CBSE Economics Class 12 Sample Paper 4 Page 1

Sample Paper 4
ECONOMICS (030)
Class XII Session 2022-23
Time: 3 Hours Max. Marks: 80
General Instructions:
1. This question paper contains two sections:
Section A – Macro Economics
Section B – Indian Economic Development
2. This paper contains 20 Multiple Choice Questions type questions of 1 mark each.
3. This paper contains 4 Short Answer Questions type questions of 3 marks each to be answered in 60 to 80 words.
4. This paper contains 6 Short Answer Questions type questions of 4 marks each to be answered in 80 to 100 words.
5. This paper contains 4 Long Answer Questions type questions of 6 marks each to be answered in 100 to 150 words.

Section A -Macro Economics

Multiple Choice Questions (Q1 to Q10) 1 ´ 10=10

1. Which out of the following is a monetary measure to correct deficient demand?

(a) Reduce government spending (b) Lowering margin requirements
(c) Increase government spending (d) None of these

2. Read the following statements-Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Fiscal deficit shows a better position of the government expenditure in comparison to budget deficit.
Reason (R): Fiscal deficit reflects borrowings requirement of the government.
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is 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
3. The two key constituents of aggregate demand are________.
(a) Investment and growth (b) Consumption and Investment
(c) Both (a) and (b) (d) Neither (a) nor (b)


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Which of the following is not a reason for excess demand?
(a) Deficit financing (b) Fall in the propensity to consume
(c) Rise in aggregate demand (d) Increase in investments

4. Suppose you are a member of the Advisory Committee to the Finance Minister of India’. The Finance Minister is
concerned about the rising revenue deficit in the budget.
Which of the following measures can be used to control the rising revenue deficit of the government?
(a) Increase taxation (b) Reduce the burden of subsidy
(c) Reduce government administrative expenses (d) Any of these


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Which of the following is the implication of revenue deficit?

(i) A high revenue deficit shows fiscal indiscipline.
(ii) It shows wasteful expenditure of government on administration.
(iii) It implies that government is dissaving.
(a) (i), (ii) and (iii) (b) (i) and (ii) (c) (ii) and (iii) (d) (i) and (iii)

5. Read the following statements carefully:

Statement 1: Sector which transforms one physical good into another physical good is tertiary sector.
Statement 2: Consumption of fixed capital refers to fall in the value of fixed assets due to normal wear and tear and
foreseen obsolescence.
In the light of the given statements, choose the correct alternative from the following:
(a) Statement 1 is false and statement 2 is true (b) Statement 1 is true and statement 2 is false
(c) Both statements 1 and 2 are false (d) Both statements 1 and 2 are true

6. Read the following statements-Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Average Propensity to Consume can be greater than one.
Reason (R): Consumption can be greater than income in an economy.
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is 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

7. Read the following statements carefully:

Statement 1: When the consumption expenditure is more than the income, the value of APS will be negative.
Statement 2: If Marginal Propensity to Save (MPS) is equal to zero, the value of investment multiplier will be not
defined ( 3 ).
In the light of the given statements, choose the correct alternative from the following:
(a) Statement 1 is false and statement 2 is true (b) Statement 1 is true and statement 2 is false
(c) Both statements 1 and 2 are false (d) Both statements 1 and 2 are true

8. The following information is given for an imaginary country:

( all figures in `lakh)
(i) Durable use producer goods with a life 10
span of 10 years
(ii) Single use producer goods 5
(iii) Sales 20
(iv) Unsold output produced during the year 2
(v) Taxes on production 1
Identify the correct value of NVAFC from the given options.
(a) `10 lakh
(b) `20 lakh
(c) `15 lakh
(d) `25 lakh


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CBSE Economics Class 12 Sample Paper 4 Page 3

Read the following figure carefully and choose the correct option from the alternatives given below:

Alternatives :
(a) Real (b) Circular (c) Nominal (d) Either (a), (b) or (c)

9. Read the following statements carefully:

Statement 1: Excess supply is the situation under which aggregate demand exceeds aggregate supply at the full
employment level.
Statement 2: Excess demand is the situation under which aggregate demand falls short of aggregate supply at full
employment level.
In the light of the given statements, choose the correct alternative from the following:
(a) Statement 1 is false and statement 2 is true (b) Statement 1 is true and statement 2 is false
(c) Both statements 1 and 2 are false (d) Both statements 1 and 2 are true

