Solution Of CBSE Economics QP Code 58/s/2 Set 2

Solution of CBSE economics QP compartment exam 2024 set 1

Solution of CBSE Economics Compartment Exam 2024 QP code 58/s/2 set 2 series &RQPS/S

Solution of CBSE Economics QP code 58/s/2 Set 2

Official Question paper of Economics Compartment exam 2024

Series &RQPS/S

SET-2

QP Code 58/s/2

Solution of CBSE Economics QP Compartment Exam 2024 58/S/2 Set 2

Section A Macro Economics

___________ is the total volume of money held by the public, for the purpose of disposing off, at a particular point of time.
(Choose the correct alternative to fill in the blank)
(A) Term deposits
(B) Demand for money
(C) Money supply
(D) Credit creation

Answer- (C)

Under _______ exchange rate system, the Central Bank and Government of the country do not have any authority to interfere in the exchange rate determination.
(Choose the correct alternative to fill in the blank)

(A) fixed
(B) floating
(C) managed floating
(D) gold standard

Answer- (B)
Floating exchange rate is decided by the market forces of demand and supply.

Keeping all other factors constant, trade surplus may arise in the Balance of Payments of a nation because of ________.
(Choose the correct alternative to fill in the blank)

(A) rise in export of coffee to Japan
(B) fall in import of banking services
(C) fall in exports of cereals
(D) rise in remittances to abroad

Answer- (A)

Suppose in a hypothetical economy, the Central Bank increases the reserve ratio from 10% to 25%. Keeping the amount of initial deposits constant at ₹ 1,000 crore, the amount of total money creation would be ₹ _______ crore.
(Choose the correct alternative to fill in the blank)

(A) 10,000
(B) 4,000
(C) 6,000
(D) 5,000

Answer- (B)

Read the following statements carefully :

Statement 1 : Gross National Product (GNP) can be greater than Gross Domestic Product (GDP) in a two-sector economy.
Statement 2 : Net factor income from abroad is zero in a two-sector economy.

In the light of the given statements, choose the correct alternative from the following :
(A) Statement 1 is true and Statement 2 is false.
(B) Statement 1 is false and Statement 2 is true.
(C) Both Statements 1 and 2 are true.
(D) Both Statements 1 and 2 are false

Answer- (B)
In 2 sector economy, there is no Rest of World sector. Hence NFIA=0.

Identify, which of the following options exhibits the proportional relation between consumption and disposable income.

(A) Marginal Propensity to Consume (MPC)/Average Propensity to Consume (APC)
(B) Marginal Propensity to Consume (MPC) < Average Propensity to Consume (APC)
(C) Marginal Propensity to Consume (MPC) = Average Propensity to Consume (APC)
(D) Marginal Propensity to Consume = 1

Answer- (C)

In an economy, break-even level of income can be determined, when _______.

(i) Marginal Propensity to Consume (MPC) = Marginal Propensity to Save (MPS)
(ii) Income (Y) = Consumption (C)
(iii) Savings (S) = 0
(iv) Average Propensity to Consume (APC) = Average Propensity to Save (APS)
(Choose the correct alternative to fill in the blank)
Alternatives :
(A) Only (i)
(B) (i) and (ii)
(C) (ii) and (iii)
(D) (i) and (iv)

Answer- (C)

Read the following statements carefully :

Statement 1 : Average Propensity to Consume (APC) represents the change in total income with respect to a given change in total consumption.
Statement 2 : When income changes, change in consumption (∆C) can never exceed the change in income (∆Y).

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

(A) Statement 1 is true and Statement 2 is false.
(B) Statement 1 is false and Statement 2 is true.
(C) Both Statements 1 and 2 are true.
(D) Both Statements 1 and 2 are false.

Answer- (B)

For a hypothetical economy, it is known that :
Average Propensity to Save (APS) = 0.4
Income (Y) = ₹ 100 crore
Autonomous Consumption (C) = ₹ 10 crore

The value of investment multiplier would be __________.
(Choose the correct alternative to fill in the blank)

(A) 5
(B) 2
(C) 4
(D) 10

Answer- (B)

The ___________ account of Balance of Payments reflects the net changes in financial claims on the Rest of the World (ROW).
(Choose the correct alternative to fill in the blank)

(A) Trade
(B) Capital
(C) Current
(D) Visible

Answer- (B)

(a) “Devaluation of currency and depreciation of currency have the same implications, but they originate from divergent sources.”
Do you agree with the given statement ? Give valid reason in support of your answer.

