Practicing the CBSE Sample Papers for Class 12 Economics with Solutions Set 5 allows you to get rid of exam fear and be confident to appear for the exam.
CBSE Sample Papers for Class 12 Economics Set 5 with Solutions
Time: 3 Hours.
Max. Marks: 80
General Instructions:
- This question paper contains 34 questions.
- Marks are indicated against each question.
- Answers should be brief and to the point.
- Answers to the questions carrying 3 marks may be from 50 to 75 words.
- Answers to the questions carrying 4 marks may be about 150 words.
- Answers to the questions carrying 6 marks may be about 200 words.
Section – A (Macro Economics)
Question 1.
Read the following statements carefully:
Statement 1: Saving curve is always straight line due to fundamental law of consumption.
Statement 2: Investment multiplier ranges from negative infinity to positive infinity due to the assumption that “one man’s expenditure is other man’s income.”
In the light of the given statements, choose the correct alternative from the following:
Alternatives:
(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 false.
Answer:
(d) Both statements 1 and 2 are false.
Explanation: Saving curve slope is straight line when the MPS is constant and Investment multiplier ranges from one to positive infinity.
Question 2.
The price of ₹ is rising exponentially in India. What can be likely impact of such a situation on the exports and imports of India?
(a) export and import will rise.
(b) export and import will fall.
(c) export will fall and import will rise.
(d) export will rise and import will fall.
Answer:
(d) export will rise and import will fall.
Explanation: Since Rupee is depreciating, it will induce the foreigner’s purchase from India as Indian goods will become cheaper for Americans. Hence, exports will rise. On the other hand, Americangoods will become expensive for Indian as more Rupee is to be paid for same unit of Dollar. Hence imports will fall.
Question 3.
Which of the following is correct about Money Supply?
(a) Currency held by the Public.
(b) Currency held by the Reserve Bank of India.
(c) Currency held by the Public and Demand Deposits with Commercial Banks.
(d) Currency held in the Government Account.
Answer:
(c) Currency held by the Public and Demand Deposits with Commercial Banks.
Explanation: Currency held by the public and demand deposits with Commercial Banks. Money supply includes Currency with public and banks, it does not include into bank deposits.
Question 4.
Read the following statements carefully:
Statement 1: Withdrawal from the foreign exchange reserves by RBI will be recorded on the credit side of the capital account of Balance of Payment (BOP).
Statement 2: Autonomous items are meant to create deficit and surplus in Balance of Payment (BOP). In the light of the given statements, choose the correct alternative from the following:
Alternatives:
(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 false.
Answer:
(c) Both statements 1 and 2 are true.
Explanation: Withdrawal by RBI from foreign exchange reserve will lead to inflow of foreign currency in the market. Hence, it will be credited in capital account. Autonomous items are undertaken in order to achieve economic motive. Hence, it can lead to deficit or surplus in BOP
Question 5.
Read the following statements carefully:
Statement 1: In National Income Accounts, interest income includes interest on loans taken for both Productive as well as Consumption Purpose.
Statement 2: Interest income includes only the actual interest and not the imputed interest of funds provided by the entrepreneur.
In the light of the given statements, choose the correct alternative from the following:
(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 false.
Answer:
(d) Both statements 1 and 2 are false.
Explanation: National income includes only the interest income generated by granting of the loan I for production purpose and it includes interest income which is actual as well as imputed.
OR
Read the following figure carefully and choose the correct pair from the alternatives given below:
Alternatives:
(a) I- Intermediate goods, II- Final goods, III- Capital goods
(b) I- Capital goods, II- Final goods, III- Intermediate goods
(c) I- Final goods, II- Intermediate goods, III- Capital goods
(d) I- Investment goods, II- Perishable goods, III- Producer goods.
Answer:
(c) I- Final goods, II- Intermediate goods, III- Capital goods
Explanation: Consumption goods is the category of final goods.Final goods have two categories- Consumption and Capital.Any good which is meant for further production and resale is known as intermediate goods,
Question 6.
