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

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Economics [Foreign Set 2]
Marks: 100Date: 2014-2015 March

[1]1

A consumer consumes only two goods. If the price of one of the goods falls, the indifference curve: (Choose the correct alternative)

a. Shifts upwards
b. Shifts downwards
c. Can shift both upwards or downwards
d. Does not shift

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

What is meant by monotonic preferences?

Concept: Preferences of the Consumer
Chapter: [0.022000000000000002] Consumer Equilibrium and Demand
[1]3

If with the rise in the price of good Y, demand for good X rises, the two goods are: (Choose the correct alternative)

a. Substitutes
b. Complements
c. Not related
d. Jointly demanded

Concept: Demand Curve and Its Slope
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 table :

Good X (units) Good Y (units)
0 20
1 18
2 14
3 8
4 0
Concept: Concepts of Production Possibility Frontier
Chapter: [0.021] Introduction
[3]6 | Attempt one of the following
[3]6.1

What will be the impact of "Education for All campaign" (Sarv Shiksha Abhiyan) on the Production Possibilities Curve of the Indian economy and why?

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

What will likely be the impact of the large-scale inflow of foreign capital in India on Production Possibilities Curve 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 significance of the feature 'product differentiation' in monopolistic competition.

 

Concept: Main Market Forms
Chapter: [0.024] Forms of Market and Price Determination
[4]9 | Attempt one of the following
[4]9.1

What is supply?

Concept: Concept of Supply
Chapter: [0.023] Producer Behaviour and Supply

Explain the effect of technological progress on supply of a good.

Concept: Concept of Supply
Chapter: [0.023] Producer Behaviour and Supply
[4]9.2

What is 'change in supply'? Explain the effect of tax imposed on a good on the supply of the good.

Concept: Movements Along and Shifts in Supply Curve
Chapter: [0.023] Producer Behaviour and Supply
[4]10

A consumer spends Rs 200 on a good priced at Rs 5 per unit. When the price falls by 20 percent, he continues to spend Rs 200. Find the price elasticity of demand by percentage method.

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

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

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

Explain why will a producer not be in equilibrium if the conditions of equilibrium are not met.

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 one of the following
[6]14.1

A consumer consumes only two goods, each priced at Rupee one per unit. If the consumer chooses a combination of the two goods with Marginal Rate of Substitution equal to 2, is the consumer in equilibrium? Give reasons. Explain what will a rational consumer do in this situation.

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 2 and Rs 1 per unit respectively. It the consumer chooses a combination of the two goods with marginal utility of X being 4 and that of Y also being 4, is the consumer in equilibrium ?Give reasons. Explain what will a rational consumer do in this situation. Use Marginal Utility Analysis.

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

Primary deficit in a government budget equals : (Choose the correct alternative)

a. Interest payments
b. Interest payments less borrowings
c. Borrowings less interest payments
d. None of the above

Concept: Deficit Budget - Primary Deficit
Chapter: [0.016] Government Budget and the Economy
[1]16

Name any two components of 'aggregate demand'.

 

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

If MPC = 1, the value of the multiplier is: (Choose the correct alternative)

a. 0
b. 1
c. Between 0 and 1
d. Infinity

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

Other things remaining the same, when the foreign currency becomes cheaper, the effect on national income is likely to be : (Choose the correct alternative)

a. Positive
b. Negative
c. Positive and negative both
d. No effect

Concept: Concept of Foreign Exchange Rate
Chapter: [0.015] Balance of Payments
[1]19

Which one of these is a revenue expenditure?

a. Purchase of shares
b. Loans advanced
c. Subsidies
d. Expenditure on acquisition of land

Concept: Classification of Expenditure
Chapter: [0.016] Government Budget and the Economy
[3]20

Giving reasons explain where charity to foreign countries is recorded in the Balance of Payments Accounts

Concept: Systems of Exchange Rates
Chapter: [0.015] Balance of Payments
[3]21
If the Real Gross Domestic Product is Rs 200 and the Nominal Gross Domestic Product is Rs 210, calculate the Price Index (base = 100).
Concept: Gross and Net Domestic Product (GDP and NDP)
Chapter: [0.012] National Income and Related Aggregates
[3]22 | Attempt one of the following
[3]22.1

Give the meanings of 'autonomous' transactions and 'accommodating' transactions in the Balance of Payments Accounts.

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

Give the meanings of Balance of Trade and Balance on Current Account of 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 the Investment Expenditure from the following :
National Income = 750
Autonomous Consumption = 200
Marginal Propensity to Save = 0.4

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

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

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

Explain 'Bankers' Bank' function of the central bank.

Concept: Central Bank Function - Banker's Bank
Chapter: [0.013999999999999999] Money and Banking
[4]25

Currency is issued by the central bank, yet we say that commercial banks create money. Explain. How is this money creation by commercial banks likely to affect the national income? Explain

Concept: Function of Central bank - Bank of Issue
Chapter: [0.013999999999999999] Money and Banking
[6]26

Explain the role of government budget in fighting inflationary and deflationary tendencies.

 

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:

Payment of corporate tax by a firm

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

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

Purchase of machinery by a factory for own use

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

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

Purchase of uniforms for nurses by a hospital

Concept: Concept of National Income
Chapter: [0.012] National Income and Related Aggregates
[6]28 | Attempt one of the following
[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 Cash Reserve Ratio in removing an 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 'deficient demand' in macroeconomics.

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

Explain the role of 'Margin Requirements' in removing this deficient demand gap.

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

Calculate National Income and Private Income :

    (Rs crores)
(i) Net imports 5
(ii) Net domestic capital formation 15
(iii) Personal income 90
(iv) National debt interest 10
(v) Corporate tax 25
(vi) Government final consumption expenditure 20
(vii) Net factor income to abroad (−) 5
(viii) Net indirect tax 10
(ix) Undistributed profits 0
(x) Private final consumption expenditure 100
Concept: Aggregates related to National Income - Private Income
Chapter: [0.012] National Income and Related Aggregates

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