Students can access the CBSE Sample Papers for Class 12 Economics with Solutions and marking scheme Term 2 Set 4 will help students in understanding the difficulty level of the exam.

## CBSE Sample Papers for Class 12 Economics Term 2 Set 4 with Solutions

Time allowed: 2 Hours
Maximum Marks: 40

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.

Question 1.
“Final goods include only those goods which are consumed by the households”. Defend or refute the given statement with valid reason. (2)
The given statement is refuted as final goods include those goods which are either consumed by the households or purchased by a producer for investment purposes.

Question 2.
When are actual stocks greater than desired stocks?
OR
Answer the following questions based on the figure given below:

At which level of income, Average Propensity to Consume will be equal to one and why? (2)
When aggregate demand falls short of the expectations of the producers, actual stocks are greater than desired stocks. Some Output remains unsold.
OR
Average Propensity to Consume will be equal to one at point B, as here Average Propensity to Save is zero.

Question 3.
If a consumption function of a hypothetical economy is given as C = 100 + 0.6 Y, then
(A) What will be the values of marginal propensity to consume and marginal propensity to save for the economy?
(B) Write the corresponding saving functions.
OR
From the following data calculate investment expenditure:
(i) Marginal propensity to save = 0.2
(ii) Equilibrium level of income = ₹22,500
(iii) Autonomous consumption = ₹500 (2)
(A) C = 100 + 0.6 Y (given)
So, MPC = 0.6
MPS = 1 – MPC = 1
– 0.6 = 0.4

(B) S = – C + (l- b)Y
S = – 100 + 0.4 Y
OR
Y = $$\bar{C}$$ + (1 – MPS)Y + I
₹22,500 = ₹500 + (1 – 0.2)
₹22.500 + I
I = ₹22.500 – ₹500 – ₹18.000
= ₹4.000

Question 4.
‘Water has become an economic commodity.’ Justify the statement.
OR
You might have seen and heard on TV news or read in newspapers about foreigners flocking to India for surgeries, liver transplants, dental and even cosmetic care. Why? (2)
Water has become an economic commodity because drinking water is not readily available in the world. We pay monthly water bills for the consumption of water. We buy water for drinking in the form of bottled water. Since we pay for water on the basis of supply and demand, it would not be technically wrong to view water as an economic commodity. Although water is not yet a formal commodity for sale on a formal basis, it will likely be within the next two decades.
OR
Because our health services combine latest medical technologies with qualified professionals and is cheaper for foreigners as compared to costs of similar health care services in their own countries. In the year 2004-05, as many as 1,50,000 foreigners visited India for medical treatment. And this figure is likely to increase by 15 percent each year.

Question 5.
Raj is going to school. When he is not in school, you will find him working on his farm. Can you consider him as a worker? Why? (2)
Yes, he will be considered as a worker because all those who are engaged in economic activities, in whatever capacity – high or low, are workers. Raj is also engaged in an economic activity as he is contributing to the gross national product of the economy.

Question 6.
Compare and analyse the given data of India and China with valid arguments.
Annual Growth of Gross Domestic Product (%), 1980 – 2017

 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
The given data shows that China has gained economic strength over the years. 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 during the decade of 1980s. The growth rate o’ 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 caliber and character in the period 2015-17 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 7.
“The one-child policy produced consequences beyond the goal of reducing population growth.” Explain.
OR
Group the following features pertaining to the economies of India, China and Pakistan under three heads:

• One-child norm
• Low fertility rate
• High degree of urbanisation
• Mixed economy
• Very high fertility rate
• Large population
• High density of population
• Growth due to manufacturing sector
• Growth due to service sector (3)

Read the following case carefully and answer question number 8 and 9 given below :
Ramesh is a tailor and he also owns a shop. He is famous quality and comfortable women’s and men’s clothing for a casual lifestyle. Ramesh stitches only for households. In a single day he earns ₹1,000 from stitching the clothes. Over this day, his equipment such as swing machines, scissors, measuring tape, etc. depreciates in the value by ₹100. Out of his remaining income, i.e., ₹900, Ramesh pays sales tax worth ₹60. He takes ₹400 to his home and keeps ₹440 for improvement and buying of new equipment. He further pays ₹40 as income tax from his income.
One-child norm introduced in China in the late 1970s is the major reason for low population growth. It is stated that this measure led to a decline in the sex ratio, that is, the proportion a females per 1000 males. One child norm and the resultant arrest in the growth of pollution also have other implications. For instance after a few decades, in China, there will be more elderly people in proportion to young people, and also reduced the fertility rate considerably.
OR