If the value of MPC is 0.75. the resultant increase in income due to increase in investment by ₹200 crore will be:
(a) ₹2000
(b) ₹20
(c) ₹800
(d) ₹50
Answer:
(c) ₹800
Explanation:
\(\begin{aligned}
\mathrm{MPC} &=0.75 \\
\mathrm{~K} &=\frac{1}{1-\mathrm{MPC}}=\frac{1}{1-0.75}=\frac{1}{0.25}=4 \\
\mathrm{~K} &=\frac{\text { Change in income }}{\text { Change in investment }} \\
4 &=\frac{\text { Change in income }}{200}
\end{aligned}\)
Change in income = 200 x 4
Change in income = ₹ 800
OR
Which of the following can be negative?
(a) MPS
(b) MPC
(c) APS
(d) Both (a) and (c)
Answer:
(c) APS
Explanation: APS can be negative because.
\(\mathrm{APS}=\frac{\mathrm{S}}{\mathrm{Y}}\)
Where, S = Savings and Y = Income
Savings can be negative when income is less than consumption.
Question 7.
Match the Statements given under A with the correct options given under B.
| (A) | (B) | ||
| I. | Repo Rate | A | Rate of Interest Payable to Commercial Banks on their surplus deposits with RBI. |
| II. | Reverse Repo Rate | B | Rate of Interest which RBI provides short-term credit to Commercial Banks. |
| III. | Bank Rate | C | Policy of the Central Bank |
| IV. | Monetary Policy | D | Rate of Interest at which RBI lends money to Commercial Bank for long period. |
Choose the correct alternative:
(a) I-(B), II-(A), III-(D), IV-(C)
(b) I-(A), II-(B), m-(C), IV-(D)
(c) I-(D), II-(B), III-(A), IV-(C)
(d) I-(B), II-(A), III-(C), IV-(D)
Answer:
(a) I-(B), II-(A), III-(D), IV-(C)
Question 8.
Calculate BOT:
| Import of goods | 400 |
| Shipping | 5 |
| Travel, tourism etc. | 10 |
| Interest | 4 |
| Unilateral Transfers | 40 |
| Exports of goods | 340 |
(a) ₹60 Surplus
(b) ₹60 Deficit
(c) ₹65 Deficit
(d) ₹65 Surplus
Answer:
(b) 60 Deficit
Explanation: BOP( Balance of trade ) = Exports- of=goods – Imports of goods
= 340- 400=-60
OR
If the balance in Current Account is- ₹ 1000 crore, what will be the balance in Capital Account of BOP?
(a) ₹1000 crore
(b) (-)₹1000 crore
(c) Zero
(d) None of these
Answer:
(a) ₹1000 crore
Explanation: Since, Balance of payment always balances which implies no deficit or surplus after the inclusion of accommodating items. So if the balance in current account is ₹1000 cr then balance in capital account will be ₹1000 cr to achieve equilibrium in Balance of Payment.
Question 9.
Read the following statement -Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): When planned AD is greater than planned AS, it will lead to fall in inventory levels.
Reason (R): Inventories are used when demand is high in the economy.
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true, but Reason (R) is false.
(d) Assertion (A) is false, but Reason (R) is true.
Answer:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
Explanation: When planned AD is greater than planned AS. It implies, excess of demand for goods and services which will induce the firms to use their inventories. Hence, the level of inventories will fall.
Question 10.
Read the following statement -Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Involuntary unemployment exists in case of deficient demand.
Reason (R): Full employment is a situation when all the factors of production are fully and efficiently employed, when used at their normal capacity
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion(A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion(A).
(c) Assertion (A) is true, but Reason (R) is false.
(d) Assertion (A) is false, but Reason (R) is true.
Answer
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
Explanation: Involuntary unemployment arises due to the lack of demand in the economy. As the demand levels are less, factors of productions do not get employed for the production of the commodities. Hence, the income levels also decreases and this situation arises when there is an existence of deficient demand.
