CSSC Common Examination 2024-25

Macro Economics – Answer Key

Class: XII Time: 3 hrs
Marks: 80

Section - A
Macro- Economics (1)

1. (c) Gross domestic

Capital Formation

Net domestic + Depreciation

capital
formation
2. (b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of
Assertion (A). (1)
3.(a) RBI act as banker to the central government (1)
4.(c) Margin Requirement (1)
5.(a) Both the statements are true. (1)
6.(b) 1/MPS (1)
7.(b) Induced Investment (1)
8.(a) Falls, Rises (1)
9.(d) D-(iv) (1)
10.(d) Accommodating Transaction (1)
11. A) Gross National Product = GNPmp = Profits + Rent + Interest + Royalty + COE + Consumption of
fixed capital + NFIA + (Indirect Tax – Subsidy)
= 70+40+100+10+600+30+(-)25+(20-5)
=Rs. 840 Crores. (3)

(OR)
B) GDPmp = PFCE + GFCE +GDCF-(X-M)-Dep-NIT+NFIA
 EXPENDITURE METHOD
Private final consumption expenditure
+ Govt final consumption expenditure
+Gross domestic capital formation
+ net exports
↓

Gross domestic product at market price GDPmp (3)

↓
(-) Depreciation
↓
(-) Net indirect taxes
↓
+NFIA
↓
National income (NNPfc)

12.(i) ‘Make in India’ will increase supply (inflow) of foreign exchange in India, causing improvement in
the balance of payments position. (3)
(ii) Import of pulses will lead to outflow of foreign exchange from the country, causing adverse
effect on balance of payment position.
13.The deposits made under the plan are going to affect national income of the country in the following
way, (4)

 Opening more bank accounts means more bank deposits.

 More deposits mean increase in the lending capacity of the commercial banks.
 More lending by banks means more investments in the country.
 More investments means more national income.

14.(A) (i) The given statement is refuted. Excess demand is a situation when AD>AS corresponding to
full employment level in the economy under the situation of full employment, there is no further
possibility/ scope of creating more employment opportunities. At full employment level, it is assumed
that all the resources are already fully and effectively employment. Therefore, excess demand will not
create more opportunities of employment in the economy. (3)
(ii) Ex -ante savings refer to desired savings or planned savings during the period of one year. (1)

(or)
B) Change in Initial Investment (∆I) = Rs. 700 Cr
(Marginal propensity to save (MPS) = 0.2 (4)
We know that, Investment multiplier (k) = 1/ MPS = 1/0.2 = 5
Increase in Income (∆y) = K *∆I = 5*700 = 3500 crore
15.i) Restricting autonomous imports of gold will reduce the foreign exchange demand, it will reduce
the foreign exchange payments, since autonomous payments decline, BOP deficit will decline. This
decline will reduce pressure of deficit and it is the economic value realized. (2)

ii) Loan from IMF to cover deficit of BOP. It is inflow of foreign exchange it will be recorded on the
credit side. (2)
Acquisition of a foreign company by TATA transactions relating to outflows of foreign
exchange recorded on the debit side.
16.A)i). Fees to a mechanic paid by a firm. It is not included because it is an intermediate cost of firm.
(2)
ii) Interest paid by an individual on a car loan taken from a bank. It is not included because the
loan is taken to meet consumption expenditure and therefore interest paid on such loan is not a
factor payment. (2)
iii) Expenditure on purchasing a car for use by firm. It is included because it is an investment
expenditure. (2)
(OR)
B) i) Non monetary exchanges refers to goods and services produced but not exchanged through
money like domestic services rendered by the members of our family to each other the value of these
services is many times difficult to estimate and so it escapes national income estimation. These
exchanges however have positive effect on the welfare of the people. (3)
ii) Government expenditure on popularizing yoga raises GDP because it is government’s final
consumption expenditure. It also raises welfare of the people because yogic exercise improves health
and thus raises efficiency of the people. (3)
17) i).Goods and Services Tax (GST) Indirect tax:
Indirect tax is a tax where the payer and the bearer of the tax are different people. Income tax – direct
tax. Direct tax is a tax where the payer and bearer of the tax is the same person. Besides the objective
of raising more revenue the proposals also serve some Welfare objectives: (4)
1. Raising goods and services tax on cigarettes will make them more expensive. The price rise is
expected to discourage cigarette smoking which will positively impact the health of people and
raise their welfare.
 2. Raising the income tax on income above rupee one crore will reduce the gap between the rich and
poor people. In other words, income inequalities will reduce.
3. The extra revenue raised from these proposals could be spent on health education and other
welfare enhancing schemes to improve the welfare of the poor.

ii) Measures to control revenue deficit.

a) To reduce government administrative expenses
b) To reduce the burden of subsidy (2)
c) To increase taxation.(Any Two)

