Pre board question Paper with Marking scheme 2019-20

1. Stani Memorial Public School, Phagi
Pre- Board-1 2019-20
Class - XII
Subject- Economics (030)
Time allowed: 3 ¼ hours M.M: 80
General Instructions:
All questions are compulsory to attempt
i. All the questions in both the sections are compulsory. Marks for questions are indicated
against teach question.
ii. Question number 1 - 9 and 17 - 23 are very short-answer questions carrying 1 mark each.
They are required to be answered in by ticking correct answer, one word or one sentence
each.
iii. Question number 10 - 12 and 24 are short-answer questions caring 3 marks each.
Answers to them should not normally exceed 60-80 words each.
iv. Question number 13 - 15and 25 - 28 are also short-answer questions carrying 4 marks
each. Answers to them should not normally exceed 80-100 words each.
v. Question number 16 and 29 - 31 are long answer questions carrying 6 marks each.
Answers to them should not normally exceed 100-150 words each.
vi. Answer should be brief and to the point and the above word limit be adhered to as far as
possible.
Section A – (Macro Economics)
MULTIPLE CHOICE QUESTIONS:CHOOSE THE CORRECT ANSWER -
Q.1 Economic Agents includes: 1
a. Government b. Consumers
b. c. Producers d. All of these
Q.2 Financial help to a victim is: 1
a. Transfer payment b. Factorincome
c. Net factor income from abroad d. None of these
Q.3 The central bank can increase availability of credit by - 1
a. Raising repo rate b. Raising reverse repo rate
c. Buying government securities d. Selling government securities
FILL IN THE BLANKS –
Q.4 A quantity measured per unit of time period is known as ________ variables. 1
Q.5 The problem of __________ arises when the value of certain goods is counted more than
once. 1
Q.6 If legal reserve ratio is 20%, the value of money multiplier will be ______. 1

2. STATE WHETHER TRUE / FALSE -
Q.7 Demand Deposits are equal to cash deposits with the commercial banks. 1
Q.8 Investment multiplier works both forward and backward. 1
Q.9 In the event of depreciation of country’s currency its export tend to increase while
import tend to decrease. 1
Q.10 Distinguish between full employment and voluntary employment 3
Q.11 Should purchase of wheat in the wholesale market be treated as the purchase of final
good?Explain. 3
Q.12 Distinguish between MPC & APC . Give a numerical example 3
Q.13 What is open market operation explain. 4
Q.14 What is government budget ? Explain how taxes and subsidies can be used to
influence allocation of resources. 4
Q.15 What is meant by devaluation and Revaluation of currency and differentiate between
them. 4
.
Q.16 Calculate National income by using expenditure method. 6
Items Amount Crore
Wages and salary in cash 1000
Rent 50
Interest 45
Undistributed Profit 35
Corporatetax 25
Mixed Income 200
Dividend 45
Net factor income to abroad -20
Change in stock 40
Private final consumption expenditure 800
Gross domestic fixed capital formation 400
Subsidies 50
Consumption of fixed capital 90
Indirect taxes 100
Govt final consumption 300
Section B – (Indian Economic Development)
MULTIPLE CHOICE QUESTIONS:CHOOSE THE CORRECT ANSWER -
Q.17 The British introduced the railways in India in - 1
a. 1850 b. 1845 c. 1854 d. 1832
FILL IN THE BLANKS -
Q.18 Muslin is a type of __________ which had its origin in Bengal. 1
STATE WHETHER TRUE / FALSE -
Q.19 Foreign investment includes both foreign direct investment and foreign institutional
investment. 1
OR

3. The Tata Iron and Steel Company was incorporated in 1905.
MATCH THE FOLLOWING – 1*4 = 4
Q.24 What do you understand by “the drain of Indian wealth” during the colonial period? 3
Q.25 What were the Financial Sector Reforms adopted in New Economic Policy1991? 4
Q.26 Give a quantitative appraisal of India’s demographic profile during the colonial 4
period.
Q.27 Why was public sectorgiven a leading role in industrial development during the
planning period? 4
Q.28 Elaborate the objective of ‘reallocation of resources’ in the government budget. 4
Q.29 What was the condition of Agricultural Productivity during colonial period and what
were the main causes of India’s agricultural stagnation during the colonial period? 6
Q.30 While subsidies encourage farmers to use new technology, they are huge burden on
Government finances. Discuss the usefulness of subsidies in the light of this fact. 6
Q.31 Critically evaluate the impact of Economic Reforms in India. 6
Q.20 Quota
A. Monetary assistance given by government for
production activities.
Q.21 Import Substitution B. The contribution made by each of the sectors in GDP.
Q.22
Structural
Composition
C. Quantity of goods that can be imported.
Q.23
Subsidy D. Replacing the imported goods bydomestically
produced.

