Students can access the CBSE Sample Papers for Class 12 Economics with Solutions and marking scheme Term 2 Set 5 will help students in understanding the difficulty level of the exam.

## CBSE Sample Papers for Class 12 Economics Term 2 Set 5 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.
When is gross national product of an economy equal to gross national product?
OR
How is GDP at current prices converted into GDP at constant prices? (2)
When net factor income from abroad is zero, gross national product of an economy is equal to gross national product.
OR
The following formula is used to covert GDP at current prices into GDP at constant prices:

GDP at constant prices $$=\frac{\text { GDP at current prices }}{\text { Current Price Index }} \times 100$$

Question 2.
Calculate equilibrium level of income:
(i) Autonomous consumption = ₹200
(ii) Marginal propensity to consume = 0.9
(iii) Investment expenditure = ₹1,000
OR
An economy is in equilibrium. Find Marginal Propensity to Consume from the following: National Income = ₹2,000
Autonomous Consumption = ₹400
Investment Expenditure = ₹200 (2)
Y = C + l and C
= ₹200 + 0.9 Y
l = ₹1,000
Y = ₹200 + 0.9Y + ₹1,000
0.1Y = ₹1,200
Y = ₹12,000
OR
Given, Y = ₹2,000,
C = ₹400,
l = ₹200
We know, Y = C + b(Y) + l
₹2,000 = ₹400 + b(₹2,000) + ₹200
₹2,000 = ₹400 + ₹200 + b(₹2,000) ₹2,000 – ₹600 = b (₹2,000)
b = 1 400/2 000 = 0.7
b or MPC = 0.7

Question 3.
Value of which of the following can be greater than one and why?
(A) Marginal Propensity to Consume (MPC)
(B) Average Propensity to Consume (APC)
OR
Answer the following questions based on the figure given below:

At which level of income Average Propensity to Save (APS) will be equal to zero and why? (2)
(A) Marginal Propensity to Consume (MPC) cannot be greater than one as it is percentage change in consumption when there is some change in the level of income which cannot be more than the change in income.

(b) The value of Average Propensity to Consume (APC) can be greater that one. This is because total consumption can be greater than total income, due to the existence of autonomous consumption.
OR
APS will be equal to zero at Point B as it indicates break-even level of income where Savings (S) are zero or Consumption(C) is equal to Income (Y).

Question 4.
State the names of six Indian Systems of Medicines (ISM) under AYUSH scheme of Government of India. (2)
The six Indian Systems of Medicines (ISM) under AYUSH scheme of Government of India includes: Ayurveda, Yoga, Unani, Siddha, Naturopathy and Homeopathy.

Question 5.
‘Self-employed workforce is higher in rural areas.’ Justify the given statement with a valid argument. (2)
Most of the rural people are mainly engaged in agriculture and do farming on their own plots thus, self-employed workforce is higher in rural areas.

Question 6.
All three countries India, China and Pakistan had started planning their development strategies in similar ways.” Explain.
OR
“Human development is more progressed in China than in India.” Explain. (3)
While India announced its first Five Year Plan for 1951-56, Pakistan announced its first five-year plan, now called the Medium Term Development Plan, in 1956. China announced its First Five Year Plan in 1953. Since 2018, Pakistan is working on the basis of 12th Five Year Development Plan (2018-23), whereas, China is working on 14th Five Year Plan (2021-25). Until March 2017, India has been following Five Year Plan-based development model. India and Pakistan adopted similar strategies, such as creating a large public sector and raising public expenditure on social development. Till the 1980s, all the three countries had similar growth rates and per capita incomes.
OR
The process of Chinese economic reforms began in earnest and broadly during the 1980’s. At this point, India was in the middle of a slow growth process. At that time, poverty in rural China was reduced by 85% during the period from 1978 to 1989. In India, at the moment, it was reduced by only 50%. Moreover, the global exposure to China’s economy has become much wider than the Indian economy. Also, China’s overseas production has been the reason for significant growth. And India continues to be an inactive player in international markets.

Question 7.
Do you support the introduction of the one-child norm in India to control the population following the Chinese model? Give two arguments in support of your answer. (3)

Read the following case carefully and answer question number 8 and 9 given below:
Indian GDP may grow 9.2% this fiscal on base effect

India’s economy is expected to grow 9.2% in the current financial year, aided by the base effect of 7.3% contraction last year, according to the first advance estimates by the National Statistical Office (NSO) released on Friday.

The strong growth will lift: real gross domestic product (GDP) 1.3% over the pre-Covid levels ofFY20, but the underlying data showed consumer stress and weakness in the contact-intensive services sector. The estimated growth is below the Reserve Bank of India’s pre-third wave projection of 9.5% last month.

Most private economists had this week trimmed their growth forecast for the current fiscal following the surge in Covid cases.

The nominal gross domestic product (GDP) is forecast to rise 17.6% in the year against the budget estimate of 14.4% for the current year, underscoring high inflation. Gross value added (GVA) is projected to grow 8.6% compared with a contraction of 6.2% in FY21.
Economists see a downward bias to the growth estimates, as the data may not fully capture the impact of the ongoing third wave, a possibility acknowledged by the statistics office.

