Page 1 Sample Paper 02

Sample Paper 02
Class - 12th Exam - 2024 - 25
Economics (030)
Time : 3 Hours Max. 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 Type Questions of 1 mark each.
3. This paper contains 4 Short Answer Type Questions of 3 marks each to be answered in 60 to
80 words.
4. This paper contains 6 Short Answer Type Questions of 4 marks each to be answered in 80 to
100 words.
5. This paper contains 4 Long Answer Type Questions of 6 marks each to be answered in 100 to
150 words.

SECTION-A - Macro Economics

1. Read the following statements carefully:

Assertion (A): An increase in the Cash Reserve Ratio (CRR) by the central bank reduces the
lending capacity of commercial banks.
Reason (R): A higher CRR means that banks must hold a larger fraction of their deposits as
reserves, leaving less funds available for lending purposes.
Choose the correct option from those given below:
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation
of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation
of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.

2. “The government implements a fiscal stimulus package that includes increased public expenditure
on infrastructure projects. Economists predict that this will lead to a multiplied increase in
national income, exceeding the initial spending amount due to the induced consumption.”
Source: [Economic Times - Government Stimulus, 2023](https://economictimes.
indiatimes.com/news/economy/policy/government-announces-fiscal-
stimulus-package/articleshow/99000000.cms)
Which economic concept explains the amplified effect of this government spending on national
income?


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Page 2 Sample Paper 02 CBSE 12th Economics

(A) Investment Multiplier

(B) Marginal Propensity to Save
(C) Aggregate Supply Curve
(D) Paradox of Thrift

3. Revenue receipts of the government consist of tax revenue, such as income tax and GST,
and ________ revenue, which includes interest receipts and dividends from public sector
enterprises.
Choose the correct option to fill in the blank.
(A) Borrowed (B) Capital
(C) Non-tax (D) Investment

4. A sustained increase in the exchange rate (domestic currency price of foreign currency) is called
a currency ________.
Choose the correct option to fill in the blank.
(A) Depreciation
(B) Appreciation
(C) Devaluation
(D) Revaluation

5. From the given diagrams, identify the correct option that indicates the ‘Production Possibility
Frontier’ passing through the origin drawn at a particular angle.

(A) (ii) (B) (iv)

(C) (i) (D) (iii)

6. The component of money supply that includes currency held by the public and demand deposits
with commercial banks is known as ______.
Choose the correct option to fill in the blank.
(A) M3 Money Supply (B) High-Powered Money
(C) M1 Money Supply (D) Near Money

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Page 3 Sample Paper 02

7. Read the following statements carefully:

Statement 1: Aggregate demand in an economy consists of the total demand for final goods
and services and includes consumption, investment, government spending, and net exports,
representing the overall spending in the economy.
Statement 2: When aggregate demand exceeds aggregate supply at full employment, it leads
to demand-pull inflation, causing general price levels to rise due to excessive demand over
available output.
In light of the given statements, choose the correct option from the following:
(A) Both Statements 1 and 2 are true.
(B) Statement 1 is true and Statement 2 is false.
(C) Both Statements 1 and 2 are false.
(D) Statement 1 is false and Statement 2 is true.

8. Revenue receipts of the government include tax revenues and non-tax revenues. An example of
non-tax revenue is the _______ earned by the government from its investments in public
sector enterprises.
Choose the correct option to fill in the blank.
(A) Excise Duty
(B) Dividends
(C) Income Tax
(D) Customs Duty

9. Read the following statements carefully:

Statement 1: Devaluation refers to the deliberate downward adjustment of the value of a
country’s currency relative to another currency under a fixed exchange rate system, making
exports cheaper and imports more expensive.
Statement 2: Depreciation is a decrease in the value of a currency due to market forces under
a flexible exchange rate system, also leading to cheaper exports and more expensive imports.
In light of the given statements, choose the correct option from the following:
(A) Statement 1 is false and Statement 2 is true.
(B) Both Statements 1 and 2 are false.
(C) Statement 1 is true and Statement 2 is false.
(D) Both Statements 1 and 2 are true.

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Page 4 Sample Paper 02 CBSE 12th Economics

10. On the basis of the given bars, identify the percentage change in the collection of GST in
February 2019-20

(A) Negative (B) 8.5%

(C) 8.10% (D) 8.20%

11. Calculate intermediate consumption from the following:

(` in lakhs)
(i) Value of output 2,000
(ii) Depreciation 40
(iii) Subsidy 10
(iv) Sales tax 30
(v) Net Value Added at factor cost 1,600


O
If the Real GDP is `300 and Nominal GDP is `330, calculate the Price Index (base = 100).

