D.A.V.

INSTITUTIONS, WEST BENGAL ZONE

FIRST PRE-BOARD EXAMINATION
SESSION – 2024-2025

CLASS – XII MAX. MARKS - 80

SUBJECT - ECONOMICS TIME - 3 HOURS

Sl. No. Marking scheme Marks Marks

allocated

SECTION A – MACROECONOMICS

1. D capital formation 1 1

2. A.All people who are willing and able to work at the 1 1

prevailing wage rate.

3. B.Statement 1 is false and Statement 2 is true. 1 1

4. B. Fiscal. 1 1

5. C. Deficit, 14.66. 1 1

6. B. Both Assertion (A) and Reason (R) are true, but Reason (R) 1 1
is not the correct explanation of Assertion (A).

7. D. Autonomous Consumption, Induced Consumption and 1 1

Autonomous Investment.

8. A. Deflationary gap. 1 1

9. B. Economic stability. 1 1

10. D. Sum of Gross National Product (GNP) and Gross Domestic 1 1

Product (GDP) is always equal to zero (0).

11. Net National Product at Factor Cost 3

(NNPFC) =(i)+(iii)+(ii)+(ix)+(vi)–(iv)–(vii)–(v)+ (viii) 1.5

=1,200+500+800+70+(–50)–100–200-150+80 1
= ₹ 2,150 crore 0.5

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12. Yes, devaluation and depreciation of currency can lead to a fall 3 3
in the value of domestic currency in relation to foreign
currency. This may result in the promotion of exports and the
reduction of imports, as domestic goods become relatively
cheaper and foreign goods become costlier. Hence, both
devaluation and depreciation of currency have similar
implications. However, devaluation of currency occurs due to
actions taken by the government, while depreciation of
currency is caused by market forces of demand and supply.

OR

Accommodating transactions are commonly undertaken to

maintain stability in the Balance of Payments (BOP) account. 3 3
These transactions are independent of any economic motive
and are determined by the net result of autonomous items, such
as a surplus or deficit in the BOP. Therefore, accommodating
transactions play a crucial role in maintaining stability in the
Balance of Payments account by providing a mechanism to
address imbalances in international transactions caused by
autonomous items.

13. MPC+MPS=1 1 4
Rising MPS indicates falling MPC 1
It implies lesser and lesser proportion of additional income
going to consumption expenditure
Gradual shrinkage of the economy 1
Economy might slow down and fall into a situation of 1
recession.

OR
MPC=1-MPS 1
=1-0.2=0.8
We know that,
AD=C+I 1
AD= 𝐶+MPC(Y)+I 1
=50+3200+100
=3350 1

14. a) i)demand 1 4
ii)supply 1
b) Good because purchasing power of US dollars increases in 1
the Indian market. Demand for domestic goods will rise.
Bad because imports of essential capital goods become 1
expensive.

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15. The given statement is refuted. While a car is often 1 4
considered a final consumer good when purchased by an
individual for personal use, its classification can change based
on the buyer’s intent.
For instance, if a consumer buys a car solely for personal 2
transportation, it is indeed a final consumer good. However, if
a business purchases a car to use for deliveries or as a company
vehicle, it is classified as a capital good, which is a final
producer good. Additionally, if a retailer buys a car to sell in
their dealership, this transaction qualifies the car as an
intermediate good since it is part of the supply chain.
Therefore, the classification of a car depends on the end use and
1
the buyer’s purpose.

16. ‘KT’ represent inflationary gap which means aggregate 2 6

demand is more than aggregate supply corresponding to full
employment level.
Two Fiscal policies
a) Revenue policy: To correct the situation of inflationary gap,
government raises the rate of all taxes.
This reduces the purchasing power by reducing disposable
income of the people which in turn will reduce AD in the 2
economy.
b) Expenditure Policy: To correct the situation of inflationary
gap, government should reduce its public expenditure.
This reduces the purchasing power by reducing total income
of people which in turn will reduce AD in the economy.
Two Monetary Policies
a) Rise in CRR: CRR is raised to lower credit creation
capacity of the commercial banks. Lesser availability of credit
causes a fall in AD. Accordingly excess demand is corrected.
b) Margin Requirement: Margin requirement is raised to 2
restrict the availability of credit. Accordingly, AD is reduced
and excess demand is corrected.
OR
a) i)The shaded area AOB indicates negative savings or 1
dissavings.
ii) The point where total consumption is equal to total income 2
or the point where total savings become zero.
S = 0 at break-even point i.e. when C=Y, S=0
After break-even point, saving is positive.
b) No. Nether MPS nor MPC can ever be negative. Because
MPS is the ratio between additional saving (ΔS) and additional
income (ΔY). Likewise, MPC is the ratio between additional 3
consumption (ΔC) and additional income (ΔY). The ratio ΔS/

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 ΔY refers to the slope of S- function which is always positive
(because positive relationship between S and Y). Likewise, ΔC/
ΔY refers to slope of C- function which is always positive
(because of positive relationship between C and Y).

