Subject

Economics

Class

CBSE Class 12

Pre Boards

Practice to excel and get familiar with the paper pattern and the type of questions. Check you answers with answer keys provided.

Sample Papers

Download the PDF Sample Papers Free for off line practice and view the Solutions online.
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 Multiple Choice QuestionsShort Answer Type

21.

Explain the relationship between income of the buyers and demand for a good.

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22.

How can increase in foreign direct investment affect the price of foreign exchange? 

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23.

What are demand deposits? 

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24.

Give one example of “externality” which reduces welfare of the people. 

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25.

Give two examples of indirect taxes. 

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26.

What is a Government Budget? 

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27.

Explain the problem of double coincidence of wants faced under barter system. How has money solved it? 

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28.

Distinguish between revenue expenditure and capital expenditure in Government budget. Give an example of each. 

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29.

Distinguish between revenue deficit and fiscal deficit.

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30.

Explain any one objective of Government Budget. 


One of the main objectives of government budget is Reallocation of Resources. Through the budgetary policy, Government aims to reallocate resources in accordance with the economic (profit maximisation) and social (public welfare) priorities of the country. Government can influence allocation of resources through:

(i) Tax concessions or subsidies:
To encourage investment, government can give tax concession, subsidies etc. to the producers. For example, Government discourages the production of harmful consumption goods (like liquor, cigarettes etc.) through heavy taxes and encourages the use of ‘Khadi products’ by providing subsidies.

(ii) Directly producing goods and services:
If private sector does not take interest, government can directly undertake the production.

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