CBSE Sample Papers for Class 12 Economics Set 5 with Solutions

Students must start practicing the questions from CBSE Sample Papers for Class 12 Economics with Solutions Set 5 are designed as per the revised syllabus.

CBSE Sample Papers for Class 12 Economics Set 5 with Solutions

Time Allowed: 3 Hours
Maximum Marks: 80

General Instructions:

This question paper contains two sections:
Section A – Macro Economics
Section B – Indian Economic Development
This paper contains 20 Multiple Choice Questions type questions of 1 mark each.
This paper contains 4 Short Answer Questions type questions of 3 marks each to be answered in 60 80 words.
This paper contains 6 Short Answer Questions type questions of 4 marks each to be answered in 80 100 words.
This paper contains 4 Long Answer Questions type questions of 6 marks each to be answered in 100 150 words.

Section – A (40 Marks)
Macro Economics

Question 1.
“It separated the act of sale and purchase”. Which function of money is reflected in this statement? [1]
(Choose the correct alternative)
(a) Medium of exchange
(b) Store of value
(c) Measure of value
(d) Standard of deferred payment
Answer:
(a) Medium of exchange

Explanation:
Without money, all transactions would have to be conducted by Barter, which involved direct exchange of good or service for another i.e. double coincidence of wants. Money effectively eliminates the double coincidence of wants problem by serving as a medium of exchange and sale and purchase of goods or services can be done separately.

Related Theory
Other important functions of money are:

Measure of value
Store of value, basis of credit
Unit of account
Standard of deferred payment

Question 2.
What will happen to the money supply when the Central Bank purchases securities from the open market? [1]
(Choose the correct alternative)
(a) Money supply will increase.
(b) Money supply will decrease.
(c) Money supply will remain the same.
(d) None of these
Answer:
(a) Money supply will increase

Explanation:
When central bank purchases government securities from the open market, it increases the liquidity of commercial banks and allows them to increase their loans and investments thereby increasing money supply in the economy.

Related Theory
The different measures adopted by the central bank to increase money supply in the economy are by printing more money, reducing interest rates, reducing repo rate etc. The different measures adopted by the central bank to decrease the money supply in the economy are sale of bonds and securities, increasing interest rates, increasing repo rate.

Question 3.
Which of the following is not a source of demand for foreign exchange? [1]
(Choose the correct alternative)
(a) Foreign tours
(b) Export of goods and services
(c) Import of goods and services
(d) Purchase of assets in foreign countries
Answer:
(b) Exports of goods and services

Explanation :
The demand of foreign exchange refers to the requirement of foreign currency to make the payments. It is the outflow of foreign currency. Export of goods and services result in inflow of foreign currency and hence, it is not a source of demand for foreign exchange instead it is a source of supply of foreign exchange.

Related Theory
When a price of a foreign currency loll, imports from that country become cheaper so imports increases and hence the demand for foreign currency rises. When a foreign currency becomes cheaper in terms of the domestic currency, it promotes tourism to the country as a result, demand for foreign currency rises.

Question 4.
From the set of statements given in column I and column II, choose the correct pair of statement: [1]

	Column I		Column II
(1)	Ex-ante Saving	(A)	Actual saving in the economy
(II)	Ex-ante Investment	(B)	Planned or desired investment
(III)	Ex-post Saving	(C)	Actual investment expenditure
(IV)	Ex-post Investment	(D)	Planned or desired saving

(a) (I) – A
(b) (II) – B
(c) (III) – C
(d) (IV) – D
OR
Which of the following impact of deficient demand is false?
(Choose the correct alternative)
(a) It decreases the general price level.
(b) There is no change in the employment level in the economy.
(c) Firms will decrease their output for the subsequent period.
(d) None of these
Answer:
(b) (II)- (B)

Explanation:

Ex-ante Savings: Amount of saving which households or savers plans to save at different levels of income in the economy during the period of one year.
Ex-ante Investment: Investment expenditure which is intended to be made in the economy during the period of one year.
Ex-post Savings: Actual saving in an economy during a year. It is the sum total of planned . saving and unplanned saving.
Ex-post Investment: Considered in the calculation of National income.

(b) There is no change in the employment level in the economy.

