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Choose The Correct One (10 1 10)

This document contains an economics exam for grade 12 with multiple choice and long answer questions. It begins with 20 multiple choice questions testing concepts like the demand for foreign exchange, balance of payments, taxes, fiscal policy, and money and banking. The long answer section includes questions requiring calculations and explanations related to exchange rates, equilibrium income, investment types, central banking functions, and balance of payments.

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visnu priya
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66 views3 pages

Choose The Correct One (10 1 10)

This document contains an economics exam for grade 12 with multiple choice and long answer questions. It begins with 20 multiple choice questions testing concepts like the demand for foreign exchange, balance of payments, taxes, fiscal policy, and money and banking. The long answer section includes questions requiring calculations and explanations related to exchange rates, equilibrium income, investment types, central banking functions, and balance of payments.

Uploaded by

visnu priya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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SRI SWAMY INTERNATIONAL SCHOOL,

(Affiliated to CBSE, New Delhi Affln. No. 1930458)


Masinayakanpatty, Ayothiyapattanam, Salem – 636 103
Ph: 0427 – 2290905 / 7339401223
***********************************************************************************************
TERM – I EXAMINATION (2019-2020)
Date: 17.09.2019 GRADE: XII – B Subject: Economics
Time Allowed: 3 Hrs Max. Marks: 80

Choose the Correct one (10*1=10)

1. The demand curve for foreign exchange is


a. Downward sloping b. Upward sloping c. Horizontal d. Vertical

2. Point out a demerit of fixed exchange rate has


a. BOP surplus countries face inflation b. No effect on stock of gold in BOP surplus countries
c. BOP surplus countries face inflation d. None

3. Point out a demerit of fixed exchange rate


a. BOP deficit countries run down the stock of gold b. None
c. BOP surplus countries run down the stock of gold d. Has no effect on the stock of gold

4. If CDA (Capital Development Authority, Islamabad) gets a loan from World Bank for roads, it will be
recorded in the balance of payments in section:
a. Capital account b. Invisible balance c. Visible balance d. Official financing

5. An example of a direct tax is


a. Entertainment tax b. VAT c. Income Tax d. Sales tax

6. Fiscal deficit is equal to borrowings. It is


a. False b. True c. Can’t predit d. Insufficient information

7. Public expenditure can be unplanned only


a. Insufficient information b. True c. Can’t say d. False

8. What is "mps" or the 'marginal propensity to save'?


a. None of these
b. the proportion of total additional planned savings to total additional income
c. the fraction of total additional income that is used for consumption
d. the proportion of total additional income to total additional planned savings

9. In S = - a + (1 - b) Y, ‘a’ denotes
a. Automatic consumption expenditure b. Annual consumption expenditure
c. Autonomous savings. d. Consumption expenditure

10. MPC = 1 - MPS. It is


a. None of these b. True. c. Depends on their values d. False.

11. If MPC is less than one, it follows that


a. (1-b) i.e. MPS is zero b. (1-b) i.e. MPS is positive
c. (1-b) i.e. MPS is negative d. (1-b) i.e. MPS is infinity

12. The formula of investment multiplier in terms of MPS is


a. AC/AD b. 1/MPS c. C/ I d. C/Y
1
13. The broad definition of money is based on
a. Medium of payment function b. Transferability of money
c. Store of value function d. Cant’ determine

14. The process of money creation or credit creation is done by


a. commercial banks b. Central bank c. World bank d. Rural bank

15. Bank rate is for


a. Commercial banks by the government b. Commercial banks by the central bank
c. Central banks by the central bank d. Central bank by the commercial banks

16. One of the functions of Central Bank among the following is


a. Custodian of banks b. Custodian of deliveries
c. Custodian of foreign exchange d. Custodian of securities

17. Can the gross domestic product be greater than the gross national product?
a. No b. Yes c. Never d. Can’t determine

18. State which one of the following is true.


a. Rent is a factor income b. Royalty is not a factor income
c. Tax is a factor income d. Subsidies is a factor payment

19. National Income is a


a. Hypothetical concept b. Non economic concept c. Stock concept d. Flow concept

20. Money flow is the flow of


a. Goods only b. Factor payments c. Services only d. Goods and services only

Answer All (5*3=15)

1. Explain the impact of Devaluation of domestic currency on the export and imports of an economy.
2. Calculate the equilibrium level of income in the economy.
C = 500 + (0.9)Y;
Investment expenditure = 3,000
3. Categorise the following as induced investment and autonomous investment.
i. Government has set up public health centres in rural areas.
ii. Government has decided to invest Rs. 1,000 crore to save Sunder ban Forests.
iii. Airtel has invested ? 1,000 crore to improve its services.
4. Explain the "Bankers' Bank function" of the central bank
5. Give the meaning of favourable balance of payments

Answer All (3*4=12)

1. The Central Bank takes steps to control rise in the price of foreign exchange. Explain the economic
values it involves as far as the common man is concerned.
2. Tax rates on higher income group have been increased. Which economic value does it reflect?
Explain.
3. Calculate Autonomous Consumption expenditure from the following data about an economy which
is in equilibrium:
National Income = Rs 1,200
Marginal Propensity to Save = 0.20
Investment expenditure = Rs 100

2
Answer All (3*5=15)
1. Distinguish between autonomous and accommodating transactions of balance of payments account.
2. Explain how open market operations are helpful in controlling credit creation.
3. Find Net Value Added at Factor Cost

Answer All (3*6=18)


1. Find Net National Product at Market price

2. (a) If planned saving is less than planned investment, what changes will bring economy in
equilibrium? (3)
(b) In poor country like India people spend a high rate of income so that APC and MPC are high, yet
value of Multiplier is low. Why? (3)

3. (a) Does an excess of AD over AS always imply a situation of inflationary gap? (3)
(b) From the following data about a government budget find (i) revenue deficit, (ii) fiscal deficit and
(iii) primary deficit. (3)

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