CBSE Sample Papers for Class 12 Economics Set 6 with Solutions

Students must start practicing the questions from CBSE Sample Papers for Class 12 Economics with Solutions Set 6 are designed as per the revised syllabus.

CBSE Sample Papers for Class 12 Economics Set 6 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.
Inventory is a ……………………. concept whereas the change in inventory is a ………………… concept. [1]
(Fill up the blank with correct alternative)
(a) stock, flow
(b) flow, stock
(c) stock, stock
(d) flow, flow
OR
If in an economy the value of Net Factor Income from Abroad is ₹ 200 crores and the value of Factor Income to Abroad is ₹ 40 crores. Identify the value of Factor Income from Abroad.
(Choose the correct alternative)
(a) ₹ 200 crores
(b) ₹ 160 crores
(c) ₹ 240 crores
(d) ₹ 180 crores
Answer:
(a) stock, flow

Explanation :
Stock variable is measured at one specific time, and represents a quantity existing at that point of time which may have accumulated in the past. Inventory is measured at a particular point of time and hence it is a stock concept.

A flow is a quantity which is measured with reference to a period of time. Change in inventory is a change over a period of time, say, a day, a week or a year. Hence, change in inventory is a flow concept.

(c) ₹ 240 crores
Explanation:
Net income from abroad = Value of factor income from abroad – value of factor income to abroad
₹ 200 crores = Value of factor income from abroad – ₹ 40 crores
Value of factor income from abroad = 200 + 40
= ₹ 240 crores

Related Theory
Net factor income from abroad is the difference between the factor income earned from abroad by normal residents of a country and the factor income earned by the non-residents in the domestic territory of that country.

Question 2.
In the present COVID-19 times, many economists have raised their concerns that Indian economy may have to face a deflationary situation, due to reduced economic activities in the country.
Suppose you are a member of the high powered committee constituted by the Reserve Bank of India (RBI).

You have suggested that as the supervisor of commercial banks, …………………. (restriction/ release) of the money supply be ensured, by the Reserve Bank of India (RBI). (Choose the correct alternative) [1]
Answer:
release

Explanation:
Deflationary situation arises when aggregate demand in an economy is lower than the aggregate supply at full level of employment. It is a situation of deficient demand. This deflationary situation can be corrected by raising the level of aggregate demand. Reserve Bank of India release the supply of money in the economy to increase the aggregate demand.

Related Theory
Inflationary situation arises when aggregate demand is more than the aggregate supply at full level of employment in the economy. It is a situation of excess demand and can be overcome by restricting the money supply in the economy.

Question 3.
Supply of money refers to ……………………… [1]
(Choose the correct alternative)
(a) Currency held by the public
(b) Currency held by Reserve Bank of India (RBI)
(c) Currency held by the public and demand deposits with commercial banks
(d) Currency held in the government account
Answer:
(c) Currency held by the public and demand deposits with commercial banks

Explanation:
Supply of money refers to the total stock of money held by the people of an economy at a particular point of time. It is a stock concept. It includes currency notes issued by the Reserve Bank of India, rupee notes and coins in circulation and demand deposits of the public with the banks.

Related Theory
Supply of money does not include cash balance held by central and state government and stock of money held by banking system of country as they are not in actual circulation in the economy.

Question 4.
Identify the correct pair of formula from the following column I and II: [1]
(Choose the correct alternative)

	Column 1		Column II
A	Current Account Surplus	(I)	Receipts < Payments
B	Current Account Surplus	(II)	Receipts > Payments
C	Balance Current Account	(III)	Receipts ≠ Payments
D	Current Account Deficit	(IV)	Receipts ≤ Payments

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

Explanation:
Current account surplus refers to positive current account balances, means that a country has more exports than imports of goods and services. It means that the receipts are more than payments.

Related Theory

The main components of the current account are:
Trade in goods, visible balance
Trade in services, invisible balance.
Investment incomes
Unilateral transfers

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

Assertion (A): Increased lending abroad is recorded on the debit side of the capital account.
Reason(R): Lending affects the asset and liabilities of the economy and involves the outflow of income.

(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 true, and Reason (R) is the correct explanation of Assertion (A).

Explanation :
It is true that lending abroad is recorded on the debit side, and the lending affects the asset and liabilities of the economy. This clearly shows that the reason is the correct explanation of the assertion.

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

Assertion (A): Balance of trade is also referred to as the balance of payments.
Reason(R): Balance of trade includes the value of imports and exports of visible goods and invisible goods.