Question 5.
Read the following Statement-Assertion (A) and Reason (R). Choose one of the correct alternatives given below: [1]

Assertion (A): MPS cannot have a negative value.
Reason (R): At very low level of income there is dissaving.
(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 and 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.
OR
Read the following statement-Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): An excess of aggregate demand over full employment level of aggregate supply represents a situation of inflationary gap.
Reason (R): Production can not be increased beyond this level.
(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 and 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.
Answer:
(c) Assertion (A) is true, but Reason (R) is false.

Explanation:
MPS cannot have a negative value as it is the ratio of AS and AY and AS and AY can at the most be zero.

(a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
Explanation:
An excess of aggregate demand over full employment level of aggregate supply represents a situation of inflationary gap, production cannot be increased beyond this level. Increase in AD here onwards, will increase only the general price level.

Question 6.
Read the following Statement-Assertion (A) and Reason (R). Choose one of the correct alternatives given below: [1]

Assertion (A): Most of the economies these days follow managed exchange rate system
Reason (R): The only way government tries to manipulate the exchange rate in a ‘managed exchange rate’ is by buying and selling foreign currency or indirectly my monetary policy.
(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 and 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.
Answer:
(a) Both Assertion (A) and Reason (R) are correct, and the reason (R) is the correct explanation for Assertion (A).

Explanation:
A country follows a mix of fixed and flexible exchange rate systems wherein the Government attempts to manipulate the exchange rate directly by buying/selling foreign currency or indirectly by monetary policy.

Related Theory
Current account of balance of payments records all the transactions relating to export and import of good and service and unilateral transfers.

Question 7.
Study the given below: [1]

What does the above picture state?
(a) Leakages
(b) Injections
(c) Both (a) and (b)
(d) None of the above
Answer:
(a) Leakages

Explanation:
It means to withdraw money from the circular flow of an economy. Leakage from the circular flow of income of an economy happens when the firms and households save a part of their incomes.

Question 8.
From the following data, what is the value of Consumption Expenditure? [1]

S.No	Particulars	Amount (in Rs)
(I)	Equilibrium level of income	5,000
(II)	Autonomous consumption	500
(III)	Marginal Propensity to Save	0.4

(a) 3000
(b) 3350
(c) 3500
(d) 3050
OR
On the basis of following information, identify whether the economy is in equilibrium or not.

S.No.	Particulars	₹ (in crores)
(I)	Autonomous Consumption and Investment Expenditure $(\bar{A})$	500
(II)	Marginal Propensity to Save (MPS)	0.2
(III)	National Income	4,000

(a) Yes
(b) No
(c) Question is incomplete
(d) None of the above
Answer:
(c) 3500

Explanation:
We know that:
Consumption expenditure = c + bY
= 500 + 0.6 (5,000)
= ₹ 3,500 crores

(b) No
Explanation:
The economy is in equilibrium when
AD = AS
AS = Y = 4,000
AD = A + MPC(Y)
(MPC = 1 – MPC)
= 1 – 0.2
= 0.8
= 500 + 0.8 × 4,000
= 500 + 3,200 = × 3,700
So, in the above question
AD = 4,000 and AS = 3,700
AD is not equal to AS, so the economy is not in equilibrium.

Question 9.
Read the following statements carefully and choose the correct alternative from the following: [1]

Statement 1: Capital expenditure is the expenditure of the government which leads to either increase in government assets or reduction in government liabilities.
Statement 2: Expenditure on old age pensions, expense on national security, expense on health and education etc. are some examples of capital expenditure of the government.

Alternative:
(a) Both the statements are true.
(b) Both the statements are false.
(c) Statement 1 is true and statement 2 is false.
(d) Statement 2 is true and statement 1 is false.
Answer:
(c) Statement 1 is true and statement 2 is false.

Explanation:
Expenditure on old age pensions, expense on national security, expense on health and education etc. are revenue expenditure of the government. Examples of capital expenditure of the government are expenditure on the construction of national highways, repayment of government loans, etc.

Question 10.
Read the following statements carefully and choose the correct alternative from the following: [1]

Statement 1: Recovery of loans by the Government is a capital receipt.
Statement 2: Interest received on loan is a revenue receipt of the Government.