Answer : Yes, devaluation and depreciation of currency may lead to fall in the value of domestic currency in relation to foreign currency. This may result in promotion of exports and reduction of imports, as the domestic goods become relatively cheaper and foreign goods costlier. Hence, both devaluation and depreciation of currency have the same implications.

However, devaluation of currency originates due to the actions taken by the government while depreciation of currency is caused by the market forces of demand and supply.

OR

(b) Outline the meaning and reasons behind narrowing down of Current Account Deficit.

Answer : Current Account Deficit (CAD) arises when receipts from exports of goods & services and unilateral transfers are less than the payments for imports of goods & services and unilateral transfers.

CAD may narrow down when either receipts from exports of goods and services and unilateral transfers increase or payments for imports of goods and services and unilateral transfers decrease.

On the basis of the given data, estimate the value of Net Value Added at Factor Cost (NVA_FC) :
Items Amount (₹ in crore)
i) Sales 2500
ii) Purchase of raw material 700
iii) Change in Stock 100
iii) Gross Investment 500
v) Net Indirect Tax 300
vi) Net Investment 400

Solution :
Net Value Added at Factor Cost (NVA_FC) = Sales + Change in Stock – Purchase of raw material – [Gross Investment–Net Investment= Depreciation] – NIT

=(i) + (ii) – (iii) – [(iv) – (v)] – (vi)
= 2,500 + 100 – 700 – [500 – 400] – 300
= ₹ 1500 crore

Solution of CBSE Economics QP Compartment Exam 2024 58/S/2 Set 2

(a) “When ex-ante Aggregate Demand (AD) falls short of ex-ante Aggregate Supply (AS) it results in fall in unintended inventories.”

Defend or refute the given statement, giving valid arguments.

Answer :
The given statement is refuted.
If ex-ante Aggregate Demand falls short of ex-ante Aggregate Supply, it implies that households and firms are planning to buy less than what the firms expected them to. As a result, inventories will be piled up with the producers, which may lead to increase in unintended accumulation of inventories.

(b) Assume the following for a hypothetical economy :

(i) Autonomous Consumption Expenditure (C) = ₹25 crore
(ii) Marginal Propensity to Save (MPS) = 0.1
(iii) Level of Income (Y) = ₹ 2,000 crore
(iv) Autonomous Investment (I) = ₹ 25 crore

Is the economy in equilibrium situation? Justify your answer with valid calculations.

Answer : Given,
Autonomous Consumption Expenditure (𝐂) = ₹ 25 crore
Marginal Propensity to Save (MPS) = 0.1
Level of Income (Y) = ₹ 2,000 crore
Autonomous Investment (I) = ₹ 25 crore

Marginal Propensity to Consume (MPC) = 1 – MPS
= 1 – 0.1
= 0.9

At equilibrium level of income, Y= C + I

Substituting the value of Y in (C + I)
C + I = 𝐂̅ + (MPC)Y + I
= 25 + 0.9 x 2000 + 25
= ₹1,850 crore

Y > C + I at an income level of ₹2,000 crore.

Thus, the economy is not in equilibrium at an income level of ₹2,000 crore.

Alternative answer:
At equilibrium level of income, S= I
Substituting the value of Y in S
S = −𝐂̅ + (MPS)Y
= −𝟐𝟓 + 0.1 x 2000
= 175 crore

While I = ₹25 crore (given)
S > I at an income level of 2,000 crore.

Thus, the economy is not in equilibrium at an income level of 2,000 crore.

OR

“The Reserve Bank of India (RBI) performs the same function for the government as the commercial banks perform for the general public.” Discuss briefly any two such functions performed by the Central Bank for the Government of India.

Answer : The Reserve Bank of India (RBI) as the banker to the government maintains account, accepts receipts and makes payments, carries out exchange, remittance, and other banking operations.

Functions performed by RBI for the Central Govt-
1) The Reserve Bank of India advances loans to the government to meet its requirements, in case of financial crisis.

2) The RBI accept deposits and make payments for the behalf of Govt of India.
Thus, the Reserve Bank of India facilitates the same banking functions for the government just as the commercial banks do for the general public.

(a) Differentiate between final goods and intermediate goods. (3 marks)

Answer : Final goods are those goods which are used for final consumption or final investment purpose. The value of final goods are included in the estimation of National Income.

Whereas; Intermediate goods are used either for re-sale purpose or used for further production in the same year. The value of intermediate goods are not included in the estimation of National Income.

