S R Study Material

SAMPLE PAPER 1 2024-25

Class 12 - Economics
Time Allowed: 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.

SECTION A – MACRO ECONOMICS

1. Statement I: Portfolio Investment, e.g. Foreign Institutional Investments (FIIs), Offshore Funds, etc is included [1]
in the current account of BOP.
Statement II: Surplus in capital account arises when capital inflows (like receipt of loans from abroad, sale of
assets or shares in foreign companies) are greater than capital outflows (like repayment of loans, purchase of
assets or shares in foreign countries).

a) Statement I is true and statement II is false. b) Statement II is true and statement I is false.

c) Both the statements are true. d) Both the statements are false.
2. In the terminology of economics and money demand, the terms M3 and M4 are also known as : [1]

a) Long money b) Short money

c) Broad money d) Narrow money

3. If Marginal Propensity to Save (MPS) is equal to zero, it indicates that the National Income of the economy will [1]
be ________.

a) < 1 b) not defined (∞)

c) 0 d) 1
4. If the value of export of merchandise is ₹1,500 crore and imports of goods are 20 percent more than exports. The [1]
value of imports and trade deficit will be ₹________ crores and ₹________ crores respectively.

a) 1,800; 3,300 b) 1,200; 300

c) 1,200; 3,300 d) 1,800; 300

5. The important factor influencing the propensity to save in an economy is: [1]

a) The level of savings b) The level of investment

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 c) The level of consumption d) The level of income (Y)
6. Deficient demand refers to a situation when: [1]

a) AD < AS (corresponding to full b) AS > AD (corresponding to

employment level) underemployment level)

c) AD > AS (corresponding to full d) AD = AS (corresponding to

employment level) underemployment level)
7. When income is zero, savings will be ________. [1]

a) infinity b) negative

c) zero d) positive
8. In a two sector economy, firms depend on the households for supply of: [1]

a) Money b) Both Goods and Services and Factor Inputs

c) Goods and Services d) Factor Inputs

9. Deposit creation by banks comes to an end when ________. [1]

a) money multiplier becomes zero b) legal reserve ratio becomes zero

c) total reserves equal initial deposits d) fresh deposits with banks become zero
10. When the value of a currency is fixed in terms of some other currency, it is called: [1]

a) Money value b) Parity value

c) Free value d) Commodity value

11. Explain why interest on public debt is treated as a transfer payment. [3]
12. State the components of capital account of balance of payment. [3]
OR
Explain why there is a rise in demand for foreign exchange when its price falls.
13. State the meaning of Deficient Demand. Suggest any two monetary policy tools used to reduce deficient [4]
demand.
14. C = 100 + 0.75 Y is a consumption function (where C = consumption expenditure and Y = national income) and [4]
investment expenditure is 800. On the basis of this information calculate:
i. The equilibrium level of national income.
ii. Saving at the equilibrium level of national income.
OR
Calculate Marginal Propensity to Consume from the following data about an economy which is in equilibrium.
National income = 2000
Autonomous consumption expenditure = 200
Investment expenditure = 100
15. Explain the Government's Bank function of the central bank. [4]

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16. Answer the following questions: [6]
(a) i. How are the following treated while estimating private final consumption expenditure? Give [3]
reasons for your answer.
i. Exports.
ii. Direct purchases made abroad by resident households.
iii. Final consumption expenditure of non-profit institutions serving households.
iv. Change in stocks.
ii. How will you treat the following while estimating National Income? Give reasons for your [3]
answer.
i. Salaries received by non-residents Indian working in Russian Embassy in India.
ii. Profits earned by an Indian bank from its branches abroad.
iii. Entertainment tax received by the government.