Alternatives:
(a) Both the statements are true.
(b) Both the statements are false.
(c) Statement 1 is true and statement 2 is false.
(d) Statement 2 is true and statement 1 is false.
Answer:
(a) Both the statements are true.

Explanation:
Recovery of loans is a capital receipt as it will lead to decline if financial assets of the government. Interest received on loans is a revenue receipt as it neither create liability nor reduce the assets of the government.

Question 11.
State whether the following statements are true or false. Give valid reason for your answer. [3]
(A) Unplanned inventories accumulate when planned investment is less than planned saving.
(B) Deflationary gap exists when aggregate demand is greater than aggregate supply at full employment level.
(C) Average propensity to save can never be negative.
Answer:
(A) True
Explanation:
As planned savings are more than planned investment, it well cause the marginal propensity to consume to reduce. This will lead to a fall in the aggregate demand resulting in accumulation of unplanned inventories with the producers.

(B) False
Explanation:
Deflationary gap exists when aggregate demand is lesser than the aggregate supply at full employment level. It is a situation of deficient demand. When aggregate demand is greater than aggregate supply at full employment level it is a situation of inflationary gap.

(C) False
Explanation:
Average propensity to save is the proportion of income that is saved rather than spent It can be negative at income levels which are lower than break-even point.

Question 12.
The ratio of MPC and MPS is 4 : 1. The consumption at zero level of income is ₹ 40 crores. [3]
(A) Frame a consumption equation
(B) Find the value of investment multiplier
(C) Find the break even level of income
OR
What is investment multiplier? If change in investment of ₹ 100 crores is required to bring a change in income by ₹ 1000 crores, calculate MPC and MPS.
Answer:
MPC: MPS = 4:1
Hence, MPC = $\frac{4}{5}$ = 0.8
MPS = 1 – MPC = 1 – 0.8 = 0.2
(A) Consumption Function:
C = $\overline{C}$ + bY
Where C is consumption function $\overline{C}$ is autonomous consumption (i.e. minimum consumption for survival when income is zero)
b shows Marginal propensity to consume Y stands for level of income Putting the values in
C = $\overline{C}$ + bY
C = 40 + 0.8Y

(B) Value of investment multiplier,
k = $\frac{1}{\text { MPS }}$
= $\frac{1}{0.2}$ = 5

(C) Break even level of income is that level at which,C = Y
We have, C = 40 + 0.8Y
Therefore,
40 + 0.8Y = Y
-Y + 0.8Y = -40
-0.2Y = -40
Y = $\frac{-40}{-0.2}$
= ₹ 200 crores

Investment multiplier refers to the concept that any increase in public or private investment spending has a more than proportionate positive impact on aggregate income and the general economy. It expresses the relationship between an initial increase in investment and resultant increase in the aggregate income, i.e. investment multiplier explains how many times income increases as a result of increase in investment. It is denoted by k. The equation for calculating investment multiplier is:
k = $\frac{\Delta Y}{\Delta I}$
Where k stands for investment multiplier
∆Y is the change in income
∆I is the change in investment
If change in investment is ₹ 100 crores and change in income is ₹ 1000 crores, then
Investment multiplier, k = $\frac{\Delta Y}{\Delta I}$
Substituting the given variables,
k = $\frac{1000}{100}$
= 10 times.
Alternatively,
k = $\frac{1}{\text { MPS }}$
So, MPS = $\frac{1}{k}$
= $\frac{1}{10}$ = 0.1
and MPC = 1 – MPS
= 1 – 0.1
Therefore, MPC = 0.9

Question 13.
“Loans are children of deposits and deposits are children of loans.” Explain. [4]
OR
“The Central Bank acts as a banker, advisor and agent to the government.” Explain.
Answer:
Loans are children of deposits and deposits are children of loans. It means deposits are the results of loan activities of a bank and loans are given after the deposits in the bank. This is the most important function of commercial bank. In the process of accepting deposits and advancing of loans, commercial bank creates credit. They are able to lend more money than they have as cash deposits. This is known as credit creation.

People deposit their money with the commercial bank. Bank use this money as deposits to give loans. When bank gives loan to someone, it simply creates a bank deposit equal to the loan amount in the name of the borrower. The new deposit created by the bank becomes a part of the money supply. This is known as bank credit money.