Question 11.
Calculate Net Value Added at factor cost NVApc from the following data:
| S. No. | Particulars | Amount (₹ in crore) |
| (i)’ | Value of output | 800 |
| (ii) | Intermediate consumption | 100 |
| (iii) | Indirect taxes | 30 |
| (iv) | Depreciation | 20 |
| (v) | Subsidies | 50 |
| (vi) | Purchase of machinery | 50 |
Answer:
Intermediate Consumption = ₹(800- 200) = ₹600
NVAFC = GVAMp – Depreciation
NIT (Indirect tax- Subsidies)
NVAFC = ₹[600- 20- (30- 50)]
= 580 + 20 = ₹600
Question 12.
Why demand curve for foreign exchange is downward sloping? Explain.
OR
Differentiate between Balance of Payment and Balance of Current Account.
Answer:
Demand curve of foreign exchange is downward sloping due to inverse relationship between foreignexchange rate and demand for foreign currency in the country.
It implies as the price of foreign currency rises (for example, 1$ = ₹70 to 1$ = ₹72), then the demand for foreign currency will fall in the country and vice versa.
It is because of following reasons:
(a) As the price of foreign currency rise, the effective cost of goods available from foreign country will also rise. This will make foreign goods expensive for local people and import falls. This leads to fall in demand for foreign currency.
(b) It discourages tourism to that country.
OR
Difference between Balance of Payment and Balance of Current Account:
| Balance of Payment | Balance of Current Account | |
| 1. | It is a stamen that shows all the international transactions that takes place between the residents of the two countries in a given time period. | It is a part of BOP that records the transactions relating to exports and imports and unilateral transfers. |
| 2. | It is always in balance. | It can be in deficit, surplus or in balance. |
| 3. | It records capital transactions. | It does not record capital transactions. |
Question 13.
In an economy the level of income is ₹15,000 crores and ratio of APC and APS is 4:1, How much is total consumption expenditure in the economy ₹ Calculate.
Answer:
\(\begin{aligned}
\text { Income } &=₹ 1500 \text { crore } \\
\mathrm{APC}: \mathrm{APS} &=4: 1 \\
\mathrm{APC} &=\frac{4}{5} \\
\mathrm{APS} &=\frac{1}{5} \\
\mathrm{APC} &=\frac{\mathrm{C}}{\mathrm{Y}}=\frac{4}{5}=\frac{\mathrm{C}}{15000}
\end{aligned}\)
Consumption = ₹12000 crore
Question 14.
Assuming that increase in investment is ₹1,000 crore and marginal property to consume is 0.9. Explain the working of multiplier.
Answer:
Given that,
Value of MPC = 0,9
Initial increase in investment = ₹ 1,000 crore. So, every increase of ₹ 1 in the income, 0.9 part of the increased income will be consumed by people.
Consumption = ₹ 0.90
Saving = ₹ 0.10
It is given that initial increase in investment of ₹ 1,000 will lead to change in the income by ₹ 1000 in the first round. As MPC is 0.9 so people will consume 0.9 of the increased income i.e., t 900 there bysaving ₹ 100. In the next round due to increase in the consumption expenditure by ₹ 900 there will be anincrease in income by ₹ 900.
Then people will again spend the increased income i.e., t 810 and save the rest part of the income ₹90. Similarly, this process will continue and the income will go on increasing as a result of the increase in consumption. The total change in the income is ₹10,000 and the change in the investment will be ₹ 1,000.
Question 15.
Read the following news report and answer the question followed.
The Reserve Bank of India said it will conduct the first ever purchase auction of State Development Loans (SDLs) under Open Market Operations on 22nd October. The purchase auction amount has been kept at this level considering, this is the first ever OMO purchase of SDLs, RBI said. The size of the auctions may be enhanced in the subsequent auctions depending on market response. How the above conducted auction by RBI will affect the money supply in the economy?
OR
Margin requirement is a qualitative measure to influence the flow of credit in the economy. Justify the statement.
