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# Economics Delhi Set 2 2014-2015 CBSE (Science) Class 12 Question Paper Solution

SubjectEconomics
Year2014 - 2015 (March)
Economics [Delhi Set 2]
Marks: 100Date: 2014-2015 March

[1]1

If Marginal Rate of Substitution is constant throughout, the Indifference curve will be :(choose the correct alternative)

a. Parallel to the x-axis.
b. Downward sloping concave.
c. Downward sloping convex.
d. Downward sloping straight line.

Concept: Indifference Curve
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[1]2

Define budget set.

Concept: Consumer's Budget
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[1]3

When the income of the consumer falls the impact on a price-demand curve of an inferior good is: (choose the correct alternative)

a. Shifts to the right.
b. Shifts of the left.
c. There is upward movement along the curve.
d. There is downward movement along the curve

Concept: Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[3]4

The measure of price elasticity of demand of a normal good carries minus sign while price elasticity of supply carries plus sign. Explain why?

Concept: Elasticity of Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[3]5

Giving reason comment on the shape of production possibilities curve based on the following schedule:

 Good X (units) Good Y (units) 0 8 1 6 2 4 3 2 4 0
Concept: Concepts of Production Possibility Frontier
Chapter: [0.021] Introduction
[3]6 | Attempt Any One
[3]6.1

What will be the impact of recently launched 'Clean India Mission' (Swachh Bharat Mission) on the Production Possibilities curve of the economy and why?

Concept: Concept of Production
Chapter: [0.023] Producer Behaviour and Supply
[3]6.2

What will likely be the impact of large-scale outflow of foreign capital on Production Possibilities curve of the economy and why?

Concept: Concept of Production
Chapter: [0.023] Producer Behaviour and Supply
[3]7

What is maximum price ceiling? Explain its implications.

Concept: Price Ceiling
Chapter: [0.024] Forms of Market and Price Determination
[3]8

Explain the implications of the following in a perfectly competitive market :

Large number of sellers

Concept: Main Market Forms
Chapter: [0.024] Forms of Market and Price Determination
[4]9 | Attempt Any One
[4]9.1

Define cost.

Concept: Cost - Fixed Cost
Chapter: [0.023] Producer Behaviour and Supply

State the relation between marginal cost and average variable cost.

Concept: Cost - Average Variable Cost
Chapter: [0.023] Producer Behaviour and Supply
[4]9.2

Define revenue

Concept: Measures of Government Deficit Or Surpluses
Chapter: [0.016] Government Budget and the Economy

State the relation between marginal revenue and average revenue.

Concept: Total, Average and Marginal Revenue
Chapter: [0.023] Producer Behaviour and Supply
[4]10

A consumer spends Rs 60 on a good priced at Rs 5 per unit. When price rises by 20 percent, the consumer continues to spend Rs 60 on the good. Calculate the price elasticity of demand by percentage method.

Concept: Elasticity of Demand
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[6]11

Market for a good is in equilibrium. There is simultaneous "decrease" both in demand and supply of the good. Explain its effect on market price

Concept: Market Equilibrium
Chapter: [0.024] Forms of Market and Price Determination
[6]12

Why is the equality between marginal cost and marginal revenue necessary for a firm to be in equilibrium? Is it sufficient to ensure equilibrium? Explain.

Concept: Concept of Producer's Equilibrium
Chapter: [0.023] Producer Behaviour and Supply
[6]13

State the behaviour of marginal product in the law of variable proportions. Explain the causes of this behaviour

Concept: Law of Variable Proportions
Chapter: [0.023] Producer Behaviour and Supply
[6]14 | Attempt Any One
[6]14.1

A consumer consumes only two goods X and Y both priced at Rs 3 per unit. If the consumer chooses a combination of these two goods with Marginal Rate of Substitution equal to 3, is the consumer in equilibrium? Give reasons. What will a rational consumer do in this situation? Explain

Concept: Consumer'S Equilibrium
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[6]14.2

A consumer consumes only two goods X and Y whose prices are Rs 4 and Rs 5 per unit respectively. If the consumer chooses a combination of the two goods with marginal utility of X equal to 5 and that of Y equal to 4, is the consumer in equilibrium? Give reason. What will a rational consumer do in this situation? Use utility analysis.

Concept: Consumer'S Equilibrium
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[1]15

Borrowing in government budget is: (choose the correct alternative)

a. Revenue deficit
b. Fiscal deficit
c. Primary deficit
d. Deficit in taxes

Concept: Meaning of Government Budget
Chapter: [0.016] Government Budget and the Economy
[1]16

Define aggregate supply?

