Please refer to Class 12 Economics Sample Paper Term 1 With Solutions Set C provided below. The Sample Papers for Class 12 Economics have been prepared based on the latest pattern issued by CBSE. Students should practice these guess papers for class 12 Economics to gain more practice and get better marks in examinations. The Term 1 Sample Papers for Economics Standard 12 will help you to understand the type of questions which can be asked in upcoming examinations.
Term 1 Sample Paper for Class 12 Economics With Solutions Set C
Section A
1. Special Economic Zones are created by the government to achieve which of the following objectives?
(a) Balanced regional development
(b) Reallocation of resources
(c) Economic stability
(d) All of these
Answer
A
2. If money created by commercial banks is ₹ 5,000 with a reserve requirement of 50%, the value of initial deposits will be ……… .
(a) ₹ 1,000
(b) ₹ 2,000
(c) ₹ 2,500
(d) ₹ 3,000
Answer
C
3. Read the following statements carefully and choose the correct alternatives from the following.
Statement I Small scale industries promote balanced regional growth.
Statement II The effect of tariffs and quotas is that they restrict imports and protect domestic firms from foreign competition.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect
Answer
C
4. ………… is an example of non-tariff barriers imposed by the government, to restrict
international trade during 1950s.
(a) Export duty
(b) Import duty
(c) Quota
(d) All of these
Answer
C
5. India’s foreign exchange reserves have jumped by $100 billion in 10 months to a record high of $534.5 billion. This transactionwill be recorded inwhich side of capital account?
(a) Debit side
(b) Credit side
(c) Not recorded in capital account
(d) It is official reserve item
Answer
A
6. Fees received from a government college is an example of ………… of budget.
(a) revenue receipt
(b) capital receipt
(c) Both (a) and (b)
(d) None of these
Answer
7. Rural development attempts improve ………… .
(a) agricultural production
(b) living of rural people
(c) infrastructure
(d) All of these
Answer
D
8. Read the following statements carefully and choose the correct alternatives from the following.
Statement I Swarn Jayanti Gram Swarozgar Yojana was implemented in April 1999.
Statement II A healthy person contributes to economic growth by providing uninterrupted labour supply for a longer period of time.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect
Answer
C
9. Raw material required in the process of production is a form of ……… .
(a) human capital
(b) working capital
(c) fixed capital
(d) None of these
Answer
B
10. When transactions are conducted across national borders, one currency must be converted into another. The rate at which this is done is known as
(a) Foreign exchange
(b) Foreign exchange rate
(c) Monetary policy
(d) None of these
Answer
B
11. Write the correct pair.
Codes
(a) A – (i)
(b) B – (ii) (c) C – (iii) (d) D – (iv)
Answer
B
12. If the balance of current account of BoP is ₹ 10,000 crores and balance of capital account of BoP shows a negative balance of ₹ 20,000, the state of BoP will be ……… .
(a) surplus
(b) deficit
(c) balances
(d) None of these
Answer
B
13. In 2014, ……… raised the MPCE levels to ₹ 972 for rural areas and ₹ 1,407 for urban areas.
(a) S.D. Tendulkar committee
(b) Rangarajan committee
(c) Mahalnobis committee
(d) None of these
Answer
14. If borrowing in a budget is equal to ₹ 2,000 crores and interest payments are 10% of borrowings, what will be the value of primary deficit?
(a) ₹ 2,000 crores
(b) ₹ 1,800 crores
(c) ₹ 1,600 crores
(d) Can’t be determined
Answer
B
15. Read the following statements carefully and choose the correct alternatives from the following.
Statement I Deficit in balance of trade account indicates greater value of visible imports over value of visible exports.
Statement II Improvement in exchange rate of country’s currency necessarily means improvement in its BoP status.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect
Answer
A
16. ………… production comes under agricultural diversification.
(a) Food grains
(b) Commercial crops
(c) Horticulture and dairy
(d) All of these
Answer
D
17. Read the following statements carefully and choose the correct alternatives from the following.
Statement I Borrowing from RBI by the government is a revenue receipt of budget.
Statement II Construction of a flyover is a capital expenditure of the government.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect
Answer
B
18. Which of the following is a non-tax revenue receipt of government budget?
(a) GST
(b) Import duty
(c) Escheat
(d) Wealth tax
Answer
C
19. During a year of surplus crop production, government purchases crops directly from the farmers by providing MSP. This expenditure by the government is a part of which component of government budget?
(a) Revenue expenditure
(b) Capital expenditure
(c) Both (a) and (b)
(d) Non-planned expenditure
Answer
A
20. Benefit of economic growth which percolates down to all the sections of the society is termed as ………… .
(a) Poverty alleviation programme
(b) Social participation
(c) Trickle down approach
(d) Redistribution of income
Answer
C
21. Poverty line is measured normally in terms of ……… .
(a) gross income
(b) per capita income
(c) per capita expenditure (d) Both (b) and (c)
Answer.
