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Question Paper Solutions for Economics All India Set 1 2017-2018 CBSE (Arts) Class 12

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Marks: 80
[1]1

State one example of positive economics.

Chapter: [1.01] Introduction
Concept: Positive and Normative Economics
[1]2

Define fixed cost. Give an example.

Chapter: [1.03] Producer Behaviour and Supply
Concept: Cost - Fixed Cost
[1]3

When the Average Product (AP) is maximum, the Marginal Product (MP) is: (Choose the correct alternative)

(a) Equal to AP

(b) Less than AP

(c) More than AP

(d) Can be any one of the above

Chapter: [1.03] Producer Behaviour and Supply
Concept: Average and Marginal Physical Products
[1]4

When the total fixed cost of producing 100 units is Rs 30and the average variable cost Rs 3, total cost is : (Choose the correct alternative)

(a) Rs 3

(b) Rs 30

(c) Rs 270

(d) Rs 330

Chapter: [1.03] Producer Behaviour and Supply
Concept: Basic Concepts of Cost
[3]5 | Attempt one of the following
[3]5.1

Explain the central problem for whom to produce.

Chapter: [1.01] Introduction
Concept: Central Problems of an Economy
[3]5.2

Explain the central problem of "choice of technique".

Chapter: [1.03] Producer Behaviour and Supply
Concept: Concept of Production
[3]6

What is meant by inelastic demand?

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Demand

Compare inelastic demand with perfectly inelastic demand.

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Demand
[4]7 | Attempt one of the following
[4]7.1

Given the price of a good, how does a consumer decide as to how much of the good to buy?

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Consumer'S Equilibrium
[4]7.2

Define an indifference curve.

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Indifference Curve

Explain the three properties of the indifference curves.

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Indifference Curve
[4]8

When the price of a commodity changes from Rs 4 per unit to Rs 5 per unit, its market supply rises from 100 units to 120 units. Calculate the price elasticity of supply. Is supply elastic? Given reason

Chapter: [1.03] Producer Behaviour and Supply
Concept: Concept of Supply
[4]9

What is meant by price ceiling? Explain its implications.

Chapter: [1.04] Forms of Market and Price Determination
Concept: Price Ceiling
[6]10

Explain the conditions of consumer’s equilibrium using indifference curve analysis.

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Indifference Curve
[6]11

Explain the conditions of a producer's equilibrium in terms of marginal cost and marginal revenue. Use diagram.

Chapter: [1.03] Producer Behaviour and Supply
Concept: Concept of Producer's Equilibrium
[6]12 | Attempt one of the following
[6]12.1

Features of Monopolistic Competition.

Chapter: [1.04] Forms of Market and Price Determination
Concept: Main Market Forms

Which of the characteristics separates it from perfect competition and why?

Chapter: [1.04] Forms of Market and Price Determination
Concept: Main Market Forms
[6]12.2 | Explain the implications of the following :
[3]12.2.1

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

Freedom of entry and exit to firms

Chapter: [1.04] Forms of Market and Price Determination
Concept: Main Market Forms
[3]12.2.2

Explain the implications of the following in an oligopoly market:

Non-price competition

Chapter: [1.04] Forms of Market and Price Determination
Concept: Main Market Forms
[1]13

Which of the following affects national income? (Choose the correct alternative)

(a) Goods and Service tax

(b) Corporation tax

(c) Subsidies

(d) None of the above

Chapter: [2.01] National Income and Related Aggregates
Concept: Concept of National Income
[1]14

Define money supply

Chapter: [2.03] Determination of Income and Employment
Concept: Changes in Government Spending Taxes and Money Supply
[1]15

The central bank can increase availability of credit by: (Choose the correct alternative)

(a) Raising repo rate

(b) Raising reverse repo rate

(c) Buying government securities

(d) Selling government securities

Chapter: [2.02] Money and Banking
Concept: Definition - Central Bank
[1]16

Why does consumption curve not start from the origin?

Chapter: [2.03] Determination of Income and Employment
Concept: Concept of Aggregate Demand and Aggregate Supply
[3]17 | Attempt one of the following
[3]17.1

Which among the following are final goods and which are intermediate goods? Give reasons.