Answer:
As per the news, RBI is planning to conduct a purchase auction. When RBI purchases Government securities, sellers are usually the commercial banks.This will lead to flow of money towards commercial banks. Commercial banks will witness better liquidity position and higher lending capacity. This will enhance the credit creation process and money supply in the economy.
OR
The margin requirement is a qualitative measure which is meant to influence the direction of credit in the economy. It refers to the difference between the amount of collateral and the loan amount granted by the commercial banks. As the margin requirement increases, the borrowers will get lesser amount of loans with the same amount of collateral, This will reduce the lending capacity of the commercial banks and hence the credit creation affected and money supply will fall. As the margin requirement decreases, the borrowers will get more amount of loans with the same amount of collateral. This will increase the lending capacity of the commercial banks and hence the ,credit creation affected and money supply will fall.
Question16.
(a) Discuss briefly the three components of “Income from property and entrepreneurship”.
(b) What is the difference between national product and domestic product? What are its three components?
Answer
(a) The three components of the income from property and entrepreneurship are as follows:
(i) Rent – It is the income earned by the owner from the land, building, machinery and other properties.
(ii) Royalty- Royalty is the payment made for the use of natural resources (i.e., mining) or granting the right for using patents, copyrights and trademarks etc.
(iii) Profits – The income earned by entrepreneurs from entrepreneurship is called profits.
However, profit is divided in 3 parts:
A. Dividend/Distributed profits.
B. Reserves/Retained earnings/undistributed profits/savings of private corporate sector.
C. Corporate Tax (tax on company’s profit).
(b) The difference between national product and domestic products called NFIA. (Net Factor Income from Abroad)
It is calculated as:
Factor income from abroad-factor income to abroad Its components are as follows:
(i) Net Compensation of Employee: Income from work can be earned by working in the domestic territory of other country e.g., wages and salaries.
(ii) Net income from property and entrepreneurial (Rent, Interest and Profit) : Income can also be earned through ownership of property, financial assets etc. in other country. Also profit is earned by undertaking entrepreneurial activities abroad.
(iii) Net retained earnings of the resident companies abroad: It is undistributed profits.
Question17.
(a) Compare the trends depicted in the figure given below:
(b) How Government budget is an effective tool in reducing inequalities in income and wealth.
OR
(a) Differentiate between tax receipts and non-tax receipts in the government budget with suitable examples.
(b) Explain two implications each of revenue and fiscal deficit?
Answer:
(a) The image shows the trends in tax receipts charged by the government over the years from the general public. From 2011 to 2020, only an increase of 0.4% of GDP is seen in the tax receipts. Tax receipts are collected by government vs direct and indirect taxes and there has been different trend in both the types of taxes. It is observed that there has been a rise in the tax collection through indirect taxes over the last 10 years while direct taxes have fallen. Since, the burden of indirect taxes are more on poor, so there is inequalities in income and wealth.
(b) An objective to “reduce inequalities in the distribution of income and wealth”, can be achieved in two ways:
(i) By imposing higher taxes on the income of rich people on the goods consumed by them, which will reduce the disposable income.
(ii) Increasing the Government expenditure by providing free services to poor peoples like education, medical etc. This will raise the disposable income of the poor. Thus the gap between rich and poor is reduced
OR
(a) Difference between Tax Receipts and Non-Tax Receipts
| Tax Receipts | Non-Tax Receipts | |
| 1. | These are the compulsory receipts levied by the government on any individual or organisation to collect revenue for public welfare and development. | Non-tax receipts are the revenue receipts other than taxes but does not generate any liability or reduces any assets of the government. |
| 2. | It is categorise as Direct and Indirect taxes. | It is categorises as commercial and administrative revenue. |
| 3. | Income tax and GST. | E.g, interest and school fees charged in government schools. |
(b) Revenue deficit:
1. It signifies that Government is living beyond to conduct day to day operations. It implies that Government has to cover up the revenue deficit, through borrowings or sale of assets.