Banker, advisor and agent to government is one of the most important function of Central Bank. The Central Bank performs the following functions:
(1) As a banker to the government: As a banker, the central bank performs banking functions for the government by accepting the government deposits and granting loans to the government The central bank also performs the function of making receipts and collection of payments of the government and making payments on behalf of the government

(2) As an advisor to the government: As an advisor, the central bank gives advice to the government regarding economic policy matters, money market capital market and government loans. The central bank also assist in formulating and implementing fiscal and monetary policies to regulate the supply of money in the market and control inflation.

(3) As an agent of the government: As an agent, the central bank manages the public debt, undertakes the payment of interest on this debt, and provide all other services related to the debt.

Question 14.
Would the Central Bank need to intervene in a managed floating system of foreign exchange? Explain why? [4]
Answer:
Managed floating exchange rate system is a mixture of a flexible exchange rate system as the float part and a fixed rate system as the managed part. This system is also known as dirty floating. In this system, foreign exchange rate is determined by market forces.

However, the central bank needs to intervene in this system in order to restrict the fluctuations in the exchange rate within certain limits. The aim is to keep exchange rate close to the desired target values. The central bank intervene to buy and sell foreign currencies in an attempt to moderate exchange rate movements whenever it feel such actions are appropriate.

Question 15.
Explain Paradox of thrift. [4]
Answer:
If all the people of the economy increases the proportion of their savings i.e. if the marginal propensity to save (MPS) of the economy increases, it reduces consumption in the economy, which in turn, reduces total output. This result is known as the Paradox of thrift, which states that as people become more thrifty they end up saving less or same as before.

Paradox of thrift was popularised by the renowned economist John Maynard Keynes which states that individuals try to save more during an economic recession, which essentially leads to a fall in aggregate demand and hence in economic growth.

In the figure, initial saving curve is SS and investment curve is II. The economy attains equilibrium (Savings = Investment) at E and equilibrium level of income is OY. Now, suppose the people decides to become thriftier by reducing consumption expenditure and increases savings. As a result, saving curve shift upward to S₁S₁, intersecting investment curve II at E₁.

Unplanned inventories will increase and firms will cut down production and employment and move to new equilibrium E₁. The figure shows that in the end, planned savings has fallen from EY to E₁Y₁. At new point of equilibrium E₁, investment level and also realised saving remains the same (E₁Y₁) but level of income has fallen from OY to OY₁. The decline in equilibrium level of income shows the paradox of thrift as the reverse process of multiplier has worked on reducing consumption expenditure.

Question 16.
(A) “Government uses the fiscal policy to stabilise economic fluctuations in an economy”. Discuss. [6]
(B) Explain the importance of government budget.
Answer:
(A) Stabilisation policy is a strategy enacted by the government to maintain a healthy level of economic growth. The government may need to correct fluctuations in income and employment. The overall level of employment and prices in the economy depends upon the level of aggregate demand.

Fiscal policy can do this by increasing or decreasing aggregate demand, which is the demand for all goods and services in an economy. Fiscal policy has a stabilising effect on an economy i.e., if the budget balance increases, output rises and decreases when it falls.

The main goal of stabilisation policy is to smooth out the business cycle, reducing output during economic expansions and increasing output during recessions.

(B) The importance of government budget can be explained as follows:

It shows the fiscal policy of the government. It is an important instrument of the government to achieve its objectives.
It reflects the government’s approach to allocation of resources in the country.
It is used to correct the situations of inflationary/deflationary gap in the country.

Question 17.
Calculate (A) Gross Domestic Product at factor Cost and (B) Factor income to abroad: [6]

	Particular	₹ (in crores)
(i)	Compensation of employees	800
(ii)	Profits	200
(iii)	Dividends	50
(iv)	GNP at market price	1400
(v)	Rent	150
(vi)	Interest	100
(vii)	Gross domestic capital formation	300
(viii)	Net fixed capital formation	200
(ix)	Change in stocks	50
(x)	Factor income from abroad	60
(xi)	NIT	120

OR
Analyse the bar graph of different countries.