17. a) Capital expenditure refers to the estimated expenditure of 2 6

the government in a fiscal year which creates assets or causes
a reduction in liabilities. The increase in capital expenditure is
driven by higher outlay on transport infrastructure and capital
loans to states.
b) Yes. High fiscal deficit leads to low GDP growth. Reasons 4
are
i) Government lacks funds for investment.
ii) Owing to high fiscal deficit, taxes are raised. This reduces
the disposable income of the people. Low disposable income
leads to low aggregate demand and their low inducement to
invest in the economy.
iii) Also low GDP growth leads to high fiscal deficit. Because,
low GDP generates low revenue for the government

SECTION B – INDIAN ECONOMIC DEVELOPMENT

18. C. c)-iii 1 1
19. D. Great Proletarian Cultural Revolution. 1 1
20. C. 1-(iii); 2-(ii); 3-(i). 1 1
21. B. Both Assertion (A) and Reason (R) are true, but Reason (R) 1 1
is not the correct explanation of the Assertion (A).
22. C. First five-year plan of China commenced in 1956. 1 1
23. D. Promoting imports of luxury goods. 1 1
24. D. Both Statements 1 and 2 are false. 1 1
25. C. (i) and (iii). 1 1
26. C.Russian economic model was the base for the Indian 1 1
economic system.
27. C.Disinvestment 1 1
28. Yes, Green Revolution in India increased agricultural 3
production and productivity leading to self-sufficiency of food
grains through the use of HYV seeds, chemical, fertilisers,
pesticides, etc. These chemical fertilisers and pesticides led to
soil degradation/contamination of food products and various 3
water bodies.
Thus, although Green Revolution made India self-sufficient in
food grain production but was criticised on ecological grounds.

29. (A)The situation depicted in the given figure is ‘Global 1 3

Warming’.

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 One of the strategies to effectively overcome the problem of
Global Warming is preventing deforestation / planting more
trees. Forests are natural absorbers of carbon dioxide and help 2
in maintaining the balance of gases in the atmosphere. Planting
more trees can help to reduce the concentration of greenhouse
gases, improving air quality and providing a sustainable
solution to combat climate change.

(Any other relevant answer to the second part to be duly

awarded).

OR

(B)India can support renewable energy goals by:

1.Expanding Solar Energy: Install more solar plants and

rooftop panels, especially in sunny regions like Rajasthan and 1
Gujarat.

2.Growing Wind Energy: Increase wind farms in coastal and

windy areas, such as Tamil Nadu and Gujarat. 1

3.Using Biomass and convert Waste-to-Energy: Convert

agricultural waste and urban waste into energy, reducing 1
pollution and generating power.

(Any other relevant answer to be duly awarded).

30. The introduction of farm subsidies had been an opinionated 4

step taken by the government of India.

Arguments in favour of continuing farm subsidies:

• Eliminating subsidies may increase inequalities of income 1

between rich and poor farmers.
• Most farmers (small and marginal) may not be able to afford 1
expensive agricultural Inputs without subsidies.

Arguments against farm subsidies:

• It is often argued that farm subsidies have helped the fertiliser 1
industry much more than helping the needy farmers.
• Economists argue that subsidies are a huge burden on
government’s finances. 1

31. (A) Two Trade and Investment Policy Reforms Introduced in 4

1991:

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 1. Removal of Quantitative Restrictions: The government 2
reduced restrictions on imports and exports, fully removing
them for products like consumer and agricultural goods.
This allowed for more open trade.

2. Relaxation in Import Licensing: The import licensing 2

system was mostly abolished, except for hazardous and
environmentally sensitive products, making the import
process easier.

OR

(B)India is often regarded as the “Outsourcing Destination of

the World” due to several key factors:

1.Affordable LabourCosts: India offers labor at significantly 1

lower wage rates than developed nations, making it cost-
effective for MNCs to outsource operations here.

2.Abundant Skilled Workforce: India has a large pool of

skilled professionals, instilling confidence in MNCs regarding 1
workforce quality.

3.Supportive Government Policies: The Indian government

provides attractive incentives, such as tax breaks and lower tax 1
ratesto encourage outsourcing.

4.Strong International Reputation: India has established a

credible and trustworthy image on the global stage, further 1
attracting MNCs.

32. To be discussed : 4 4
Causes
i)Vehicular emissions
ii)Industrial emissions
iii)Forest fires
Consequences
iv)Respiratory diseases
v)Lung cancer
(according to the marks)
33. (A) The given data shows that geographically, China occupies 4 4+2=6
a larger area in comparison to Pakistan. The density of
population in China stands at 148 per sq. km which is lower

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 than that of Pakistan i.e. 275 per sq. km.The fertility rate in
Pakistan is 3.6 which is more than double as compared to
China’s fertility rate of 1.7. In China, the adoption of one child
norm led to a significant decline in the fertility rate.

(B)In the late 1970’s, owing to the population explosion and

the subsequent socio-economic concerns, China adopted the 2
One Child Norm. This policy led to a sharp decline in its
population growth rate. In addition to this, the sex ratio
declined. Furthermore, the implementation of the one-child
norm led to increase in the population of elderly people in
proportion to young people.

OR

(A)The given data shows the data pertaining to the sectoral

share of employment and Gross Value Added (GVA). Due to 4
topographic and climatic conditions, the cultivable area in
China is relatively smaller than that of India. Hence, the
contribution of the agricultural sector to the GVA in China is
7% employing 26% of its workforce, whereas in India it is 16%
employing 43% of its workforce.
Owing to rapid industrialisation in China, the contribution of
the industrial sector to GVA stands at 41% with 28% of the
workforce as against corresponding figures of 30% and 25% in
India. Both the nations have similar contribution of the Service
sector to GVA standing at 54% and 52% with corresponding
32% and 46% to the workforce, respectively in India and
China.

(B)The setting up of Special Economic Zones (SEZs) in China

led to a substantial Increase in foreign direct investment in the 2
economy. With the massive inflow of foreign capital and
technology in China, the productive capacity increased thereby
contributing to the rapid economic growth of China.

34. i)Informalisation of workforce 1 6

ii)All government departments, public enterprises and private 2
enterprises employing atleast ten people are formal sectors.
Rest all are informal sectors.
iii)Social security, labour protection, income equality, better 3
wages, regular income, skill development, economic growth
(any three)

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