1) Milk purchased by a tea stall

2) Bus purchased by a school

3) Juice purchased by a student from the school canteen

Chapter: [2.01] National Income and Related Aggregates
Concept: Basic Concepts - Final Goods
[3]17.2

Given normal income, how can we find real income? Explain.

Chapter: [2.01] National Income and Related Aggregates
Concept: Methods of Calculating National Income - Income Method
[3]18

Define multiplier

Chapter: [2.03] Determination of Income and Employment
Concept: Investment Multiplier and Its Mechanism

What is the relation between marginal propensity to consume and multiplier?

Chapter: [2.03] Determination of Income and Employment
Concept: Investment Multiplier and Its Mechanism

Calculate the marginal propensity to consume if the value of multiplier.

Chapter: [2.03] Determination of Income and Employment
Concept: Investment Multiplier and Its Mechanism
[4]19

Explain the role of the Reserve Bank of India as the “lender of last resort”.

Chapter: [2.02] Money and Banking
Concept: Definition - Central Bank
[4]20 | Attempt one of the following
[4]20.1

What is meant by inflationary gap?

Chapter: [2.03] Determination of Income and Employment
Concept: Concept of Aggregate Demand and Aggregate Supply

State three measures to reduce inflationary gap.

Chapter: [2.03] Determination of Income and Employment
Concept: Concept of Aggregate Demand and Aggregate Supply
[4]20.2

What is aggregate demand?

Chapter: [2.03] Determination of Income and Employment
Concept: Concept of Aggregate Demand and Aggregate Supply

State components of Aggregate demand ?

Chapter: [2.03] Determination of Income and Employment
Concept: Concept of Aggregate Demand and Aggregate Supply
[4]21

The value of marginal propensity to consume is 0.6 and initial income in the economy is Rs 100 crores. Prepare a schedule showing Income, Consumption and Saving. Also show the equilibrium level of income by assuming autonomous investment of Rs 80 crores.

Chapter: [2.03] Determination of Income and Employment
Concept: Consumption Function and Propensity to Save
[6]22 | Attempt one of the following
[6]22.1 | Explain the meaning of the following
[2]22.1.1

Explain 'Revenue Deficit in a Government budget? What does it indicate?

Chapter: [2.04] Government Budget and the Economy
Concept: Measures of Government Deficit Or Surpluses
[2]22.1.2

Define fiscal deficit

Chapter: [2.04] Government Budget and the Economy
Concept: Measures of Government Deficit Or Surpluses
[2]22.1.3

What is primary deficit?

Chapter: [2.04] Government Budget and the Economy
Concept: Deficit Budget - Primary Deficit
[6]22.2 | Explain the following objectives of government budget:
[3]22.2.1

Explain the role of Government budget in allocation of resources.

Chapter: [2.04] Government Budget and the Economy
Concept: Government Budget - Allocation of Resources
[3]22.2.2

Explain the following objective of government budget:

Reducing income inequalities

Chapter: [2.03] Determination of Income and Employment
Concept: Changes in Government Spending Taxes and Money Supply
[6]23

Explain the impact of rise in exchange rate on national income.

Chapter: [2.01] National Income and Related Aggregates
Concept: Concept of National Income

Explain the concept of 'deficit' in balance of payments.

Chapter: [2.05] Balance of Payments
Concept: Concept of Balance of Payments Account
[6]24

Calculation (a) Net National Product at market price, and (b) Gross Domestic Product at factor cost:

    (Rs in crores)
1 Rent and Interest 6000
2 Wages and Salaries 1800
3 Undistributed Profit 400
4 Net indirect taxes 100
5 Subsidies 20
6 Corporation tax 120
7 Net factor income to abroad 70
8 Dividends 80
9 Consumption of fixed capital 50
10 Social security contribution by employers 200
11 Mixed income 1000

 

Chapter: [2.01] National Income and Related Aggregates
Concept: Aggregates Related to National Income - Net National Product (NNP)

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