(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): India’s foreign exchange reserves comprise FCA (foreign currency assets), gold, SDR with IMF and reserve tranche position in the IMF.
Reason(R): It is kept as a cushion against any potential balance of payment-related crisis.

Explanation:
balance of trade is also referred to as the balance of payments, and the reason is a balance of trade includes the value of imports and exports of visible goods and invisible goods. This shows that the assertion is the incorrect and reason is correct.

(b) Both Assertion and Reason are correct, but the reason is not the correct explanation for Assertion
Explanation:
Foreign exchange reserves are assets denominated in foreign currency that are held by the central bank (RBI) and not commercial banks.

Read the following news report and answer Questions 7-10 on the basis of the same:

The Reserve Bank of India (RBI), cut Repo Rate to 4.4%, the Lowest in at least 15 pears. Also, it reduced the Cash Reserve Ratio (CRR) maintained bp the banks for the first time in over seven pears. CRR for all banks was cut bp 100 basis points to release ₹ 1.37 lakh crores across the banking spstem. RBI governor Dr. Shaktikanta Das predicted a big global recession and said India will not be immune. It all depends how India responds to the situation. Aggregate demand map weaken and ease core inflation.
The Economic Times; March 27th, 2020

Question 7.
Read the following statements carefully and choose the correct alternative from the following: [1]

Statement 1: Speculative demand for money is inversely related to the rate of interest.
Statement 2: Different people have different expectations regarding the future movements in the market rate of interest based on their private information regarding the economy.

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.
OR

What does the above picture state?
(a) Virtual payment platform
(b) leakeges
(c) demonetisation
(d) None of the above
Answer:
(a) Both the statements are true.

Explanation:
When the interest rate is very high everyone expects it to fall in future and hence anticipates capital gains from bondholding. Hence people convert their money into bonds. Thus, speculative demand for money is low. When interest rate comes down, more and more people expect it to rise in the future and anticipate capital loss. Thus they convert their bonds into money giving rise to a high speculative demand for money.

(b) leakages
Explanation:
Paytm is an example of mobile wallet which is used as a common digital payment platform.

Question 8.
Read the following statements-Assertion (A) and Reason (R). Choose one of the correct alternatives given below: [1]

Statement 1: Money supply refers to the stock of money available at particular time.
Statement 2: Volume of money held by public for transactions o settlement of debts.

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

Explanation:
Money supply can be defined as stock of money available with the public at a particular point of time. It means total volume of money held by public is used for transactions and for repaying debts.

Question 9.
Read the following statements-Assertion (A) and Reason (R). Choose one of the correct alternatives given below: [1]

Statement 1: Reserve Bank of India grants credit to the banks that are facing temporary liquidity problems.
Statement 2: Reserve Bank of India provides short term loans to central and state governments, whenever necessary and also manages the public debt of the country.

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:
(c) Assertion (A) is true but Reason (R) is false

Explanation:
Explanation: Appreciation of rupee leads to rise in imports as the foreign items become cheaper in comparison to the domestic goods.

Question 10.
Balance Sheet of Bank [1]

Assets		Liabilities
Reserves	₹ 100	Deposits	₹ 100
		Net Worth	₹ 0
Total	₹ 100	Total	₹ 100

If we assume that there is no currency in circulation then what will be the total money supply in the economy?
(a) 100
(b) 200
(c) 300
(d) 50
OR
Balance sheet of a Bank

Assets		Liabilities
Reserves	₹ 500	Deposits	₹ 500
		Net Worth	0
Total	₹ 500	Total	₹ 500

What amount will the banks have to lend, if the reserve ratio is 20% ?
(a) 40
(b) 800
(c) 400
(d) 200
Answer:
(a) 100

Explanation:
M₁ = Currency + Deposits
= 0 + 100 = 100

Question 11.
State with valid reason, which of the fallowing statement is true or false: [3]
(A) Gross Value Added at market price and Gross Domestic Product at market price are one and the same thing.
(B) Intermediate goods are always durable in nature.
Answer:
(A) The given statement is false as Gross Domestic Product is the result of sum of Gross Value Added by all the producing units/firms in an economy, during an accounting year.

Gross domestic product at market price refers to the market value of final goods and services produced within the domestic territory of a country during a specified period, inclusive of depreciation.

Gross value added at market price is the value of output less than the value of intermediate consumption. Value added represents the contribution of labour and capital to the production process. When the value of taxes on products is added, the sum of value added for all resident units gives the value of gross domestic product (GDP).

