Sample Paper with Solution by Experts for Ace 2 Term Last Minute Review!

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The CSBE Class 12 Economics Term 2 2022 exam will take place on May 28, 2022. Students are currently in their final review mode. The more questions students solve, the better their results. So, Jagran Josh experts have offered some sample questions along with solutions below.

CBSE Class 12 Economics Term 2: Sample Paper

1. Distinguish between stocks and flows. Also give two examples of each.

Rep.

Store

To flow

It refers to that variable which is measured at a given time.

It refers to that variable which is measured over a period of time.

It has no time dimension.

It has a time dimension because its magnitude can be measured over a period of time

Examples – Population of India as of 31.3.2021, money supply, national wealth

Examples – Number of births in 2020, national income, money expenditure.

2. Define externalities. Give an example of a negative externality. What is its impact on well-being?

Ans:- Externalities: – The GDP index does not take into account externalities: the good and the bad impact of economic activities without the price or the penalty.

Impact on well-being: this also reduces the importance of GDP as an index of well-being.

3. Distinguish “real” GDP and “nominal” GDP. Which of these indices is the best index of people’s well-being and why?

Rep. NOMINAL GDP:- Nominal GDP is the market value of final goods and services (Q) produced within the national territory of a country during an accounting year, as estimated using the price of l current year (P).

Nominal GDP = Q x P

(When nominal GDP increases, the flow of goods and services in the economy may or may not increase over a period of time.

fiscal year)

REAL GDP:- Real GDP is the market value of final goods and services (Q) produced within the national territory of a country during an accounting year, as estimated using the price of l base year (*P).

Nominal GDP = Q x *P

GDP AND WELL-BEING: – Real GDP is considered as an index of the well-being of the population. People’s well-being is measured in terms of the availability of goods and services per person. The higher the GDP growth, the greater the flow of goods and services. The greater the availability of goods and services per person.

4 . Give reasons for how the following items should be treated in estimated GDP at market price?

(i) Fees for a mechanic paid by a company.

(ii) Interest paid by an individual on an automobile loan taken out with a bank.

(iii) Expenses for the purchase of a car for the use of a company.

Rep. (i) Fees paid to the mechanic by a company are not included as it is an intermediate cost of the company.

(ii) Interest paid by an individual is not included because the loan is taken out to cover consumption expenses and therefore the interest paid on such a loan is not a payment factor.

(iii) Expenditure on the purchase of care by a company is included because it is a capital expenditure, a final expenditure.

5. Giving the reason, explain if the following products are included in the national products of India.

(i) Profits earned by a branch of a foreign bank in India.

(ii) Payment of salaries of its staff by an embassy located in New Delhi.

(iii) Interest received by an Indian resident from his overseas businesses.

Rep. (i) As profits are earned within the domestic territory of India, profits earned by a branch of the foreign bank in India will be “included” in the domestic income of India.

(ii) The payment of salaries of its staff by an embassy located in New Delhi will be “not included” in the inland income of India, as it is not part of the inland territory of India.

(iii) Since interest received by an Indian resident from his overseas businesses is foreign sourced factor income, it will be “not included” in the domestic income of India.

6. Calculate the net value added at factor cost from the following data.

S. No

Items

Rs. in lakh

1

Purchases of raw materials

300

2

Import duty

20

3

excise duty

30

4

Net addition to inventory

50

5

Output value

500

6

Depreciation

ten

Answer :- Net value added at factor cost = Value of production – Purchases of raw materials – Depreciation – Import duties – Excise duties

= Rs. 500 – 300 – 10 – 20 – 30 lakh = Rs. 140 lacs

Net value added at factor cost = Rs. 140 lacs

7. What is the global offer?

Rep. Aggregate supply refers to the flow of goods and services in an economy over the course of a year. This is the ex-ante production during the year

8. Give Involuntary Unemployment Mining

Rep. Involuntary unemployment refers to a situation in which people are willing to work at the existing wage rate, but cannot find work due to a lack of demand in the market.