(b) “Externalities can be classified into negative or positive, however it is not necessary that they will be directly correlated with the Gross Domestic Product.”
Do you agree with the given statement? Give valid reasons in support of your answer. (3 marks)

Answer :
Yes, externalities may not directly correlate with the Gross Domestic Product (GDP) as externalities do not have any market in which they can be bought/sold. GDP does not take into account any such negative/positive impact on the third-party as they are not penalised/paid for such harms/benefits. Consequently, it may lead to overestimation/underestimation of the actual welfare of the economy.

(a) (i) “The Union Budget 2023 –24 had proposed an allocation of ₹22,138 crore to the Micro, Small and Medium Enterprise (MSME) Ministry.”

Identify and explain the objective that the government is trying to achieve with the proposed expenditure. (4 marks)
Answer :
The highlighted government budget objective is the ‘allocation function’. The government with the proposed allocation of ₹ 22,138 crore to the Micro, Small and Medium Enterprise (MSME) Ministry may seek to enhance national output and employment opportunities. In a country like India, such steps are fruitful for achieving socio-economic goals and overall growth of the nation.

(ii) State the formulae for calculating fiscal deficit and revenue deficit. (2 marks)
Answer :
Fiscal Deficit = Total Expenditure – Total Receipts (excluding borrowings)

Revenue Deficit = Revenue Expenditure – Revenue Receipts

OR

(b) (i) “Tax revenues, an important component of revenue receipts, can be further classified into two categories.”
Imagine yourself as a member of Department of Revenue of the Government of India. Help your friend to identify and differentiate between the two categories of taxes. (3 marks)
Answer :
The two categories of taxes are direct taxes and indirect taxes.
a) Direct taxes are those taxes whose impact and incidence lie on the same entity.
Whereas;
b) Indirect taxes are those taxes whose impact and incidence may lie on different entities.

(ii) “A budget can be deficit, surplus or balanced.”
Do you agree with the given statement? Give valid reasons in support of your answer. (3 marks)
Answer :
Yes, a budget can be deficit, surplus or balanced, it depends on the total receipts and expenditure.
a) Balance Budget: When the total receipts of the government equal its total expenditure.

b) Surplus Budget: When the total receipts of the government exceed its total expenditure.

c) Deficit Budget: When the total receipts of the government fall short of its total expenditure.

Solution of CBSE Economics QP Compartment Exam 2024 58/S/2 Set 2

Section B Indian Economic Development

_________ measure introduced in China led to the decline in its population as well as sex ratio.
(Choose the correct alternative to fill in the blank)

(A) Nationalisation of capital goods
(B) Denationalisation of capital goods
(C) One-child norm
(D) Two-child norm

Answer- (C)

_________ can be classified as one of the alternative sources of diversification from farm output.
(Choose the correct alternative to fill in the blank)

(A) Green Revolution
(B) Horticulture
(C) Organic Farming
(D) Conventional Farming

Answer- (B)

Read the following statements – Assertion (A) and Reason (R). Choose the correct alternative given below :

Assertion (A) : Human capital cannot be traded in the market, whereas its services can be traded.

Reason (R) : Human capital is intangible in nature.

Alternatives :
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.

Answer- (C)

Read the following statements carefully :

Statement 1 : The commercialisation of Indian agriculture was coercively introduced by the colonial government.

Statement 2 : Britishers had a two-fold motive behind the enforcement of food crops production.

In the light of the given statements, choose the correct alternative from the following :
(A) Statement 1 is true and Statement 2 is false.
(B) Statement 1 is false and Statement 2 is true.
(C) Both Statements 1 and 2 are true.
(D) Both Statements 1 and 2 are false.

Answer- (A)

___________ is geographically the largest nation among India, China and Pakistan and its density is _______ among the three nations.
(Choose the correct alternative to fill in the blanks)

(A) China, highest
(B) Pakistan, lowest
(C) India, lowest
(D) China, lowest

Answer- (D)

Identify the correct statement from the following :

(A) India adopted the socialistic economic system after Independence.
(B) Indian economic planning was implemented through Five Year Plans.
(C) Land reforms under industrial sector were implemented by the Government of India.
(D) Policy initiatives in the industrial sector were responsible for decline in Gross Domestic Product (GDP) in India.