4. Marking Scheme Set A Economics 30 Pre-Board-1
Q.1 All of above Q 2. Transferincome Q.3. By raising Reverse Repo rate
Q.4Flow Q.5 double counting Q.6 5
Q.7 True Q. 8 False Q. 9True
10.Fullemployment refers to a situation in which every able person willing to work
at prevailing wage rate is employed.
Voluntary unemployment : it refers to a situation when people are not willing to
work although suitable work is available for them. Such people are included in
work force.
10. Purchases wheatfrom whole sale market must be consideredas intermediate
goods not as final goods because the wheathas been bought in bulk market and
will be used for further process like flour mill, bakers or biscuit industry.
12. MPC is ratio of change in consumption ∆C to change in ∆Y
Suppose ∆C =70 ∆Y=100 then MPC =70/100=.70
APC is ratio of total consumption expenditure C to a total income Y
Suppose C=80 Y =100 then APC 80/100=.80
13 Open marketoperation refers to selling and buying of government securities by
the centralbank. By selling securities in the market money flows out of commercial
banks and into bank. This reduces demand deposits with the commercialbanks
and lowers their capacityto create credit. Borrowings from banks becomes less
and money supply is reduced.
14.Governmentbudget is a statement showing estimatedgovernment expenditure .
Govt can increase production of selectedgoodsand services by providing tax
concessionortax holidays for example subsidies to powergenerationcompany
setting up in backwardareas.
15. When a country brings down the value of its country in terms of foreign
currency by a government order, it is calleddevaluation .The effectof devaluation
is the that of depreciationof the currency .
When a country raises the value of its currency in terms of foreign currency by a
government order , it is calledrevaluation of currency . The effectof revaluation is
the same that of appreciationof currency.
16. Expenditure method
GDPmp=C+I+G+(X-M)
800+(400+40)+300+0
GDPmp=1540
NNPfc=GDPmp-D+NFIA-NIT

5. NNPfc=1540-90+20-(100-50)
NNPfc=1420
Part B INDIAN ECONOMIC DEVELOPMENT
17. C 18.CLOTH/linen 19 TRUE-TRUE 20 C 21 D 22 B 23 A
Q24 Drain of wealth means that economic policies of the British in India were
primarily motivated to snatch maximum benefits from India's trade. India's
foreign trade generated large export surplus. This export surplus did not result in
any flow of gold or silver into India. There was drain of India's wealth into Britain.
Dadabhai Naorojipropounded the theory of 'Drain of Wealth' in the 19th century.
The colonial period was characterized by the exploitation of Indian resources. ...
Thus, the British rule drained out Indian wealth for the fulfillment of its own
interests. Dadabhai Naoroji's work focused on the drain of wealth from India to
England during colonial rule of British in India. One of the reasons that the Drain
theory is attributed to Naoroji is his decision to estimate the net national profit of
India, and by extension, the effect that colonisation has on the country.
Q.No 25 In the new economic policy1991, Structural reforms canbe seenwith
respectto.
1. Liberalisation.
2. Privatisation
3. Globalisation.
Liberalisation
Liberalisation means removing all unnecessarycontroland restrictions like
permits licences, protectionistduties quotas etc. In other words, It may defined as
loosening of govt. regulation in a country to allow for private sectorcompanies to
operate business transactions with fewerrestrictions.
Privatisation
Privatisationis the generalprocess ofinvolving the private sectorin the ownership
or operation of a state owned enterprises.
Policies adoptedfor privatisation
1. Contractionof public sector.
2. Abolish the ownership of Govt. in the managementof public enterprises.
3. Sale of shares of public enterprises.
Globalisation
Globalisationmay be defined as a process associatedwith increasing openness,
growing economic interdependence and deepening economic integrationin the
world economy.
Policypromoting globalisation.
1. Increase in equity limit of foreigninvestment.
2. Partialconvertibility.
3. Long term trade policy.
4. Reductionin tariff.
26.The demographic condition on the eve of independence was as follows:-