9. C= 100 + 0.4 Y is the consumption function of an economy where C is consumption expenditure and

Y is the national income. Capital expenditure is 1,100. Calculate

(I) Equilibrium level of national income.

(II) Consumption expenditure at the equilibrium level of national income.

Answer:-At equilibrium:- Y=C+I

Y=100+0.4Y+1100

Y= 1200+0.4Y

Y-0.4=1200

0.6Y=1200

Y=1200/0.6=2000

C=100+0.4Y

= 100+0.4(2000) =100+800 =900

(I) Equilibrium level of national income = 2000

(II) Consumption expenditure at equilibrium level of national income =900

10. Calculate the marginal propensity to save from the following data on an economy in equilibrium:

National income = 1000

Autonomous consumption expenditure = 100

Investment = 120

Answer: At the equilibrium level, Y = C + I

Y = ̅+ MPC(Y) +I

1000 = 100+ MPC (1000) + 120

1000 = 220 + 1000(MPC)

1000 (MPC) = 780

MPC = 780 / 1000 = 0.78

MPS = 1 – CMP , MPS = 1 – 0.78 = 0.22

11. What is “excess demand”? Explain the role of the “reverse repo rate” in its removal?

Rep. Excess demand (Inflation gap) refers to a situation where aggregate demand exceeds aggregate supply (AD > AS) corresponding to the full employment level in the economy.

The repo rate induces the commercial bank to store its excess funds with the RBI for a short period. Towards Correction situation Deficient demand (Deflationary gap):

(i) The repo rate is falling.

(ii) As a follow-up measure, the commercial bank will reduce its deposits with the RBI (CB)

(iii) This, in turn, will increase their ability to earn money.

(iv) As a result, consumption and investment expenditure will be increased.

(v) Implying an increase in the correct AD situation and deficient demand (deflationary gap).

12. “Since the late 1970s, many developing countries, including India, began to pay attention to informal sector enterprises and workers.” Comment.

Rep. The statement given is correct. The reason is that employment in the formal sector is not increasing. The percentage of people employed in the formal sectors in India is only 6%. The remaining 94% belong to the informal sector. However, workers and enterprises in the informal sector do not receive regular income; they have no protection from the government.

Workers are fired without any compensation. The technology used in informal sector enterprises is outdated. Informal sector workers live in slums and are squatters. Lately, through the efforts of the International Labor Organization (ILO), the Indian government has initiated the upgrading of informal sector enterprises and the provision of social security measures to informal sector workers.

13. Should jobs be created in the formal sector rather than in the informal sector? Why?

Ans: The formal sector not only provides jobs, but also several social security benefits. A worker in the formal sector receives higher wages and social security benefits. Various social security benefits which allow the worker to be assured of a better quality of life when he becomes old or suffers from a physical incapacity. After a worker’s life, his family members can be assured of a decent life. The situation is completely opposite in the informal sector where even a regular salary is a dream for most workers. It is therefore necessary to create jobs in the formal sector rather than in the informal sector.

14. Define infrastructure. Explain social infrastructure and economic infrastructure

Rep. It refers to those fundamental elements of economic and social change that serve as a support system for productive activity in the economy.

Economic infrastructure:

It refers to all the elements of economic change such as energy, transport, communications, etc., which serve as a support system for the process of economic growth. It promotes economic growth which results in an increase in the standard of living of the population.

Social infrastructure:

It refers to the building blocks of social change like schools, colleges, hospitals, banks, etc. that serve as a support system for a country’s social development process. Social infrastructure focuses on the development of human resources, which involves the development of skilled personnel as well as healthy and efficient human beings.

15. What similar development strategies have India and Pakistan followed for their respective development trajectories?

Rep. Similar development strategies of India and Pakistan are

  1. India has the largest democracy in the world. Pakistan has an authoritarian militaristic political power structure.
  2. India and Pakistan have followed a mixed economy approach. Both countries have created a large public sector and planned to increase public spending on social development.

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CBSE Class 12 Economics Sample Paper for Term 2 Exam 2022: Best for Last Minute Revision

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