2. It indicates dis-savings on Government account.
Fiscal Deficit:
1. It shows the extent of dependence of the Government on borrowings to meet its budget expenditure.
2. It encourages wasteful and unnecessary expenditure on the part of the Government
Section-B (Indian Economic Development)
Question 18.
Occupational Structure refers to:
(a) Distribution of working force among the different occupations.
(b) Nature of Different Occupations.
(c) Size of Working Force in a Country.
(d) Number of People Living in a Country.
Answer:
(a) Distribution of working force among the different occupations
Explanation: Distribution of working force among the different occupations. Occupational structure is division of the workforce into primary, secondary and tertiary sector. The division of the labour force among the various occupations is referred as occupation structure.
Question 19.
______ was introduced in India to improve the agrarian relationship and agriculture sector.
(a) Technical reforms
(b) Land reforms
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer:
(b) Land reforms.
Explanation: The zamindars, Jagirdars, and other landowners held the land’s landlordship during the British era, not the farmers who worked on the land.
OR
In the Industrial policy 1956,the major role was given to ______.
(a) public sector
(b) private sector
(c) industries which were provided with special status
(d) exporters
Answer:
(b) public sector
Explanation: In 1956, the major role was given to public sector to control the private sector of the economy. The Industrial Resolution Policy of 1956 was created in response to changes that occurred as a result of economic and political developments in various spheres.
Question 20.
The Great Leap Forward campaign in China focused on:
(a) Widespread industrialisation
(b) New agricultural strategy
(c) Privatisation
(d) Economic reforms
Answer:
(a) Widespread industrialization
Explanation: permission toIncommenceChina, Great industries lead Forwarding the was backyards introduced to Industrialise the country and give permission to commence the indersties in the backyards.
OR
Growth rate of population is highest in which of the following countries?
(a) India
(b) China
(c) Pakistan
(d) None of these
Answer:
(c) Pakistan
Explanation: The growth of Population is high in pakistan due to lack of educational levels and lack of awareness about the benifits of small families.
Question 21.
Which of the following is a Non-Farm area of Employment?
(a) Livestock Farming
(b) Horticulture
(c) Fisheries
(d) All of these
Answer:
(d) All of these
Explanation: The main non-farm activities that have contributed to rural diversification include horticulure, fisheries, animal husbandry, and information technology. To increase their income, the rural workfor actively participates in a variety of non-farm activities.
Question 22.
From the set of the events given in column I and corresponding facts given in Column II, choose the correct pair of statement:
| Column-I | Column-II | ||
| I. | One child norm | (A) | India |
| II. | Capitalist Economic system | (B) | China |
| III. | 5 year planning from 1951 | (C) | India |
| IV. | Dual Pricing system | (D) | Pakistan |
Alternatives:
(a) I-(A)
(b) II-(B)
(c) III-(C)
(d) IV-(D)
Answer:
(c) III-(C)
Explanation: Five year’s plan imitated in India in 1951. It started in 1956 in Pakistan and 1949 in China.
Question 23.
Read the following statements carefully:
Statement 1: Education provides private benefits only and helps to increase the income of a particular person.
Statement 2: Education increases the productivity of labour. In the light of the given statements, choose the correct alternative from the following:
Alternatives:
(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 false.
Answer:
(b) Statement 1 is false and statement 2 is true
Explanation: Education provides both private and social benefits and increases the productivity of labour in an economy.
Question 24.
Read the following statements carefully:
Statement 1: Special economic zones were setup in China to develop the backward region.
Statement 2: In terms of the sectorial contribution to GDP, the economy of China is relying more on secondary sector . In the light of the given statements, choose the correct alternative from the following:
Alternatives:
(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 false.
Answer:
(b) Statement 1 is false and statement 2 is true
Explanation: As part of its economic reforms and policy of opening to the world, between 1978 and 1981, China established special economic zones.
Due to GL1 , China’ Secondary sector was able to contribute highest in GDP.
Question 25.
Which of the following is an advantage of sustainable economic development?