Answer:
(A) GDP_FC = NDP_FC + Depreciation
Where GDP_FC is Gross Domestic Product at factor cost
NDP_FC is Net Domestic Product at factor cost
NDP_FC = Compensation of Employees + Profit + Rent + Interest
= 800 + 200 + 150 + 100
= ₹ 1,250 crores
Depreciation = Gross Domestic Capital formation – (Net Fixed Capital formation + Change in stock)
= 300 – (200 + 50)
= 300 – 250
= ₹ 50 crores
Therefore,
GDP_FC = NDP_FC + Depreciation
= 1,250 + 50
= ₹ 1,300 crores

(B) Factor Income to abroad:
GNP_MP = GDP_FC + NFIA + NIT
Given, GNP_MP = ₹ 1,400 crores
NIT = ₹ 120 crores
Already calculated,
GDP_FC = ₹ 1300 crores
NFIA = ( FIRA – FIPA)
Where NFIA is Net Factor income from abroad
FIRA is Factor Income from abroad
FIPA is Factor income to abroad
Putting the variables in equation,
GNP_MP = GDP_FC + NFIA + NIT
1,400 = 1,300 + (60 – FIPA) + 120
1,400 = 1,480 – FIPA
FIPA = 1,480 – 1,400
= ₹ 80 crores

The bar graph illustrates the five different nations’ national income in USD per capita from 1990 to 2010.

Overall, all countries net national income per capita has risen and among all, France had the lowest national income per capita. The highest national income per capita was dedicated to the US whereas the national income per capita for the rest of countries reached about the similar level by 2010 except for France.

The US had the highest national income per capita in 1990 despite the income level was reached at about $28,000 per capita which increased substantially to more than $35,000 per capita by 2000. Meanwhile, the UK had about $22,000 national income per capita in 1990 which increased by about $4,000 per capita in 2000. By 2010, the US national income per capita remained at its dominant rate of about $36,000 income per capita whereas the UK increased its national income per capita to close to $28,000 by 2010.

In contrast, the rest of countries started at similar level of above $15,000 income per capita except for Germany which recorded at close to $20,000 income in 1990. Ten years later, the national income increased drastically where it reached at well over $20,000 income per capita for France and $25,000. per capita for Netherlands whereas German’s national income grew slightly just over $20,000 per capita. This incremental trend continued until 2010, Germany and Netherlands reached at similar income per capita of above $25,000 per capita whereas France reached at below $25,000 income per capita.

Section – B (40 Marks)
Indian Economic Development

Question 18.
………………… is regarded as architect of Indian Planning, responsible for formulating Five Years Plans. [1]
(Choose the correct alternative)
(a) Prashant Chandra Mahalanobis
(b) J. C. Kumarappa
(c) I. G. Patel
(d) Amiya Kumar Bagchi
Answer:
(a) Prashant Chandra Mahalanobis

Explanation:
Prashant Chandra Mahalanobis is responsible for formulating five year plans in India.

Related Theory
The second five year plan is also known as Mahalanobis two sector model.

Question 19.
…………………… was started in China in 1958 to promote industrialisation. [1]
(Choose the correct alternative)
(a) Rapid Industrialisation Programme
(b) Great Leap Forward
(c) Great Proletarian Cultural Revolution
(d) None of these
Answer:
(b) Great Leap Forward

Explanation:
China initiated the Great Leap Forward (GLP) campaign aimed at industrialising the country on a massive scale. The compaign continued from 1958 to 1962.

Related Theory

Rapid Industrialisation Programme: Part of industrial reforms introduced by China in 1978.
Great Proletarian Cultural Revolution: Took place from 1966-76 in China under which students and professionals were sent to work and learn from the countryside.
Five Year Plan: China announced its first five year plan in 1953. It is now working on 13th five year plan (2016-2020).

Question 20.
From the given options in column I and II, choose the correct pair: [1]

Column I	Column II
(I) India	(A) Mixed economy
(II) China	(B) 1958
(III) Beginning of five year plans in Pakistan	(C) Socialist economy
(IV) Great Leap Forward Campaign	(D) 1956

(a) (I) – (A)
(b) (II) – (B)
(c) (III) – (C)
(d) (IV) – (D)
Answer:
(a) (I) – (A).

Explanation:
Agricultural marketing is the farmer’s act of producing the agricultural produce and bring their products to market for sale and include all those activities that help the farmers to fetch the maximum price for their product.

