MONTESSORI CAMBRIDGE SCHOOL PATHANKOT

ECONOMICS PRE-BOARD II
Time:3hrs CLASS – XII (SET A) MM:80

GENERAL INSTRUCTIONS:
1. This question paper contains two sections: Section A – Macro Economics Section B –Indian Economic
Development
2. This paper contains 20 Multiple Choice Questions type questions of 1 mark each.
3. This paper contains 4 Short Answer Questions type questions of 3 marks each to be answered in 60 to
80 words.
4. This paper contains 6 Short Answer Questions type questions of 4 marks each to be answered in 80 to
100 words.
5. This paper contains 4 Long Answer Questions type questions of 6 marks each to be answered in 100 to
150 words.
SECTION A
INTRODUCTORY MACROECONOMICS
1. Read the following statements carefully: 1
Statement 1: when CRR is increased, credit creation capacity ofcommercial banks reduces.
Statement 2: with increase in reserve ratios, banks have less funds available for loans.
a) Statement 1 is true and statement 2 is false b) Statement 1 is false and statement 2 is true
c) Both statements 1 and 2 are true d) Both statements 1 and 2 are falls
2. Credit creation in commercial banks is determined by 1
a) Cash Reserve ratio b) Statutory liquidity Ratio
c) Initial Deposits d) All the above
3. Assertion (A): borrowings are capital receipts but payment of interest onborrowings is revenue
expenditure.
Reason (R): borrowings create liability but payment of interest does not reduce liability. 1
a) Both Assertion (A) and Reason (R) are true, (R) is correct explanation of (A).
b) Both Assertion (A) and Reason (R) are true but (R) is not correct explanation of (A).
c) Assertion (A) is true and Reason (R) is false.
d) Assertion (A) is false and Reason (R) is true.
4. Progressive tax is a tax which is 1
a) Charged at a decreasing rate when income of the individual increases
b) Charged at an increasing rate when income of the individual increases
c) A fixed percentage of an individual income
d) None of these. 1
5. What is effective exchange rate? 1
6. If Rs.120 are required to buy 1$, instead of Rs.100: - 1
a) Domestic currency has appreciated b) Domestic currency has depreciated
c) Rupee value of import bill will increase d) Rupee value of export bill will decrease
OR
Which of the following items are excluded from GNP measurement?
a) Purely financial transactions b) Transfer of used goods and non-market goods and services
c) Illegal activities and the value of leisure d) All of these
7. In the consumption function, 200 + 0.6Y, the value of autonomous saving will be 1
a) 200 b) -200 c) 0.6 d) 0.4
8. An economy is at full employment excess demand situation. Suggest a suitablemonetary policy measure
to bring the economy at full employment equilibrium 1
a) Reducing excess cash reserves with commercial banks
b) Encouraging borrowings of commercial banks
c) enhancing the credit creating power of commercial banks.
d) increasing excess cash reserves with commercial banks
OR
Breakeven point occurs when 1
a) Y = S b) S = 0 c) C > Y d) Y> C
9. How are both APC and APS associated with National Income 1
a) both APC and APS fall with increase in National Income
b) both APC and APS rise with increase in National Income
c) APC falls APS rises with increase in national income
d) APC rises APS falls with increase in national income
10. Which of the following is termed as Gross Domestic Product at factor cost? 1
a) It is the market value of all the final goods and services produced within domesticterritory of a
country.
b) It is the market value of all the final goods and services produced nationally.
c) It is the market value of all the final goods and services produced within domesticterritory of a
country less net indirect taxes.
d) It is the market value of all the final goods and services produced nationally lessindirect taxes.
11. Calculate ‘Sales’ 3
NVA fc = 300
Intermediate consumption = 200 Indirect tax = 20 Depreciation = 30
Change in stock = (-)50
12. In an economy, the consumption function is C= 500+0.75Y. Calculate the equilibrium level of income
and consumption expenditure, when investmentexpenditure is Rs.5000. 3
13. How does money overcome the problems of barter system? Explain briefly. 4
OR
Explain the significance of the unit of account function of money.
14. Tax rates on higher income group have been increased. Which economicvalue does it reflect? Explain
OR
Government has started spending more or providing free services like educationand health to the poor.
Explain the economic value it reflects. 4
15. Why does the demand for foreign currency fall and supply rises when its price rises? Explain. 4
16. A) Distinguish between Real Gross Domestic Product and Nominal Gross DomesticProduct. Which
of these is a better index of welfare of the people and why?
B) Explain why subsidies are added to and indirect taxes deducted from domestic product at market
price to arrive at domestic product at factor cost? 3+3 = 6
17. Explain the determination of equilibrium level of income using ‘Investment and saving’approach. Use
diagram. 6
OR
Show with the help of a diagram explain deflationary gap.
SECTION B
INDIAN ECONOMIC DEVELOPMENT
18. The opening of the Suez Canal in 1869 1
a) Raised the cost of goods transportation between Britain and India
b) Adversely affected the monopoly control of India’s foreign trade
c) Reduced the cost of goods transportation between Britain and India
d) Reduced the export of goods from India to foreign countries
19. Land Reform is: 1
(a) fixing the maximum size of land
(b) to change in the ownership of land Holdings
(c) use of new technology in agriculture sector
(d) abolition of intermediaries
20. What was the growth rate of per capita income in India on the eve of Independence? 1
a) 0.9% b) 0.5% c) 1.2% d) 3%
OR
Why there was a need for economic reforms in India?
a) Due to fiscal deficit b) Due to adverse BOP
c) Rise in prices d) All of the above
21. Which of the following is not a merit of human capital formation? 1
a) Improves technical knowledge b) Enlarges the size of business
c) Increases cost of production d) Changes social outlooks
22. Match and choose the correct combination. 1
(i) Preventive medicine (A) medical intervention during illness
(ii) Curative medicine (B) vaccination
(iii) Social medicine (C) the spread of health literacy
(a) (i) – (B); (ii) – (A); (iii) – (C) (b) (i) – (A); (ii) – (B); (iii) – (C)
(c) (i) – (C); (ii) – (B); (iii) – (A) (d) (i) – (B); (ii) – (C); (iii) – (A)

