Pre Board-I 2024-25

ECONOMICS (030)
CLASS XII (2024-25)
MARKING SCHEME Set 1
Q no Section A Macroeconomics Marks

1 C. Assertion (A) is true, but Reason (R) is false. 1

2 C. The repayment of loans with interest helps to reduce the fiscal deficit. 1

3 A. Non monetizes consumption 1

4 True 1

5 (b) An increase in government spending 1

6 C. Deficit Budget 1

7 C. Both Statements 1 and 2 are True. 1

8. D. All of the above 1

9. A. Statement 1 is true and statement 2 is False 1

10. B. decline, positive 1

11 (A) Domestic Income (NDPFC) = i + iv + ii + iii + v - viii – vi 11/2

= 600+200+200+40+500+(-)40 – 40 – 120 =
1
₹ 840 crore
OR 11/2
11 (B) 1. Intermediate goods, also known as producer goods or semi-finished 1
goods, are products that are used to make other products or services. 1
2. Non-market activities are activities that are not performed in a market
and are not intended to earn a profit.
3. Value added is the amount by which the value of an article is increased
1
at each stage of its production, exclusive of initial costs.
12. The given statement can be refuted as the fiscal deficit can exist without 3
revenue deficit. If:
a) capital budget is in deficit (CE>CR) with balance revenue budget (RE=RR)
b) capital budget is in deficit. (CE>CR) in greater proportion to surplus revenue
budget (RE).
13. I) Investments by large multinational operate corporations (MNCs) in India will 3
ensure greater inflow of foreign exchange, leading to an increase in the supply
of foreign currency. This situation may result into increase in supply of foreign
currency in the economy with the prevailing foreign exchange rate.
As a result, a new equilibrium rate of foreign exchange will be determined which
will be lower than the prevailing foreign exchange rate, leading to appreciation
of domestic currency.
II) False, exchange rate expresses the rate at which one currency exchanges with
1
the other.

Page 1 of 7
14. In figure C is a consumption curve and S is the saving curve. OC is the minimum 4
consumption when income is zero and OCI is negative saving when income is
zero at point B consumption is equal to income and saving is equal to 0 at N,
this is called the breakeven point.

OR 2
a) K=1/MPS => K=1/0.2 = 5
b) K= change in Income/ Change in Investment
substituting K=5 2
5= change in income/1000
Change in income= 5X1000 = 5000 crores
15. When ex-ante aggregate demand is more than ex-ante aggregate supply, it 4
means that households are planning to consume more than what the firms
expect them to this will lead to unintended fall in the inventory
To restore the desired /intended level of inventory produces may expand
production. As a result, there may be an increase in the level of output,
employment, and income in the economy.
16. 1. modern banking system; process of deposit and loan (credit) creation 2
by banks
2. deposit and loan (credit) creation 2
3. money 1
4. Commercial banks
2

17. I)
Year Nominal GDP Deflator Real GDP
1+1+1
GDP (Nominal
GDP/GDP
Deflator)X100)
2021-22 6.5 100 (6.5/100)X100 =6.5

2022-23 8.4 140 (8.4/140)X100 =6

2023-24 9 125 (9/125)X100 =7.2

II) 11/2
Impact on Gross Domestic Product (GDP):
Government expenditure adds to aggregate demand in the economy. It has a
multiplier effect on GDP. To illustrate:
If Government expenditure is ₹ 100 and MPC is assumed to be 0.5, then
increase in GDP would be equal to
=1/1-MPCx 100 =1/1-0.5x100 = 100/0.5= 200

Page 2 of 7
 Impact on Welfare: Expenditure on Yoga is expected to improve physical and 11/2
mental health of the people. Accordingly, skill formation as well as efficiency
are expected to rise. This will improve welfare of the people.
OR
III)
a) A dirty environment would reduce the broad standard of living, but it
would not be counted in GDP, so a rise in GDP would overrate the
standard of living.
1
b) A lower crime rate would raise the broad standard of living, but it would
not be counted directly in GDP. So arise in GDP would understand the
standard of living. 1
c) A greater variety of goods would raise the broad standard of living, but
it would not count it directly in GDP. So rise in GDP would understand
the rise of standard of living. 1
d) A decline in infant mortality rate would raise the broad standard of
living, but it would not be counted directly in GDP. So rise in GDP would
underrate the rise the standard of living. 1
IV)
The given statement is defended as subsidy is a transfer. Payment. Subsidy is
the financial assistance provided by the government to producers to fulfil their 2
social welfare objectives. Government does not get anything in consideration
for the same. It does not contribute to the current flow of goods and services,
and hence do not contribute to any value addition, no marks to be allotted if
reason is not given all wrongly given
18. d. None of these 1

