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Marking Scheme

The document outlines the marking scheme for ICSE Economic Applications for the year 2024-25, including answers to specific questions related to fiscal agents, overdrafts, primary and derivative deposits, open market operations, and cash reserve ratios. It distinguishes between fixed and current deposits, highlighting their characteristics and differences. The answers are structured to provide clear definitions and implications of each economic concept discussed.

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10 views3 pages

Marking Scheme

The document outlines the marking scheme for ICSE Economic Applications for the year 2024-25, including answers to specific questions related to fiscal agents, overdrafts, primary and derivative deposits, open market operations, and cash reserve ratios. It distinguishes between fixed and current deposits, highlighting their characteristics and differences. The answers are structured to provide clear definitions and implications of each economic concept discussed.

Uploaded by

rajuchocolate2580
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Marking Scheme,

10 ICSE Economic Applications, 2024-25

RT 3.

1 C, 2 A, 3 C, 4 D.

Question2

(i)Fiscal Agent: a. Manages the public borrowings [1]

b. Collects taxes and other payments on behalf of the government [1]

(ii) Overdraft; a.Need not provide security for overdrafts, b.interest has to be paid
only for the amount withdrawn. [1]

But in the case of a loan security should be given and interest has to be paid for the
whole amount of loan. [1]

( iii) Primary deposit: Cash Deposits made by the people in a commercial bank. It
is created when customer makes payments to the banks. [1]

Derivative deposit is the deposit created by the commercial bank to the borrower’s
account. It is created when a loan is granted by the bank. [1]

Question 3

(i) a.Open Market operations:

Sale of securities: Government securities are sold in the market which reduces the
cash resources of commercial banks affecting their ability to lend to businesses and
people. It reduces aggregate demand and price level during inflation.
Purchase of securities:

During deflation, securities are purchased from the market . As a result the reserves
of commercial banks increase enabling them to lend more loans. It creates more
demand and growth of the economy. [3]

b.Cash reserve Ratio:

CRR is the minimum portion of the deposits kept by the commercial banks with
the Central Bank.

During inflation Cash reserve ratio is increased to reduce the lending capacity of
the commercial banks.

During deflation CRR is reduced which makes the banks able to lend more with
additional reserves available with them. [2]

(ii) Fixed deposits

Money deposited for a fixed period of time

It can be withdrawn after the fixed period.

It gives the highest rate of interest.

Cheque facility is not provided

Current deposits:

It bears no interest.

Money from the deposit can be withdrawn any time.

Overdraft facility is offered to account holders.

Cheque facility is provided to withdraw money or make payments.

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