23. Which among the following is a process that involves the assembling, storage, processing,
transportation, packaging, grading, and distribution of different agricultural-commodities across the
country? 1
a) Agricultural Management b) Agricultural Banking
c) Agricultural Diversification d) Agricultural Marketing
24. Read the following statements- 1
Assertion (A) and Reason (R). choose one of the correct alternative given below Assertion: Social
medicine is a source of human capital
Reason: Easy availability of medicine makes cure easy
a) Both assertion A and reason R are true and Reason R is the correct explanation ofassertion A
b) Both assertion A and reason R are true and Reason R is NOT the correct explanationof assertion A
c) Assertion A is true but reason R is false
d) Assertion A is false but reason R is true
25. Use of which of the following has resulted in a significant reduction in Delhi’s pollution? 1
a) LPG at homes b) Solar cells for electricity
c) Thermal power plants d) CNG in public transport
26. Which source of credit had emerged to fully integrate the formal credit system into the overall rural
social and community development? 1
a) Self-help Groups b) Regional Rural Banks
c) Commercial Banks d) Land Development Banks
27. With which of the following concepts is the commune system associated? 1
a) Industrialisation b) Human rights
c) Equal distribution of land d) Special Economic Zones
28. Agriculture sector appears to be adversely affected by the reform process. Why? 3
29. Interpret the given picture on account of current Chinese economy 3

OR
China’s rapid industrial growth can be traced back to its reforms in 1978. Do you agree?Elucidate.
30. The following table shows distribution of workforce in India for the year 1972-73. Analyze it and give
reasons for the nature of workforce distribution. You will notice that the data is pertaining to the
situation in India 30 years ago.
Place of Residence Workforce (in millions)
Male Female Total
Rural 125 70 195
Urban 32 7 39

31. a) State any four pressing environmental concerns of India. 4

32. China’s rapid industrial growth can be traced back to its reforms in 1978. Do you agree?Elucidate.4

33. 1) Why was it necessary for a developing country like India to follow self-relianceas a planning
objective? 6
2) What is sectoral composition of an economy? Is it necessary that the servicesector should
contribute maximum to GDP of an economy? Comment.
OR
1) Those public sector undertakings which are making profits should be privatized. Do you agree with
this view? Why?
2) Why has the industrial sector performed poorly in the reform period?

34. Read the following text carefully and answer the given questions on the basis of thesame and common
understanding 6
We classify workers into two categories: workers in formal and informal sectors which are also referred to as
organised and unorganised sectors. All the public sector establishments and those private-sector establishments
which employ 10 hired workers or more are called formal sector establishments and those who work in such
establishments are formal sector worker. The workers in the formal sector get regular income. They also enjoy
social security benefits such as maternity benefit, provident fund,gratuity and pension. They earn more than
those in the informal sector. The government through its labour laws, enable them to protect their rights in
various ways. The formal sector workers form trade unions bargaining with employers for better wages and
other.
social security measures. All those who work in the areas other than formal sector comesunder Informal sector
Informal sector, which includes millions of farmers and agriculturallaborers, owners of small enterprises and
people working in those enterprises, the self- employed people who do not have any hired workers, all non
from casual wage laborers who work for more than one employer such as construction workers and head load
workers.
1) There has been a change in the structure of workforce and the nature of employment in India
explains.
2) Work plays an important role in our lives as individuals and as members of society why do people
work?