Thus, gross domestic product (GDP) represents the sum total of gross value added in the economy after adjusting for taxes and subsides. Hence, gross value added at market price and gross domestic product at market price are not one and same thing.

(B) False
Intermediate goods are those goods which are used as raw material in the eventual production of a final good. These are unfinished or partly finished goods used by the firms to resell them and generate profit in an accounting year. Intermediate goods are non-durable in nature. These are unprocessed or semi processed products which are used as inputs in the process so as to be converted into another form.

Question 12.
State, giving valid reasons, whether the following statements are true or false: [3]
(A) Current account in Balance of Payments records only the exports and imports of goods and services.
(B) Borrowings from abroad are recorded in the Capital Account of the Balance of Payments on the debit side.
OR
‘Trade Deficit must exist if a country is facing a situation of Current Account Deficit’. Defend or refute the statement, with valid argument.
Answer:
(A) The given statement is false as the Current Account of Balance of Payments records unilateral transfers along with exports and imports of goods and services.

Current account of balance of payments records not only the exports and imports of goods and services but also the unilateral transfers. Unilateral transfers include gifts, donations, personal remittances, etc. These refer to those receipts and payments which take place without any service in return.

(B) The given statement is false as the borrowings from abroad are recorded in the Capital Account of Balance of Payments on the credit side as it results in an inflow of foreign currency in the economy.

Borrowings from abroad is the inflow of foreign currency in the country. All the inflows are recorded on the credit side of the balance of payments account. Borrowings from abroad is a capital receipt and hence, will be recorded on the credit side of the capital account of balance of payments.

The given statement is refuted as the Current Account Deficit (CAD) is a broader concept CAD occurs when the foreign exchange payments on account of visible, invisibles and current transfers are in excess over the receipts of visible, invisibles and current transfers.

A country may face a situation of CAD, even if the country has trade surplus, with greater negative balances on account of services and unilateral transfers.

Explanation:
The given statement is refuted. Current account deficit indicates that the country’s imports are in excess of its exports. It includes exports and imports of goods and services and also the unilateral transfers. It is broader concept than trade deficit.

Trade deficit is the excess of imports of goods than exports. It is not necessary that trade deficit will exist in situation of current account deficit. There may be current account deficit even after trade surplus due to greater negative balances in services and unilateral transfers.

Question 13.
(A) Define money multiplier. [1]
(B) Credit creation is inversely related to the reserve deposit ratio’. Justify the given statement, using a hypothetical example. [3]
Answer:
(A) Money multiplier is the process by which the commercial banks create credit based upon the reserve ratio and initial deposits.

Related Theory
Money multiplier is the amount of money that commercial banks generate with the deposits. It is the number by which total deposits can increase due to a given change in deposits.

(B) Reserve deposit ratio is the minimum reserves which a commercial bank must maintain as per the instructions of the Central Bank. Credit Creation = $\frac{1}{\text { reserve ratio }}$
Thus, credit creation is inversely related to the reserve deposit ratio.
For Example: Suppose the Reserve Ratio is 0.2 and initial deposit is ₹ 1000 crores.
Total Credit Created = $\frac{1}{\text { reserve ratio }}$ × initial deposits
= $\frac{1}{0.2}$ × 1000
= ₹ 5,000 crores.
Now, suppose reserve ratio is increased to 0.5
Total Credit Created = $\frac{1}{\text { reserve ratio }}$ × initial deposits
= $\frac{1}{0.5}$ × 1000
= ₹ 2,000 crores.
Thus, on the basis of the above illustration we can say that there exists an inverse relation between reserve and credit creation.

Reserve deposit ratio, also known as cash reserve ratio, is the percentage of deposits which commercial banks are required to keep as cash according to the directions of the central bank.

Credit creation, by commercial banks is determined by (1) amount of initial deposits and (2) reserve deposit ratio or cash reserve ratio
Symbolically, credit creation
= $\frac{1}{\text { reserve ratio }}$ × initial deposits
This can be illustrated with the help of an example. Suppose, the initial deposits with commercial banks is ₹ 5,000 crores and the reserve deposit ratio is 20%. In this case, credit creation by commercial bank would be:
Credit creation = $\frac{1}{20 \% \text { or } 0.2}$ × 500
= ₹ 25,000 crores
Now, Reserve Bank of India increases the reserve ratio to 25%. The credit creation by commercial bank would now be:
Credit creation = $\frac{1}{25 \% \text { or } 0.25}$ × 5,000
= ₹ 20,000 crores
It is clear from the above example that as the reserve ratio is increased from 20% to 25% the credit creation by commercial bank with an initial deposit of ₹ 5,000 crores falls from ₹ 25,000 crores to ₹ 20,000 crores. It justifies that credit creation is inversely related to reserve deposit ratio.