Commercialisation of agriculture is a phenomennon where agriculture is governed by commercial consideration i.e. certain specialised crops to be grown for sale in national and international markets to fetch higher incomes to the farmers.

Question 21.
In the past few decades ………………….. (primary/secondary/tertiary) sector has created maximum job opportunities in India (Fill up the blank with correct alternative) [1]
Answer:
(a) primary

Explanation:
There is no shift of labour force in India from primary sector to tertiary sector but still, primary sector creates maximum jobs in India. In India, more than half of the workers are working in primary sector.

Question 22.
Read the following statements—Assertion (A) and Reason (R). Choose one of the correct alternatives given below: [1]

Assertion (A): Agricultural marketing is a process that involves the assembling, storage, processing, transportation, packaging, grading and distribution of different agricultural commodities across the country.
Reason (R): Commercialisation of agriculture offers tremendous scope for farmers to earn higher incomes.

(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 and 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
OR
Assertion (A): Growth of rural economy depends primarily on infusion of capital from time to time, to realise higher productivity in agriculture and nonagriculture sector.
Reason (R): National Bank for agriculture and Rural development (NABARD) was set up in 1982 as an apex body to coordinate the activities of all institutions involved in the rural financing system.

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Asertion (A).
(b) Both Assertion (A) and Reason (R) are true and 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.
Answer:
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

Explanation:
India has adopted the mixed economy in which public sector, consisting of government enterprises and private sector consisting of private enterprises co-exist with each other. The important decisions are taken by the government through market related to economic activities. China adopted the socialist economy in which all economic activities-production, distribution, exchange and consumption are planned and coordinated by the government.

Pakistan initiated its first five year plan in 1956 as its planning process.
China introduced Great Leap Forward Campaign in 1958 aimed at industrialising the country on a massive scale.

(a) Both Assertion (A) and Reason (R) are true .and Reason (R) is the correct explanation of Assertion(A).
Explanation:
The farmers has to borrow from various sources, as the gestation between crop sowing and realisation of income after production is too long. They have to meet their initial investment on seeds, fertilisers, implements and other expenses. To meet these requirements of capital, national bank for agriculture and rural development (NABARD) has been set up.

Question 23.
Read the following statements-Assertion (A) and Reason (R). Choose one of the correct alternatives given below: [1]

Assertion (A): The development of agriculture and industry leads to the development of service sector.
Reason (R): As the primary and secondary sector develops, the demand for transport, storage structures, bank, insurance, etc., increases.

(a) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Asertion (A).
(b) Both Assertion (A) and Reason (R) are true and 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
Answer:
(a) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Question 24.
Choose the correct alternatives to be fitted in given blanks A and B : [1]

Regularly move in and out of poverty

Rich most of the times but sometimes have a patch of bad luck

(a) Churning poor, usually poor
(b) Transient poor, churning poor
(c) Churning poor, transient poor
(d) Ocassionally poor, non poor
Answer:
(c) Churning poor, transient poor

Explanation:
Churning poor are those who regularly move in and out of poverty (example: small farmers and seasonal workers) and those who are rich most of the time but may sometimes have a patch of bad luck are called the transient poor (example: gambler).

Question 25.
Indian Systems of Medicine includes six systems , also known as AYUSH. Which of the following is not a system of medicine included in AYUSH? [1]
(a) Ayurveda
(b) Homoeopathy
(c) Allopathy
(d) Naturopathy
Answer:
(c) Allopathy

Explanation:
Indian Systems of Medicine (ISM) includes six system – Ayurveda, Yoga, Unani, Siddha, Naturopathy and Homoeopathy, also known as AYUSH.

Question 26.
Read the following statements carefully and choose the correct alternative from the following: [1]

Statement 1: Most poverty alleviation programmes implemented by the government prior to 2015 were based on the perspective of the Five Year Plans
Statement 2: Expanding self-employment programmes and wage employment programmes are being considered as the major ways of addressing poverty.

Question 27.
Read the following statements carefully and choose the correct alternative from the following: [1]

Statement 1: The rural poor work mainly as landless agricultural labourers, cultivators with very small landholdings.
Statement 2: The urban poor are largely, the overflow of the rural poor who had migrated to urban areas in search of alternative employment and livelihood.

