Royal Singh

Royal academy Auraiya

ECOMONIC
Class 12 - Economics
Time Allowed: 3 hours Maximum Marks: 205

1. Continuous sectoral flow of goods and money in an economy is known as ________. [1]

a) Both Real Flow and Nominal Flow b) Nominal Flow

c) Circular Flow d) Real Flow

2. Money flow involves exchange of: [1]

a) Debentures b) Gifts

c) Goods and services d) Money

3. Which of the following is not true about AD in a two-sector economy? [1]

a) AD curve has a positive slope

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b) AD curve starts from some point above
origin
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c) AD = Consumption + Investment d) AD = Consumption + Saving
4. Break-even point is achieved when: [1]
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a) National Income > Consumption b) National Income = Consumption

c) Consumption = Investment d) Consumption = Saving

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5. Giving reasons classify the following into intermediate products and final products : [4]
i. Computer purchased by a school.
ii. Cold drinks purchased by a school canteen.
6. Classify the following into stock and flow : [4]
i. Money supply
ii. Depreciation
iii. Investment
iv. Pocket money
7. Discuss briefly, the circular flow of income in a two sector economy with the help of a suitable diagram. [6]
8. a. Machine purchased is always a final good. Do you agree? Give reasons for your answer. [6]
b. Should the following be treated as final expenditure or intermediate expenditure? Give reason.
i. Purchase of furniture by a firm
ii. Expenditure on maintenance by a firm
9. Describe the evolution of money. [4]
10. What do you mean by credit/money creation? Explain the process of money creation by the commercial banks [6]
with the help of a numerical example.
11. Suppose an economy is in equilibrium. From the following data, calculate investment expenditure in economy: [4]

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 i. National Income (Y) = ₹ 10,000 crore
ii. Marginal Propensity to Save (MPS) = 0.2
iii. Autonomous Consumption ( c̄ ) = ₹ 100 crore
12. What is meant by aggregate demand? Explain the various components of aggregate demand. [6]
13. In an economy equilibrium level of income of Rs. 1200 Crores. The ratio of MPC to MPS is 3 : 1. Calculate the [6]
additional investment needed to reach a new equilibrium level of income of Rs. 2000 crores.
14. i. From the information given in the diagram, categorize the items into revenue receipts and capital receipts, [4]
stating valid reasons.
WHERE INDIA GETS ITS MONEY FROM?
For every ₹ 1 that the Govt. earns

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ii. Distinguish between Revenue deficit and Fiscal deficit.
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15. Explain the role of government budget infighting inflationary and deflationary tendencies. [4]
16. Calculate: [6]
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a. Revenue Deficit,
b. Fiscal Deficit and
c. Primary Deficit from the following data:

Particulars (₹ in Crore)

(i) Revenue Expenditure 45,000

(ii) Borrowings 12,000

(iii) Revenue Receipts 35,000

(iv) Interest Payments 30% of Revenue Deficit

17. Explain the meaning of managed floating exchange rate. [3]

18. Explain, how exchange rate is determined under a free market exchange rate system. [3]
19. State the merits of flexible exchange rate. [6]
20. a. Distinguish between appreciation of home currency and depreciation of home currency. [6]
b. What is meant by current account surplus?
c. State any one source of supply of foreign currency for a country.
21. Why should the aggregate final expenditure of an economy be equal to the aggregate factor payments? Explain. [3]
22. Calculate Depreciation on Capital Asset from the following data: [4]

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 S. No Particulars Amount (in ₹ crore)

I. Capital value of the asset 1,000

II. Estimated life of the asset 20 years

III. Scrap Value Nil

23. The value of the nominal GNP of an economy was ₹ 2,500 crores in a particular year. The value of GNP of that [4]
country during the same year, evaluated at the prices of same base year, was ₹ 3,000 crores. Calculate the value
of the GNP deflator of the year in percentage terms. Has the price level risen between the base year and the year
under consideration?
24. Explain the term compensation of employees and its components. Giving reasons, state whether the following [6]
are treated as compensation of employees:
i. Gifts by employers
ii. Bonus
25. Will the following factor incomes be included in the domestic factor income of India? Give reasons for your [6]
answer.
i. Compensation of employees to the residents of Japan working in the Indian Embassy in Japan.
ii. Profits earned by a branch of a foreign bank in India.