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
[1]17

The value of the multiplier is: (choose the correct alternative)

a. 1/"MPC"

b. 1/"MPS"

c. 1/(1-"MPS")

d. 1/(MPC- 1)

Concept: Investment Multiplier and Its Mechanism
Chapter: [0.011000000000000001] Determination of Income and Employment
[1]18

Other things remaining unchanged, when in a country the price of foreign currency rises, national income is: (choose the correct alternative)

a. Likely to rise
b. Likely to fall
c. Likely to rise and fall both
d. Not affected

Concept: Concept of National Income
Chapter: [0.012] National Income and Related Aggregates
[1]19

The non-tax revenue in the following is: (choose the correct alternative)

a. Export duty
b. Import duty
c. Dividends
d. Excise

Concept: Direct and Indirect Tax
Chapter: [0.016] Government Budget and the Economy
[3]20

Where will the sale of machinery to abroad be recorded in the Balance of Payments Accounts? Give reasons.

Concept: Concept of Balance of Payments Account
Chapter: [0.015] Balance of Payments
[3]21

If the Nominal GDP is Rs. 1200 and Price Index (with base = 100) is 120, calculate Real GDP.

Concept: Gross and Net Domestic Product (GDP and NDP)
Chapter: [0.012] National Income and Related Aggregates
[3]22 | Attempt Any One
[3]22.1

Name the broad categories of transactions recorded in the 'capital account' of the Balance of Payments Account

Concept: Concept of Balance of Payments Account
Chapter: [0.015] Balance of Payments
[3]22.2

Name the broad categories of transactions recorded in the 'current account' of the Balance of Payments Accounts

Concept: Concept of Balance of Payments Account
Chapter: [0.015] Balance of Payments
[4]23

An economy is in equilibrium. Find 'autonomous consumption' from the following:
National income = 1000
Marginal propensity to consume = 0.8
Investment expenditure = 100

Concept: Consumption Function and Propensity to Save
Chapter: [0.011000000000000001] Determination of Income and Employment
[4]24 | Attempt Any One
[4]24.1

Explain the ‘bank of issue’ function of central bank.

Concept: Function of Central bank - Bank of Issue
Chapter: [0.013999999999999999] Money and Banking
[4]24.2

Explain "Banker to the Government" function of the Central Bank.

Concept: Central bank Function - Goverment Bank
Chapter: [0.013999999999999999] Money and Banking
[4]25

A government of India has recently launched 'Jan-Dhan Yojana' aimed at every household in the country to have at least one bank account. Explain how deposits made under the plan are going to affect the national income of the country.

Concept: Concept of National Income
Chapter: [0.012] National Income and Related Aggregates
[6]26

Explain the role of government budget in influencing allocation of resources.

Concept: Government Budget - Allocation of Resources
Chapter: [0.016] Government Budget and the Economy
[6]27

Giving reason explain how should the following be treated in the estimation of national income:

Expenditure by a firm on payment of fees to a chartered accountant

Concept: Concept of National Income
Chapter: [0.012] National Income and Related Aggregates

Giving reason explain how should the following be treated in the estimation of national income:

Payment of corporate tax by a firm

Concept: Concept of National Income
Chapter: [0.012] National Income and Related Aggregates

Giving reason explain how should the following be treated in the estimation of national income:

Purchase of refrigerator by a firm for own use

Concept: Concept of National Income
Chapter: [0.012] National Income and Related Aggregates
[6]28 | Attempt Any One
[6]28.1

What is meant by inflationary gap?

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment

Explain the role of Repo Rate in reducing the Inflationary gap.

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
[6]28.2

Explain the concept of Deflationary Gap

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment

Explain the role of 'Open Market Operations' in reducing Deflationary Gap

Concept: Concept of Aggregate Demand and Aggregate Supply
Chapter: [0.011000000000000001] Determination of Income and Employment
[6]29

Calculation National Income and Personal Disposable Income:

 (Rs crores) 1 Rent 100 2 Net current transfers to rest of the world 30 3 Social security contributions by employers 47 4 Mixed income 600 5 Gross domestic capital formation 140 6 Royalty 20 7 Interest 110 8 Compensation of employees 500 9 Net domestic capital formation 120 10 Net factor income from abroad (-)10 11 Net indirect tax 150 12 Profit 200

Concept: Concept of National Income
Chapter: [0.012] National Income and Related Aggregates

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