(030)_KVS(DR)/2024/KK

KENDRIYA VIDYALAYA SANGATHAN, DELHI REGION

MARKING SCHEME (2024-25)

CLASS- XII SUBJECT- ECONOMICS

M.M. – 80 TIME: 03:00 HOURS

SECTION A (Macro Economics)

1 d) Both statements 1 and 2 are false 1

2 c) Inflow of US Dollars in India will rise. 1

3 b) 1 1

4 c) Both statements 1 and 2 are true 1

5 d) Both A and B 1

6 c) C= 70+0.8Y 1

7 c) Redistribution of income 1

8 b) fiscal 1

9 c) Both Statements 1 and 2 are true. 1

10 a) Both Assertion (A) and Reason (R) are true and Reason (R) is the 1
correct explanation of Assertion (A).

11 Tax revenue collection by the government may be categorized as: 3

• Direct Taxes: It refers to those taxes whose impact and incidence lie on
the same entity. In other words, the liability of paying direct taxes can’t
be shifted.

• Indirect Taxes: It refers to those taxes whose impact and incidence may
lie on different entities. In other words, the liability of paying indirect
taxes can be shifted.

12 (a) GVA at MP = NVA at FC + Dep + NIT 3

= 80 + 20 + (15-5) = 110 lakhs
GVA at MP = VOO – IC
110 = 200 – IC
IC = 90 lakhs
OR
(b) Value addition refers to the excess of “Value of Output” over the
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 “Value of Intermediate Consumption”
Value addition= VOO-IC whereas
Final value of output refers to the total money value of goods and
services produced during a given period of time.
Final value of output= (Number of units produced) x (Price per
unit)

13 At equilibrium, AD=AS 4

C+I = Y

100+0.7*800 + I = 800

I = 140

14 (A) When ex-ante AD is less than ex-ante AS, it means that 4

households are planning to consume less than what the firms
expect them to. This will lead to unsold stocks.

To restore the desired level of inventories, producers may plan a cut

in production. As a result, there may be a decrease in the level of
output, employment and income in the economy.

OR

The working process of the increase in investment on the National

Income, is based on the assumption that one’s expenditure is another’s
income. In Round 1, the investment in infrastructure undertaken by the
government of 1,000 crore, will generate an additional income by the like
amount (1,000 crore). Since Marginal Propensity to Save (MPS) is 0.2 i.e.
MPC is 0.8 it will lead to an increase in the consumption expenditure by
800 crore (80% of 1,000) and saving by 200 crore (20% of 1,000). As
one’s expenditure is another’s income, an increase in consumption
expenditure results in an increase in income by 800 crore in the
subsequent round. This process continues till the sum of the change in
savings becomes equal to the change in the investment.

Investment Multiplier = 1/1−MPC = 1/1−0.8 = 5 Thus, the above

schedule indicates that an increase in investment (∆I) of 1,000 crore
leads to a total increase in national income (∆Y) by 5,000 crore, which is
5 times the increase in investment.

15 (I) Foreign Portfolio Investments in India in the fiscal year 2023-24 will 3
be recorded on the credit side of the capital account of the Balance of
Payments (BOP) account. It is recorded on the credit side, as it results in
the inflow of foreign exchange. Furthermore, such transactions are
documented in the capital account as they reflect the change in the
ownership of financial assets between the residents of a country and rest
of the world.

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 (II) Balance of Payments deficit occurs when autonomous receipts fall
short of autonomous payments during a given fiscal year in an economy.
1

16 a. Not included as it is a part of factor income paid to abroad. 3

b. Included as it is the factor income earned from abroad.

(b) It is indeed true that all the machines are not capital goods. Their
categorization as capital goods depends entirely on their end use. For
3
example, a sewing machine used by homemaker for non-economic
activities will not be categorized as capital good. But if the same is used
by a tailor, then it will be a capital good as it is used for economic activity
of producing stitched clothes.

OR

A. Income Method

NDP at FC= COE + OS + MISE = 150 + (40+40+100) +0 =330 3

GNP at FC= NDP at FC + DEP + NFIA = 330 + 15 - 5 = 340 CR

B. EXPENDITURE METHOD

GDP AT MP= C + I + G + (X-M) = 220 + (50+15) + 85 + (20-25) = 365 3

GNP at FC= GDP at MP + NFIA – NIT = 365 – 5 – 20 = 340 CR

17 a. By increasing the CRR, the commercial banks has to maintain more 3

cash with central bank which will reduce their credit creation capacity.
Thus, money supply in the economy will reduce.

b. CRR is the minimum percentage of deposits of commercial banks (net

of demand and time liabilities) which is kept in cash form with RBI. 3
SLR is the percentage of deposits of commercial banks (net of demand
and time liabilities) which every bank is required to maintain with itself
in the form of designated liquid assets.

SECTION B (Indian Economic Development)

18 a. All of the above 1

19 Absorptive capacity 1

For Visually Impaired Candidates:

b. Soil erosion

20 c) 1 and 4 1
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21 Both Assertion (A) and Reason (R) are true and Reason (R) is not the 1
correct explanation of Assertion (A)
22 II-B 1

23 d) All of the above 1

24 a. ICMR 1

25 a. 6% 1

26 d. The sale of crop immediately after harvest owing to urgent cash 1

needs of the farmers
27 b. Both Assertion (A) and Reason (R) are true and Reason (R) is not the 1
correct explanation of Assertion (A)

28 Drain of Indian wealth refers to the use of large export surplus of India 3
for Britain. It is clear from the following:

a. The surplus was used to make payments towards the expenditure

incurred by the office set up by the colonial govt. in Britain.

b. The surplus was used to pay war expenditure fought by the British
govt.

c. The surplus was used to import invisible items.

