GURUSHARAN CONVENT
SQP TERM 1 EXAMINATION
CLASS - XII ( 2025-26) DURATION: 3 HOURS
SUBJECT-ECONOMICS M.M. : 80
General Instructions:
Read the following instructions carefully and strictly follow them:
(i) This question paper contains 34 questions. All questions are compulsory.
(ii) This question paper contains two sections:
Section-A: Macro Economics
Section-B: Indian Economic Development
(iii) This paper contains 20 Multiple Choice Questions type questions. Each question carries 1 mark.
(iv) This paper contains 4 Short Answer Questions Type-I questions. Each question carries 3 marks.
Answer these questions in 60 to 80 words.
(v) This paper contains 6 Short Answer Questions Type-II questions, Each question carries 4 marks.
Answer these questions in 80 to 100 words.
(vi) This paper contains 4 Long Answer Type Questions. Each question carries 6 marks. Answer these
questions in 100 to 150 words.
(vii) Attempt all parts of a question together.
(viii) There is no overall choice in the question paper, However, an internal choice has been provided in
few questions. Only one of the choices in such questions has to be attempted.
Q. SECTION -A Marks
No. (Macro Economics)
1. Read the following statements Assertion (A) and Reason (R). Choose the correct alternative
given below :
Assertion (A): Transfer payments are included in the estimation of national income.
Reason (R): Transfer payments lead to production of goods and services in the economy.
Alternatives :
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of
Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false. 1
(D) Assertion (A) is false, but Reason (R) is true.
2. is the total volume of money held by the public, for the purpose of disposing
off, at a particular point of time. (Choose the correct alternative to fill in the blank)
(A) Term deposits (B) Demand for money
(C) Money supply (D) Credit creation
1
3. Read the following statements carefully:
Statement 1: Ex-post savings and Ex-post investments are equal at all levels of income.
Statement 2: Under the effective demand principle, the equilibrium output is equal to ex-ante
Aggregate Demand (AD).
In the light of the given statements, choose the correct alternative from the following:
(A) Statement 1 is true and Statement 2 is false.
(B) Statement 1 is false and Statement 2 is true. 1
(C) Both Statements 1 and 2 are true.
(D) Both Statements 1 and 2 are false.
4. Read the following statements carefully:
Statement 1: Average Propensity to Consume (APC) represents the change in total income with
respect to a given change in total consumption.
Statement 2: When income changes, change in consumption (∆C) can never exceed the change in
income (∆Y).
In the light of the given statements, choose the correct alternative from the following:
(A) Statement 1 is true and Statement 2 is false.
(B) Statement 1 is false and Statement 2 is true.
(C) Both Statements 1 and 2 are true.
(D) Both Statements 1 and 2 are false. 1
5. Identify the incorrect feature(s) of money supply (M1 ) from the following :
(i) It is measured at a point of time.
(ii) It does not include stock of money held by the government.
(iii) It is always the currency in the hands of the Central Bank of a nation.
Alternatives :
(A) (i) and (ii) (B) (ii) and (iii) (C) (ii) only (D) (iii) only
1
6. Total consumption expenditure by households under Keynesian Economics is a combination of
__________ and __________.
(Choose the correct alternative to fill in the blanks)
(A) Autonomous Consumption, Autonomous Investments
(B) Autonomous Investments, Induced Consumption
(C) Induced Investments, Autonomous Investments
1
(D) Autonomous Consumption, Induced Consumption
7. Arrange the following in the correct sequential order, if the government of a nation is trying to
curtail the situation of inflationary gap:
(i) Decrease in disposable income
(ii) Increase in taxes
(iii) Decrease in Aggregate Demand
Alternatives:
(A) (i), (ii), (iii) (C) (ii), (iii), (i)
(B) (iii), (ii), (i) (D) (ii), (i), (iii)
1
8. GNP deflator is represented by which of the following formulae ? (Choose the correct alternative)
(a) (Nominal GNP / Real GNP) × 100 (b) (Real GNP / Nominal GNP) × 100
(c) 100 × Change in Rate of Inflation/ Real (d) 100 × Real GNP / Change in Rate of 1
GNP Inflation
9. Identify, which of the following is not considered as ‘Normal Resident’ of India?
(A)An Indian citizen working in U.S.A. embassy located at New Delhi.
(B)An Indian officials working in Indian embassy in China.
(C)An Indian diplomats visiting Canada for a summit.
