कें द्रीय विद्यालय संगठन, जयपुर संभाग
KENDRIYA VIDYALAYA SANGATHAN, JAIPUR REGION
वितीय प्री बोर्ड परीक्षा / 2nd PRE BOARD EXAMINATION :2024-25
कक्षा / CLASS: XII SET-1
विषय /SUB: ECONOMICS (कोर् / CODE:030)
MARKING SCHEME
1 (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct 1
explanation of Assertion (A)
2 (d) rationalisation of taxes in pro-poor direction 1
3 (c) Phase of income disposition 1
4 (b) Appreciation of the currency 1
5 (c) 1,2,3 1
6 (b) Rs. 150 crores 1
7 (a) Statement 1 is true and Statement 2 is false. 1
8 (b) Rs. 2500 crores 1
9 (c) Both Statements 1 and 2 are true. 1
10 (a) An Indian buying a European company 1
11.(A) NDPFC = GDPFC- Depreciation = 650 – 100 =550 3
NDPFC =Compensation of Employee+ Operating surplus+ Mixed income
550= 300+Operating surplus+0
Operating surplus= Rs. 250 crores
OR
(B) Precaution-
(i) Expenditure on intermediate goods will not be included in national income as it
led to double counting
(ii) Purchase of second-hand goods are not to be included in national income as
such expenditure were already taken when they were originally purchased.
(iii) Expenditure on shares is not to be taken in as they are mere paper claims
(iv) Expenditure on transfer payment not to be included as they do not cause any
value addition
(v) Expenditure on own account production of goods will be taken. (Any Three)
12 Three sources of capital receipts in a government budget- 3
(i) Recovery of loans state government
(ii) Borrowings and other liabilities
(iii) Receipts on account of disinvestment
13 It is true that as a result of huge leaps in the index of Ease of Doing Business, 4
many MNCs shifting their production base to India. As a consequence of it, FDI
has risen manifold in the domestic economy. Rise in FDI implies the influx of
foreign exchange in the domestic economy. Influx of foreign exchange has tended
to impact the Indian economy in the following ways:
(i) Other things remaining constant, increase in the supply of foreign exchange acts
as supply shock that leads to a forward shift in supply curve of foreign exchange.
Consequently, exchange rate falls.
(ii) Forex reserves of the RBI tend to rise. It helps RBI to effectively manage the BOP
deficit by way of 'movement of official reserves'.
(iii) High reserves of foreign exchange, owing to its increasing influx in the domestic
economy improves credit rating of the economy in the international money
markets.
14 In the given figure the gap 'EF' represents 'Deflationary Gap' in the economy. This 2
gap arises due to aggregate demand being less than aggregate supply
corresponding to full employment.
The two fiscal measures that can be adopted to correct the situation of 2
deflationary gap are:
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(a) To increase the spending by the Government. This increase will directly increase
the aggregate demand and thereby help in correcting the deflationary gap.
(b) Decreasing the taxes will increase the disposable income. So, it will increase
their consumption expenditure. This in turn will increase the aggregate demand
and thereby help in correcting the deflationary gap.
OR
Given –
APC: APS = 5: 3 Let APC be 5X and APS be 3X
APC+APS= 1
5X + 3X = 1
X=1/8 so APC =5/8 APS= 3/8
APS = S/Y
3/8 = S/ 6000
S=2250
15(1) Value of the Investment Multiplier:- 1
Investment Multiplier (K) = 1 / (1 - MPC) K = 1 / (1 - 0.8) K = 1 / 0.2 = 5
Hence, the value of the investment multiplier is 5.
(2) Total Increase in Income:- 1
Total Increase in Income (ΔY) = Investment Multiplier (K) × Initial Investment
(ΔI) ΔY = 5 × ₹1,000 crore = ₹5,000 crore. Therefore, the total increase in
income is ₹5,000 crore.
(3) Impact on Economic Growth:- The investment multiplier shows how an initial 2
increase in investment leads to a multiplied increase in income and output in
the economy. In this case, the government’s investment of ₹1,000 crore in
infrastructure generates ₹5,000 crore in total income, which stimulates
economic activity, increases employment, and contributes to higher overall
economic growth.
16 (a) Process of Credit Creation Using Money Multiplier: 3
Credit creation is the process by which commercial banks create money by lending
out a portion of their deposits. The Cash Reserve Ratio (CRR) is 10%, meaning
the bank must hold 10% of the deposit as reserves and can lend out the remaining
90%. Amount to be kept as reserves = 10% of ₹10,000 = ₹1,000 Amount that
can be lent out = ₹10,000 - ₹1,000 = ₹9,000
When ABC Bank lends ₹9,000 to another person The bank must keep 10% of ₹
9,000 as reserves (₹900) and can lend out the rest (₹8,100). This cycle continues,
with each round of lending and depositing leading to new loans, increasing the
total amount of money in the economy. The total amount of money created is
determined by the money multiplier.
Money Multiplier = 1 / CRR
Money Multiplier = 1 / 0.1 = 10
(b) The total credit created by the banking system is a multiple of the initial deposit, 1
calculated using the money multiplier.
