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Question Paper Solutions - Economics 2014 - 2015-CBSE 12th-Class 12 CBSE (Central Board of Secondary Education)

SubjectEconomics
Year2014 - 2015 (March)

Alternate Sets

Marks: 100
[1]1

Define an indifference curve.

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Indifference Curve
[1]2

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

a. Substitutes
b. Complements
c. Not related
d. Competitive

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Demand
[1]3

If Marginal Rate of Substitution is increasing throughout, the Indifference Curve will be: (Choose the correct alternative)

a. Downward sloping convex
b. Downward sloping concave
c. Downward sloping straight line
d. Upward sloping convex

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Indifference Curve
[3]4

Giving reason comment on the shape of Production Possibilities curve based on the following schedule :

 Good X (units Good Y (units) 0 30 1 27 2 21 3 12 4 0

Chapter: [1.05] Concept of Production and Production Function
Concept: Concept of Production
[3]5 | Attempt Any One
[3]5.1

What is likely to be the impact of "Make in India" appeal to the foreign investors by the Prime Minister of India, on the production possibilities frontier of India? Explain

Chapter: [1.05] Concept of Production and Production Function
Concept: Concept of Production
[3]5.2

What is likely to be the impact of efforts towards reducing unemployment on the production potential of the economy? Explain

Chapter: [2.03] Determination of Income and Employment
Concept: Unemployment
[3]6

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

Chapter: [1.03] Analysis of Demand and Elasticity of Demand
Concept: Elasticity of Demand
[3]7

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

Homogeneous products.

Chapter: [1.04] Forms of Market and Price Determination
Concept: Main Market Forms
[3]8

What is maximum price ceiling? Explain its implications.

Chapter: [1.04] Forms of Market and Price Determination
Concept: Price Ceiling
[4]9

A consumer spends Rs 1,000 on a good priced at Rs10 per unit. When its price falls by 20 percent, the consumer spends Rs800 on the good. Calculate the price elasticity of demand by the Percentage method

Chapter: [1.03] Analysis of Demand and Elasticity of Demand
Concept: Elasticity of Demand
[4]10 | Attempt Any One
[4]10.1

What is the behaviour of (a) Average Fixed Cost and (b) Average Variable Cost as more and more units of a good are produced?

Chapter: [1.06] Cost and Revenue
Concept: Cost - Fixed Cost
[4]10.2

Define Average Revenue. Show that Average Revenue and Price are same.

Chapter: [1.06] Cost and Revenue
Concept: Total, Average and Marginal Revenue
[6]11 | Attempt Any One
[6]11.1

A consumer consumes only two goods X and Y, both priced at Rs 2 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? Why or why not? What will a rational consumer do in this situation? Explain.

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Consumer'S Equilibrium
[6]11.2

A consumer consumes only two goods X and Y whose prices are Rs 5 and Rs 4 respectively. If the consumer chooses a combination of the two goods with marginal utility of X equal to 4 and that of Y equal to 5, is the consumer in equilibrium? Why or why not? What will a rational consumer do in this situation? Use utility analysis

Chapter: [1.02] Consumer Equilibrium and Demand
Concept: Consumer'S Equilibrium
[6]12

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

Chapter: [1.05] Concept of Production and Production Function
Concept: Law of Variable Proportions
[6]13

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

Chapter: [1.03] Producer Behaviour and Supply
Concept: Concept of Producer's Equilibrium
[6]14

A market for a good is in equilibrium. The supply of good "decreases". Explain the chain of effects of this change

Chapter: [1.04] Market Mechanism
Concept: Market Equilibrium
[1]15

What is aggregate demand?

Chapter: [1] Understanding Economics
Concept: Concept of Aggregate Demand and Aggregate Supply
[1]16

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

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

Chapter: [2.03] Determination of Income and Employment
Concept: Investment Multiplier and Its Mechanism
[1]17

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

a. Revenue expenditure - Revenue receipts
b. Total expenditure - Total receipts
c. Revenue deficit - Interest payments
d. Fiscal deficit - Interest payments

Chapter: [2.04] Government Budget and the Economy
Concept: Deficit Budget - Primary Deficit
[1]18

A direct tax is called direct because it is collected directly from (Choose the correct alternative)

a. The producers on goods produced

b. The sellers on goods sold

d. The income earners

Chapter: [5.01] Fiscal Policy
Concept: Direct and Indirect Tax
[1]19

Other things remaining the same, when in a country the market price of the foreign currency falls, national income is likely (Choose the correct alternative)

a. to rise
b. to fall
c. to rise or to fall
d. to remain unaffected

Chapter: [2.05] Balance of Payments
Concept: Concept of Foreign Exchange Rate
[3]20

If the Real GDP is Rs400 and Nominal GDP is Rs450, calculate the Price Index (base = 100).

Chapter: [2.01] National Income and Related Aggregates
Concept: GDP and Welfare
[3]21 | Attempt Any One
[3]21.1

What are fixed and flexible exchange rates?

Chapter: [2.05] Balance of Payments
Concept: Systems of Exchange Rates
[3]21.2

Give meaning of managed floating exchange rate.

Chapter: [2.05] Balance of Payments
Concept: Concept of Foreign Exchange Rate
[3]22

Where is 'borrowings from abroad' recorded in the Balance of Payments Accounts? Give reasons.

Chapter: [2.05] Balance of Payments
Concept: Concept of Balance of Payments Account
[4]23 | Attempt Any One
[4]23.1

Explain bankers bank function of a Central bank.

Chapter: [4.02] Banking
Concept: Central Bank Function - Banker's Bank
[4]23.2

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

Chapter: [3.02] Banks
Concept: Function of Central bank - Bank of Issue
[4]24

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

Chapter: [3.02] Banks
Concept: Function of Central bank - Bank of Issue
[4]25

An economy is in equilibrium. Calculate the Investment Expenditure from the following
National Income = 800
Marginal propensity to save = 0.3
Autonomous Consumption = 100

Chapter: [2.03] Determination of Income and Employment
Concept: Consumption Function and Propensity to Save
[6]26

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

Payment of interest by a firm to a bank

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

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

Payment of interest by a bank to an individual

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

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

Payment of interest by an individual to a bank

Chapter: [2.01] National Income and Related Aggregates
Concept: Concept of National Income
[6]27 | Attempt Any One
[6]27.1

Explain the concept of 'deficient demand' in macroeconomics.

Chapter: [1] Understanding Economics
Concept: Concept of Aggregate Demand and Aggregate Supply

explain the role of Bank Rate in correcting deficient demand?

Chapter: [1] Understanding Economics
Concept: Concept of Aggregate Demand and Aggregate Supply
[6]27.2

What is 'excess demand'?

Chapter: [2.06] Central Bank
Concept: Repo Rate and Reverse Repo Rate

Explain the role of 'Reverse Repo Rate' in removing it.

Chapter: [2.06] Central Bank
Concept: Repo Rate and Reverse Repo Rate
[6]28

Explain how the government can use the budgetary policy in reducing inequalities in incomes.

Chapter: [2.07] Public Economics
Concept: Objectives of Government Budget
[6]29

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: [6.02] Concepts and Definition
Concept: Aggregates Related to National Income - Net National Product (NNP)

Calculate the 'National Income' and 'Private Income' :

 (Rs in crores) 1 Rent 200 2 Net factor income to abroad 10 3 National debt interest 15 4 Wages and salaries 700 5 Current transfers from government 10 6 Undistributed profit 20 7 Corporation tax 30 8 Interest 150 9 Social security contributions by employers 100 10 Net domestic product accruing to government 250 11 Net current transfers to rest of the world 5 12 Dividends 50

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