12. “Foreign Institutional Investors (FIIs) remained net seller in the Indian capital markets over
the last few weeks”. —The Economic Times
State and discuss the likely effects of the given statement on foreign exchange rate with reference
to the Indian Economy.

13. Explain the concept of ‘Excess demand’ with the help of a diagram.

14. Explain the concept of ‘deficient demand’ with the help of a suitable diagram.


O
Explain any one fiscal and two monetary measures to correct the deflationary gap.
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Page 5 Sample Paper 02

15. Read the following text carefully :

The concept of the multiplier explains how an initial investment leads to a multiplied increase
in national income. It operates on the principle that one person’s expenditure is another’s
income. For instance, an investment of `100 crores with a marginal propensity to consume
(MPC) of 0.8 leads to successive rounds of income increase. In the first round, income rises by
`100 crores, and in the second, by `80 crores (80% of `100 crores). This process continues, with
each round generating smaller increases, until the total income increase reaches `500 crores.
Explain how the multiplier works and determine the total increase in national income when the
MPC is 0.8 and the initial investment is `100 crores.

16. Read the following text carefully and discuss briefly the relevant function of the Central Bank,
indicated.
The Reserve Bank of India (RBI) is the central bank of India whose primary function is to
manage and govern the financial system of the country. It is a statutory body established in
the year 1935 under the Reserve Bank of India Act, 1934. The central bank regulates the issue
and supply of the Indian rupee. It also looks after the central government’s money. The central
bank plays the role of the bankers’ bank and regulates the banking sector. It also plays an
important role in India’s development story by supporting the government in its developmental
projects and policies.

17. (a) Distinguish between stock and flow variables with suitable examples.
(b) Calculate Gross Domestic Product at factor cost from the following data:
` (in crores)
(i) Gross national product at factor cost 3,750
(ii) Compensation of employees 2,000
(iii) Net exports (—)50
(iv) Profit 700
(v) Net domestic capital formation 1,000
(vi) Opening stock 150
(vii) Closing stock 200
(viii) Gross fixed capital formation 1,050
(ix) Interest 600
(x) Rent 400
(xi) Factor income from abroad 20

O
Explain the precautions that should be taken while estimating national income by value added
method.

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Section-B - Indian Economic Development

18. The environment performs vital functions like assimilating waste, providing resources, and
sustaining life. Choose the correct combination of vital environmental functions from the
options below:
(i) Provides resources for production.
(ii) Absorbs waste generated by production and consumption activities.
(iii) Regulates the climate.
(iv) Ensures biodiversity.
(A) (i) and (ii)
(B) (ii) and (iii)
(C) (i), (ii) and (iii)
(D) (i) and (iv)

19. Read the following statements carefully:

Statement 1: Liberalisation policies in India led to increased foreign direct investment (FDI)
in various sectors.
Statement 2: Privatization under the LPG policy involved the complete withdrawal of the
government from all public sector enterprises.
In light of the given statements, choose the correct option from the following:
(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.

20. Read the following statements carefully: Assertion (A) and Reason (R). Choose the correct
option from those given below:
Assertion (A): Human capital formation has no significant impact on economic development.
Reason (R): Economic development is solely dependent on natural resources.
Options:
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation
of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.

21. In the context of rural development, credit facilities are often provided through ______,
which play a crucial role in supporting farmers and rural entrepreneurs by offering accessible
financing options.


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Page 7 Sample Paper 02

Choose the correct option to fill up the blank.

(A) commercial banks; private investors
(B) multinational corporations; government agencies
(C) cooperative societies; microfinance institutions
(D) foreign aid; non-governmental organizations

22. Which of the following are characteristics of the informal sector in India?
Which of the following is/are correct ?
(i) Lack of job security
(ii) Lower wages
(iii) Limited social benefits
(iv) Formal employment contracts
Option :
(A) (i), (ii) and (iii)
(B) (ii) and (iv)
(C) (i) and (iv)
(D) (i), (ii), (iii) and (iv)

23. Identify which of the following statements correctly describe sustainable development.
Which of the following is correct ?
(A) Prioritizing economic growth over environmental concerns
(B) Ignoring social aspects in development
(C) Balancing economic, social, and environmental goals
(D) Depleting natural resources for immediate benefits

24. In comparison with Pakistan, India has achieved higher levels of _________.
Which of the following is correct ?
(A) Military expenditure
(B) Human development indicators
(C) Trade deficits
(D) Population growth rates

25. Identify which of the following factors contributed to the low level of economic development in
India on the eve of independence.
Which of the following is correct ?
(A) Extensive industrialization
(B) High dependency on agriculture
(C) Advanced infrastructure
(D) Balanced occupational structure

