CBSE Economics Class 12 Sample Paper 3 Page 1

Sample Paper 3
ECONOMICS (030)
Class XII Session 2023-24
Time: 3 Hours Max. Marks: 80
General Instructions:
1. This question paper contains two sections:
Section A – Macro Economics
Section B – Indian Economic Development
2. This paper contains 20 Multiple Choice Questions type questions of 1 mark each.
3. This paper contains 4 Short Answer Questions type questions of 3 marks each to be answered in 60 to 80
words.4. This paper contains 6 Short Answer Questions type questions of 4 marks each to be answered in 80 to
100 words. 5. This paper contains 4 Long Answer Questions type questions of 6 marks each to be answered in
100 to 150 words.

Section A -Macro Economics

Multiple Choice Questions (Q1 to Q10) 1 ´ 10=10

1. Read the given news taken from the article “Currency caution: On the Indian rupee’s depreciation” published in
The Hindu on 23rd July, 2022.
“The Indian rupee is experiencing its worst slump in four years. Since the start of 2022, the currency has
depreciated by more than 7% against the US dollar, weakening past a historic low of 80 to a dollar mark earlier
this week.” In layman terms, which of the following is the reason for depreciation of Indian rupee?
(a) Increase in demand of US dollar and decrease in supply of US dollar
(b) Increase in both demand and supply of US dollar
(c) Increase in supply of US dollar and decrease in demand of US dollar
(d) Decrease in both demand and supply of US dollar

2. Find the missing figures and choose the correct alternatives

Income Consumption Average Propensity to Consume (APC)
0 30 ––
10 70 ...(iii)...
30 ...(ii)... 3.67
50 150 ...(iv)...
...(i)... 190 2.71
Alternatives
(a) 80, 120, 8, 4
(a) 60, 120, 8, 4
(c) 70, 110, 7, 3
(d) 60, 110, 7, 3
Page 2 Sample Paper 3 CBSE Economics Class 12

3. The economic reforms under the New Economic Policy of 1991 were made so that....... (a) market forces would
drive the economy towards growth and development
(b) the government would drive the economy towards growth and development
(c) the public would drive the economy towards growth and development (d) None of the
above

4. ______is exercised through discussions, letters and speeches to banks.

(a) Moral suasion
(b) Selective credit control
(c) Margin requirement
(d) Open market operation

5. Fees of government college is a revenue receipt because: (a) It increases assets of the government.
(b) It creates liabilities of the government.
(c) It neither creates any liability nor reduces any asset of the government.
(d) It neither creates any asset nor reduces any liability of the government.

6. Read the following data carefully and choose the correct option from the alternatives given below:
Particulars Farmer Baker
Total production 100 200
Intermediate goods used 0 50
Value added 100 —
(a) 200
(b) 100
(c) 150
(d) 50

7. Statement 1: Activity resulting in benefits to others is called a “positive externality”.

Statement 2: ‘Pollution created by factories/vehicles’ is an example of negative externality.
In the light of the given statements, choose the correct alternative from the following:
(a) Statement 1 is false and statement 2 is true
(b) Statement 1 is true and statement 2 is false
(c) Both statements 1 and 2 are false
(d) Both statements 1 and 2 are true

8. Identify the correct pair from the following Column I and Column II:
Column I Column II

A Expenditure on collection of taxes (i) Capital expenditure

.
B. Expenditure on scholarships (ii) Revenue expenditure
C. Expenditure on purchasing computers (iii) Revenue expenditure
CBSE Economics Class 12 Sample Paper 3 Page 3

D Expenditure on building a bridge (iv) Revenue expenditure

.
Alternatives:
(a) D - (iv) (b) C - (iii)
(c) B - (ii) (d) A - (i)
9. Assertion (A): The monetary policy is a policy formulated by the central bank.
Reason (R): The policy involves measures taken to regulate the supply of money, availability, and cost of credit
in the economy.
In the light of the given statements, choose the correct alternative from the following:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is false but Reason (R) is true
(d) Assertion (A) is true but Reason (R) is false

10. From the given data of an imaginary economy, find the value of consumption expenditure: (i)
Autonomous Consumption = `150 crore
(ii) Marginal Propensity to Consume = 0.75
(iii) National Income = `1,000 crore
(a) `900 crore
(b) `700 crore
(c) `850 crore
(d) `800 crore

Short Answer Questions (Q11 to Q12) 3´2=6

11. What are official reserve transactions (ORT)? Explain their importance in the Balance of Payments Account.
or
Explain why there is a rise in demand for foreign exchange when its price falls.