10. Identify the correct pair from the following Column I and Column II.
Column I Column II
A. Excess demand (i) When AD is exceeds AS at the
full employment level of income
B. Inflationary gap (ii) Ratio of change in consumption
expenditure to change in income
C. Autonomous consumption (iii) When AD less than AS at the full
employment level of income
D. Marginal Propensity to Save (iv) Consumption expenditure
planned to be incurred during a
given period
Alternatives:
(a) C - (iii) (b) A - (i) (c) D - (iv) (d) B - (ii)

Short Answer Questions (Q11 to Q12) 3´2=6

11. Read the given text carefully and answer the questions that follow:
Money was historically an emergent market phenomenon that possess intrinsic value as a commodity; nearly all
contemporary money systems are based on unbacked fiat money without use value. Its value is consequently derived
by social convention, having been declared by a government or regulatory entity to be legal tender; that is, it must be
accepted as a form of payment within the boundaries of the country, for “all debts, public and private”, in the case
of the United States dollar. Contexts which erode public confidence, such as the circulation of counterfeit money or
domestic hyperinflation, can cause good money to lose its value.
(a) What is money?
(b) State the components of money supply.

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12. Explain “Bankers” bank function of the Central Bank.

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What do you know about the following?
(a) Legal tender, (b) Fiat money, (c) High powered money

Short Answer Questions (Q13 to Q15) 4 ´ 3 = 12

13. Explain the ‘problem of double counting’ in the estimation of national income with the help of an example. How
can this problem be avoided?


o
What are ‘non-monetary exchanges’? Explain with suitable examples how they are a limitation of the GDP as an
‘indicator of welfare’.

14. Find Gross Value Added at Market Price from the given data:
(`Lakh)
(i) Depreciation 20
(iv) Domestic sales 200
(v) Net change in stocks (–)10
(vi) Exports 10
(vii) Single use producer goods 120

15. Read the given text carefully and explain the basis of classifying taxes into direct and indirect tax with examples.
To run a nation judiciously, the government needs to collect tax from the eligible citizens; paying taxes to the local
government is an integral part of everyone’s life, no matter where we live in the world. Now, taxes can be collected
in any form such as state taxes, central government taxes, direct taxes, indirect taxes, and much more. For your ease,
taxation is divided into two categories, viz. direct taxes and indirect taxes. This segregation is based on how the tax
is being paid to the government.

Long Answer Questions (Q16 to Q17) 6 ´ 2 = 12

16. (a) On the basis of given figures interpret India’s performance in BoP and foreign exchange reserve.

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CBSE Economics Class 12 Sample Paper 4 Page 5

(b) Distinguish between depreciation of a currency and devaluation of a currency.

17. Draw a hypothetical propensity to consume curve and from it derive the propensity to save curve. Explain the steps
involved.


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Explain the ‘Consumption Function’ with the help of a schedule and diagram.

Section B -Indian Economic Development

Multiple Choice Questions (Q18 to Q27) 1 ´ 10=10

18. In which of the following areas, Pakistan has an edge over India?
(i) Export of software after economic reforms
(ii) Number of Phd’s produced in science and engineering every year
(iii) Percentage of undernourished children
(a) (i) and (iii) (b) (ii) and (iii) (c) only (iii) (d) (i) and (ii)

19. Read the following statements carefully:

Statement 1: In 1997, a UN conference on climate change was held in Japan.
Statement 2: Global warming refers to the destruction of ozone in the ozone layer, due to presence of chlorine from
man-made chlorofluorocarbons and other forces.
In the light of the given statements, choose the correct alternative from the following:
(a) Statement 1 is false and statement 2 is true (b) Statement 1 is true and statement 2 is false
(c) Both statements 1 and 2 are false (d) Both statements 1 and 2 are true

20. What is the full form of PPP in terms of Gross Domestic Product?
(a) Purchasing Power Price (b) Purchasing Power Parity
(c) Public Private Partnership (d) None of these

21. Read the following statements carefully:

Statement 1: Sarva Siksha Abhiyan (SSA) was launched in 2000 to ensure 5 years of primary education for all
children in the age group of 6-14 years by 2007 and 8 years of schooling by 2010.
Statement 2: National Programme for Education of Girls at Elementary Level was launched in 2003, under SSA, for
providing additional support for education of under-priviliged girls at the elementary level.
In the light of the given statements, choose the correct alternative from the following:
(a) Statement 1 is false and statement 2 is true (b) Statement 1 is true and statement 2 is false
(c) Both statements 1 and 2 are false (d) Both statements 1 and 2 are true