Total credit created = ₹10,000 × 10 = ₹1,00,000
(II) These limitations include:- 2
1. Cash Reserve Ratio (CRR): The central bank can increase the CRR, which is
the percentage of a bank’s total deposits that must be kept as reserves with the
central bank. By raising the CRR, commercial banks have less money to lend,
thus reducing their capacity to create credit.
2. Statutory Liquidity Ratio (SLR): The central bank can increase the SLR,
requiring commercial banks to invest a higher proportion of their deposits in
government securities. This reduces the funds available for loans and curtails
credit creation.
3. Open Market Operations (OMO): The central bank can sell government
securities in the open market to absorb excess liquidity from the banking system.
This reduces the cash available with commercial banks for lending purposes.
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4. Repo Rate: The central bank can increase the repo rate (the rate at which
commercial banks borrow money from the central bank). A higher repo rate
makes borrowing more expensive for commercial banks, which in turn raises the
interest rates they charge on loans, reducing borrowing by the public.
5. Selective Credit Control: The central bank can implement selective credit
control measures, such as imposing restrictions on loans for specific purposes
(e.g., speculative activities), to ensure that credit is not excessively directed
toward inflationary sectors.(Any Two)
17 (I) Income from property and entrepreneurship includes the following three 4
components:
(i) Rent: It is the factor income received by the households for the use of their
land by the producing units
(ii) Interest: It is the factor income received by the households for the use of their
capital by the producing units.
(iii) Profit It is the factor income received by the households for the use of their
entrepreneurial skills by the producing units. Profit is further split into three
components:
*Dividend: It is that part of the profit which is distributed among the
shareholders. It is also called 'distributed profit.
* Corporation Profit Tax It is that part of the profit which is paid to the government
by way of profit.
* Undistributed Profit: It is that part of the profit which is retained by the firms
for future use, particularly so meet some contingent expenses. It is also called
corporate saving.
(II) Increase in sale of private vehicles indicates that production of these vehicles has 2
increased, which will lead to increase in GDP of the economy.
However, increase in vehicles on road will increase the pollution in the
environment, which will lead to fall in the welfare of the people.
OR
(I) Money flow and real flow are opposite to each other, because:
Money flows are in response to the real flows. There is real flow of goods and
services from the producers to the households. It is in response to it, that the
households make payments to the producers. So that money flows from the
households to producers in terms of consumption expenditure. Likewise, there is
a real flow of factor services from the households to the producers. It is in
response to it, that the producers make payments to the households. So that,
money flows from producers to the households in terms of factor payments.
(II) Producer goods include:
(i) Goods used as raw material, like wood used to make furniture, and
(ii) Goods used as fixed assets, like plant and machinery. Capital goods include
only fixed assets of the producers. These are durable-use producer goods. On the
other hand, goods used as raw material are single-use producer goods. These are
not repeatedly used in the process of production. Accordingly, all producer goods
are not capital goods.
18 (a) Labour supply 1
19 (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct 1
explanation of Assertion (A)
20 (a) Statement 1 is true and Statement 2 is false. 1
21 (c) development of small-scale industries 1
22 (d) Credit taken to meet expenditure on agriculture 1
23 (c) All types of direct and indirect tax have been subsumed by it 1
24 (b) Montreal 1
25 (d) (iv), (i), (iii), (ii) 1
26 (d) Growth is driven by technology 1
27 (b) Encouraging women’s self-employment and saving 1
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28(A) (a) India has large supply of skilled labour. 3
(b) The wage rates are comparatively lower than that of in the developed
countries.
(c) Growth of Information technology has enabled India to excel in many services
such as BPOs, record keeping, accountancy, banking services, film editing, clinical
advice etc., hence these are being outsourced to India.
OR
(B) (a) Investment in agriculture sector, particularly in infrastructure (including
irrigation, power, roads, etc.), has fallen in the reform period. The withdrawal of
fertilizer subsidy has led to increase in the cost of production, which has severely
affected the small and marginal farmers
(b) The agriculture sector has been experiencing a number of policy changes such
as reduction in import duties on agricultural products, removal of minimum
support price, lifting of quantitative restrictions on agricultural products, etc.
These have adversely affected Indian farmers as they now have to face increased
international competition.
(c) Agriculture has been neglected, largely owing to the fact that, unlike industry,
it does not serve as epicentre of growth process.
29 The reasons for the slowdown of growth and re-emergence of poverty in 3
Pakistan's economy-
(a) Agricultural growth and food supply situation in Pakistan were based not on
an institutionalised process of technical change but on good harvest. When there
was a good harvest, the economy was in good condition, when it was not, the
economic indicators showed stagnation or negative trends.
(b) In Pakistan most foreign exchange earnings came from remittances from
Pakistani workers in the Middle-east and the exports of highly volatile agricultural
products.
(c) There was also growing dependence on foreign loans on the one hand and
increasing difficulty in paying back the loans on the other.
30 Yes, I agree with the given statement. The present day fast industrial growth in 4
China can be traced back to the reforms introduced in phases in 1978. China
introduced reforms in phases.