(a) Higher per capita income
(b) Rapid industrialisation
(c) Beneficial to future generations
(d) Agricultural develop
Answer:
(c) Beneficial to future generations
Explanation: Sustainable development focuses on giving benefits to future generation in terms of resources
OR
The concept of sustainable development is related to:
(a) Rural development
(b) Growth rate of GDP
(c) Human development
(d) Environment
Answer:
(d) Environment
Explanation: Concept of sustainable development is related to saving our environment.
Question 26.
Read the following statement – Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Informal sector workers form the trade unions.
Reason (R): Informal sector workers are not provided better salary and working conditions.
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true, but Reason (R) is false.
(d) Assertion (A) is false, but Reason (R) is true.
Answer:
(d) Assertion (A) is false, but Reason (R) is true.
Explanation: Formal sector workers forms the trade unions and informal sector workers do not receive better salary, and other benefits due to no supervisory authority.
Question 27.
Read the following statement -Assertion (A) and Reason (R) Choose one of the correct alternatives given below:
Assertion (A): India has an edge over China because of young population.
Reason (R): China opted for a family planning and led to high dependent population in the country.
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true, but Reason (R) is false.
(d) Assertion (A) is false, but Reason (R) is true.
Answer:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
Explanation: China opted for ONE CHILD POLICY which led to increase in more elderly population in China.
Question 28.
Interpret the given picture on account of the strategies opted for sustainable development.
Answer:
The picture shows the strategies that can be opted for sustainable development. “Development that meets the need of present generation without compromising the ability of future generation to meet their own needs. Thus, sustainable development is the process which involves fulfilling the need of present generation. Without causing any harm to the ability of future generation to meet its own needs like:
Wind Power: In areas where speed of wind is usually high, mills can provide electricity without any adverse impact on the environment. Wind turbines move through the wind and electricity is generated. Although initial cost is high, yet the benefits are more than the cost.
Solar Power: Solar energy is used in different ways such as drying up clothes, agricultural products etc. Apart from this, with the help of solar cells, solar energy is used to generate electricity. This technology is useful in the areas where power supply is either not possible or it is costly
Question 29.
Defend or refute the following statement with valid explanation. “Women in urban areas contributes more in employment in comparison to the women in rural areas.”
OR
Explain the steps taken by the Government in Developing Rural Markets.
Answer:
I refute the statement because of the following reasons:
1. As in the agriculture and allied work, more skills and specialisation is not required to rural women engage themselves in farm work to support family income.
2. As the poverty levels are higher in the rural areas in comparison to the urban areas, so rural women engage themselves in productive work to support family livelihood.
3. As the income in the urban families is higher in comparison to the rural families, so there is less need for urban females to get into job.
OR
The steps taken by the government in developing rural markets, include the following measures:
1. Regulated Markets: Regulated markets have been organised with a view to protect the farmers from the malpractices of sellers and brokers. This policy benefited farmers as well as consumers.
2. Infrastructural Facilities: The Government aims to provide physical infrastructure facilities like roads, railways, warehouses, godowns, cold storages, processing units, etc.
3. Cooperative Marketing: The aim of cooperative marketing is to realise fair price for farmers’ products. Cooperative Marketing is a system in which the farmers pool their marketable surplus of crops and distribute the sale proceeds on the basis of each individual share.
4. Different Policy Instruments: In order to protect the farmers, the government has initiated the following policies:
A. Minimum Support Prices (MSP): To safeguard the interest of farmers, government fixes the minimum support prices, which is regarded as an offer price, at which the Government is willing to buy any amount of grains from the farmers.
B. Maintenance of Buffer Stocks: The Food Corporation of India (FCI) purchases wheat and rice at the procurement prices, to maintain buffer stock. Buffer stock ensures regularity in supply and stability in prices.
C. Public Distribution System (PDS): PDS operates through a network of ration shops and fair price shops, in which essential commodities like wheat, rice, kerosene, etc. are offered at a price below the market price, to the weaker sections of the society.