Section – B
Indian Economic Development
18. (c) Assertion (A) is true, and reasons (R) is false. (1)
19. (d) Statement 2 is true and statement 1 is false. (1)
20. (a) Export duties were removed (1)
21. (d) Reduced harm to beneficial insects and pollinators. (1)
22. (a) Labour force which is employed (1)
23. (b) Seasonal (1)
24. (c) Rapidly increasing human population. (1)
25. (b) Liberty indicator (1)
26. (a) Agriculture (1)
27. (a) European union (1)
28. (i) Agricultural marketing may be defined as the process that involves, gathering the produce after
harvesting processing the produce, grading the produce according to its quality, packaging the
produce according to buyer’s preferences, storing the produce for future sale and selling the
produce when price is lucrative. (3)
(OR)
ii) India has become a favorable destination of outsourcing for most of the MNC’s because of the
following reasons,
Easy Availability of cheap labour. The wage rates in India are comparatively lower than that of in
the developed countries. As a result, MNC’s outsourcing their business in India.
Availability of skilled manpower: India has vast skilled manpower, which enhances the faith of
MNC’s. (3)
Favourable Government policies: MNC’s get various types of lucrative offers from the Indian
government like tax holidays, low tax rate etc.
International Worthiness: India has a fair international worthiness and credibility.
29) The given picture indicates the usage of renewable sources of energy. Power is the need of the hour and
the usage of non-renewable sources of energy lead to an environmental crisis. On the other hand, using
renewable sources of energy like solar, wind and hydro energies ensure sustainable development without any
adverse impact on the environment. The power generated through these resources is a cleaner and greener
alternative. (3)
30) Economic growth (in terms of GDP growth) would become a meaningless exercise if the benefits of it
accrue to only a handful of people in the society. Benefits of growth must spread across larger sections of
the society, so that the distribution of income becomes equitable. Equity implies social justice, and
economic growth must be combined with social justice. That is why, planning in India, focuses merely on
economic growth but a “growth with social Justice” (4)
31) The government organisations play an important role in the functioning of schools and hospitals in
India.
In education: the ministries of education at the union and state level and departments of education and
various organisations like National council of educational research and training (NCERT) university grants
commission (UGC) and All India council of technical education (AICTE) regulate the education sector.
In Health: The ministries of health at the union and state level departments of health and various
organisations like Indian council for medical research (ICMR) regulate the health sector. (4)
(OR)
Investment in education system in India has been a woeful failure. The fact of the matter is that in 1952
we were spending a meagre 0.6% of our GDP on education that rose to only 4% in 2014. This has fallen
well short of 6% target as proposed by the education commission 1964 moreover, throughout this period,
the increase in education expenditure has not been uniform and there has been irregular rise and fall. This
shows the apathy of the government towards investment in the education system, one can imagine if the
recommended 6%p.a of the GDP would have been spent properly, the present education system would
have reached unforeseen heights (4)
32) i) Nations are forming various regional and economic grouping like SAARC, European union, G-8, G-
20 ASEAN etc. inorder to strengthen their economies.
ii) Nations are having economic reforms. They have liberalized their economies with decrease in
government interference in economic activities. (4)
iii) Nations are also opening up their economies through the process of Globalisation.
33) i) Sustainable development is the development that meets the need of the present generation without
compromising the ability of the future generations to meet their own needs. (2)
ii) The Indian Government has accelerated the pace of green growth as India is,

 Facing the grave reality of depleting natural resources, limited supply of water minerals and fossil
fuels. This has created a number of environmental issues in recent past in India. (2)
 To counter the climate threat, India has committed to achieve net zero target by the year 2070.
This will facilitate much needed de-carbonization of Indian industries reduce depending on fossil
fuel imports and to become market leader in the sunrise industry. (2)
34) A) Some of the problems faced by farmers during the initial years of organic farming are:
(i) In the initial years, organic farming has a lesser yield as compared to modern agricultural farming. As a
result, small and marginal farmers found it difficult to adapt to large-scale production. (2)
(ii) Organic farming faces problems of inadequate infrastructure and marketing facilities. (2)
(iii) Organic produce has a shorter shelf life as compared to sprayed produce. The choice in production of
off-season crops is quite limited in organic farming. (2)
(Or)
B) I) Increasing use of chemical fertilizers makes country self-dependent in food production but it
deteriorates environment and cause harmful impacts on living beings. This problem can be handled by
promoting organic farming. Organic farming is the process of producing safe and healthy food. Moreover,
organic agriculture restores, maintains and enhances the ecological balance. There is an increasing
demand for organically grown food, to enhance food safety throughout the world. (3)
II) Non-farm activities like animal husbandry, dairying, horticultures, handloom, etc. provide alternative
avenues or sustainable livelihood and may raise the level of income as the risk due to fluctuations in
production and market prices is generally less. In India, agriculture is mainly a seasonal occupation and
during off seasons, it becomes difficult to find employment and stabilize farmers' income. So, the Prime
Minister has urged appropriately in the best interest of the farmers of the rural India. (3)