(a) In the initial phase, reforms were initiated in agriculture, foreign trade and
investment sectors. In agriculture, commune lands were divided into small plots
which were allocated (only for use and not as ownership) to the individual
households. They were allowed to keep all income from the land after paying
stipulated taxes.
(b) In the later phase, reforms were initiated in the industrial sector. At this stage,
State Owned Enterprises were made to face competition from Private sector firms.
(c) The reform process also involved dual pricing. This means fixing the prices in
two ways: Farmers and industrial units were required to buy and sell fixed
quantities of inputs and outputs on the basis of prices fixed by the government
and the rest were purchased and sold at market prices.
(d) In order to attract foreign investors, special economic zones were set up.
31(A) (a) Climate change is one of the biggest threats to sustainable development 2
because it disrupts ecosystems, leads to resource scarcity (such as water), and
affects agricultural productivity. The increasing frequency of extreme weather
events (floods, droughts, hurricanes) due to climate change can exacerbate
poverty and hinder economic progress.
(b) To mitigate the effects of climate change, strategies such as reducing carbon 2
emissions, switching to renewable energy, implementing reforestation projects,
adopting energy-efficient technologies, and encouraging sustainable
transportation like electric vehicles should be adopted. Moreover, international
cooperation is crucial for addressing global climate challenges, as climate
change knows no borders.
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OR
(B)(a) It is true that migration leads to human capital formation. This is because: 2
(i) Those who are unemployed get opportunities of actualising their skill.
(ii) Those who are underemployed get opportunities of fuller utilisation of their skills.
In a market economy, migration offers the best opportunities of higher supplies
of skill corresponding to higher wages.
(b) True. Lower employment among women in India points to our economic and social 2
backwardness. It leads to economic backwardness, because the economy fails to
generate enough jobs. It leads to social backwardness, because job work for the
women is considered as a social taboo.
32 Agricultural diversification helps in increasing farmers' income as: 4
(i) There is a greater risk in depending exclusively on farming for livelihood.
Diversification reduces the risk from the agriculture sector. It also provides
sustainable livelihood options to the rural people.
(ii) Expansion into other sectors provides supplementary gainful employment
during the off-season period.
33(a) The data indicates that the agricultural sector employs a disproportionately large 1
share of the workforce (44%) but contributes only a small share to GDP (16%).
This suggests that a significant portion of employment in agriculture is low-
productivity, potentially indicating underemployment or disguised
unemployment, where more people are engaged in agricultural activities than are
necessary.
(b) The slow shift from agriculture to other sectors can be attributed to several 3
factors:
*Lack of skills and education: Many agricultural workers lack the skills or
education necessary to transition into jobs in industries or services.
*Limited industrial growth: The industrial sector in India has not expanded rapidly
enough to absorb a large number of workers transitioning from agriculture.
*Slow rural development: Infrastructure and opportunities for employment
outside agriculture are still limited in rural areas.
(c) The government can take the following measures to reduce underemployment in 2
agriculture:
(i) Diversification of agriculture: Encouraging farmers to adopt high-value crops,
animal husbandry, and allied activities can increase income and productivity.
(ii) Promotion of small and medium enterprises (SMEs): Development of rural
industries can create alternative employment opportunities and reduce reliance
on agriculture.
34(A) (I) It is true that subsidies have facilitated the use of HYV technology leading to 4
Green Revolution in India.
*In the absence of subsidies, it would have been impossible for the farmers
(particularly the small farmers) to buy expensive inputs related to HYV
technology.
However, it is equally true that subsidies have caused a huge financial burden on
the government.
It is not only direct subsidies, but also the MSP (Minimum Support Price) which is
a form of indirect subsidy which has mounted the government expenditure on
agriculture.
In fact, the financial burden on the government is further compounded when it is
compelled to cope with 'loan waivers' for the farmers
(II) Inward looking trade strategy refers to the policy of reliance on import
substitution and protection to the domestic industry through import restrictions
and import duties in the area of international trade.
* The policy of protection (in the form of import substitution) is based on the
notion that industries of developing countries, like India, are not in a position to
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compete against the goods produced by more developed economies. Therefore,
there was a need for protection and hence import substitution.
* Also, restriction on imports was necessary because of the risk of drain of foreign
exchange reserves on the import of luxury goods.
OR
(B) (I) l agree with the given statement. During the British rule, India became an 2
exporter of primary products and there was huge export surplus due to excess
exports. However, this export surplus was used:
*To make payments for expenses incurred on administration of India by the
colonial government of Britain.
*To meet expenses on wars fought by the British government.
(II)(a) Adoption of modern technology- Modernisation refers to updating and 4
adoption of modern technology in the process of growth.
Green Revolution in Indian agriculture is a well-known example of how
technology can be about revolutionary changes in output. Recently, IT revolution
has redefined the concept of domestic production through Business Process
Outsourcing.
(b) Change in outlook- Social angle of modernisation includes issues like
empowerment of women so that they also participate in the process of
production and contribute to the process of economic and social prosperity.
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