Question 14.
In an economy C = 200 + 0.5 Y is the consumption function where C is the consumption expenditure and Y is the national income. Investment expenditure is ₹ 400 crores. [4]
Is the economy in equilibrium at an income level ₹ 1500 crores? Justify your answer.
OR
Define:
(A) Ex-Ante Savings
(B) Full Employment
Answer:
Given , Consumption function (C) = 200 + 0.5Y, Investment (I) = 400, Level of income (Y) = 1500
At Equilibrium level →
AD = AS
Y = C + I
thus, Y = (200 + 0.5Y) + 400
Y – 0.5 Y = 600
Y 600/0.5 = ₹ 1200 crores.
The equilibrium level of income = ₹ 1200 crores.
The given income ₹ 1500 crores) is greater than equilibrium level of income (₹ 1200 crores). Therefore, the economy is not in equilibrium.

(A) Ex-ante savings – Ex ante savings refers to the planned savings of an economy at different levels of income.

Related Theory
(A) Ex-ante savings: Ex ante savings refers to the desired savings or planned savings during the period of one year. This is the savings which is intended to be made in the economy at different levels of income.

(B) Full employment – It refers to a situation, where all the willing and capable resources get a gainful job at prevailing wage rate. It is a situation where there is no involuntary unemployment.

Related Theory
(B) Full employment: Full employment refers to a situation in which every able bodied person who is willing to work at the prevailing rate of wages is, infact, employed. It is an economic situation in which all available labour resources are being used in the most efficient way possible and there is no involuntary unemployment in the economy.

Question 15.
‘India’s GDP contracted 23.9% in the April- June quarter of 2020-21 as compared to same period of 2019-20, suggesting that the lockdown has hit the economy hard’. The Hindustan Times, 1st September 2020. [4]
State and discuss any two fiscal measures that may be taken by the Government of India to correct the situation indicated in the above news report.
Answer:
The situation suggests that Aggregate Demand is Less than Aggregate Supply. Following two fiscal measures may be taken to control it:
(1) Decrease in Taxes: To curb the situation, the government may decrease the taxes. This may increase the purchasing power in the hands of the general public. This may increase the Aggregate Demand . in the economy to bring it equal to the Aggregate Supply.

(2) Increase in Government Expenditure: The government may also increase its expenditure. This may increase the purchasing power in the hands of the general public which in turn may increase the Aggregate Demand in the economy to bring it equal to the Aggregate Supply.

Question 16.

In the given figure, what does the gap ‘ICT’ represents? State and discuss any three fiscal measures to correct the situation. [6]
OR
Suppose the Gross Domestic Product (GDP) of Nation X was ₹ 2,000 crores in 2018-19, whereas the Gross Domestic Product of Nation Y in the same year was ₹ 1,20,000 crores. If the Gross Domestic Product of Nation X rises to ₹ 4,000 crores in 2019-20 and the Gross Domestic Product of Nation Y rises to ₹ 2,00,000 crores in 2019-20.
Compare the rate of change of GDP of Nations X and Y, taking 2018-19 as base year.
Answer:
‘KT’ represents inflationary gap which means aggregate demand is more than aggregate supply corresponding to full employment level. Two fiscal measures to correct the situation of inflationary gap are:
(1) Revenue Policy To correct the situation of inflationary gap, government raises the rate of all taxes. This reduces the purchasing power by reducing disposable income (i.e., after tax income) of the people which in turn will reduce the aggregate demand in the economy.

(2) Expenditure Policy To correct the situation of inflationary gap, government should reduce its public expenditure. This reduces the purchasing power by reducing total income of the people which in turn will reduce the aggregate demand in the economy.

Nation/Year	2018-19	2019-20	$\left(\begin{array}{l} (\text { GDPin } 2019-20)- \\ (\text { GDPin2018-19) } \\ \hline \text { GDPin } 2018-19 \end{array}\right)$ × 100 (Base year = 2018-19
X	₹ 2,000 crores	₹ 4,000 crores	= $\frac{2000}{2000}$ × 100 = 100%
Y	₹ 1,20,000 crores	₹ 2,00,000 crores	=$\frac{80,000}{1,20,000}$ × 100 = 66.67%

Nation X has registered a GDP growth rate of 100% and has performed better on the front of GDP rise as compared to Nation Y that has registered a GDP growth rate of 66.67%.