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26. “Post-independence, India adopted a mixed economic system and initiated a series of Five-Year
Plans aimed at achieving self-reliant and equitable growth. The Industrial Policy Resolution
of 1956 emphasized the development of heavy industries and the public sector, envisioning a
socialist pattern of society where the state would play a dominant role in economic activities.”
What was the primary objective of the Industrial Policy Resolution of 1956?
(A) Promotion of foreign investment in all sectors
(B) Strengthening the role of the private sector in the economy
(C) Establishment of a socialist pattern through state-led industrialization
(D) Encouraging small-scale industries over heavy industries

27. Identify which of the following statements is correct about the Liberalisation, Privatisation,
and Globalisation (LPG) policy introduced in India.
Which of the following is correct ?
(A) LPG policy aimed to increase state control over key industries
(B) LPG policy restricted foreign direct investment in India
(C) LPG policy involved deregulation of industries and reducing import tariffs
(D) LPG policy focused solely on agricultural reforms

28. Elaborate the exploitative nature of the colonial government in India with the help of suitable
examples.

29. Why were the benefits of Green Revolution restricted to few states and few crops in initial
stages of planning?


O
How did the government promote regional equality in industrial development?

30. (a) Interpret the given picture on account of current environmental challenges.

(b) What do you mean by biocomposting? How is it helpful in promoting sustainable

development?

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Page 9 Sample Paper 02

31. Evaluate the role of the rural banking system in India.

O
“Is it possible to develop Information Technology as an alternate livelihood option”? Give
reasons.

32. Enlist all the factors involved in the introduction of the economic reforms by way of the
announcement of the New Economic Policy (NEP).

33. Read the following text carefully and answer the given questions on the basis of the same and
common understanding:
The China-Pakistan Economic Corridor (CPEC) has deepened the decades-long strategic
relationship between the two nations. But it has also sparked criticism for burdening Pakistan
with mountains of debt and allowing China to use its debt-trap diplomacy to gain access to
strategic assets of Pakistan.
The foundations of CPEC, part of China’s Belt and Road Initiative, were laid in May 2013.
At the time, Pakistan was reeling under weak economic growth. China committed to play an
integral role in supporting Pakistan’s economy.
Pakistan and China have a strategic relationship that goes back decades. Pakistan turned
to China at a time when it needed a rapid increase in external financing to meet critical
investments in hard infrastructure, particularly power plants and highways. CPEC’s early
harvest projects met this need, leading to a dramatic increase in Pakistan’s power generation
capacity, bringing an end to supply-side constraints that had made rolling blackouts a regular
occurrence across the country.
Pakistan leaned into CPEC, leveraging Chinese financing and technical assistance in an attempt
to end power shortages that had paralysed its country’s economy. Years later, China’s influence
in Pakistan has increased at an unimaginable pace.
China as Pakistan’s Largest Bilateral Creditor: China’s ability to exert influence on Pakistan’s
economy has grown substantially in recent years, mainly due to the fact that Beijing is now
Islamabad’s largest creditor. According to documents released by Pakistan’s Finance Ministry,
Pakistan’s total public and publicly guaranteed external debt stood at $44.35 billion in June
2013, just 9.3 per cent of which was owed to China. By April 2021, this external debt had
ballooned to $90.12 billion, with Pakistan owing 27.4 per cent - $24.7 billion - of its total
external debt to China, according to International Monetary Fund (IMF).
Additionally, China provided financial and technical expertise to help Pakistan build its road
infrastructure, expanding north-south connectivity to improve the efficiency of moving goods
from Karachi all the way to Gilgit-Baltistan (PoK). These investments were critical in better
integrating the country’s ports, especially Karachi, with urban centers in Punjab and Khyber-
Pakhtunkhwa provinces.
Despite power asymmetries between China and Pakistan, the latter still has tremendous agency
in determining its own policies, even if such policies come at the expense of the long-term socio-
conomic welfare of Pakistani citizens.
(a) Outline and discuss any two economic advantages of China Pakistan Economic Corridor
(CPEC) accruing to the economy of Pakistan.
(b) Analyse the implication of bilateral ‘debt-trap’ situation of Pakistan vis-a-vis the Chinese
economy.
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Page 10 Sample Paper 02 CBSE 12th Economics

34. Suggest measures to make the rural areas in India more vibrant (Include two success stories of
rural development experiments carried out in India).


O
The following table shows distribution of workforce in India for the year 1972-73. Analyse it
and give reasons for the nature of workforce distribution.
Place of Residence Workforce (in millions)
Male Female Total
Rural 125 69 195
Urban 32 7 39

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