Commerce (English Medium) Class 12 - CBSE Question Bank Solutions

India’s post-1990 economic strategy entailed three important breaks with the past:

• To dismantle the vast network of controls and permits that dominated the economic system.
• To redefine the role of the state as a facilitator of economic transactions and as a neutral regulator rather than the primary provider of goods and services.
• To move away from a regime of import substitution and to integrate fully with the global trading system.

The 1991 reforms unleashed the energies of Indian entrepreneurs and gave untold choices to the consumers and changed the face of the Indian economy. The reform agenda constituted a paradigm shift and has defined the broad contours of economic policymaking for three decades.

Liberalization was adopted as the guiding principle of governance and all governments since 1991, have broadly stuck to that path.

Today we don’t need a paradigm shift. We need to look at individual sectors and see which one of these needs, reforms to create a competitive environment and improve efficiency. The power sector, the financial system, governance structures, and even agricultural marketing need reforms.

Today’s reforms also require much more discussion and consensus-building. The central government needs to work in tandem with state governments and consult different stakeholders impacted by reform decisions. Timing and sequencing are critically important in the new reforms’ agenda.

Read the following statements - Assertion (A) and Reason (R):

Assertion (A) - India’s pre-1990 economic strategy dismantles the vast network of controls and permits that dominated the economic system.

Reason (R) - The 1991 reforms unleashed the energies of Indian entrepreneurs, gave untold choices to consumers, and changed the face of the Indian economy.

From the given alternatives choose the correct one:

“Income method” is also known as ______.

Which of the following is the formula for revenue deficit?

Which of the following is MOST LIKELY to be the main contributor to the fiscal deficit in this case?

Read the following figure carefully and choose the correct pair from the alternatives given below:

Compare the trends depicted in the figures given below:

Figure 1: Trends in Fiscal deficit and Primary deficit	Figure 2: Fiscal deficit as a percent of Budget estimate

Distinguish between Factor Cost and Market Price.

How good is the system of G.S.T as compared to the old tax system?

Statement 1: China introduced structural economic reforms on its own, without any pressure.

Statement 2: Scholars argue that in India, the economic reforms process led to the worsening of all the economic indicators.

On the basis of the given information, calculate the value of:

1. Fiscal deficit
2. Primary deficit

“The pre-independent India’s occupational structure experienced growing regional variation.”

Justify the above statement with valid explanation.

Identify the correct reason(s) that may affect the demand for foreign exchange in an economy.

1. Imports of visibles
2. Exports of invisibles
3. Remittances by residents working abroad
4. Purchase of assets abroad

Statement 1: Special Economic Zones (SEZ's) policy has led to huge Foreign Direct Investment (FDI) flow to China.

Statement 2: China's rapid industrial growth was the result of its economic reform in 1981.

In the light of the given statements, choose the correct alternative:

Unemployment is reduced due to the measures were taken by the government. State its economic value in the context of production possibilities frontier.

Complete the following table:

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

Complete the following table:

Distinguish between the nominal exchange rate and the real exchange rate. If you were to decide whether to buy domestic goods or foreign goods, which rate would be more relevant? Explain.

Suppose it takes 1.25 yen to buy a rupee, and the price level in Japan is 3 and the price level in India is 1.2. Calculate the real exchange rate between India and Japan (the price of Japanese goods in terms of Indian goods).

What is the marginal propensity to import when M = 60 + 0.06Y? What is the relationship between the marginal propensity to import and the aggregate demand function?