(D)An Indian working in an American Company located in New York for a period of more 1
than 1 year.
10. Complete the Table.
Producer Value of output Intermediate Consumption Value Added 1
Farmer 2000 - 2000
Baker (i) 2000 2000
Retail Seller 4,400 (iii) 400
Total (ii) 6,000 (iv)
Alternatives:
(a) 4000, 10400, 4000, 4000 (b) 4000, 10400, 4000, 4400
(c) 2000, 6000, 6000, 4400 (d) 4000, 10400, 6000, 4000
11. S. No Items Amount (in ₹ crore)
(i) Sales 900
(ii) Change in stock 150
(iii) Purchase of raw material 150
(iv) Gross Investment 100
(v) Net Investment 80
(vi) Net Indirect Taxes 20
On the basis of above information calculate the value of Net value added at factor cost.
(NVAFC) 3
12. (a)Assume the following for a hypothetical economy: 3
(i) Autonomous Consumption Expenditure (C) = ₹ 25 crore
(ii) Marginal Propensity to Save (MPS) = 0.1
(iii) Level of Income (Y) = ₹ 2,000 crore
(iv) Autonomous Investment (I) = ₹ 25 crore
Is the economy in equilibrium situation? Justify your answer with valid calculations.
OR
For a hypothetical economy, the government incurs an additional investment expenditure of ₹
5,000 crore. Assuming that the Marginal Propensity to Save (MPS) becomes half from its
present level of 20%, estimate the change in income due to this fall in Marginal Propensity to
Save (MPS).
13. Giving reasons, classify the following into intermediate goods or final goods: 2
(a)Machine purchased by a dealer of machines.
(b)Maya purchased cream, flour and sugar for her bakery shop. 2
14. Explain the concept of investment Multiplier with the help of a hypothetical numerical. 4
example
15. Read the following text carefully from ‘The Economic Times’ dated 8thJune, 2023:
“The Reserve Bank of India’s ( RBI’s) rate setting panel unanimously decided to keep the
benchmark lending rate unchanged at 6·5%. The committee voted to remain focused on the
withdrawal of accommodating monetary policy.”
On the basis of given text and common understanding, answer the following questions : 2
(a) Identify and discuss the economic issue indicated in the above text.
2
(b) Discuss the likely consequence on money supply if the rate setting panel would have
decreased the said rate.
16. (A)Define effective demand. Discuss how, effective demand can be restored, if ex-ante 3
Aggregate Demand (AD) is more than ex-ante Aggregate Supply (AS) 3
(B)In the given figure, what does the gap ‘KT’ represent ? State and discuss any two fiscal
measures to correct the situation.
17. (a) Differentiate between stock variables and flow variables with suitable example. 3
(b) “Externalities can be classified into negative or positive, however it is not necessary that
theywill be directly correlated with the Gross Domestic Product.”
3
Do you agree with the given statement? Give valid reasons in support of your answer.
SECTION – B
(Indian Economic Development)
18. Read the following statements Assertion (A) and Reason (R). Choose the correct alternative
given below :
Assertion (A) : The excessive regulation of permit license raj prevented certain private firms
from becoming fairly competitive.
Reason (R) : Private sector wasted huge amounts in obtaining licenses rather than on improving
the product quality and international competitiveness.
Alternatives :
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the
correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not
the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false. 1
(D) Assertion (A) is false, but Reason (R) is true.
19. Britain maintained a monopoly control over India’s exports and imports while the rest was
allowed with a few other countries like .
(Choose the correct alternative to fill in the blank)
(i) China (ii) Ceylon (Sri Lanka) (iii) Persia (Iran)
Alternatives:
(A) Only (i) (B) (i) and (ii)
(C) (ii) and (iii) (D) (i), (ii) and (iii) 1
20. Read the following statements carefully :
Statement 1 : Under the colonial rule, basic infrastructure (like railways, post and telegraph etc.)
was developed.
Statement 2 : The real motive behind the infrastructural development in India was to strengthen
the British interests.
In the light of the given statements, choose the correct alternative from
the following :
(A) Statement 1 is true and Statement 2 is false.
(B) Statement 1 is false and Statement 2 is true.
(C) Both Statements 1 and 2 are true.
(D) Both Statements 1 and 2 are false. 1
21. Identify the correct statement from the following:
(A) India adopted the socialistic economic system after Independence.
(B) Indian economic planning was implemented through Five Year Plans.
(C) Land reforms under industrial sector were implemented by the Government of India.