C
22. Read the following statements carefully and choose the correct alternatives from the following.
Statement I LPG subsidies given by the government to poor rural households is an example of revenue expenditure of the government.
Statement II Tax payments to the government do not provide any direct benefit to the tax payer.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect
Answer
C
23. Presently, there are only three industries reserved for public sector, viz ……. , …. and … .
(a) railways
(b) atomic energy
(c) defence
(d) All of these
Answer
D
24. Which of the following accounts for the largest share in the livestock sector of India?
(a) Poultry
(b) Cattle
(c) Goats
(d) Ponies and mules
Answer
A
Section B
25. To meet the foreign exchange crisis, the Indian government ……… the Indian rupee in 1991.
(a) devalued
(b) revalued
(c) depreciated
(d) appreciated
Answer
A
26. Read the following statements carefully and choose the correct alternatives from the following.
Statement I Fiscal deficit is zero in case there is no provision for borrowing in the government budget.
Statement II A progressive tax causes a greater burden on poor.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect
Answer
27. Assertion (A) The sole purpose of Britishers was to exploit the natural resources of India.
Reason (R) They wanted to reduce India to being a raw material supplier for Britain’s industries.
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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false
Answer
A
31. Write the incorrect pair
Codes
(a) A –
(i) (b) B – (ii)
(c) C – (iii) (
d) D – (iv)
Answer
B
29. Which one of the following statements is incorrect?
(a) Revenue receipts are regular in nature
(b) There is no future obligation to return the amount in case of revenue receipts
(c) Capital receipts either create an asset or cause a reduction in the liabilities of the government
(d) Borrowings are treated as capital receipts as they lead to an increase in liability
Anserw
30. Through the budgetary policy, the government of a country directs the allocation of resources in a manner such that there is a balance between the goals of profit
maximisation and social welfare. This reflects which objective of government budget?
(a) Reducing income inequality
(b) Promoting regional balance
(c) Reallocation of resources
(d) None of these
Answer
31. The portion of agricultural produce which is sold by the farmers in the market after meeting their own requirement is known as ………… .
(a) Subsistence crop
(b) Deficit crop
(c) Marketable surplus
(d) None of these
Answer
c
32. Read the following statements carefully and choose the correct alternatives from the following.
Statemet I There is no difference between BoT and balance of current account.
Statement II ‘Transfer from rest of the world’ is a debit component of BoP on current account.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect
Answer
d
33. Assertion (A) Even with expanded employment opportunities, the poor will not be able to buy for themselves all the essential goods and services.
Reason (R) Three major programmes that aim at improving the food and nutritional status of the poor are Public Distribution System, Integrated Child Development Scheme and Mid-day Meal Scheme.
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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false
Answer
b
34. Choose the incorrect option from the given below
(a) Absolute poverty in India is measured in terms of GDP.
(b) WTO promotes multilateral trade agreements.
(c) India’s development is possible only through Rural development.
(d) The proportion of people depending on agriculture did not decline as expected in the planning phase.
Answer
A
35. Assertion (A) Commercialisation of agriculture helped the farmers.
Reason (R) Their financial status improved drastically.
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 false, but Reason (R) is true
(d) Both Assertion (A) and Reason (R) are false
Answer
D
36. Assertion (A) Poverty is a challenge for the world.
Reason (R) About 300 million people are poor in this world.
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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false
Answer
A
37. Assertion (A) Many of the services such as voice-based business processes, record keeping, accountancy are being outsourced by multinational companies to India.
Reason (R) The low wage rates and availability of skilled manpower in India have made it a destination for global outsourcing in the post-reform period.
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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false
Answer
A
38. As per the IPR, 1956, small scale industries are considered as ……… intensive.
(a) cost
(b) labour
(c) capital
(d) Both (a) and (b)
Answer
D
39. India opted for economic planning due to which of the following weaknesses of the free market system?
(a) Inequalities
(b) Exploitation of workers
(c) Instability
(d) All of these
Answer
D
40. Assertion (A) Credit creation process increases the money supply in economy.
Reason (R) In credit creation process, commercial banks multiply loans many times as compare to their primary deposits.
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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false
Answer
A
41. Assertion (A) Borrowings are a type of revenue receipts but payment of interest on borrowings are capital expenditure.
Reason (R) Capital receipts create liability but payment of interest does not reduce liability.
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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false
Answer
C
42. Read the following statements carefully and choose the correct alternatives from the following.
Statement I Non-farm activities are seasonal in nature.
Statement II The fishing community considers water bodies as the providers.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect
Answer
B
43. Large increase in production of food grains resulting from the use of HYV seeds is called ……… .
(a) Modern farming method
(b) Golden revolution
(c) Green revolution
(d) Both (a) and (c)
Answer
D
44. Which of the following is not a problem of human capital formation in India?
(a) Population growth
(b) Proper manpower planning
(c) Brain drain
(d) All of these
Answer
B
45. Assertion (A) Appreciation of domestic currency happens owing to a rise in the value of domestic currency.
Reason (R) Appreciation of domestic currency boosts imports from foreign country.