Question 30.
Analyse the following table and compare the health status of India and Sri Lanka on the basis of various health indictors. Indicators of Health in India in comparts on with other countries, 2015-2017
| Indicators | India | China | USA | Sri Lanka |
| Infant Mortality Rate/1,000 live births | 84 | 8 | 5.7 | 7.5 |
| Under-5 Mortality/1,000 live births | 39.4 | 9.3 | 6.6 | 8.8 |
| Birth by skilled attendants (% of total) | 85.7 | 100 | 99 | 99 |
| Infants immunised (DTP (%) | 88 | 99 | 95 | 99 |
| Government health spending as a % of GDP (%) | 3.9 | 5.7 | 16.8 | 3.0 |
| Out of pocket expenditure as a % of current health expenditure. | 65 | 32.4 | 11.1 | 38.4 |
Answer:
The data depicts the health status of different countries. Comparing the health status of India and Sri Lanka Both the countries are performing at the same level in health status. Health indices like IMR and under 5 Nourished are better for Sri Lanka, eve when India is spending 3.9% of GDP on health as compared to 3% by Sri Lanka.
Even the, “Birth by skilled professionals” is higher in Sri Lanka as compares to India. It indicates that Sri Lanka is utilising its resources effectively in health sector as less expenditure is giving more results.
Question 31.
(a) State the goal of five years planning in India which was on priority for first seven five years plans.
(b) “Restrictive Tarde Policy before 1991 was not a success”. Support your answer with valid explanation.
OR
“Does Modernisation as a planning objectives shows a dichotomy with employment generation.” Justify the statement.
Answer:
(a) Self-Reliance
(b) (i) Restrictive trade Policy has imposed restrictions on the imports of goods with the help of tariff and non-tariff barriers. This was done to reduce the competition and giving protection to the domestic industries. But, this policy was failed.
(ii) Indian consumer had to purchase whatever Indian producer Produced.
(iii) Producers had no incentive to improve the quality of their product, when they can sell low quality items at higher prices.
OR
The given statement is appropriated. Modernisation implies use of advanced technology to enhance productivity at a faster pace. With application of modern technology, higher output is obtained at a relatively lower cost. However, in a labour abundant country like India modernisation may lead to an increase in unemployment as modern technology requires lesser labour per unit of output.
Question 32.
State whether the following statements are true or false with valid arguments.
(a) On the job training encourages education levels in the country.
(b) Human capital is dependent on physical capital.
Answer:
(a) False, On the job training helps to bridge the gap between education and practical application of knowledge and promotes readiness to work but it does not encourage education level in the country
(b) False, Physical capital is dependent on human capital. As machine cannot be used if there is no skilled person to operate it. For the faster and more widespread human capital formation, there is a requirement of physical capital but human capital is not completely dependent on physical capital.
Question 33.
(a) Define agriculture diversification.
(b) Discuss the role of regulated markets started by government to ensure smooth agricultural marketing.
(c) Why do small and marginal farmers find it difficult to adopt organic farming?
OR
(a) Human Capital Formation and Economic Growth goes parallel . Give valid arguments in support of the given statement.
(b) “Disguised unemployment is majorly seen in rural areas due to no employment opportunities.” Defend or refute the statement with valid reason.
Answer:
(a) Shift in cropping practises or a farmer’s choice of another non-farming activity, such as raising poultry or other animals are both the examples of agriculture diversification. Expanding this yield thanks to this approach enables farmers to earn more money. Agricultural diversification incudes two aspects:
(i) Change in the cropping pattern
(ii) Shift of the work force to other allied activities. With the intention to have better income options.
(b) (i) It was initiated to create orderly and transparent marketing conditions.
(ii) It helped farmers to get better income if they sell their produce directly to the consumers.
(c) It is because of the following reasons:
(i) Yield from organic farming are less than the modem agriculture farming.
(ii) Organic products are more prone to pests.
