Students can access the CBSE Sample Papers for Class 12 Economic with Solutions and marking scheme Term 2 Set 7 will help students in understanding the difficulty level of the exam.
CBSE Sample Papers for Class 12 Economics Term 2 Set 7 with Solutions
General Instructions :
- This is a subjective question paper containing 13 questions.
- This paper contains 5 questions of 2 marks each, 5 questions of 3 marks each and 3 questions of 5 marks each.
- 2 marks questions are Short Answer Type Questions and are to be answered in 30-50 words.
- 3 marks questions are Short Answer Type Questions and are to be answered in 50-80 words.
- 5 marks questions are Long Answer Type Questions and are to be answered in 80-120 words.
- This question paper contains Case/Source Based Questions.
Maximum Marks: 40
Time: 2 Hours
Short Answer (SA) Type I Questions (2 Marks)
Question 1.
Calculate NNPFC from the following data
| Items | ₹ (in crore) |
| GNPmp | 15,000 |
| Depreciation or Consumption of Fixed Capital | 1,000 |
| Indirect Taxes | 500 |
| Subsidies | 150 |
| Net Factor Income from Abroad | 650 |
Or
If the Real GDP is ₹200 and Nominal GDP is ₹350, calculate Price Index (base =100).
Answer:
NNPFC = GNPMP – Depredation – Net Indirect Taxes
= 15,000 – 1,000 – (500 – 150) (∵ NIT = Indirect taxes – Subsidies)
= 14,100 – 350
= ₹13,650 crore
Or
Real GDP = ₹200
Nominal GDP = ₹350
Price Index = \(\frac{\text { Nominal GDP }}{\text { Real GDP }} \times 100\)
\(\frac{350}{200}\) x 100 = 175
Question 2.
Explain the role of open market operations in correcting the problem of deflationary gap.
Answer:
Open market operations refers to the sale and purchase of securities by the Central Bank to the commercial bank or general public.
In the situation of deflationary gap, the Central Bank buys securities in the open market and makes payment to the sellers. The money flows out of the Central Bank and ultimately reaches the commerdal banks as deposits. This raises the lending capadty of the banks. People can borrow more. This will raise the level of aggregate demand in the economy.
Question 3.
How is unemployment measured in India?
Or
“Unemployment in India is one of the most faced challenges by the government. Many programmes are initiated for the same. One of the most successful programmes is NREGA.” In the light of the statement, briefly explain the main features of the National Rural Employment Guarantee Act, 2005.
Answer:
Measurement of unemployment (any two)
(i) Usual Status The usual status approach to measuring unemployment uses a reference period of 365 days i.e., one year preceding the date of the survey of NSSO for measuring unemployment.
(ii) Current Weekly Status The current weekly status approach for measuring unemployment uses seven days preceding the date of survey as the reference period.
(iii) Current Daily Status The current daily status approach for measuring unemployment seeks to ascertain the activity status of an individual for each day of the reference week.
Or
The main features of the National Rural Employment Guarantee Act, 2005 (NREGA) is as follows (any two)
- It guarantees the 100 days of wage employment in the financial year to a rural household whose adult members volunteer to do unskilled manual work.
- In this scheme, one-third of the proposed jobs will be reserved for women.
- This scheme initially started in 200 districts. Later on, this scheme will be further extended to 600 districts.
- If the applicant is not employed within 15 days, then he/she will be entitled to a daily unemployment allowance.
Question 4.
Find investment from the following
National Income = ₹600
Autonomous Consumption = ₹150
Marginal Propensity to Consume = 0.70
Or
In an economy, the marginal propensity to consume is 0.75. Investment expenditure in the economy increases by ₹75 crore. Calculate the total increase in national income.
Answer:
Here, Y = ₹600, \(\bar{C}\) = ₹150, MPC or b = 0.70
We know that, Y = C + S or Y – C = S or S = 600 – (\(\bar{C}\) + bY)
= 600 – (150 + 0.7 x 600) = 600 – (150 + 420)
= 600 – 570 = ₹30
As, I = S = ₹30 (At equilibrium level of income)
Hence, Investment = ₹30 Or Here,
MPC = 075, ΔI = ₹75 crore
ΔI = ΔS = ₹75 crore
MPC = 1 – MPC = 1 – 0.75 = 0.25
Now, MPC = \(\frac{\Delta S}{\Delta Y}\) or 0.25 = \(\frac{75}{\Delta Y}\)
Or
ΔY = \(\frac{75}{0.25}\)
Change in National Income (ΔY) = ₹300 crores
Question 5.
