COMMON PRE-BOARD EXAMINATION 2023-24

Subject: ECONOMICS (055)

Class XII

MARKING SCHEME
MARKS
SET Q.No: VALUE POINTS SPLIT
UP
Section A – Macro Economics

A 1 (d) End-use of goods 1 Mark

A 2 (d) Assertion (A) is false but Reason (R) is true 1 Mark

A 3 (b) Accepting deposits of general public 1 Mark

A 4 (c) Statement 1 is true and Statement 2 is false. 1 Mark

A 5 (c) A—(iv), B—(iii), C—(i), D—(ii) 1 Mark

A 6 (b) Ratio of change in saving to change in income 1 Mark

1
A 7 (b) 1 Mark
MPS

A 8 (c) A country, rest of the world 1 Mark

A 9 (b) Deficit of ₹650 lakhs 1 Mark

A 10 (b) Domestic currency has appreciated 1 Mark

(A) Non-Monetary Exchanges: These are those activities in an economy
which cannot be evaluated in terms of money due to non-availability of 3 Marks
data. (To be
e.g. domestic services provided by family members at home, barter marked
exchanges, etc. Although these activities contribute to welfare, they are a as a
major cause of understanding of GDP in the economy. Therefore, GDP whole)
may not give the true picture of welfare of a country.
A 11 (OR)
(B) When GDP represents quantities of final goods and services produced
or when GDP is measured on the basis of constant prices, it is called real 1 Mark +
GDP. (1 Mark) 2 Marks
Nominal GDP 180 =3
Real GDP = Price Index x 100 = 120 x 100 =₹150
Marks

(1 Mark each formula, 1 Mark for substituting values and final answer)
(a) Purchase of domestic goods by foreigners (exports)
1x3=3
A 12 (b) Direct foreign investments and portfolio investments in the home
Marks
country

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 (c) Speculative purchases of foreign exchange
(d) Remittance of foreign exchange by the residents of the country
from abroad.
(any other valid point) 1 Mark each
(A) Central bank is a banker, agent and financial advisor to the
government 1 Mark x 4
(i) As a banker to the government, it manages accounts of the =
government. 4 Marks
(ii) As an agent to the government, it buys and sells securities on
behalf of the government.
(iii) As an advisor to the government, it frames to policy to regulate the
money market.
(iv) It gives loan to the government.
(any other valid point – 1 Mark each)
(OR)
A 13
(B) As a Bankers’ Bank it has almost the same relation with other banks
in the country as a commercial bank has with its customers.
As a banker’s bank: - 1 Mark x 4
(i) Custodian of cash reserves. =
(ii) Clearing house function. 4 Marks
(iii) It provides additional Fund to those Bank temporary difficulties.
As a supervisor: -
(i) Periodic inspection of banks.
(ii) Central bank supervises, regulates and controls the commercial
banks.
(any other valid point – 1 Mark each)
MPC = 1 – MPS
= 1 – 0.2 = 0.8 (1 – Mark for MPC)
At equilibrium, Y = C + I 1 Mark x 4
̅
Y = C + 0.8Y + I (1 – Mark) =
A 14
10000 = C̅ + 0.8 x 10000 + 1500 4 Marks
C̅ = 10000 – 8000 – 1500
C̅ = 500 (1 – mark for substitution of correct values)
(1 – Mark for final answer))
(A) Budget
(B) (a) Economic upliftment of the economy
1x4=4
A 15 (C) Reduces
Marks
(D) (c) Recovery of loans is a revenue receipt.
(1 Mark each)
(a) Component of net factor income from abroad are:
(i) Net compensation of employees 2 Marks
(ii) Net income from property and entrepreneurship +
(iii) Net retained earnings of resident companies abroad 2 Marks
(Any two – 1 Mark each) +
A 16
(b) Domestic Income (NDPfc) = Compensation of Employees (i) + Rent 2 Marks
and Interest (ii) + Corporate Tax (iv) + Dividend (vii) + Undistributed Profits
(viii) + Mixed Income of Self Employed (x) (2 – Marks)
= ₹2000 + ₹800 + ₹460 + ₹940 + ₹300 + ₹200 (2 – Marks) 6 Marks
= ₹4,700 crore

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 In an economy, equilibrium level of income and employment is determined
when AD (Aggregate Demand) is equal to AS (Aggregate Supply).
(1 Mark)