Question 17.
(A) Elaborate the objective of ‘allocation of resources’ in the Government budget. [3]
(B) Discuss briefly how the Government budget can be used as an effective tool in the process of employment generation. [3]
Answer:
(A) Allocation of resources: Government seeks to allocate resources with a view to balance the goals of all sections of the society. Production of goods and services which are injurious to health may be discouraged through taxation policy.

Explanation:
Allocation of resources is one of the important objectives of government budget. In a mixed economy, the private producers aim towards profit maximisation while the government aims towards welfare maximisation The government, through its budget, aims to reallocate resources in accordance with the economic and social priorities of the country. The government can influence allocation of resources through:
(1) Tax concessions and subsidies: To encourage investment, the government can give tax concessions, subsidies etc. to the producers. The government discourages the production of harmful consumption goods, like liquor, cigarettes etc., through heavy taxes and encourages the use of khaki products by providing subsidies.

(2) Directly producing goods and services: If private sector does not take interest, government may directly1 control activities, like sanitation, water supply etc.

(B) Government budget can be used as an effective tool in the process of employment generation in various ways. Investment in infrastructural projects like construction of flyovers, bridges, expansion of roads etc. creates jobs for different sections of the workforce. In rural/urban areas government can provide jobs through various employment generation schemes like MGNREGA, SJSRY, PMRY etc.

Section – B (40 Marks)
Indian Economic Development

Question 18.
………………… was the Indian Finance Minister in 1991, acknowledged for his capabilities to steer away the economic crisis looming large on the erstwhile Indian Economy. (Choose the correct alternative) [1]
(a) Dr. Subramanian Swamy
(b) Dr. Manmohan Singh
(c) Pranab Mukherjee
(d) Dr. Urjit Patel
Answer:
(b) Dr. Manmohan Singh

Explanation:
Dr. Manmohan Singh was the finance minister of Government of India from June 1991 to May 1996. In 1991, India faced a severe economic crisis. Then prime minister, Mr. P.V. Narsimha Rao appointed Dr. Manmohan Singh as finance minister who is acknowledged for steering away the economic crisis.

Related Theory
Dr. Manmohan Singh, later on served as Prime minister of India from 2004 to 2014.

Question 19.
India entered the …………………. stage of Demographic Transition after the year 1921. [1]
(Choose the correct alternative)
(a) Fourth
(b) Second
(c) Third
(d) First
Answer:
(b) Second

Explanation:
The theory of demographic transition deals with transition from high to low birth rates and death rates. The second stage of demographic transition is characterised with population explosion. Population explosion refers to the situation when population increases due to high birth rate and low death rate. India entered the second stage of demographic transition in 1921.

Related Theory
India is witnessing the third stage of demographic transition from 1971.

Question 20.
From the set of events/systems given in column I and corresponding relevant fact given in column II, about China, choose the correct pair of statement:

	Column I		Column II
A	Great Leap Forward	(I)	Cultivating land collectively
B	Commune System	(II)	Opening of the Industries in their homes
C	Proletarian Cultural Revolution	(III)	Students were sent to work and learn from the countryside
D	Economic Reforms in China	(IV)	1988

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

Explanation:
In 1965 Mao Zedang introduced the great proletarian cultural revolution fn China, in which students and professionals were sent to work and learn from the countryside. .The reason for this was that due to conflicts with China, Russia withdrew its professionals who had been earlier sent to China to help in the industralisation process.

Related Theory

The Great Leap Forward (GLF) campaign initiated in 1958 aimed at industrialising the country on a massive scale.
Under the commune system, people collectively Cultivated lands.
Economic reforms in China were introduced in 1978.

Question 21.
………………… adopted ‘One Child Policy’ as a measure to control population. [1]
(Choose the correct alternative)
(a) India
(b) China
(c) Pakistan
(d) Russia
OR
The farmers suffered from ……………………. weighing and …………………… of accounts.
(Choose the correct alternative)
(a) correct, discrepancy
(b) over, manipulation
(c) under, correction
(d) faulty, manipulation
Answer:
(b) China

Explanation:
China introduced the one child norm in 1970s to control population growth in the country.

Related Theory
Though the one child norm was able to control the population growth in China, it led to decline in the sex ratio, i.e. the proportion of females per 1000 males, in the country.