(D) Policy initiatives in the industrial sector were responsible for decline in Gross Domestic
Product (GDP) in India.
1
22. Read the following statements Assertion (A) and Reason (R). Choose
the correct alternative given below :
Assertion (A) : World Trade Organization (WTO) is expected to establish the rule-based trading
regime, to avoid unilaterally placed arbitrary restrictions by member nations.
Reason (R) : It is imperative to enlarge world production and ensure
optimum utilization of world resources along with environmental protection.
Alternatives :
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of
Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false. 1
(D) Assertion (A) is false, but Reason (R) is true.
23. Read the following statements carefully :
Statement 1: The commercialisation of Indian agriculture was coercively introduced by the
colonial government.
Statement 2: Britishers had a two-fold motive behind the enforcement of food crops
production.
In the light of the given statements, choose the correct alternative from the following:
(A) Statement 1 is true and Statement 2 is false.
(B) Statement 1 is false and Statement 2 is true.
(C) Both Statements 1 and 2 are true.
(D) Both Statements 1 and 2 are false.
1
24. Identify, which of the following is not a Human Development Indicator (HDI).
(A) Life Expectancy at Birth (B) Adult Literacy Rate 1
(C) Maternal Mortality Rate (D) Unemployment
25. Identify the sources of Human Capital Formation and choose the correct
alternative to fill in the blanks. 1
Alternatives:
(A) Expenditure on Health and Expenditure on Schools
(B) Expenditure on Technology and Expenditure on Knowledge
(C) Expenditure on Migration and Expenditure on Knowledge
(D) Expenditure on Health and Expenditure on Migration
26. The problem of………………is caused by high levels of chlorine and bromine compounds in the
stratosphere.
(A) Ozone depletion. (B) Global warming. (C) Water pollution. (D) soil erosion 1
27. Under the economic reforms introduced in India in 1991 were set up to attract
foreign investors. (Choose the correct alternative to fill in the blank)
(A) Remittance Zones (B) Land Zones
(C) Special Commune Zones (D) Special Economic Zones
1
28. “Green Revolution made India self-sufficient in food grains, but was criticized on ecological
grounds.”
Do you agree with the given statement? Present valid reasons in support of your answer. 3
29 Ravya was initially working as an office clerk in a firm. In the pursuit to attain position and
income, she attended a few on-the-job training sessions. These sessions contributed positively
to her skills and expertise.” Explain the impact of Ravya’s decision on human capital
formation. 3
30. “British colonial government systematically exploited India.” Explain how? 4
31. “As an economy grows, the number of employed persons in an economy also increases;
however, since 1991 India has come up as an exception to this.’’
Do you agree with the given statement? Give valid arguments in support of your answer. 4
32. ‘India can transform itself knowledge-based economy by using information 4
technology.’ Justify the given statement.
33. (i) “Every coin has two sides - debate over farm subsidies is one such classic example of the 3
same.”
Justify the given statement with two arguments each in favour of and against the continuation
of the farm subsidies.
(ii) State the importance of “Growth with equity” as the objective of Indian economic planning. 3
34. Read the text carefully and answer the following questions:
In the contemporary world with a lot of sustainable development concerns, green
growth, and net zero emissions are two important concepts which are generally
discussed together. These two concepts are essential for the future of the Earth, as by
working together on them we can create a more sustainable future for ourselves and for
the generations to come. Green growth refers to, “the economic growth that is achieved
in a way that minimizes environmental impact”, whereas, “net zero emission is the state
of achieving balance between anthropogenic emission of greenhouse gases and removal
of such emissions from the atmosphere.”
There exists a robust connection between the two concepts: (1) Green growth can help
to reduce greenhouse gas emissions, which is essential for achieving net zero emissions.
(2) Green growth can help to create jobs and boost economic growth, which can help to
make it more affordable for countries to invest in net zero emissions technology. A
nation can do a lot to promote these two factors together, like: (a) Investing in
renewable energy sources which do not produce greenhouse gases. (b) Adopting energy
efficient measures, such as insulation and other such appliances which can help to
reduce energy consumption. (c) Altering transportation habits, like adopting walking,
biking and using public transportation as they are lower-carbon ways to travel.
On the basis of the given text and common understanding, answer the following
questions:
(a) State the meaning of green growth and net zero emissions. 2
(b) Discuss briefly the interconnection between green growth and net zero emissions. 3
(c) Illustrate any one factor to promote net zero emission. 1