The estimates are likely to undergo revisions as more data become available, the statistics office said, adding that these are early estimates.

https://economictimes.indiatimes.com/news/economy/indicators/india-govt-forecasts-
year-to-march-economic-growth-of-9-2/articleshow/88758290.cms
Arguments in support of the introduction of the one-child norm in India to control the population are:

• One-child norm will reduce the pressure of population growth of the country.
• One-child norm will solve the problem of food insufficiency in India.

Question 8.
“India’s economy is expected to grow 9.2% in the current financial year.”
Does the given statement mean that welfare of people of India increase at the same rate? (3)
Generally, it is considered that an increase in the Gross Domestic Product (GDP) of any economy (India in this case) ensures an increase in the welfare of the people of the country. However, this may not always be correct. Some of the prime reasons for the same are:

• unequal distribution and composition of GDP,
• non-monetary transactions in the economy which are not accounted for in GDP, and
• occurrence of externalities in the economy (both positive and negative).

Question 9.
Explain the meaning of Real Gross Domestic Product and Nominal Gross Domestic Product. Real Gross Domestic Product is a better indicator of economic growth than Nominal Gross Domestic Product’. Do you agree with the given statement? (3)
Nominal Gross Domestic Product (GDP) is measured as the product of current year output (Ql) of final goods and services and their current year price (PI). Real Gross Domestic Product (GDP), on the other hand, is measured as product of current year output (Ql) and their base year price (PO). Real GDP will increase if the output of goods and services produced in an economy is increasing.

Yes, the real GDP is a a better indicator of economic growth than Nominal GDP as the Real GDP is free from the influence of inflation or deflation in the economy during the time period.

Question 10.
“Infrastructure facilities raise productivity in tertiary sector of the economy.” Defend or refute the statement with valid argument. (3)
The given statement is defended. Infrastructural facilities include rapid and efficient means of transport and communication. Such facilities are an essential components to enhance the productivity in the tertiary sector like education, banking, health, insurance etc. Some of these facilities have a direct impact on the production of goods and services while others give indirect support by building the social sector of the economy.

Question 11.
(A) Find national income. ₹ (In crores)
(i) Wages and salaries 1000
(ii) Net current transfers to abroad 20
(iii) Net factor income paid to abroad 10
(iv) Profit 400
(v) National debt interest 120
(vi) Social security contributions by employers 100
(vii) Rent 200
(viii) Interest 300
(ix) Royalty 50

(B) Gross Value Added at market price and Gross Domestic Product at market price are one and the same thing. State with valid reason, whether the statement is true or false.

OR

(A) Suppose in an imaginary economy GDP at Market Price in a particular fiscal year was ₹ 4,000 crores, National Income was ₹ 2,500 crores, Net Factor Income paid by the economy to Rest of the World was ₹ 400 crores and the value of Net Indirect Taxes is ₹ 450 crores. Estimate the value of consumption of fixed capital for the economy from the given data.
(B) Giving valid reasons, state why the ‘expenditure on providing police services by the government’ will be undertaken in estimation of National Income. (5)
(A) National Income = Wages and Salaries + Social security contributions by employers + Rent + Royalty + Interest + Profit – Net factor income paid to abroad
= 1000 + 100 + 200 + 50 + 300 + 400 – 10 = ₹ 2040 crore

(B) The given statement is false as Gross Domestic Product is the result of sum of Gross Value Added by all the producing units/firms in an economy, during an accounting year.
OR
(A) NNPfc = GDPmp – Consumption of fixed capital – Net factor income to abroad – Net indirect taxes
2500 = 4000 – CFC -450 – 400
2500 = 3150 – CFC
CFC = ₹650 (in crores)

(B) Expenditure on providing police services by the government is a part of government’s final consumption expenditure thus should be included in the estimation of national income.

Question 12.
‘An economy is operating at under employment level of income’. What is meant by the given statement₹ Discuss one fiscal measure and one monetary measure to tackle the situation. (5)
An economy is said to be operating at an under employment equilibrium level, if the planned aggregate expenditure falls short of available output in the economy, corresponding to the full employment level. It results into excess of output available over the anticipated aggregate demand at full employment level. To tackle such a situation the aggregate demand has to be increased up to the level that the stocks can be cleared.

Following measures may be taken for the same:
(i) Decrease in taxes: The government under its fiscal policy may decrease the rate of taxes (both direct and indirect taxes). This will ensure greater purchasing power in the hands of general public. This will help to increase aggregate demand and remove the deflationary gap.

(ii) Increase in money supply: Central bank through its expansionary monetary policy can increase the money supply in the economy. Central bank can use tools like bank rate, cash reserve ratio, repo and reverse repo rates etc. to ensure greater money in the hands of general public which would, in turn, increase the aggregate demand in the economy and be helpful in reducing/removing the deflationary gap.

Question 13.
(A) Why are less women found in regular salaried employment₹
(B) Analyse the recent trends in sectoral distribution of workforce in India:
Trends in Employment Pattern (Sectorwise), 1993 – 2012(in %)

 Sector 1993­ 1994 1999­ 2000 2011­ 2012 Primary 64 60.4 24.3 Secondary 16 15.8 24.3 Services 20 23.8 26.8