22. Which of the following are major fish producing states in India?
(i) Odisha
(ii) Gujarat
(iii) Maharashtra
(iv) Andhra Pradesh
(a) (i), (ii) and (iii) (b) (i), (ii) and (iv) (c) (i), (iii) and (iv) (d) (ii), (iii) and (iv)


o
Surplus population engage in agriculture can be employed in:
(a) Fisheries (b) Horticulture
(c) Animal husbandry (d) Any of these

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23. Read the following statements-Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Pakistan shifted its policy orientation in late 1970s and 1980s.
Reason (R): A variety of regulated policy framework after independence lead to slow growth of Pakistan.
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is 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

24. China is moving ahead of India and Pakistan is true for ______ indicator.
(a) HDI ranking (b) GDP per capita
(c) Proportion of population below poverty line (d) All of these


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A campaign in China in 1958 where people were encouraged to set up industries in their backyard was named as:
(a) Anti-rightist Movement (b) Great Leap Forward
(c) Four Pests Campaign (d) Great Proletarian Cultural Revolution

25. Match the situations given in Column I with their respective implications given in Column II and choose the correct
alternative:
Column I Column II
A. White revolution (i) It is also known as the Neel
Kranti Mission
B. Blue revolution (ii) It was found by MS
Swaminathan
C. Golden revolution (iii) It is also known as Operation
Flood.
D. Green revolution (iv) It is related to increased
production of honey and
horticulture.
Alternatives:
(a) A - (iii), B - (iv), C - (ii), D - (i)
(b) A - (iii), B - (i), C - (ii), D - (iv)
(c) A - (iii), B - (ii), C - (i), D - (iv)
(d) A - (iii), B - (i), C - (iv), D - (ii)

26. Read the following statements-Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): International monetary fund was set in 1944.
Reason (R): To promote international monetary cooperation through a permanent institution which provides
machinery for consultation and collaboration on international monetary problems.
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is 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


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CBSE Economics Class 12 Sample Paper 4 Page 7

Read the following statements-Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Second Five Year Plan emphasise on the establishment of heavy industries.
Reason (R): Third Five Year Plan introduced the concept of import substitution as a strategy of industrialization.
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is 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

27. Which duty has been removed to increase the competitive position of Indian goods in the international markets?
(a) Custom duty (b) Import duty (c) Export duty (d) None of these

Short Answer Questions (Q28 to Q29) 3´2=6

28. Give the steps taken towards ‘Privatisation’ in 1991.

o
State the fiscal reforms introduced under the New Economic Policy in 1991.

29. Interpret the given picture on account of economic reforms of 1991.

Short Answer Questions (Q30 to Q32) 4 ´ 3 = 12

30. Answer the following questions on the basis of the following data:
Country Annual Growth of Sex Ratio
Population (%)
India 1.2 929
Pakistan 2.1 947
(a) Comment upon the annual population growth rate in India and Pakistan.
(b) Comment upon the Sex Ratio in both the above countries.

31. What do you mean by globalisation? Give its main features.

o
Highlight the main features of Indian economy on the eve of independence.

32. What activities you would suggest to generate employment in rural areas?

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Long Answer Questions (Q33 to Q34) 6 ´ 2 = 12

33. Why is the world faced with an environmental crisis?

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Provide any three suggestions to improve agricultural marketing.

34. Read the following text carefully and answer the given questions on the basis of the same and common understanding:
People, generally are emotionally attached to their place of birth. But millions of people leave their places of birth
and residence. There could be variety of reasons. These reasons can be put into two broad categories, i.e., push
factor, these cause people to leave their place of residence or origin; and pull factors, which attract the people from
different places.
In India, people migrate from rural to urban areas mainly due to poverty, high population pressure on the land, lack
of basic infrastructural facilities like healthcare, education, etc. Apart from these factors, natural disasters such
as flood, drought, cyclonic storms, earthquake, tsunami, wars and local conflicts also give extra push to migrate.
On the other hand, there are pull factors which attract people from rural areas to cities. The most important pull
factor for majority of the rural migrants to urban areas is the better opportunities, availability of regular work and
relatively higher wages. Better opportunities for education, better health facilities and sources of entertainment, etc.,
are also quite important pull factors.
Hence, migration is a response to the uneven distribution of opportunities over space. People tend to move from
place of low opportunity and low safety to the place of higher opportunity and better safety. This, in turn, creates
both benefits and problems for the areas, people migrate from and migrate to. Consequences can be observed in
economic, social, cultural, political and demographic terms.
(a) Explain, why in India people mainly migrate from rural to urban areas?
(b) Explain, how expenditure on migration is a source of human capital formation?

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