Practice Questions
Session 2022-23
ECONOMICS (030)
CLASS: XII
Time: 3 Hours Maximum Marks: 80
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.
[Link] SECTION A – MACRO ECONOMICS Marks
Q.1 Read the following statements carefully: 1
Statement 1: Aggregate demand is the sum total of consumption and
investment expenditures.
Statement 2: Total consumption consists of an autonomous component and an
induced component.
Choose the correct option based on the above statements.
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
Q.2 “The World Bank has been extending loans to Country X on favourable 1
terms for infrastructure, poverty alleviation, and rural development projects for
four decades.”
Identify the reason for these loans to be listed as external assistance under the
capital account of the Balance of Payments.
1
A. The loans have been taken from an entity outside the country.
B. The loans aim to improve the standard of living in the country.
C. The loans have crossed the three-decade period.
D. The loans can be paid off over a longer period.
Q.3 The Reserve Bank of India can increase the money supply in the economy by 1
. (Choose the correct alternative)
A. demonetisation of currency
B. buying government bonds
C. increasing the cash reserve ratio
D. persuading banks to discourage loans
Q.4 There are two statements given below, marked as Statement (1) and Statement 1
(2). Read the statements and choose the correct option.
Statement (1): The Balance of Payments is a key economic indicator of a
country’s economic well-being.
Statement (2): It is a summary of all economic transactions of a country and
the rest of the world in a given financial year.
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
Q.5 Given below are some basic activities that occur in an economy. 1
Identify the activity that would not help to study the economy in its totality?
A. government introducing policies
B. aggregate demand and supply of goods
C. determination of the consumer’s equilibrium
D. determination of equilibrium level of income and employment
OR
The total consumption and investment curves are given below:
1
2
Identify which of the following represents “Autonomous Consumption”.
A. OR
B. RC
C. RY
D. RI
Q.6 As the Marginal Propensity to Save (MPS) increases, the value of the 1
investment multiplier . (Choose the correct alternative)
A. increases
B. decreases
C. becomes zero
D. does not change
OR
What is the value of the investment multiplier, when the Marginal Propensity to 1
Consume (MPC) is 0.1?
A. 10
B. 1.1
C. 0.01
D. 100
Q.7 Which of these do not fall under the purview of the Central Bank? 1
P: controlling money supply
Q: providing loans to citizens
R: issuing currency
S: holding foreign exchange reserves
Alternatives:
3
A. only S
B. only Q
C. Q and S
D. P and R
Q.8 The money exchanged in which of the following situations will not be 1
considered as Invisible items under the Balance of Payments?
A. An Indian flying to the US for his medical treatment.
B. Oil India Limited (OIL) purchasing crude oil from Iraq.
C. The Indian diaspora remitting money to their families at home
D. Tata consultancy services (TCS) providing cloud consulting to African
nations.
OR
Identify the situation that can be certainly deduced from a "capital and current 1
account equilibrium"?
A. The current account deficit is financed by the selling of foreign
exchanges.
B. There is an inverse relationship between the current and the capital
account.
C. The capital account has to be equal to the current account to achieve
equilibrium.
D. The country is running into an economic deficit and requires borrowing
from foreign reserves.
Q.9 There are two statements given below, marked as Statement (1) and Statement 1
(2). Read the statements and choose the correct option.
Statement (1) When aggregate supply is plotted as a 45°line graph, the
economy is said to be at equilibrium.
Statement (2) The total amount spent on aggregate demand is equal to the total
expenditure in the country.
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
Q.10 Choose the equation that represents the equilibrium condition in a two-sector 1
economy.
̅C ̅C
A. Y = B. Y =
MPS 1−MPS
4
̅ +I̅
C ̅ +I̅
C
C. Y = D. Y =
1−MPC MPC
Q.11 Study the table given below which has information about two firms of an 3
economy.
Wages (in ₹) Profits (in ₹) Interest (in ₹) Rent (in ₹)
Firm A 50 150 100 100
Firm B 90 210 100 100
Further, it should be noted that-
1. Net Factor Income from Abroad is (-) ₹ 20
2. Employee's contribution to the Social Security Fund by Firm A and Firm B is
₹ 5 and ₹ 10 respectively
Calculate the National Income.
Q.12 a) When does a Current Account Surplus situation arise? 3
b) Discuss its significance in an economy.
OR
3
Venture capital refers to the funding provided by investors to small or start-up
businesses with strong potential for growth.
In light of the above statement, how does the process of devaluation of a
currency affect Foreign Direct Investment or Portfolio investment?
Q.13 In an economy, the initial income was ₹1000 crore which increased by 4
₹ 2500 crore.
Given MPS = 0.3, = ₹500, calculate the investment expenditure at the
increased level of income.
Q.14 Assuming that there exists a situation of excess demand in an economy leading 4
to an inflationary gap.
a) What is the impact of excess demand in the economy
b) Explain any two monetary measures that can help to control this situation.
5
Q.15 ‘During the last few years’ initiatives such as Jan Dhan Yojna, Aadhar-enabled 4
payment systems, e-Wallets, National Financial Switch (NFS) and others have
strengthened the government's resolve to go cashless.’
Source: NCERT
Elaborate on how such initiatives may have affected the Indian economy.
OR
Explain the process of credit creation by commercial banks with the help
of a numerical example. 4
Q.16 (a) In what situation will the Real Gross Domestic Product be greater than the 3
Nominal Gross Domestic Product? 3
(b) If the Nominal Gross Domestic Product is ₹2200 crores, and the price index
(base = 100) is 110. Calculate the Real Gross Domestic Product.
Q.17 Answer the following questions.
(a) "National highway is a private good because it is funded by taxes." Defend 3
or refute the given statement with valid arguments.
(b) How does the government budget ensure economic equality in an economy? 3
OR
(a) In the 2022-23 budget in India, a lot of importance has been given to 3
reforming the education system and all-inclusive welfare. Analyse the value of
such an allocation.
(b) State which category of receipts or expenditures the following are 3
categorised as:
i) custom duty
ii) government acquisition of land
iii) Sale of PSUs
(END)