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

Assertion (A): India became an exporter of primary products and an importer of finished consumer and capital goods produced in Britain.
Reason (R): Restrictive policies of commodity production, trade and tariff pursued by the colonial government adversely affected the structure, composition and volume of India’s foreign trade.

(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 statements-Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): The major policy initiatives i.e. land reforms and green revolution helped India to become self-sufficient in food grains production.
Reason (R): The proportion of people depending on agriculture did not decline as expected.

(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 true and Reason (R) is the correct explanation of Assertion (A).

Explanation:
India has been an important trading . nation since ancient times but the restrictive policies of commodity production. Trade and tariff pursued by the colonial government adversely affected the structure, composition and volume of India’s foreign trade. Consequently, India became an exporter of primary products such as raw silk, cotton, wool, sugar, indigo, jute etc. and an importer of finished consumer goods like cotton, silk and woollen clothes and capital goods like light machinery, produced in the factories in Britain.

(b) Both Assertion (A) and reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
Explanation :
The major policy initiatives i.e. lands reforms and green revolution helped India to become self sufficient in food grains production. It is also true that the GDP contributed by agriculture declined significantly between 1950 and 1990 but the proportion of population depending on agriculture did not decline as expected. It is not a reason for success of land reforms and green revolution.

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

Assertion (A): Every year government fixes a target for disinvestment of Public Sector Enterprises (PSEs).
Reason (R): Disinvestment is an excellent tool for discarding the loss incurring Public Sector Enterprises (PSEs).

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

Explanation:
Both the statements here are true but the reason (R) does not correctly explain the assertion (A). An important aspect of present industrial policy is that it should not operate commercial enterprises. With that end in view, the government has decided to disinvest the public enterprises and accordingly fixes a target for disinvestment every year.

Question 24.
Read the following statements-Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Statement 1. India announced the New Economic Policy in 1991 consisting of wide range of economic reforms.
Statement 2. World Bankand International Monetary Fund (IMF) granted $ 7 billion to manage the economic crisis in late 1980, with conditions.

Explanation:
Under the colonial rule, India was basically an agrarian economy, employing nearly 85% of its population. Nevertheless, the growth of the agriculture sector was meager. The main reasons for stagnation were: Lack of irrigation facilities, Forceful commercialization, Use of fertilizers etc.

Question 25.
Some economists argue that debt waiver schemes are extremely beneficial to the poor and marginalised farmers, as these schemes reduce the burden of ……………………. (indebtedness/personal expenditures) [1]
Answer:
Indebtedness

Explanation:
The farmers has to borrow not only to meet their investment needs but also to satisfy their personal needs. The debt waiver schemes reduce the burden of indebtedness of farmers which helps to restore their capacity of invest and produce.

Related Theory
The debt waiver schemes add to the fiscal burden of the government.

Question 26.
Read the following statements-Assertion (A) and Reason (R). Choose one of the correct alternatives given below: [1]

Statement 1: Public Distribution System (PDS) is a major programme that aim at improving the food and nutritional value of the poor.
Statement 2: Food for work programme was launched in 1984 – 85 to provide nutritional food to the poor.

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

Explanation:
The major programmes that aim at improving the food and nutritional value of the poor are : (i) Public Distribution System) (PDS); and (ii) Integrated Child Development Scheme. Food for work Programme (FWP) was launched in 1977 – 78. Under this programme, the government gave work to poor people related to various subject related to kucharoad, clearing debris etc. and gave goodgrains instend of wages.

Question 27.
………………… (Regional Rural Banks/ Land Development Banks) is the most prominent body responsible for providing loans for long term land development. [1]
OR
Green Revolution introduced during the planning process was restricted mainly to crops like
(a) Wheat and rice
(b) Cereals and pulses
(c) Cotton and jute
(d) Fower and bajra
Answer:
Land development banks

Explanation:
Land Development Bank is a special kind of bank in India. The main objective of land development bank is to promote the development of land, agriculture and increase the agricultural production.

(a) Wheat and rice
Explanation:
Green Revolution in India commenced in 1965, leading to an increase in food grain production, especially in wheath and rice.

Question 28.
Sanjeev gets work for two hours a day. For the rest of the day, he is looking for work. Can you classify him as an unemployed person? [3]
OR
Low employment among women is a reflection of economic of a country. Suggest some measures for increased employment opportunities for women.
Answer:
Yes, Sanjeev is unemployed. If a person does not get employment for even one hour during half a day, she/he is called ‘unemployed’. Sanjeev is employed for only two hours during a day and spends the remaining part of the day looking for work.