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iii. Rent received by an Indian resident from the Russian Embassy in India.
iv. Profits earned by a branch of State Bank of India in England
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26. Find GVA at basic prices of a firm. [4]

Items (₹ in lakh)
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(i) Durable use producer goods with a life span of 10 years 10

(ii) Single use producer goods 5

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(iii) Sales 20

(iv) Unsold output produced during the year 2

(v) Net product taxes 1

27. From the following data calculate National Income by income and expenditure method: [4]

(₹ in Crore)

(i) Government final consumption expenditure 100

(ii) Subsidies 10

(iii) Rent 200

(iv) Wages and salaries 600

(v) Indirect Taxes 60

(vi) Private final consumption expenditure 800

(vii) Gross domestic capital formation 120

(viii) Social security contribution by employers 55

(ix) Royalty 25

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 (x) Net factor income paid to abroad 30

(xi) Interest 20

(xii) Consumption of fixed capital 10

(xiii) Profit 130

(xiv) Net Export 70

(xv) Change in stock 50

28. Calculate National Income by [6]

i. Income method and
ii. Expenditure method from the following data.

S.no. Contents (Rs. in crores)

(i) Interest 150

(ii) Rent 250

(iii) Government Final Consumption Expenditure 600

(iv) Private Final Consumption Expenditure Sir 1,200

(v) Profit 640

(vi) Compensation of Employees 1,000

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(vii) Net Factor Income to Abroad 30
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(viii) Net Indirect Taxes 60

(ix) Net Exports (-) 40

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(x) Consumption of Fixed Capital 50

(xi) Net Domestic Capital Formation 340

29. Given the following data, find the missing values of Gross Domestic Capital Formation and Wages and [6]
Salaries.

S.No. Particulars Amount (in Cr. ₹)

(i) Mixed Income of Self Employed 3,500

(ii) Net Indirect Taxes 300

(iii) Wages & Salaries ?

(iv) Government Final Consumption Expenditure 14,000

(v) Net Exports 3,000

(vi) Consumption of Fixed Capital 300

(vii) Net Factor Income from Abroad 700

(viii) Operating Surplus 12,000

(ix) National Income 30,000

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 (x) Profits 500

(xi) Gross Domestic Capital Formation ?

(xii) Private Final Consumption Expenditure 11,000

30. Discuss the function of Central Bank as Banker, Agent and Advisor to the Government. [4]
31. Read the following news published on September 26, 2022: [4]
The central bank has increased the benchmark lending rate by 140 basis points.
Identify the likely cause and consequences behind this action taken by the Reserve Bank of India.
32. How does the Central Bank control credit creation in the economy through open market operation and bank rate? [6]
Explain.
33. How is bank rate' used by central bank in influencing credit creation by commercial banks? Explain. [6]
34. For a hypothetical economy, assume the government increased an infrastructural investment by ₹ 10,000 crore. [4]
80% of additional income is consumed in the economy. Estimate the increase in income and the corresponding
increase in consumption expenditure in the economy.
35. Explain the concept of the inflationary gap. [4]
36. Discuss briefly the working process of investment multiplier (k), assuming that Change in Investment (ΔI) is ₹ [6]
4,000 crore and Marginal Propensity to Consume(MPC) is 0.5.
37. Discuss the working of the adjustment mechanism in the following situations: [6]
a. If Aggregate demand is greater than Aggregate supply.ir
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b. If Ex-Ante Investments are less than Ex-Ante Savings.
38. What is meant by inflationary gap? Suggest any two fiscal measures to correct the situation of inflationary gap. [4]
39. India’s GDP contracted 23.9% in the April-June quarter of 2020-21 as compared to same period of 2019- [4]
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20, suggesting that the lockdown has hit the economy hard.
State and discuss any two fiscal measures that may be taken by the Government of India to correct the situation
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indicated in the above news report.

40. Explain the role of the following in correcting the inflationary gap in an economy: [6]
i. Legal reserves
ii. Bank rate
41. Explain the concept of deficient demand in macroeconomics. Also explain the role of Bank Rate in correcting. [6]
42. Indian investors lend abroad. Answser the following questions: [4]
a. In which sub-account and on which side of the Balance of Payments Account such lending is recorded? Give
reasons.
b. Explain the impact of this leanding on market exchange rate.
43. Amid galloping oil prices and slowing foreign investment, India’s current account deficit for 2017-18 has [4]
touched $48bn, the highest since 2012-13. - Times of India
In the light of the above statement, analyse the factors that cause disequilibrium in the balance of payment.
44. Giving reason explain how the following will be entered in (i) current account or capital account and (ii) on [6]
credit side or debit side of balance of payments:
a. Imports of machinery
b. Investments from abroad

45. a. Distinguish between Autonomous and Accommodating transactions of Balance of Payments account. [6]
b. Distinguish between depreciation of a currency and devaluation of a currency.

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