(b) OR
i. Calculate National Income and Net National Disposable Income from the following: [3]

Items (Rs.in Arab)

Net change in stocks 50

Government final consumption expenditure 100

Net current transfers to abroad 30

Gross domestic fixed capital formation 200

Private final consumption expenditure 500

Net imports 40

Depreciation 70

Net factor income to abroad (-) 10

Net indirect tax 120

Net capital transfers to abroad 25

ii. Calculate national income. [3]

S.no. Contents (Rs. in crores)

(i) Net Domestic Capital Formation 150

(ii) Government Final Consumption Expenditure 300

(iii) Net Factor Income from Abroad (-) 200

(iv) Private Final Consumption Expenditure 600

(v) Depreciation 30

(vi) Net Exports 50

(vii) Net Indirect Taxes 90

(viii) Net Current Transfers from Rest of the World 40

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17. Answer the following questions: [6]
(a) From the following data, calculate [3]
a. Revenue deficit and
b. Fiscal deficit

Particulars Amount (in ₹ crores)

(i) Non- tax Revenue 2,000

(ii) Tax Revenue 1,200

(iii) Recovery of Loans 145

(iv) Other Revenue Expenditure 2,630

(v) Capital Expenditure 500

(vi) PSU Disinvestment 120

(vii) Interest Payments 1,070

(b) Explain the concept of fiscal deficit in a government budget. What does it indicate? [3]
SECTION B – INDIAN ECONOMIC DEVELOPMENT
18. Disguised unemployment in India is mainly related to: (i) Agricultural sector (ii) Rural sector (iii) Factory sector. [1]
Options are

a) i,iii b) iii,ii

c) i,ii,iii d) i,ii
19. Which of the following country has highest rate of population growth? [1]

a) Pakistan b) India

c) None. d) China
20. Gross Domestic savings as a proportion of GDP has risen from ____ in 1950-51 to ____percent in 1990-91 [1]

a) 8.9, 23.1 b) 10, 28

c) 7.4, 22.6 d) 8.5, 34.6

21. Which scheme provides adequate and timely support from the banking system to the farmers for their cultivation [1]
needs in a flexible manner

a) KBC b) KCC

c) KMM d) KMC
22. Assertion (A): There was a serious apprehension that the government was getting into a debt trap. [1]
Reason (R): It leads to erosion of faith of international financial institutions the fiscal state of the government.

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 a) Both A and R are true and R is the correct b) Both A and R are true but R is not the
explanation of A. correct explanation of A.

c) A is true but R is false. d) A is false but R is true.

23. Following states have high literacy rate except________. [1]

a) Mizoram b) Rajasthan

c) Kerala d) Delhi
24. The size of population is comparatively very small in Pakistan just about ____ of China [1]

a) 1/15th b) 1/10th

c) 1/5th d) 1/2th
25. Two major environmental issues facing the world today are _____and_____ [1]

a) global warming and air pollution b) ozone depletion and pollution

c) global warming and ozone depletion d) air pollution and noise pollution
26. Statement I: Under the colonial regime, the motive behind infrastructure development was to provide basic [1]
amenities to the people.
Statement II: The real motive behind infrastructure development was to subserve various colonial interests.

a) Statement I is true, but statement II is false. b) Both the statements are false.

c) Statement II is true, but statement I is false. d) Both the statements are true.
27. Match the following. Options are as below [1]

a. Intermediaries i. Bringing together all plots of land into one block

b. Tenancy reforms ii. Take cultivated land on rent

c. Consolidation of land holdings iii. Exploitative agrarian relations

a) a(i),b(ii),c(iii) b) a(iii),b(i),c(ii)

c) a(iii),b(ii),c(i) d) a(ii),b(iii),c(i)
28. How do the Illiteracy factor contribute to the environmental crisis in India? What problem do they pose for the [3]
government?
OR
State the role of Pollution Control Boards in India.
29. Compared to females, more males are found to be working. Why? [3]
30. Do you think there is any contradiction between growth and self-reliance and growth and employment [4]
generation?
31. Why there was need for economic reforms? [4]
OR
Agricultural sector appears to be adversely affected by the reform process. Why?
32. Discuss the weaknesses of education sector in India. [4]
33. Answer the following questions: [6]
(a) i. If farmers who borrowed from cooperative banks could not pay back loan due to crop failure [3]
and other reasons, their loans should be waived off else they might commit suicide. Do you