I shall suggest the following measures to increase the employment opportunities for women.

Education and training opportunities for women should be further expanded, diversified and made easily accessible.
Residential accommodation for working mother should be increased.
There should be much more facilities of creches and child care during the working hours of mothers.
There should be large scale publicity and building of public opinion in favour of employment of women.

Question 29.
Interpret the given situation. [4]

Answer:
In the recent years, India has witnessed an unprecedented shift of the workforce from the formal sector to informal sector. This process whereby, the proportion of informal worker in the total workforce increases is known as informalisation of workforce.

Informalisation of workforce refers to the situation wherein there is continuous decline in the percentage of workforce in the formal sector and a simultaneous rise in the percentage of work force in the informal sector.

One of the objectives of development planning in India since independence has been to provide decent livelihood to its people. It has been envisaged that the industrial strategy would bring surplus workers from agriculture to industry with better standard of living but even after 70 years of planned development, more than half of Indian workforce depends on farming as the major source of livelihood.

Informal sector includes millions of farmers, agricultural labourers and owners of small enterprises.

Question 30.
‘Agriculture sector appears to be adversely affected by the economic reform process.’ Explain the given statement. [4]
Answer:
The agricultural sector was adversely affected by the reform process in the following manner:

Public investment in agriculture sector especially in infrastructure like irrigation, power etc. has been reduced in the reform period.
Reduction of fertiliser subsidy has increased the cost of production affecting thereby the small and marginal farmers.
Increased international competitiveness due to liberalisation and reduction of import duties.
Shift from food crops to cash crops due to export-oriented policy in agriculture led to a rise in prices of food-grains.

Question 31.
‘Atamnirbhar Bharat’ had been at the roots of the Indian planning process in the form of‘self reliance’ as an objective of the planning process. Do you agree with the given statement? Justify the rationale of the given statement. [4]
OR
Discuss briefly any two major steps taken by the Government of India on ‘Financial Sector’ front under the Economic Reforms of 1991.
Answer:
The given statement is correct; in the early post-independence period the aim of the government’s policy was to reduce the dependence on the foreign countries for goods, services, technology and capital. It stressed on the use of domestic resources to avoid foreign interference, as it was feared that the dependence on the imported food supplies, foreign technology and foreign capital may increase foreign interference in the policies of our country. Similarly, the main thrust of the ‘Atmanirbhar Bharat’ is also to make India an economy that is self-reliant and self-suffcient.

Two steps taken by the government of India on financial sector under the Economic Reforms of 1991 were:

Change in the role of Reserve Bank of India (RBI): The role of RBI was reduced from regulator to facilitator of financial sector. This means that financial sector was given greater autonomy (to take decisions) on many matters independent of RBI.
Origin of Private Banks: The reform process led to establishment of private sector banks of Indian as well as foreign origin.

Question 32.
Compare and analyse the given data of India and China with valid arguments. [4]
Annual Growth of Gross Domestic

Country	1980-90	2015-2017
India	5.7	7.3
China	10.3	6.8

Source: Key Indicators for Asia and Pacific 2016, Asian Development Bank, Philippines; World Development Indicators 2018.
Answer:
The given data shown that China has gained economic strength over the years. When many developed countries were finding it diff icult to maintain a growth rate of even 5%, China was able to maintain near doubledigit growth during the decade of 1980s. The growth rate of China has decelerated to an average of 6.8%, over the period 2015-17.

In the recent past India has posted a decent rise in the growth rate. While India had maintained a reasonable growth rate of 5.7% in the decade of 1980’s it has shown great calibre and character in the period 201517 by registering an average of 7.3%, over the period 2015-17. Nevertheless, Indian elephant has to travel a long distance before it could present itself as a real threat to the growth story of the Chinese dragon.

Question 33.
(A) ‘If the rate of resource extraction exceeds the rate of regeneration, it leads to reduction in carrying capacity of the environment.’ [3]
Discuss the rationale of the given statement with valid reasons.
(B) Explain the meaning of labour supply, labour force and workforce. [3]
OR
(A) Why are less women found in regular salaried employment?
(B) Analyse the recent trends in sectoral distribution of workforce in India:
Trends in Employment Pattern (Sector wise), 1993-2012 (in %)

Sector	1993-94	1999-2000	2011-2012
Primary	64	60.4	24.3
Secondary	16	15.8	24.3
Services	20	23.8	26.8

Answer:
(A) The environment is able to perform its functions uninterruptedly so long as the demand for these functions is within the carrying capacity of the environment This means that the resources are not extracted beyond the rate of their regeneration. If there is a disequilibrium (demand being more than supply), the environment fails to replenish itself and it will lead to environmental crisis. Thus, to maintain a healthy environment the carrying capacity of the environment must be valued and respected.