Explanation:
Economists identify the poor on the basis of their occupation and ownership of assets. They state that the rural poor work mainly as landless agricultural labourers, cultivators with very small landholdings, or landless labourers, who are engaged in a variety of non-agricultural jobs and tenant cultivators with small land holdings. The urban poor are largely the overflow of the rural poor who had migrated to urban areas in search of alternative employment and Livelihood.

Question 28.
The given picture shows the zamnidari system followed during the colonial period. Discuss the main causes of India’s agricultural stagnation during the colonial period? [3]

Answer:
As the main causes of stagnation of agriculture sector were as follows:
(1) Land Tenure System: There were three forms of Land tenure system introduced by the British rulers in India. These were:
(a) Zamindari system
(b) Mahalwari system
(c) Ryotwari system

(2) Commercialisation of Agriculture: Farmers were forced to cultivate commercial crops like Indigo. Indigo was required by the textile industry in Britain for dyeing of the textile. As a result there was fall in the production of food crops. The farmers had to suffer from frequent occurrence of famine. Indian agriculture was transformed into a raw material exporting sector for England.

(3) Partition of the Country: Partition of the country in 1947 also adversely affected India’s agricultural production. The rich food producing areas of West Punjab and Sindh went to Pakistan. It created food crisis in the country. Also, the whole of fertile land under jute production went to East Pakistan. The jute industry was most severely affected due to partition.

Question 29.
Give two instances of: [3]
(A) Overuse of environmental resources
(B) Misuse of environmental resources.
Answer:
(A) Two instances of overuse of environmental resources are:

Excess use of electricity leads to depletion of resources like coal and water from which electricity is generated.
Excess use of petrol and diesel invehicles.

(B) Two instances of misuse of environmental resources are:

Soil degradation due to improper use of fertilisers, insecticides and pesticides along with crop rotation and crop shifting.
Drying up of rivers due to supply of water from them to dams and reservoirs.

Question 30.
“The rural areas in India suffer from lack of adequate financing facilities”. State the reasons for the requirement and sources available to meet out this problem. [4]
Answer:
Growth of rural economy depends on timely infusion of capital. Credit in rural areas is required:

To meet certain expenses because the gestation period between crop sowing and realisation of income after production is too long.
To invest in seeds, manure and fertilisers. Non-farm sectors such as cottage and small scale industries also require capital.
For rural people for self employment.

The sources of credit in rural system are:

Non institutional sources: Money lenders, friends, relatives and land owners.
Institutional sources: National Bank for Agriculture and Rural Development (NABARD), Self Help Groups (SHGs), Regional Rural Banks, Commercial Banks, Co-operative Banks, Co-operative Financing societies.

Question 31.
With reference to the table below, list points stating a comparison of the demographic features of India, China and Pakistan. [4]

Country	India	China	Pakistan
Est. Population (in millions)	1311	1371	188
Annual Growth of Population 2015	1.2	0.5	2.1
Density (per sq. km)	441	146	245
Sex Ratio 2015	929	941	947
Fertility Rate 2015	2.3	1.6	3.7
Urbanisation 2015	33	56	39

Answer:
With reference to the given data, the following points highlights the comparison of the demographic features of India, China and Pakistan:

The population of Pakistan is very less as compared to India and China.
With’ respect to density, although China is the largest nation and geographically occupies the largest area compared to India and Pakistan, its density is the lowest at 146 per sq. km.
The growth of population is highest in Pakistan followed by India and China. This is mainly the result of China’s one child norm that was introduced in 1970s. This also led to the decline in the sex ratio in China.
The sex ratio is low and biased against females in all three countries. This is due to preference of the male child in all the three countries.
The fertility rate is low in China and very high in Pakistan.
Urbanisation is the highest in China (56%). The percentage of people living in urban areas is 33% in India and 39% in Pakistan.