Observe the data given below carefully and answer the question
Trends in Employment Pattern (Statuswise) 1972-2012 (in%)
| Status | 1972-73 | 2011-2012 |
| Self-employed | 61.4 | 52.0 |
| Regular Salaried Employees | 15.4 | 18.0 |
| Casual Wage Labourers | 23.2 | 30.0 |
| Total | 100.0 | 100.0 |
Data suggest that the percentage of casual wage workers have increased between 1972-73 to 2011-12. Give reason, why?
Answer:
In recent past, there has been migration that has happened from rural areas to urban areas in search of better jobs. Since, everyone cannot be absorbed as regular salaried employees owing to lack of skills, it has led to increase in percentage of casual workers.
Short Answer (SA) Type II Questions (3 Marks)
Question 6.
When is an economy in equilibrium? Explain, with the help of saving and investment functions.
Or
State whether the following statements are true or false.
(i) APC can never be zero or negative.
(ii) MPC is slope of both consumption and AD curves.
(iii) APS falls with rise in income.
Answer:
The equilibrium level of income or output is that level at which the planned savings and planned investments are equal.
It is derived from aggregate demand and aggregate supply approach.
Aggregate Demand (AD) in a two sector economy is defined as the sum of Consumption Expenditure (C) and Investment Expenditure (I) i.e., AD =C + 1, whereas Aggregate Supply (AS) is defined as the sum of Consumption Expenditure (C) and Saving (S) i.e., AS = C + S.
Mathematically, at equilibrium level of output,
AD = AS or, C + I = C + S
Hence, I = S
or S = I
Determination of Equilibrium Level of Income and Output
Or
- True, APC is calculated from consumption. Consumption is comprised of autonomous consumption which can never be zero.
- True, MPC measures the change in consumption demand due to change in income, thus it measures the slope of both consumption and AD curves while investment expenditure is assumed to be constant.
- False, APS rises with rise in level of income. When income increases, people tend to save a more part of their income.
Question 7.
Elaborate the concept of ‘consumption of fixed capital’ and ‘capital loss’.
Answer:
Consumption of Fixed Capital It refers to the depreciation of fixed assets as they are being used in the production process.
The various causes of consumption of fixed capital includes
- Normal wear and tear
- Accidental damages
- Expected obsolescence
Generally, a provision is made by the producers to meet these expenses.
Capital Loss It refers to the loss in value of fixed assets when these are not being used.
The various causes of capital loss includes
- Natural calamities
- Fall in the market price of assets
No provision can be made for these as they arises unexpectedly.
Question 8.
Observe the data given below and answer the question.
Level of Child Labour (2012-13) Percentage of children aged 5-14 years engaged in work at the state level and the district with the lowest and highest rate in each state.
Source Annual Health Survey Report, A Report On Core And Vital Health Indicators, Part I In which state, highest percentage of children aged between 5 to 14 years are engaged in workforce and why?
Direction Read the following text carefully and answer questions 9 and 10 given below
The 20th century included the inception of modem family planning, which restricted the fertility of hundreds of millions of couples around the world. Due to concerns about the world’s unprecedented rate of population growth in the mid-20th century, some aid agencies and international organisations began to support the establishment of family planning programs.
About 40 years later, in the mid-1990s, large-scale family planning programs were active in 115 countries.
China’s One Child Policy (OCP) is the largest among the World’s family planning programs. In the 1970s, after two decades of explicitly encouraging population growth, policy-makers in China began enacting a series of measures to curb it. The OCP was formally initiated in 1979 and firmly established across the country in 1980.
It was the first time that family planning policy became formal law in China. Differing from birth control policies in many other countries, the OCP assigned a compulsory general ‘one-birth’ quota to each couple, though its implementation has varied considerably across regions for different ethnicities at different times. The policy affected millions of couples and lasted more than 30 years.