 India China Pakistan Mixed economy One-child norm High degree of urbanisation Mixed economy Large population Low fertility rate Very high fertility rate High density of population High degree of urbanisation Large population Growth due manufacturing sector

Question 8.
Calculate the value of net value added at factor cost by Ramesh. (3)
Gross value added at market price (GVAMP) = Ramesh’s contribution to GDP = ₹1.000 NVAMP = GVAMP – Depreciation = ₹1.000 – ₹100 = ₹900
NVAFC = NVAMP – Net Indirect Taxes = ₹900 – ₹60 = ₹840

Question 9.
What is the difference between ‘market price’ or ‘factor cost’ in reference to value-added? When will be market price and factor cost equal? (3)
Factor cost is the total cost of all the factors of production consumed or used in producing a good or service. Whereas, market price is the price at which a product is sold in the market. Market price and Factor cost will be equal when there is no indirect taxes and subsidy.

Factor cost = Market price – Indirect tax + Subsidies
Factor cost = Market price – 0 + 0
Factor cost = Market price

Question 10.
What will happen if there is no additional employment generated in the economy even though we are able to produce goods and services in the economy? How could jobless growth happen? (3)
The country is going through a structural change and shifting to the modern techniques using the capital-intensive method of production, which is cost-effective and gives more output by employing less labor. Thus, in India employment growth started declining and reached the level of growth that India had in the early stages of planning. This means that in the Indian economy, without generating employment, we have been able to produce more goods and services. This phenomenon is known as jobless growth.

Question 11.
“Ruling out any impact of stimulus on the price situation, Chief Economic Advisor K.V. Subramanian on Thursday said the COVID-19 pandemic has severely dented the demand for non-essential or discretionary goods.”

Identify the situation stated in the above lines and explain any two measures to correct them. (5)
The situation stated in the given lines is a Deflationary condition. It is that situation when Aggregate Demand is lesser than Aggregate Supply corresponding to full employment level.

Two fiscal measures to control it are:

1. Decrease in Taxes: To curb the deflationary gap the government may decrease the taxes. This may increase the purchasing power in the hands of the people which in turn may increase the Aggregate Demand in the economy to bring it equal to the Aggregate Supply.
2. Increase in Government Expenditure: To curb the deflationary gap the government may increase its expenditure. This may increase the purchasing power in the hands of the people which in turn may increase the Aggregate Demand in the economy to bring it equal to the Aggregate Supply.

Question 12.
(A) Find gross national product at market price. (₹ in crores)
(i) Private final consumption expenditure 800
(ii) Net current transfers to abroad 20
(iii) Net factor income to abroad (-)10
(iv) Government final consumption expenditure 300
(v) Net indirect tax 150
(vi) Net domestic capital formation 200
(vii) Depreciation 100
(viii) Net imports 30
(ix) Income accruing to government 90
(B) State any two precautions to be taken while using the expenditure method of measuring national income?
OR
(A) Calculate Net Domestic Product at Factor Cost: (₹ crore)
(i) Gross National Disposable Income 600
00 Net current transfers to abroad (-) 20
(iii) Consumption of fixed capital 60
(iv) Indirect tax 100
(v) Subsidies 10
(vi) Net factor income to abroad (-) 10
(vii) National debt interest 40

(B) When will be the domestic factor income greater than national income? (5)
(A) GNPMP = Private final consumption expenditure + Government final consumption expenditure + Net domestic capital formation + Depreciation – Net imports – Net factor income to abroad = 800 + 300 + 200 + 100 – 30 – (-)10 = ₹1380 crore

(B) The following precautions to be taken while using the expenditure method of measuring national income:

• Expenditure on second-hand goods is not to be included.
• Expenditure on shares and bonds is not to be included.

OR

(A) NDPFC = Gross National Disposable Income – Consumption of fixed capital + Net current transfers to abroad-indirect tax + Subsidies + Net factor income to abroad
= 600 – 60 + (-20) – 100 + 10 + (-10)
= ₹420 Crore

(B) National Income = Domestic Factor Income + Net Factor Income from Abroad
Thus, when net factor income from abroad is negative, domestic factor income is greater than national income.

Question 13.
(A) “Ujjwala Yojana has been a game-changer for rural India.” State any three conventional fuels being targeted under the LPG cylinder distribution scheme (Ujjwala Yojana).

(B) “The Indian Health System needs a stronger does of public expenditure to cure itself.” Justify the given statements with valid arguments. (5)