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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false
Answer
D
46. Choose the correct pair from given below.
Codes
(a) A – (i)
(b) B – (ii)
(c) C – (iii)
(d) All of these
Answer
C
47. Assertion (A) Fixed exchange rate system involves active involvement of state government of the respective countries.
Reason (R) In fixed exchange rate system, once the exchange rate is decided, it is usually kept as fixed in order to maintain the stability in economic transactions.
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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false
Answer
C
48. Observe the picture given below.
Which of the following components will complete the flow chart given above?
(a) BoT components
(b) BoP components
(c) Accommodating components
(d) Official reserve account components
Answer
B
Section C
Direction : – Read the following case study and answer questions 49 to 54 on the basis of the same.
Before the beginning of Industrial Revolution in England, the East Indian Company concentrated on the export of Indian manufactured goods, textiles, spices, etc., to Europe where these articles were in great demand. The Industrial revolution reversed the character of India’s foreign trade.
Tremendous expansion of productive capacity of manufactures resulted in increased demand of raw materials for British industry and the need to capture foreign markets. As a first step, attempts were made to restrict and crush Indian manufactures. On the other hand, efforts were made to commercialise agriculture so as to step up the export of raw materials. The Indian textile handicrafts were the first to be hit. The decline of this industry started a chain reaction leading to the speedy decline of other handicrafts.
49. Which of the following reasons can be attributed for the decline of India’s worldfamous handicraft industry during the colonial rule?
(a) Commercialisation of agriculture
(b) Discriminatory tariff policies
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer
B
50. Assertion (A) The dual policy motive led to systematic de-industrialisation of Indian handicraft.
Reason (R) The colonial rule turned India into a mere exporter of raw materials.
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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false
Answer
A
51. Read the following statements carefully and choose the correct alternatives from the following.
Statement I Decline in handicraft led to increase in unemployment in India.
Statement II During colonial rule, there was huge export surplus from India’s foreign trade.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect
Answer
C
52. Tremendous expansion of productive capacity of manufacturers resulted in ………… demand of raw materials for British industry and the need to capture foreign markets.
(a) increased
(b) decreased
(c) unchanged
(d) None of these
Answer
A
53. Which was the first industry to be hit due to the colonial government policies?
(a) Cotton textile
(b) Jute textile
(c) Both (a) and (b)
(d) None of these
Answer
C
54. Which of the following goods were exported from India before the colonial rule?
(a) Manufactured goods
(b) Textiles
(c) Spices
(d) All of these
Answer
D
Direction : – Read the following case study and answer questions 55 to 60 on the basis of the same.
The Reserve Bank of India raised inflation forecasts on the back of higher oil and other raw materials while it maintained the growth forecast at 9.5% for FY22 despite anemic investment demand. Governor Shaktikanta Das said inflation measured by the Consumer Price Index (CPI) might remain close to the upper tolerance band of 6% up to September expecting easing of pressure thereafter on kharif harvest arrivals. (RBI has fixed inflation rate target in between 2%-6 %.) The central bank projected CPI at 5.7% for FY22 as compared to its earlier projection of 5.1%.
“The supply-side drivers could be transitory while demand-pull pressures remain inert, given the slack in the economy. A pre-emptive monetary policy response at this stage may kill the nascent and hesitant recovery that is trying to secure a foothold in extremely difficult conditions,” Das said.
Crude oil prices are volatile with implications for imported cost pressures on inflation, RBI said. “The combination of elevated prices of industrial raw materials, high pump prices of petrol and diesel with their second-round effects, and logistics costs continue to impinge adversely on cost conditions for manufacturing and services, although weak demand conditions are tempering the pass-through to output prices and core inflation.
55. Inflation in the economy indicates ………… in the economy.
(a) excess of money supply
(b) shortage of money supply
(c) adequate money supply
(d) None of these
Answer
A
56. Read the following statements carefully and choose the correct alternatives from the following.
Statement I During inflation, central bank uses dear money policy.
Statement II Dear money policy reduces the ability of government to invest in the economic activity.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect
Answer
A
57. Assertion (A) Demand-side reasons cases high inflation in the economy.
Reason (R) Demand pull inflation increases due to increase in money supply 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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false
Answer
B
58. How does RBI promote growth of the country?
(a) By controlling price level in country
(b) By changing various interest rates and money supply
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer
C
59. RBI fixes inflation target for which of the following reasons?
(a) To make growth process faster
(b) To make coordination with government
(c) To stabilise economy
(d) All of the above
Answer
C
60. Increase in crude oil prices leads to ……… .
(a) increase in money supply
(b) increase in prices
(c) increase in economic growth
(d) All of these
Answer
B