12. What is depreciation of Rupee? What is its likely impact on Indian imports and how?

Short Answer Questions (Q13 to Q15) 4 ´ 3 = 12

13. Suppose in the budget, the government proposed to raise the excise duty on cement. It also proposed to raise the
income tax on individuals earning more than rupees one crore per annum. (a) Identify and explain the type of
taxes proposed by the government.
(b) Was the objective only to earn revenue for the government?
(c) What possible welfare objective could the government be considering?

14. ‘Lack of store of value’ was a major problem under barter system, but goods like diamond, gold can be easily
stored for future use. Then why this was not a popular mean under barter system?
Page 4 Sample Paper 3 CBSE Economics Class 12

15. “Economists are generally concerned about the rising Marginal Propensity to Save (MPS) in an economy.” Why
so? Explain.
or
Explain all the changes that take place in an economy, when AD is not equal to output.

Long Answer Questions (Q16 to Q17) 6 ´ 2 = 12

16. (a) From the following data, calculate National Income by Income Method:
(` in crores)

(i) Interest 150

(ii) Rent 250
(iii) Government final consumption expenditure 600
(iv) Private final consumption expenditure 1,200
(v) Profits 640
(vi) Compensation of employees 1,000
(vii) Net factor income to abroad 30
(viii Net indirect taxes 60
)
(ix) Net exports (—) 40
(x) Consumption of fixed capital 50
(xi) Net domestic capital formation 340
(b) “India’s GDP is expected to expand 7.5% in 2019-20: World Bank” —The Economic Times
Does the given statement mean that welfare of people of India increase at the same rate? Comment with reason.
or
(a) On the basis of the following data about an economy which constitutes of only two firms, find out Value
added by firms A and B.
(` in lakhs)

(i) Sales by firm A 300

(ii) Purchases from firm B by firm A 120
(iii) Purchases from firm A by firm B 180
(iv) Sales by firm B 600
(v) Closing stock of firm A 60
(vi) Closing stock of firm B 105
(vii) Opening stock of firm A 75
(viii Opening stock of firm B 135
)
(ix) Indirect taxes by both firms 90
CBSE Economics Class 12 Sample Paper 3 Page 5

(b) If the Real Gross Domestic Product is `200 and the Nominal Gross Domestic Product is `210, calculate the
Price Index (base = 100).

17. Briefly explain the concept of under-employment equilibrium with the help of diagram. How does an increase
in investment help in achieving full employment equilibrium?

Section B -Indian Economic Development

Multiple Choice Questions (Q18 to Q27) 1 ´ 10=10

18. “The goal of equitable or rational distribution of land was not fully served by abolition of intermediaries”.
Why?
(a) Owning to policy loopholes, former zamindars continued to owe large lands
(b) In some areas, zamindars claimed to be self-cultivators
(c) Lack of political will
(d) All of the above

19. Statement 1: Cultural Revolution in China is also known as Great Leap Forward Cultural Revolution.
Statement 2: In cultural revolution, students and professionals were sent to work and learn from the foreign
countries.
In the light of the given statements, choose the correct alternative from the following:
(a) Statement 1 is false and statement 2 is true
(b) Statement 1 is true and statement 2 is false
(c) Both statements 1 and 2 are false (d) Both statements 1 and 2 are true

20. Name the state which is held as a success story in the efficient implementation of milk cooperatives. (a) Gujarat
(b) Maharashtra
(c) Andhra Pradesh
(d) Punjab

21. When did regional rural banks initiated in India?

(a) 1975 (b) 1970
(c) 1985 (d) 1980

22. Arrange the following events of China in chronological order and choose the correct alternative:
(i) Great Leap Forward Campaign
(ii) First Five Year Plan
(iii)Great Proletarian Cultural Revolution (iv) Introduction of Economic Reforms Choose the correct
alternative:
(a) (ii), (i), (iii), (iv)
(b) (iv), (i), (ii), (iii)
(c) (ii), (iv), (iii), (i)
Page 6 Sample Paper 3 CBSE Economics Class 12

(d) (iv), (ii), (i), (iii)

23. Assertion (A): In order to attract foreign investors, Special Economic Zones (SEZs) were set up.
Reason (R): SEZ is a geographical reason that has economic laws different from the country’s typical economic
laws. Usually, the goal is to increase foreign investment.
In the light of the given statements, choose the correct alternative from the following:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(c) Assertion (A) is false but Reason (R) is true
(d) Assertion (A) is true but Reason (R) is false

24. In Pakistan, most of the foreign exchange earnings come from: (i) Sustainable export of manufactured goods
(ii) Remittances from Pakistani workers working in Middle East
(iii) Export of highly volatile agricultural goods
(a) (i) and (iii)
(b) (i) and (ii)
(c) (i), (ii) and (iii)
(d) (ii) and (iii)

