Viva Questions for Class 12 Economics

Students can refer to the following economics viva questions class 12 provided below with solutions. You should practice these viva questions for economics class 12 as they are generally asked from Commerce students in class 12. Viva and MCQ questions for class 12 Economics are also very important. It is important that you go through Class 12 Board exam questions also before appearing for the examinations.

1. Broadly, how can you classify monetary policies.
Ans. Quantitative and Qualitative measures.

2. What policy does a Central Bank follow during inflation?
Ans. Dear money policy.

3. What is dear money policy?
Ans. Making credit costlier.

4. Where is RBI headquartered?
Ans. Mumbai (Maharashtra – India)

5. What are open market operation?
Ans. Buying and Selling Govt. Securities to commercial banks and public.

6. What is a direct tax?
Ans. Tax on property and income.

7. What is an indirect tax?
Ans. Tax on Goods and Service.

8. What is a reasonable fiscal deficit?
Ans. Around 3% – 4% of GDP.

9. What is disinvestment?
Ans. Selling of shares by government in PSUs.

10. What is subsidy? To whom it is given?
Ans. Subsidy is grant given to producers or exporters and even consumers.

11. What are autonomous item?
Ans. Transaction made due to economic motive such as profit maximization are autonomous items for e.g. investments made to earn profit, export of goods.

12. What are accommodating items?
Ans. Transactions undertaken to cover with deficit or surplus in autonomous transactions for e.g. decrease in foreign exchange reserves and borrowings from rest of the world.

13. Where is import of machinery shown in BOP?
Ans. Debit side of current account.

14. Is current a/c deficit (CAD) cause for alarm?
Ans. Yes, if the CAD becomes unmanageable.

15. What are Official Reserve Transactions?
Ans. Official Reserve Transactions are the transactions by a Central Bank that cause changes in its official reserves. These are usually purchases or sales of its own currency in the exchange market in exchange for foreign currencies or other foreign currency denominated assets.

16. What is externality?
Ans. The good acts of a company are not rewarded; this is positive externality. The wrong deeds are left unpunished; this is negative externality. In other words, the good and
the bad deeds of a company when not rewarded or punished are known as externality.

17. When can Domestic Income be greater than National Income?
Ans. This can happen when net factor income from abroad is negative.

18. Convert National Income at current prices to National Income at constant prices.
Ans. National Income at current price divided by price index of current year and multiplied by 100.

19. What is transfer income?
Ans. Incomes received or paid without consideration such as scholarship and old age pension.

20. What is circular flow of income?
Ans. The continuous flow of goods and services between households and firms in a two sector economy and the reverse flow of payment to each other is known as circular flow of income.