19. a. Statement 1 is true and Statement 2 is false. 1

20. b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the 1
correct explanation of Assertion (A).
21. b. land tenure system 1

22. c. only (i) 1

23. c. Balance of payment adjustment 1

24. b. The green revolution was the main reason for the rise in food grain 1
production in Pakistan
25. d. To bring about a gradual and catastrophic transformation of 1
environment
26. c. Unskilled Manual Work 1

27 c. Objective of investment in new agriculture revenues (non-farm activities) 1

increases financial risks for the rural population
28 Before 1991, the industries were regulated in various ways through industrial
licensing under which every entrepreneur had to get permission from
3
government to start a firm. Close a firm, expand the firm or produce a new
product. B. Private sector was not allowed in many industries.

Page 3 of 7
 C through controls on private fixation and distribution of selected industrial
products d
Some goods could be produced only in small scale industries
OR
Developed countries oppose outsourcing because of the following reasons
A) Outsourcing leads to the drainage of jobs that belong to their middle class. It
feels the high unemployment rate. 3
B) the outsource job leads to poor quality in goods and services produced
C) due to less of paying jobs, consumers stun to words credit, which results in a
weekend economy
29 China is able to lead in almost all the human development indicators with the 3
establishment of infrastructure in the areas of education and health landforms,
long existence of decentralized planning and existence of small enterprises
which can be easily regulated
even before the reforms, basic health services were provided in villages and
food was distributed through the commune system.
Each reform was implemented on a small skill initially, and then spread out on
a large scale
Laws and policies such as the one child among others were strictly enforced.
30 Following factors created conducive environment for new investment in 4
Pakistan
I) adoption of green revolution
II) shift off orientation of nationalisation policy to be nationalization and
encouragement to private sector
III) Financial support from Western Nations
IV) Growing remittances from Pakistani workers in the Middle East
31 (Suggested answer) 2+2
 This is necessary to save on energy. If all main traffic lights are
synchronised. Then the fuel wasted by vehicles waiting on the traffic
lights can be reduced. Similarly, if we con consciously use public
transport in place of private vehicles like scooter, motorcycle and cars,
then it saves fuel.
 Further, if solar panels are installed to fulfil domestic needs of energy
like heating, washing, and cooling, we can save a lot of fossil fuels used
to generate electricity.
OR
Following observations, explain how education system in India is a big
challenge: 1+1+1+1
(I) large number of illiterates: India harbours the largest number of
illiterates in the world, the number exceeds even the total population of
most countries in the world
(II) in adequate vocationalisation: education continue to be largely degree
oriented, throwing millions of educated youths down to the corridors of
employment exchanges. Vocationalisation of education is still a far cry.
(III) Gender bias: there is still a significant gender bias in offering
opportunities of education to male and female children. The enrolment

Page 4 of 7
 ratio is relatively low for the female candidates and their dropout ratio
is considerably high.
(IV) low rural excess level: there is a high degree of disparity in access to
education. The excess level is considerably low for the rural population
compared to the urban.
(V) Privatisation, there is a growing Train towards privatisation of education,
being very expensive. Private education has extended to widen the Gulf
between excess level for the rich and the poor.
32 (suggested answer) 3
The rapid increase in the banking sector particularly after the green revolution,
had a positive impact on farming and non-farming output, employment, and
income. These banking opportunities allowed farmers to take different credit
services, facilities and various loans to meet their production requirements.
Here are a few major credit sources of rural credit in India.
 Co-operative Credit Societies- This source of credit is the most
economical and important source of rural credit. It contributes to 27%
of rural credit. It was set up with the aim of facilitating the complete
credit needs for small and medium farmers. They started supporting the
farmers in a significant way with short-term loans issued by Primary
Agricultural Credit Societies.
 Commercial Banks- contributing to 25% of rural credit. These banks give
both direct and indirect investment to agriculture. Here, direct finance
is issued for a small and medium term allowing farmers to conduct
agricultural operations easily. Indirect finance is given in advances form
to purchase things like grains and fertilisers.
 Landlords- With introduction of successful credit system by formal
organisations, the contribution of Landlords to total credit creation is
only 1%..
 Moneylenders- the rural sector, agricultural credit is still catered by
majorly by Moneylenders. Almost 30% of total credit in agriculture is
contributed by them only. The reason behind is that , they do. Not ask
for collateral. Moreover the requirement for non-developmental
activities like marriage, death and other expenses are not catered by
banks.
 Relatives and friends- they contribute to 7% of total credit in rural area.
 Others- remaining 7% is catered by other sources.
(student may explain in his own style, this is just a sample)
1
II) Long term
33 (suggested answer):- 2
(i) India needs to produce more jobs and move a greater proportion of its
workforce into higher productivity sectors.
(ii) Jobless growth refers to a situation when the economy is able to produce 3
more goods and services without a proportionate increase in employment.
(iii) The government should consider five policies: (any two)
1
1) develop more coherent policies around manufacturing,

