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

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 Multiple Choice QuestionsLong Answer Type

11.

State the different phases of changes in Total Product and Marginal Product in the Law of Variable Proportions. Also show the same in a single diagram.

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12.

Why is the equality between marginal cost and marginal revenue necessary for a firm to be in equilibrium? Is it sufficient to ensure equilibrium? Explain.

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13.

Market for a good is in equilibrium. The demand for the good 'increases'. Explain the chain of effects of this change.

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 Multiple Choice QuestionsMultiple Choice Questions

14.

The value of multiplier is

  • 1/MPC

  • 1/MPS

  • 1/(1-MPS)

  • 1/(1-MPS)

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15.

Borrowing in government budget is

  • Revenue deficit

  • Fiscal deficit

  • Primary deficit

  • Primary deficit

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16.

The non-tax revenue in the following is

  • Export duty

  • Import duty

  • Dividends

  • Dividends

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17.

Other things remaining unchanged, when in a country the price of foreign currency
rises, national income is (choose the correct alternative)

  • Likely to rise

  • Likely to fall

  • Likely to rise and fall both

  • Likely to rise and fall both

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 Multiple Choice QuestionsShort Answer Type

18.

What is 'aggregate supply' in macroeconomics?

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19.

If Real GDP is Rs. 200 and Price Index (with base = 100) is 110, calculate Nominal GDP.

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20.

Name the broad categories of transactions recorded in the 'capital account' of the Balance of Payments Accounts.
OR
Name the broad categories of transactions recorded in the 'current account' of the Balance of Payments Accounts.


The Balance of Payments (Bop) records the transactions in goods, services and assets between residents of a country with the rest of the world for a specified time period typically a year.
Capital account of BoP records public and private investment, and lending activities. It is the net change in foreign ownership of domestic assets.

The following are the three broad categories of transactions recorded under capital account
of BOP.
1. Foreign Investment – Foreign investment is bifurcated into Foreign Direct Investment
(FDI) and portfolio investment. FDI is the act of purchasing an asset and at the same time acquiring control on it. The FDI can be in the form of inflow of investment (credit) and outflow in the form of disinvestments (debit) or abroad in the reverse manner.

Portfolio investment is the acquisition of an asset, without control over it. Portfolio investment comes in the form of Foreign Institutional Investors (FIIs), offshore funds and Global Depository Receipts (GDRs) and American Depository Receipts (ADRs).


2. Loans and Borrowings - Loans are further classified into external assistance, medium and long-term commercial borrowings and short-term borrowings. Loans and borrowings by a country from the foreign countries or from the international money market are recorded in the Capital Account of the BOP. These borrowings can be in the form of commercial borrowings or in the form of assistance. When a country borrows with the consideration of assistance, the transaction would involve a lower rate of interest as compared to the prevailing market rate of interest. As against this, commercial borrowings involve open market rate of interest. Loans and borrowings result in inflow of foreign exchange into the country. Hence, they are recorded as positive items in the Capital Account of BOP. Unlike FDI and Portfolio Investments, loans and borrowings are debt creating capital transactions.

3. Banking Capital Transactions- Banking capital comprises external assets and liabilities of commercial and government banks authorized to deal in foreign exchange, and movement in balance of foreign central banks and international institutions like, World Bank, IDA, ADB and IFC maintained with RBI. Non-resident (NRI) deposits are an important component of banking capital.

Or

Current account refers to an account which records all the transactions relating to export and import of goods and services and unilateral transfers during a given period of time. Current account contains the receipts and payments relating to all the transactions of visible items, invisible items and unilateral transfers.
Components of Current Account: The main components of Current Account are:

1. Export and Import of Goods (Merchandise Transactions or Visible Trade):
A major part of transactions in foreign trade is in the form of export and import of goods (visible items). Payment for import of goods is written on the negative side (debit items) and receipt from exports is shown on the positive side (credit items). Balance of these visible exports and imports is known as balance of trade (or trade balance). 

2. Export and Import of Services (Invisible Trade):
It includes a large variety of non- factor services (known as invisible items) sold and purchased by the residents of a country, to and from the rest of the world. Payments are either received or made to the other countries for use of these services.

Services are generally of three kinds:
(a) Shipping,
(b) Banking, and
(c) Insurance.

Payments for these services are recorded on the negative side and receipts on the positive
side.

3. Unilateral or Unrequited Transfers to and from abroad (One sided Transactions):
Unilateral transfers include gifts, donations, personal remittances and other ‘one-way’ transactions. These refer to those receipts and payments, which take place without any service in return. Receipt of unilateral transfers from rest of the world is shown on the credit side and unilateral transfers to rest of the world on the debit side.

4. Income receipts and payments to and from abroad:
It includes investment income in the form of interest, rent and profits.




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