by farmers during the initial years of organic farming are:
I. Organic farming requires inputs like organic manure bio-fertilizers and
organic pesticides. Though they are cheaper yet farmers find it
difficult to get them.
 II. The yield from organic farming is much less than that of modern
agricultural farming.
III. The price of organic food is high, so it is difficult to sell them.

30 The development of India, China and Pakistan with respect to some salient 4
Human Development indicators can be assessed and compared with the help
of falling points :
a. China is a head of India and Pakistan in human development
indicators.China has better ranking in terms of economic indicator
such as GDP, per capita, or proportion of population below poverty
line and health indicators such as mortality rates, access to sanitation,
literacy, life expectancy or malnourishment.
b. Pakistan's performance in sanitation and access to water is better
than India.
c. Maternal mortality is very high in India and Pakistan as compared to
China.
d. All the three countries provide improve the water sources for most of
their population.

OR
Various factors that led to the Rapid growth in economic development in
China are given below :
a. China initiated to implement The Economic reforms in 1978 without
any compulsion by the World Bank and IMF.
b. China established infrastructure in the field of Health and education
that helped effectively in improving the social and economic
indicators.
c. There was a long existence of decentralized planning.
d. China implemented land reforms that increase the productivity.

31 Arguments in favor of this statement are: 4

a. India has become a vibrant ecowith the introduction of NEP.
b. NEP led to considerable increase in foreign exchange reserves.
Arguments against this statement are:
a. It led to Urban concentration of growth process.
b. This policy encouraged economic colonialism.

32 Unemployment in india is considered to be up chronic problem because it has 4

been a long time phenomena . India is facing this problem ever since
independence and has not yet been able to solve this problem . Absolute
number of unemployed is increasing years after years. India has not been
able to generate enough jobs due to lack of capital and low rate of growth in
the industrial sector.
33 Yes, I agree with the statement as human capital is positively related with the 6
economic growth:
● Higher productivity of physical capital: Human Capital increases
productivity of physical capital as specialized and skilled workers can
handle machines or technology better than the Unskilled workers.
● Innovative skills: Human Capital facilitates innovation of new methods
and techniques of production.
● Higher rate of participation and equality: Human Capital Formation
leads to a higher employment rate. With increase in employment, the
productivity rises.
● Brings positive outlook: The process of human capital formation brings
a positive outlook to the society which is different from orthodox and
traditional ways of thinking.

34 The traditional handicraft industry in India enjoyed worldwide reputation but 6

the British misrule in India led to the decline of Indian handicraft industry.The
Britishers adopted the following policies to systematically destroy the
handicraft industry:
● The Britishers followed a discriminatory tariff policy by allowing tariff
free exports of raw material from India and terriff free import of
British Industrial Products in India, but placed heavy duty on the
export of handicraft products.So, Indian handicraft products started
loosing their domestic as well as foreign markets.
● Machine made products from Britain were cheap and better in quality
than the handicraft products. The competition forced many
handicrafters to shut down their business.
● The Britishers introduced railways in India to expand the market of the
low priced industrial products.

OR
Yes I agree with the statement. Due to following reasons agriculture sector
appears to be adversely affected by the reforms for process:
● Public investment in agriculture sector especially in infrastructure
which includes irrigation, ppower, roads, market linkages and research
and extension has been reduced in the Reform period.
● The removal of fertilizers subsidy has led to increase in the cost of
production which has severely affected the small and marginal
farmers.
● Where is changes in policies like reduction in import duties on
agriculture products, removal of minimum support price and lifting of
quantitative restriction on agriculture products have increased the
threat of international competition in the Indian farmers.