Page 5 of 7
 2) double down on services,
3) re-start startup India,
4) resolve tensions around the green transition, and
5) Enhance and improve the labor supply.

34 (suggested answer) 3
I) After forty years of planned development, India has been able to
achieve a strong industrial base and became self-sufficient in the
production of food grains. Nevertheless, a major segment of the
population continues to depend on agriculture for its livelihood. In
1991, a crisis in the balance of payments led to the introduction of
economic reforms in the country. This unit is an appraisal of the
reform process and its implications for India.
II) The single tax implemented from 1 July 2017 was likely to reduce
3
prices of which kind of products? Give example of any three items
which are exempted from GST and why? Give reasons.
Fresh produce: Includes vegetables, fruits, and other perishables that are
not subjected to any form of processing.
Dairy products: Milk (other than flavored milk), butter milk, curd,
unbranded natural honey are exempt from GST.(or any other example)
Goods are exempted from GST for several reasons:
 Affordability: Ensuring essential goods and services remain financially
accessible to all, especially lower-income groups.
 Accessibility: Keeping crucial life necessities within reach for everyone
without the added financial burden of taxes.
 Social Welfare: Supporting the consumption of basic needs which
contribute to the overall welfare and health of the population.
 Economic Stability: Helping stabilize essential sectors vital to the
country’s economy and public well-being.
 Equity: Reducing economic disparities by lessening the tax load on
essential products that form a larger proportion of lower-income
spending.
(any 2 reasons)
OR
I)In the first seven Five Year Plans, India had an inward-looking
strategy. This strategy aimed at replacing or substituting imports
with domestic production i.e., instead of importing goods made in
4
a foreign country, industries would be encouraged to produce them
in India itself. This concept is referred to as import substitution.
Thus, the government protected the domestic industries from
foreign competition through this policy.
Protection from imports took two forms:
(i) Tariffs i.e., a tax on imported goods to make imported goods more
expensive and thus discourage their use.

Page 6 of 7
(ii) Quotas- which limited the quantity of imports.
The policy of import substitution provides protection to domestic
industries from foreign competition. The rationale for this policy is that
industries of developing countries like India are not in a position to
compete against the goods produced by developed economies. It is
assumed that if the domestic industries are protected in the infant stage,
they will gain strength by being able to produce on large scale, and through
experience, they will be able to compete globally in good time.
II)Yes, we do agree with the above statement that the traditional
handicrafts industries were ruined under the British times. The
following are the reasons in favour of the statement.
1. Discriminatory Tariff Policy: The British rule in India corresponded
with its industrialisation. The British rule used India both as a source
of cheap raw materials as well as easy accessible market for their
finished products. Thereby, they imposed heavy tariffs (export
duties) on India’s export of handicraft products, while allowed free
export of India’s raw material to Britain and free import of British
products into India. This made Indian exports costlier and its
international demand fell drastically leading to the collapse of
handicrafts industries.
2. Competition from Machine made Britain Goods: The demand for
the handicrafts products experienced a downward trend in the
domestic markets as well. This was due to stiff competition from the
machine made textiles from Britain. This was because of the reason
that the goods produced mechanically in Britain were
comparatively cheaper and of superior quality than the Indian
handicraft goods. This narrowed the market for Indian industries.
3. Emergence of New Class: The British rule in India popularised
western lifestyle in India. There was an emergence of a new section
of population (consisting mainly of zamindars) in India who liked the
British goods. This section used to spend lavishly on the British
products that provided impetus for the development of British
industries at the cost of the domestic industries. Hence, gradually
Indian industries perished away.
4. Disappearance of Princely State: Prior to the advent of British,
India was ruled by princely states. They used to patronise
handicrafts industries and consequently, Indian handicrafts gained
reputation in the international markets. But during the British rule,
these princely states were ruined thereby ruining the protection of
these handicrafts industries. Thus, gradually Indian handicrafts lost
its reputation and its importance deteriorated.

Page 7 of 7