According to the World Bank, the fertility rate in China dropped from 2.81 in 1979 to 1.51 in 2000. The reduced fertility rate is likely to have affected the Chinese labour market profoundly. In 1979, the Chinese government formally initiated the OCP to alleviate social, economic, and environmental problems such as the high unemployment rate and scarcity of land resources.
As opposed to many family planning policies in other countries, the OCP was compulsory rather than voluntary. As the name suggests, the policy restricted a couple to having only one child. However, there were some exemptions. The birth quota varied according to residence (urban/rural) and ethnicity (Han/non-Han).
Since Han ethnicity is by far the largest in China, accounting for 93% of the population, the policy mainly restricted the fertility of people with Han ethnicity. In general, Han households in urban regions were only allowed to have one child, while most households in rural areas could have a second child if their first was female (this exception is called the “one-and-a-half-child policy”). Meanwhile, in most regions, households of non-Han ethnicity were allowed to have two or three children, regardless of gender.
In March 1991, to show resoluteness, the Central Government listed family planning among the three basic state policies in China’s Eighth Five Year Plan passed by the National People’s Council. The Eighth Five Year Plan explicitly set a goal of reducing the natural growth rate of the country’s population to less than 1.25% on average during the following decade.
To achieve such a challenging objective, national leaders employed a “responsibility system” to induce subnational or provincial officials to set high fine rates. During the short-period between 1989 and 1992, over half of the country’s provinces (16 out of 30) saw a significant increase in their fine rate, with the average rate increasing from 1.0 to 2.8 times a household’s yearly income.
Indeed, 16 of the 21 significant increases in the policy’s history (i.e., increases of more than one times a household’s income) occurred during this period. Tire amount collected via the policy fine was not made public until recently: the total was about 20 billion RMB yuan (US$ 3.3 billion) among 24 provinces that reported fine rates in 2012.
For example, Guangdong, one of the richest provinces in China, collected 1.5 billion yuan in 2012. Meanwhile, as a comparison, total local government expenditure on compulsory schooling in the province was 10.5 billion.
Answer:
As per the given data, Madhya Pradesh and Odisha are two states where 3.8 and 3.7 percent children belonging to age group of 5 to 14 years are engaged in employment. This is majorly due to lack of education and skills. As the parents are insufficient income earners and doesn’t earn sufficient income for the living, thus, the children have to join the workforce as child labourers to support family income.
Question 9.
Enumerate the effects of the policy of one child norm in China.
Answer:
The important implications of the one child norm are (any three)
- Low population growth.
- Decline in the sex ratio.
- After a few decades, there will be more elderly people in proportion to young people.
- In the long-run, China will have to provide more social security measures with fewer workers.
- It helped China in better management of human capital.
Question 10.
Comment on the growth rate trends witnessed in China and India in the last two decades.
Answer:
China has the second largest GDP (PPP) of $ 22.5 trillion, whereas India’s GDP (PPP) is $ 9.03 trillion.
When many developed countries were finding it difficult to maintain a growth rate of even 5%, China was able to maintain near double-digit growth for more than two decades.
Its growth rate in 1980-90 was 10.3% and for 2005-2013, it was 10.2%.
In the 1980-90, China was having double-digit growth and India was stuck at 5.7% decade growth rate. This rate showed improvement in 2005-2013 at 7.6%, but still it was far behind China’s growth rate.
As far as sector wise contribution to growth is concerned, in 2019, contribution of agriculture to GDP in China was 7% while in India it was 16%.
On the other hand, manufacturing contributes the highest to GDP in China at 41%, whereas in India service sector contributes the highest at around 54%. Thus, China’s growth is mainly contributed by the manufacturing sector and India’s growth by service sector.
In the last two decades, the growth of agriculture sector has declined in both the countries.
In the industrial sector, China has maintained a double-digit growth rate, whereas for India industrial growth rate has declined.
In the case of service sector, China has been able to raise its rate of growth in 2005-13, while service sector growth in India has stagnated.
Long Answer (LA) Type Questions (5 Marks)
Question 11.