OR
(a) Human Capital and Economic Growth Economic Growth means increase in net national income of a country. The contribution of educated person to the economic growth is more than that of illiterate person. Education and health along with other factors like on the job training information and migration increase the individual’s income generating capacity.
(i) Raises production : Human capital will increase the productivity in the economy. Trained person can apply his knowledge, skills in the farm, factory and office to increase the production. Healthy person can contribute more to the production than an unhealthy person. It reduces the loss of output which would have resulted from the illness of the workers.
(ii) Raises efficiency and productivity : Investment in human capital yields higher income to the people. The enhanced productivity of the human capital contributes not only towards increasing productivity but also stimulates innovations and creates ability to absorb new techniques.
(iii) Improves quality of life : Quality of life is indicated by income and health which in turn depends upon the level of education, health and skill formation acquired by a person. Literate, ,trained and educated persons are asset for an economy. Better quality of population means more economic growth.
(iv) Raises life expectancy: Human capital formation raises the life expectancy and longevity of the people. This includes both long and healthy life.
(v) Brings positive change in outlook and attitude : Attitude of trained and educated person is not traditional and custom bound. They make rational choice in respect of place and jobs this makes the mobility of the labour easy. All these changes lead to economic development.
(b) Statement is defended, Disguised unemployment refers to the situation where more people are employed than required, in such a way that if few people are removed from particular work then the output will not be affected.
This surplus labour is seen in rural areas. Due to lack of opportunities for employment. Due to this, extra labour engage theme elves on the same eland and hence this increases the pressure of population on land. This unemployment is also known as Hidden unemployment.
Question 34.
Read the following text carefully and answer the given questions on the basis of the same and common understanding:
Subsidies are created, administered device intended for use only until such a time the basic set-up of the programme of activity can take up its own protection through its required competitiveness. If it fails to happen there is no reason to protect it. The trend that the beneficiaries of subsidies expect them for every new programme and hope continuance of subsidies is noteworthy. Economists advocate that subsidies should be selective, limited and specially targeted for weaker sections only. Subsidies alter relative prices and budget constraints and thereby affect decisions concerning production, consumption and allocation of resources. Like many other countries, subsidies in Indian economy are pervasive. These are explicit or hidden and include the areas such as education, health, environment and variety of economic activities including agriculture and transport.
Study Agro-economic Research Centre, MP, June 2019
(a) Why was there a debate over subsidies with respect to agriculture?
(b) Justify the statement:
“Subsidies given on fertilizers along with various other actions taken by government was responsible for the success of green revolution”.
Answer:
(a) Following are the arguments against subsidies:
(i) Soon after independence, it was necessary to give subsidies to encourage the farmers to adopt the new technology. Now, the new technology is widely adopted and it is profitable. So, subsidies can be abolished.
(ii) Subsidies mostly benefit only the fertilizer industry and the rich farmers. The poor farmers and agricultural workers are not benefited.
(iii) The government has to spend a major part of its income to provide subsidies. So, the government does not have adequate resources for developmental activities.
(iv) Subsidies encourage the farmers to use more fertilizers than required. This destroys the natural fertility of the soil.
Arguments in the favour of subsidies:
(i) Farming in India is risky. Subsidies are needed to encourage the farmers to take the risk.
(ii) Most of the farmers are poor. They cannot afford to buy the agricultural inputs without subsidies.
(iii) Abolition of subsidies will widen the gap between the rich and the poor.
(b) Various steps taken by government that led to Green revolution was a part of new agriculture strategy. Following steps were taken:
(i) Land reforms: Measures concerning reforms in land tenure system and size of holding are termed as land reforms. It comprises of
1. Abolition of zamindari system
2. Land ceiling
3. Consolidation of land holdings.
(ii) Technologic measures: It includes various kinds of aid provided by government to adopt scientific cultivation and mechanisation of agriculture like usage of HYV seeds, fertilizers, pesticides etc.
(iii) Government also planned to provide cheap and affordable credit facilities along with storage and transportation facilities which was an added advantage to the farmers.