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 agree? Explain.
ii. Explain the importance of credit availability to farmers in rural development. [3]
(b) OR
i. Information technology plays a very significant role in achieving sustainable development and [3]
food security. Comment.
ii. Write a short note on- [3]
a. MSP (Minimum Support Price)
b. Buffer Stock
c. PDS (Public Distribution System)

34. Read the following text carefully and answer the questions given below: [6]
Foreign direct investment
Unlike India, FDI makes China a global player. In 2000, in cumulative terms, China was world’s fifth-largest
recipient of FDI, after the United States (USD1.3 trillion), the United Kingdom (USD497 billion), Benelux
Economic Union states (USD482 billion) and Germany (USD480 billion). But for 2004, China was to clock the
second largest FDI inflow of USD62 billion―next only to the United States which makes this FDI inflows the
most critical as also most visible indicator of its sustained and rapid economic development. Even India is
expected to emerge as the next hot spot for FDI inflows. Amongst others, the UNCTAD-DITE Global
Investments Prospects Assessment 2004, estimates for 2004-2007 put China and India at the top two ranks
followed by the US as third. This, however, remains rather ambitious, especially for India. Even for China, while
it is expected to continue to leapfrog, it is likely to stay at its second position and may not surpass the US for a
very long time.
But there are indicators that FDI inflows to China (even India) will continue unhindered. For example, China
today accounts for over 10% of US foreign trade destinations and China owns USD167 billion of US securities
issued by the Federal Government. During the year 2000, the total US corporate revenue generated from China
was USD7.2 billion, compared to USD4.6 billion from Mexico, USD3.5 billion from Singapore, and USD1.85
billion from Brazil. Though China faced some phases when FDI had gone down yet it has gradually witnessed
rise from USD2.7 billion for 1984 to USD62 billion by 2004, largely staying within the range of USD45 to
USD60 billion on an average year.
By comparison, India’s FDI has been generally sluggish and, for the early 1990s India’s contracted FDI stood at
USD0.15 billion for 1991, USD0.23 billion for 1992, USD0.57 billion for 1993, USD0.95 billion for 1994, and
USD1.96 billion for 1995. But from there, India’s FDI has experiences some acceleration and rose to USD3.4
billon for 2002 and USD4.3 billion for 2003; and some experts also question calculation methods and suspect
underplaying of India’s FDI statistics. For year 2004, India’s FDI was estimated to exceed a rather impressive
USD8 billion. And, given this new enthusiasm of the United Progressive Alliance, the government has been
talking of absorbing an FDI of USD15 billion for 2005 and USD30 billion for 2007 to reach a total of USD150
billion of fresh FDI in next ten years.
Among the reasons cited to explain India lagging behind, is the argument that China had decided to open up to
FDI back in 1979 and created special economic zones (SEZs) in coastal regions that had the clear advantage of
geographical proximity to Hong Kong—the hub of capital investment in Asia —, and that China had the added
advantage of its political system, cheap labour and special incentives for foreign investors as for its armed forces
which were to become major players in China’s opening up experiments. Also important is overseas Chinese
contributions. Non-resident Indians and overseas Chinese have been distinct categories in FDI inflows into their

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 respective homelands. Beginning only from the early 1990s, while non-resident Indians do contribute a little to
India’s FDI, overseas Chinese are known to present a unique example by contributing over two-thirds of the
whopping inflows of FDI into China.
Questions:
i. Discuss the reason for India's FDI being sluggish compared to that of China.
ii. Analyse the growth of the Chinese Economy focusing on the role of SEZs towards boosting FDI.

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