OR

Before the advent of Green Revolution, a large proportion of agricultural

produce was consumed by the farmers themselves instead of being sold
in the market. Green revolution led to an increase in the growth of 3
agricultural output. After the Green Revolution, a greater proportion of
the agro-produce was sold by the farmers in the market. That led to the
attainment of marketed surplus and converted India into a food surplus
economy from the food scarce one.

29 The fast-paced economic growth in China can be traced back to the 3

following reforms introduced in 1978:

• In the initial phase, reforms were initiated in agriculture, foreign trade

and investment sectors. For instance, in agriculture commune lands were
divided into small plots, which were allocated to individual households.
They were allowed to keep all income from the land after paying
stipulated taxes.

• In the subsequent phase, reforms were initiated in the industrial sector.

Private sector firms, in general, and township and village enterprises, in
particular, were allowed to produce goods. At this stage, State Owned

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 Enterprises were made to face competition.

30 India and Pakistan both have followed following similar developmental 4

strategies:

1. Five-year plans (India in 1951 & Pakistan in 1956).

2. Both of them have followed the path of mixed economy.
3. Major role assigned to public sector for growth and development.
4. Import substitution.
5. Green revolution.
6. Shift from primary to service sector.
7. Both of them introduced economic reforms to strengthen their
economies. India in 1991 & Pakistan in 1988.
31 (i) More workforce resides in rural area as farming is main activity and 1
urban areas did not have sufficient job opportunities to absorb more
workforce.

(ii) More women are found working in rural area as compared to urban
area as in rural areas most of the activities are labour intensive and low 3
income generating while in urban areas where male members are able to
earn higher income, they discourage their female counterpart for taking
up jobs.

OR

The agricultural diversification implies change in crop pattern and

shifting of agricultural workforce to other allied such as dairy, poultry,
fisheries, etc. and non-agriculture sector. The importance of agricultural
diversification is as follows:

1. Help to raise income.

2. Farming is uncertain and risky activity. Therefore, diversification is

required to enable the farmers to earn from non-farm occupations.

3. This lessens excess burden on agriculture.

4. Cash crops along with food crops may bring more income and
prosperity for the farmers.

5. To maintain the fertility of land.

32 The picture depicts unemployment. 4

1. Inadequate Economic Growth: The slow growth fails to provide

enough employment opportunities to the ever-increasing population.
With the increase in population, the economy couldn’t keep up with the
demands for employment and an increasing share of people is not able to
find jobs. This results in insufficient levels of employment nationwide.

2. Increase in Population Rate: There is a prediction of India’s

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 population exceeding China’s by the year 2024, it will furthermore be the
most populous country. Population growth couldn’t be matched by the
economic growth of the country, which leads to the majority of society
being unemployed.

3. Agriculture is a Seasonal Occupation: Only for certain months of the

year, does agriculture provide employment to a huge segment of the
population; which results in a considerable portion of the year, many
agricultural workers lack needed employment and income.

For Visually Impaired Candidates:

The given statement is defended.

In a nation like India, self employment is a major source of livelihood for

both men and women.

Self-employed workers are the ones who own and operate an enterprise
to earn their livelihood.

Thus, besides creating employment opportunities for themselves, they

also generally provide employment avenues for other people in the
economy.

33 (A) I accept it. Subsidies are concessions given by government so as 3

to give incentive to farmers to use new technology. They provide
some select goods at a lower rate to people. This leads to
wasteful use of resources. For example, if electricity is given at a
subsidized rate, people will use it carelessly leading to its
wasteful use.

(Any other valid explanation given by student)

(B) This is true in its character. So, I will defend the given statement. 3
This was because of the following reasons:
(i) Rise in equity limit of foreign investment from 40% to
51%.
(ii) Reduction in taxes
(iii) Cheap labour

(Any other valid explanation given by student)

OR

(A) (i) Lack of capital in the private sector

(ii) Low inducement to invest in industrialization process in India

(iii) Social Justice

(B) (i) Growth refers to the overall increase in the productivity of each

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 sector of our economy.

(ii) Equity means that benefits should not only reach out to the richer
sections of our society but should also be enjoyed by the poor stratas of
our society.

(iii) “Growth with equity” means that growth should take place in such a
manner that the poorer sections of our country are able to get
employment opportunities and their basic amenities are fulfilled.

34 (i). The primary causes of the environmental crisis described in the 2

passage are:

a) Rapid growth of human population leading to extensive deforestation,

habitat destruction and overconsumption of natural resources.

b) Industrialization and modernization, which contribute to global

warming and climate change through reliance on fossil fuels and
emission of greenhouse gases.

c) Expansion of agriculture and urbanization, resulting in the loss of

biodiversity and fragmentation of ecosystems.

d) Irresponsible waste management and improper disposal of plastics,

leading to the accumulation of plastic waste in oceans and landfills,
causing harm to marine life and contaminating the environment. The
excessive use of chemical fertilizers and pesticides in agriculture also
contributes to soil degradation, water pollution, and loss of biodiversity.

(ii). Industrialization has contributed to the environmental crisis in

several ways:

a) Reliance on fossil fuels for energy production leads to the emission of 2

greenhouse gases, which causes global warming and climate change.

b) The discharge of pollutants and waste from industries contaminates

air, water and soil, posing risks to human health and biodiversity.

(iii). The impact of agriculture and urbanization on the environment

includes:

a) Conversion of forests and natural habitats into agricultural lands and 2

urban areas disrupts ecosystems, leading to the loss of biodiversity and
extinction of plant and animal species.

b) Agricultural practices, such as the excessive use of chemical fertilizers

and pesticides, result in soil degradation, water pollution, and further
loss of biodiversity.

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