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

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31.

What is the difference between direct tax and indirect tax? Explain the role of government budget in influencing allocation of resources.


Direct Tax Indirect Tax
It is imposed on the income of a person based on the principle of ability to pay. The income tax burden is equitably distributed on different people and institutions. Thereby the tax burden falls more on the rich than on the poor. It is imposed on an individual but is paid by another person either partly or wholly. Hence, the impact and incidence of taxes are on different persons.
Tax burden cannot be shifted to another person. Tax burden can be shifted to another person.
Prices are not affected. Prices are affected because the price of the product is inclusive of tax.
Examples: Income and property tax Examples: Union excise duties and custom duties

Through the budgetary policy, the government can reallocate resources so that social and economic objectives can be met in the following ways:
i. The government ensures productive expenditure to maximise the welfare of the nation with minimum level of profit.
ii. The government regularises the activities of the private sector to provide social benefit to the poor.
iii. The government imposes taxes on socially unsafe goods such as alcohol and tobacco to shift resources to the production of socially essential goods.
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32.

Given saving curve, derive consumption curve and state the steps in doing so. Use diagram.

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33.

Indian investors lend abroad. Answer the following questions:
(a) In which sub-account and on which side of the Balance of Payments Account such lending is recorded? Give reasons.
(b) Explain the impact of the lending on market exchange rate.

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34. Find Gross National Product at Market Price and Private Income:  (Rs in crore)
(i) Private final consumption expenditure                                      800
(ii) Net Current transaction to abroad                                            20
(iii) Net factor income to abroad                                                  (-) 10
(iv) Government final consumption expenditure                             300
(v) Net indirect tax                                                                     150
(vi) Net domestic capital formation                                              200
(vii) Current transfer to government                                            40
(viii) Depreciation                                                                      100
(ix) Net imports                                                                         30
(x) Income accruing to government                                            90
(xi) National debt interest                                                           50
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