1 Mark +
1 Mark +
2+2=4
A 17 (1 Mark) Marks
In the above figure, AD represents aggregate demand curve and 45° line =
is the line of reference, where AS =Y. Equilibrium level of income Y is
determined at point E, where AD = AS. 6 marks
At income level Y1, Aggregate Demand exceeds Aggregate Supply,
leading to an increase in level of income up to point E.
At income level Y2, Aggregate Supply exceeds Aggregate Demand
leading to a fall in income back towards point E.
(2 Marks)
It is only when AS = AD, that the equilibrium is struck, because the equality
between AS and AD implies that the desired level of output in the
economy (as indicated by AS) is exactly equal to the desired level of
expenditure (indicated by AD) in the economy. So, the entire output as
planned by the producers (during an accounting year) is purchased by the
buyers. There are no undesired or unwanted inventories (stock of goods)
with the producers.
(2 marks)
Section B – Indian Economic Development

A 18 (b) Indian agricultural sector did not suffer during the Colonial rule 1 Mark

A 19 (a) Substituting imports with domestic production 1 Mark

A 20 (c) (A) – 4, (B) – 3, (C) – 1, (D) – 2 1 Mark

A 21 (c) Statement 1 is true and statement 2 is false 1 Mark

A 22 (a) NABARD 1 Mark

A 23 (b) Self-employed worker 1 Mark

(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the
A 24 1 Mark
correct explanation of Assertion (A)

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 (d) Not compromising on the needs of the present generation with respect
A 25 1 Mark
to the needs of future generations
(b) The use of Compressed Natural Gas (CNG) as fuel in public transport
A 26 1 Mark
system can significantly lower air pollution
A 27 (c) Attract foreign investors 1 Mark
The major hurdles faced includes (any three)
(a) Big landlords registered their lands in the name of close relatives,
thus escaping from land ceiling legislation.
(b) There have been cases in which tenants were evicted & landlords
1x3=3
A 28 claimed to the actual tillers.
Marks
(c) Landlords use loopholes in the legislation to their comparative
advantages to own a large area of land.
(d) The goal of equity was not served fully because of serious loop
holes in the legislation.
The Great Leap Forward (GLF) campaign was initiated in China in 1958,
which aimed at industrialising the country on a massive scale by
encouraging people to set up industries in their backyards.
(1 Mark)
GLF campaign met with many problems.
 A severe drought caused havoc in China killing about 30 million
people.
 When Russia had conflict with China, it withdrew its professionals
who had earlier been sent to China to help in the industrialisation
process.
(1 Mark each)
(OR)
The given statement is correct.
(1 Mark)
1 Mark
(i) In the initial phase, reforms were initiated in agriculture, foreign +
trade and investment sectors. In agriculture commune lands were 1x2
A 29
divided into small plots which were allocated to individual Marks
households. They were allowed to keep all income from the land =
after paying taxes. 3 Marks
(ii) In the latter phase, reforms were initiated in the industrial sector.
Private sector firms and township and village enterprises were
allowed to produce goods. At this stage, State Owned Enterprises
(SOE) were made to face competition.
(iii) The reform process also involved ‘dual pricing’. This means fixing
the prices in two ways- farmers and industrial units were required
to buy and sell fixed quantities of inputs and output on the basis of
prices fixed by the government and the rest were purchased and
sold at market prices. Over the years, as production increased,
proportion of goods and inputs transacted in the market also
increased.
(iv) In order to attract foreign investors, special economic zones were
set up.
(any two - 1 Mark each)
(A) Human capital refers to the skills which a person acquires through the 2 Marks
A 30
education, training/or experiences, adding to his/her value to the +