6. 1.) High Birth Rate and DeathRate. High birth rate and high death rate are
treated as indices of backwardnessofa country. Both birth rate and death rate
were very high at 48 and 40 per thousand of persons respectively.
2.) High Infant Mortality Rate. If refers to death rate of children below the age of
one year. It was about 18 per thousand live births.
3) Low Life Expectancy. Life expectancymeans the number of years that a new
born child on an average is expectedto live. It was as low as 32 years.
27. During the planning period, the public sectorwas givena leading role in
industrial development because ofthe following reasons:Lack of capital: Private
entrepreneurs lackedcapitalfor setting industries as a huge amount was required
Public sectorhas been playing a very significant role in the development of
industries in the following way:-
1.)Creationof a strong industrial base.
2.) Developmentof Infrastructure.
3.) Developmentof backwardareas.
4.) To mobilise savings and earn foreign exchange.
5.) To prevent concentrationof economic power.
6.) To promote equality of income and wealth distribution.
7.) To provide employment.
8.) to promote import substitution.
Q.28 Government Budget is an annual statement, showing item-wise estimates of
receipts and expenditures during a fiscal year. Reallocation of Resources: (i) The
government aims to reallocate resources according to economic and social
priorities through its budgetary Policy. (ii) Government encouragesthe production
of certain commodities by giving subsidies or tax reliefs. For e.g. government
encourages the use of 'khadi products' by providing subsidies. (iii) Government
can discourage the production of harmful goods like liquor or cigarettes, by
imposing heavy excise duties or taxes. In India, we use progressive taxation, i.e.,
higher taxes from rich people and distribute these receipts through various welfare
activities.
Q.29 The main causes ofIndia’s agricultural stagnationduring the colonialperiod
were :
(i) Land Revenue System—According to zamindari system, the zamindars were
recognised as permanent owners of the land", j The profit accruing out of the
agriculture sector i went to the zamindars instead of cultivators. However, both
zamindars and colonial government did nothing to improve the condition of
agriculture. Zamindars were to pay a fixed sum to the government as land revenue
and they were absolutely free to extract as much from the tillers of the soil as they
could.
(ii) Lacking Resources—Along with the land settlement system, low levels of
technology, lack of irrigation facilities and negligible use of fertilisers, all added up
to the bad condition of the farmers and contributed to the dismal level of
agricultural productivity. Despite of some proposes made in irrigation India’s
agriculture starved of investment in tracing flood control, drainage and
dyslamination of soil.

7. (iii) Commercialisation of Agriculture—Due to commercialisation of agriculture,
there were, some evidences of a relatively higher yield of cash crops in certain
areas of the country. But this could not help in improving the conditions of Indian
farmers. Instead of producing food crops, now they were producing cash crops,
which were ultimately being used by British Industries
Q 30.Subsidy means the economic benefit given by the government directly or
indirectly to the domestic producers of goods and services. Agricultural subsidy
means the benefit given to the farmers for using new and advancedtechnologies
and producing more food grains.
These subsidiaries are important because -
•They provide an incentive for adoption of new technologyby the farmers specially
the small farmers.
•It assures farmeragainstthe risk of new technology.
•It provides hedging againstthe risk of climatic conditions and brings equity
betweenrich and poor farmers by enabling the poor farmers to use modern
technologyand imports.
However, these subsidies are burden for the government and arguments against
agricultural subsidies are -
•The objective of granting subsidies was adoption of new technologyin agriculture
and as the new technologyhas been widely adopted so now the subsidy should be
removed.
•After certainlimit subsidies provided incentive for the wastefuluse of resources.
•The rich farmers also enjoy the benefits of subsidies though they don't require it.
•Subsidies benefit the fertilizer industry more than the farmers.
Q 31 Economic reforms were introduced by the Government of India in July 1991.
The reform process has completed 17 years. It would, therefore, be both
interesting and instructive to make an overall assessmentof the reform process so
as to ascertainwhetherthe country is moving in the right direction, or, to
terminate the reform process altogether.
Goals:
The objectives of the reform process were:
(a) To promote a fasterrate of growth,
ADVERTISEMENTS:
(b) To enlarge employment potential leading to full employment,
(c) To reduce the incidence of poverty,
(d) To promote equity, leading to a better dealfor the poor and less well-off
sections ofsociety,
(e) Reduction of regionaldisparities, i.e., the gap betweenthe rich and the poor
states, and

8. Four main drawbacks ofthe reform process are:
1. It increaseddisparities among states.
2. It displacedpeople having little, if any marketable skills.
3. It increased the incidence of poverty and inequality.
4. It failed to ensure human development whose keyindicators are life expectancy,
literacy rate, infant mortality rate, death rate and birth rate.