(i) Calculate gross domestic product at market price and gross national product at market price from the following data
| Items | ₹ (in crores) |
| Compensation of Employees | 2,000 |
| Net Exports | (-) 10 |
| Profits | 800 |
| Interest | 500 |
| Rent | 300 |
| Gross National Product at Factor Cost | 3,700 |
| Gross Domestic Capital Formation | 440 |
| Net Fixed Capital Formation | 300 |
| Change-in-stock | 40 |
| Factor Income from Abroad | 60 |
| Net Indirect Taxes | 200 |
(ii) What precautions are taken, while measuring national income by income method?
Answer:
(i) National Domestic Product at Factor Cost (NDPFC) = Compensation of Employees + Profits + Interest + Rent
= 2,000 + 800 + 500 + 300
= ₹3,600 crore
Gross Domestic Product at Market Price (GDPMP) = NDPFC + Net Indirect Taxes + Consumption of Fixed Capital
= 3,600 + 200 + 100
= ₹3,900 crore
Gross National Product at Market Price (GNPMP) =GNPFC + Net Indirect Taxes
= 3,700 + 200
= ₹3,900 crore
*Consumption of Fixed Capital = Gross Domestic Capital Formation – Change-in-stock – Net Fixed Capital Formation
= 440 – 40 – 300
= ₹100 crore
(ii) The following precautions are to be taken while measuring national income by income method (any four)
- Income from illegal activities like smuggling, theft, gambling, etc, should not be included.
- Commission paid on the sale and purchase of second hand goods are to be included.
- Transfer earnings like old age pensions, unemployment allowances, scholarships, pocket expenses, etc. should not be included.
- Imputed rent of owner occupied houses is to be treated along with rent as a component of factor incomes.
- Direct taxes paid like income tax paid by the employees are part of salary, like corporate taxes paid by the producers.
Question 12.
(i) What will happen to an economy, if aggregate demand increases beyond full employment level? Explain using a graph.
(ii) Define full employment and invountary unemployment.
Answer:
(i) If aggregate demand increases beyond full employment level, it will lead to inflationary situations in the economy.
In the above figure,
ADFE = AD at full employment level
ADAE = AD above full employment level
The point Q is the equilibrium point where AD AS. But at this point, aggregate demand is more than the aggregate supply in the economy. This difference of actual aggregate demand and aggregate supply i.e., EF is the inflationary gap.
Inflationary Gap = Excess Demand
= ADAE – ADFE = EF
(ii) (a) Full Employment It refers to a situation, when all those who are able to work and are willing to work at the existing wage rate are getting work.
In this situation, (at a given wage rate)
Demand for Labour = Supply of Labour and the labour market is cleared.
(b) Involuntary Unemployment It refers to a situation, when some people who are able to work and are willing to work at the existing wage rate are not getting work.
Here, Demand for Labour < Supply of Labour
In this situation, aggregate demand is not enough to induce fuller utilisation of existing resources, so some people are forced to remain unemployed.
Question 13.
There are various schemes launched by the Indian government to eradicate unemployment directly or indirectly. Mention any three anti-unemployment programmes launched by the government to reduce unemployment. How the effectiveness of these schemes can be improved?
Or
“Today development has become a burden on nature/environment.” Comment.
Answer:
(i) Various schemes run by the Indian government to reduce unemployment directly or indirectly are (any three)
- Prime Minister Rozgar Yojana
- Rural Employment Generation Programme
- Swama Jayanti Gram Swarojgar Yojana
- National Rural Employment Guarantee Act
(ii) The effectiveness of these schemes can be improved with the help of following measures (any three)
- Population control
- Create new employment opportunities
- Education
- Proper implementation and right targeting
Or
The present thinking with regard to relationship between nature and development is that there should be maximum exploitation of natural resources for development.
As a result, people are using nature beyond its carrying capacity. Our present technology is creating a number of environmental problems.
A number of non-degradable materials are being produced in present day through the production technology.
Following are the some important reasons responsible for the heavy burden on nature
- Rise in human population in underdeveloped countries.
- Affluent consumption style in developed countries.
- Misuse of production technology in almost all the countries and poor planning of development.
- As a result of above, there is a reckless use of resources creating negative effects on the society.
The negative effects of development on nature are stated below
- Pollution
- Degradation of resources