25. From the set of events/systems given in Column I and corresponding relevant fact given in Column II, choose
the correct pair of statement:
Column I Column II

A. Agrarian Economy (i) An economy with about 50% of the country’s population earning their living
from agriculture.
B. Export Surplus (ii) During the British regime, India’s imports exceeded its exports.
C. Mortality Rate (iii) Annual number of deaths per 100 people
D.Occupational (iv) Distribution of workforce as per their occupation
Structure
Alternatives :
(a) B-(ii) (b) A-(i)
(c) D-(iv) (d) C-(iii)

26. Observe the given picture carefully and answer the question that follows:
CBSE Economics Class 12 Sample Paper 3 Page 7

Roadside vending is an increasing variety of_____unemployment.

(a) informal
(b) formal
(c) Neither (a) nor (b) (d) Both (a) and (b)

27. Diversification of growth process can be achieved through the development of______sector. (a) Industrial
(b) Agricultural
(c) Service
(d) None of these

Short Answer Questions (Q28 to Q29) 3´2=6

28. Explain the concept of ‘Privatisation’. Throw light on the “different status designated to the Public Sector
enterprises (PSEs)”.

29. Explain the ‘Permit license raj’.

or
Explain the ‘policy of protection’ in industries.

Short Answer Questions (Q30 to Q32) 4 ´ 3 = 12

30. Answer the following questions on the basis of the following data:
Comment on the (a) Infant Mortality Rate (IMR) in Pakistan
(b) Percentage of Undernourished Children among the given two countries.
Country IMR (Per 1000 live births) Undernourished Children%
China 9 9
Pakistan 66 45
31. Mention any four features of small scale industries.
or
How is agricultural diversification helpful for farmers? Explain.

32. Analyse the growth of GDP and changing structure of employment.

Ans :
During the period of 1950-2010, Gross Domestic Product (GDP) of India grew at a positive rate and was higher
than the rate of employment growth. During this period the employment grew at the rate of not more than 2%
whereas fluctuations were always noticed in the field of growth of GDP.
(i) There had been a disheartening development in the late 1990’s as the employment growth started
declining and reached to the level it witnessed in the early stages of planning.
(ii) Another important observation of this period was the widening gap between the growth of GDP and
employment. This implies that in India we have been able to produce more goods and services without
generating employment. This phenomenon refers to “jobless growth”.
Page 8 Sample Paper 3 CBSE Economics Class 12

(iii) Distribution of workforce by the industrial sectors shows the following changes in the structure of
employment.
(iv) A substantial shift was noticed from farm work to non-farm work. Like during 1972-73 about 74% of
workforce was engaged in primary sector and in 2011-12, this proportion declined to about 50%.
(v) Share of secondary and service sector increased from 11% to 24% and 15% to 27% respectively, during
the same period.
(vi) The movement of people from self-employment and regular salaried employment to casual wage work
has been the other noticeable feature (1972-2012). But self-employment continues to be the major
employment provider. The above movement is known as Vasualisation of workforce’, which leads to their
high vulnerability.

Long Answer Questions (Q33 to Q34) 6 ´ 2 = 12

33. “Global CO2 levels hit new record in 2017.”

— The United Nations
(a) Why is the world faced with an environmental crisis?
(b) Why do environmental problem emerge in recent times?
or
“Existence of widespread unemployment in India is the cumulative result of many causes.” Explain any four
main causes of unemployment in India.

34. Read the following text carefully and answer the given questions on the basis of the same and common
understanding:
Chipko Movement, also called Chipko Andolan, non-violent social and ecological movement by rural villagers,
particularly women, in India in the 1970s, aimed at protecting trees and forests slated for government-backed
logging. The movement originated in the Himalayan region of Uttarakhand (then part of Uttar Pradesh) in 1973
and quickly spread throughout the Indian Himalayas. The Hindi word chipko means “to hug” or “to cling to”
and reflects the demonstrators’ primary tactic of embracing trees to impede loggers. The interior roads built for
the conflict attracted many foreign-based logging companies that sought access to the region’s vast forest
resources. Although the rural villagers depended heavily on the forests for subsistence-both directly, for food
and fuel, and indirectly, for services such as water purification and soil stabilisation-government policy
prevented the villagers from managing the lands and denied them access to the lumber. Many of the commercial
logging endeavours were mismanaged, and the clear-cut forests led to lower agricultural yields, erosion,
depleted water resources and increased flooding throughout much of the surrounding areas.
(a) What was Chipko Movement? How were villagers depended upon forest for their survival?
(b) How have people tried to prevent indiscriminate cutting of trees? Discuss the two movements started by
them for achieving the objective.