Question 32.
“We have not inherited the land from our forefathers, we have borrowed them from our future generations”. Discuss. [4]
OR
Write a short note on Operation Flood.
Answer:
Development that meets the need of the present generation without compromising the ability of the future generations to meet their own needs is known as sustainable development. It basically means that the development should not hamper the progress of our future generations. To ensure this, following.needs to be done:

Limiting the human population to a level within the carrying capacity of the environment.
Technological progress should be input efficient and not input consuming.
Renewable resources should be extracted on a sustainable basis, i.e., rate of extraction should not exceed rate of regeneration.
For non-renewable resources, rate of depletion should not exceed the rate of creation of renewable substitutes.
Inefficiencies arising from pollution should be corrected.

Operation Flood was launched in 1970 and was a project of India’s National Dairy Development Board (NDDB) which transformed India from a milk-deficient nation, into the world’s largest milk producer in the world. Under this project, farmers pool their individual milk produce and hand them over to cooperatives who processed and marketed the milk to urban areas.

The milk cooperatives of Gujarat are an illustration of the perfect implementation of this idea. Gujarat state holds a success story of the efficient implementation of milk cooperatives, which has been followed by many states.

Question 33.
Discuss in brief the goals of five years plans. [6]
Read the following hypothetical case study and answer the question on the base of the same.
Environment is defined as the total planetary inheritance and the totality of all resources. It includes all the biotic and abiotic factors that influence each other. While all living elements- the birds, animals and plants, forests, fisheries etc. are biotic elements, abiotic elements include air, water land etc. The environment performs four vital functions:

It supplies renewable and non-renewable resources. Renewable resources are those which can be used without the possibility of the resource becoming depleted or exhausted i.e. a continuous supply of the resource remains available. Nonrenewable resources are those which get exhausted with extraction and use;
it assimilates waste,
it sustains life by providing genetic and biodiversity; and
it provides asthetic services like scenery etc.

The rising population of the developing countries and the affluent consumption and production standards of the developed world have placed a huge stress on the environment in terms of its first two functions. The environment is able to absorb these functions till the resource extraction is not above the regeneration of the resource and the wastes generated are within the assimilating capacity of the environment. Many resources have become extinct and the wastes created are beyond the ability of the environment to absorb degradation.
Answer:
The goals of Five Years Plans are:
(1) Growth: It refers to the increase in country’s capacity to produce the output of goods and services within the country. A good indicator of economic growth is steady increase in Gross Domestic Product (GDP).

(2) Modernisation: To increase the production of goods and services, the producers have to adopt new technologies. Modernisation does not refer only to the use of new technology but also to changes in social outlook.

(3) Self-reliance: Self-reliance or self sufficiency refers to the elimination of external assistance. In other words, it means zero foreign aid. A nation can promote economic growth and modernization by using its own resources or resources imported from other nations. The first seven five years plans gave importance to self-reliance which means avoiding imports of those goods which could be produced in India itself.

(4) Equity: It is important to ensure that the benefits of economic prosperity reach the poor sections as well instead of being enjoyed only by the rich. So, in addition to growth, modernisation and self-reliance, equity is also important. Every Indian should be able to meet his basic needs such as food, house, education and health care and inequality in the distribution of wealth should be reduced.

(5) Full employment: The removal of unemployment is considered to be another important objective of India’s five years plans since second five years plans. Since then, special emphasis has been given to the expansion of labour intensive industries and small industries especially to provide employment to persons.

(6) Raising investment income ratio: Achieving a planned rate of investment within a given period brings the actual investment as the proportion of national income moves to a higher level that has been regarded significant. An increase in investment in the productive capacity of the country involves a corresponding increase in savings.

Question 34.
(A) “Infrastructure is often called as the lifeline of the economy.” Explain in the context of above case. [6]
(B) “Infrastructural facilities are mainly built or run by the government and public sector enterprises.” Defend or refute the statement with valid reason?
Answer:
(A) Infrastructure is often called as the lifeline of the economy. Infrastructure provides supporting services in the main areas of industrial and agricultural production, domestic and foreign trade and commerce. It helps in increasing the productivity of the factors of production and enhancing the quality of life. Infrastructure is also criticalfor achieving manufacturing competitiveness.

(B) Building of infrastructure requires large and lumpy investment and has a relatively long gestation period. Due to this fact, infrastructural facilities are either built or run by the government and public sector enterprises and if private sector is permitted to make investment and fun infrastructural projects, they must be regulated in order to ensure quality infrastructure to one and all in the society.