(B) (1) Labour supply: Labour supply refers to the number of persons willing to work ” at different wage rates. It depends upon the existing wage rate and is measured in terms of man-days.

(2) Labour force: Labour force or the workforce is the total number of people employed or seeking employment in a country or region. If a person is not in labour force then it means that the individual is involved in any one of the non-gainful or unproductive activitieslabour force constitutes of both employed and unemployed.

(3) Workforce: The total number of people in a country who are engaged in productive activities i.e. in activities that contribute to the national product of the country constitute workforce. This measure does not include those people who are willing to work but do not get work.

Related Theory
There are many ways of measuring poverty. One way is to determine it by minimum calorie intake that was estimated at 2400 calories for a rural person and 2100 calories for a person in urban areas. Though the government uses this norm as proxy for income of households to identify the poor but this mechanism does not satisfactorily identify the poor households in the country.

The major problem with this mechanism is that it groups all the poor together and does not differentiate between the very poor and other poor. This mechanism is helpful in identifying the poor as a group to be taken care of but it would be difficult to identify who among the poor need help the most.

There are many factors, other than income and assets, which are associated with poverty; for instance, the accessibility to basic education, healthcare, drinking water and sanitation. The calorie based norm also does not take into consideration social factors that trigger and perpetuate poverty such as illiteracy, ill health, lack of access to resources, discrimination or lack of civil and political freedoms.

Thus, it is understandable that calorie based norm is not an adequate measure to identify the poor.

(A) Lesser women are found in regular salaried employment in India, because:

jobs generally require skills and high level of literacy.
Lack of mobility among women in India due to social constraints.

(B) The given data indicates that over the given period, the proportion of workforce in primary sector has gone down from 64% in 1993-94 to 24.3% in 2011-12, this account to nearly a fall of 20% over the years. Whereas, the employment share of both secondary and the services sector has increased in India.

The share of secondary sector has gone up by approximately 9% (from 16% in 1993-94 to 24% approximately in 201112), the corresponding figure for services sector has gone up by 7% (from 20% in 1993-94 to 27% approximately in 201112).

These sectoral changes have been very significant in the growth journey of India, showing the gradual shift of the workforce from primary sector to the secondary and tertiary sector.

Read the following case carefully and answer question given below:

Triple Wins for Sustainable Development Sustainable development is the synonymous in the minds of many with the colour green and for good reasons. Twenty years ago, at the First Earth Summit at Rio de Janerio, in Brazil, world leaders set out what today is conventional wisdom: SOCIAL AND ECONOMIC HUMAN PROGRESS cannot be divorced from environmental protection unless both are advanced together, both will flounder together.

Sustainable development is as much about health, education and jobs, as it is about the ecosystems. It is about ever widening inclusion and movement away from decisions that erode democratic space and do not address social inequality, intolerance, and violence.

Sustainable Development is about changes that transform impoverished people, communities, and countries into informed, educated healthy and productive societies. It is about wealth creation that generates equality and opportunity. Sustainable Development is about consumption and production patterns that respect planetary boundaries; it is also about increasing tolerance and respect for human rights at all levels.

Building on human development legacy that oriented with Economists like Amartya Sen and MahbubUlHaq and was captured by the first Human Development Report in 1990. United Nations Development Programme (UNDP) has long promoted alternative approaches to measure human progress, along with the Human Development Index (HDI).

Today, we are building on this legacy by exploring how to adjust the index to reflect environmental sustainability, so that governments and citizens might better track real progress towards truly sustainable development. This must be our collective objective.

Question 34.
(A) “Sustainable development is all about ecosystem only.” Defend or refute the statement with valid argument. [6]
(B) As per the above text, which must be our collective objective?
Answer:
(A) The statement is refuted as sustainable development is as much about health, education and jobs, as it is about the ecosystems. Sustainable Development is about changes that transform impoverished people, communities, and countries into informed, educated healthy and productive societies.

It is about wealth creation that generates equality and opportunity. Sustainable Development is about consumption and production patterns that respect planetary boundaries: it is also about increasing tolerance and respect for human rights at all levels.

(B) Today, we are building on this legacy by exploring how to adjust the index to reflect environmental sustainability, so that governments and citizens might better track real progress towards truly sustainable development. This must be our collective objective.