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 reproduction process. Human capital represent enhanced productivity of 1 x 2 = 2
human beings, for example people becoming Engineers, Doctors through Marks
investment in education. Investment in human capitals contributes to =
growth of an economy in the following way. (2 – Marks) 4 Marks
(i) Generally, the productivity of an educated, skilled & healthy
workforce is relatively higher than an uneducated, un skilled &
unhealthy worker such investment may increase the productivity of
the employee as a whole.
(ii) Human capital formation may promote invention, Innovations &
technological improvement. This may create the ability to adopt
new technology which increase the production & productivity in the
economy. 1 Mark x 4
(1 – Mark each) =
(OR) 4 Marks
(B) The prime minister has urged appropriately in the best interest of the
farmers of the rural India.
(i) Non-farm activities (agro-processing industries, poultry, Craft,
handloom) provide alternative avenues for sustainable livelihood
(ii) It raises the level of income as the risks due to fluctuations in
production and market prices is generally less.
(iii) Agriculture in India is mainly a seasonal occupation. During off
season, it becomes difficult to find employment and stabilize
farmer’s income.
(iv) It helps in the shift of workforce from agricultural to No farm
activities
(any other valid point - 1 – Mark each)
(A) (a) Informalisation
1x4
(B) (d) Self- employment
A 31 =
(C) (c) Both Economic and Social Backwardness
4 Marks
(D) Informal (1 – Mark each)
(a) Liberty indicator are those indicators which represent the degree of
civil & political & economic freedom to individuals in a country.
(1 – Mark)
(i) ‘The extent of democratic participation in social and political
decision-making’
(ii) ‘The extent of Constitutional protection given to rights of
citizens’
(iii) ‘The extent of constitutional protection of the Independence
1 Mark
of the Judiciary and the Rule of Law’
+
(any one – 1 Mark)
1 Mark
(b) The given data in the table provided indicates:
A 32 +
(i) China was successful in controlling its annual population
2 Marks
growth rate with the implementation of stringent measures
=
in 1970s like the introduction of ‘one-child norm’. China was
4 Marks
able to check its population growth rate at the rate of 0.5%
p.a. in 2015. On the other hand, India stood almost double
to China with its population growth rate of 1.2% p.a.
(ii) Gender Ratio is low and biased in both the countries (at 929
and 941 respectively) due to preference for the male child.
This indicates that the social dynamics of both the countries
is similar to each other.
(1 – Mark each)

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 (a) The industrial sector reforms introduced under the new economic
policy are as follows:
(i) Abolition of industrial Licensing: New indutsrial oilicy of
1991 abolished the requirement of licensing except for
certain indutries that were of national and strategic
importance (e.g. defence equipments, industrial explosives,
hazardous chemicals, tobaccoo and alcohol.)
(ii) Contraction of public sector: Number of indutries
reserved for the public sector were reduced.
(iii) De-reservation of production areas: many production
areas earlier reserved for small scale industries were
dereserved.
(iv) Expansion of production capacity: Producer’s no longer
required licence to expand production. Expansion of
production to be based on market conditions.
(v) Freedom to import capital: liberalisation policy allowed
industrialists to import capital goods to upgrade technology. 3 Marks
(any other relevant point) (any three – 1 mark each) +
(b) 3 Marks
(i) It was a step towards free-play of the market forces to =
revitalize the financial sector; making it more vibrant and 6 Marks
efficient.
(ii) Commercial banks were allowed to decide their own interest
rate structure and no longer required to seek approval from
the Reserve Bank of India.
(iii) It led to substantial rise in institutional funding of production
A 33
units in the economy.
(any other relevant points) (any three – 1 mark each)
(OR)
(a) Economic reforms have definitely reduced the role of public sector
in the Indian economy.
The main objective of economic reforms is to make use of privately 3 Marks
owned resources for collective welfare of the people. Privatisation +
means a greater role for private capital and enterprise for collective 3 Marks
welfare of the people. =
It has restricted the areas of public sector to the following areas: 6 Marks
(i) Essential manufactured goods.
(ii) Exploration and exploitation of oil and mineral resources.
(iii) Strategic areas, i.e. defence equipment etc.
(3 Marks)
(b) Following are the advantages to economy with the introduction of
GST.
(i) Increased ease of doing business;
(ii) Reduction in multiplicity of taxes that were present in the
indirect tax system, leading to simplification and uniformity;
(iii) Helpful in removing the cascading effect of taxes as Input
Tax Credit is available across goods and services at every
stage of supply;
(iv) Reduction in compliance costs as there is need of multiple
record keeping for a variety of taxes. Thus, lesser
investment of resources and manpower in maintaining
records;

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 (v) making Indian products more competitive in the international
market and give boost to Indian Exports.
(vi) Elimination of double taxation on certain sectors like works
contract, software, and hospitality sector;
(any three, 1 Mark each))
(a) As the time gestation between crop sowing and realization of
income after production is quite long, farmers borrow from various
sources to meet their initial investment on seeds, fertilizers,
implements and for other family expenses of marriage, death,
religious ceremonies etc.
(2 Marks)
Self Help Groups (SHGs) have been set up to fill the gap in the
formal rural credit system which has proved to be inadequate and
2 Marks
has not been fully integrated into the rural, social and community
+
development.
1 Mark
(1 Mark)
A 34 +
(b) The problems faced by farmers during the initial years of organic
3 Marks
farming are (any three)
=
(i) Organic farming requires inputs like organic manure, bio-
6 Marks
fertilisers 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.
(iv) Organic products generally have more blemishes and
shorter shelf life.
(any three – 1 Mark each)

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