Answer- (B)

Identify the alternate marketing channel that operates majorly in Punjab, Haryana and Rajasthan. (Choose the correct alternative)

(A) Apni Mandi
(B) Hadapsar Mandi
(C) Rythu Bazars
(D) Uzhavar Sandies

Answer- (A)

Solution of CBSE Economics QP Compartment Exam 2024 58/S/1 Set 1

Under the economic reforms introduced in China in 1978, ______ were set up to attract foreign investors. (Choose the correct alternative to fill in the blank)

(A) Remittance Zones
(B) Land Zones
(C) Special Commune Zones
(D) Special Economic Zones

Answer- (D)

In 1965, Mao introduced the ____________ under which students and professionals were sent to work and learn from the countryside.
(Choose the correct alternative to fill in the blank)
(A) Great Leap Forward Campaign
(B) Commune System
(C) Great Proletarian Cultural Revolution
(D) Medium Term Development Plan

Answer- (C)

Britain maintained a monopoly control over India’s exports and imports while the rest was allowed with a few other countries like ________ .
(Choose the correct alternative to fill in the blank)
(i) China
(ii) Ceylon (Sri Lanka)
(iii) Persia (Iran)

Alternatives :
(A) Only (i)
(B) (i) and (ii)
(C) (ii) and (iii)
(D) (i), (ii) and (iii)

Answer- (D)

(a) Enumerate any three infrastructural development activities undertaken by the colonial government in India

Answer :
Three infrastructural development activities undertaken by the colonial government in India were as follows:
• Introduction of railways
• Development of inland trade and sea lanes
• Introduction of electric telegraph
Or
(b) “Green Revolution made India self-sufficient in food grains, but was criticized on ecological grounds.” Do you agree with the given statement? Present valid reasons in support of your answer.

Answer :
Yes, Green Revolution in India increased agricultural production and productivity leading to self-sufficiency of food grains through the use of HYV seeds, chemical fertilisers, pesticides, etc.

But, these chemical fertilisers and pesticides led to soil degradation/ contamination of food products and various water bodies. Thus, although Green Revolution made India self-sufficient in food grain production but was criticised on ecological grounds.

“Expenditure on different levels of education in India is in the same proportion.” Defend or refute the given statement, giving valid reasons.

Answer :
The given statement is refuted.
In India, elementary education takes a major share of total education expenditure and the share of the higher/tertiary education is the least. Though, on an average, the government spends less on tertiary education, ‘expenditure per student’ in tertiary education is higher than that of elementary. Moreover, the revenues from education cess have been earmarked for spending on elementary education.
In addition to this, the government sanctions a large outlay for the promotion of higher education and new loan schemes for students to pursue higher education.

(a) “A sound agricultural marketing system works as the backbone of any agro-system of any nation.” Justify the above statement by listing any two steps taken by the Indian government in this direction.
Answer :
Two steps taken by the Indian government to improve agricultural marketing are:
• Regulation of markets by the government to create orderly and transparent marketing conditions.
• Provision of physical infrastructure facilities like roads, railways, warehouses etc.

OR

(b) ‘‘Over the past few years, India has witnessed a shift from traditional conventional farming to natural/organic farming.’’ Discuss briefly any two reasons behind this shift towards organic produce.
Answer :
Two reasons behind the shift from traditional conventional farming to organic farming:
• Organically grown food has more nutritional value than the food produced through conventional farming.
• Organic farming in comparison to traditional conventional farming is pesticide-free and environmentally sustainable.

(a) (i) “As an economy grows, the number of employed persons in an economy also increases; however, since 1991 India has come up as an exception to this.’’
Do you agree with the given statement? Give valid arguments in support of your answer. (4 marks)

Answer :
Yes, after the introduction of economic reforms, in the late 1990s, the Indian economy experienced a rapid rise in the GDP growth rate. However, employment growth started declining, in spite of rising GDP i.e., India started experiencing the problem of Jobless Growth. The Indian economy was able to produce more goods and services without a corresponding rise in the number of employed persons.

(ii) Define disguised unemployment with a suitable example. (2 marks)

Answer :
Disguised unemployment refers to a situation when the person seems to be employed but is not contributing to the output i.e., his marginal productivity is zero.
For example, suppose a farmer with four acres of land and two workers can produce 100 quintals of wheat. Even if he employs one more worker, the total output remains unchanged. Hence, the contribution made by the additional worker to the total output is zero and thus can be said to be in a situation of disguised unemployment.

OR

(i) “Neha has been working in a multinational corporation since the past five years on the payroll of the company”. Identify and briefly explain the type of employment indicated in the above statement. (3 marks)
Answer :
Neha is a regular salaried employee. Or can say She is employed in formal sector. In the formal sector, an employee have defined work profile, retirement benefits, paid leaves etc.

(ii) Name the indicator that is generally used for analysing the employment situation in a country. Also discuss its importance. (3 marks)
Answer :
Worker-population ratio is an indicator which is used for analysing the employment situation in the country.

Worker-population ratio = (Total No. of workers/Population) x 100

This ratio is useful in knowing the proportion of population that is actively contributing to the production of goods and services of a country. Higher the worker population ratio, higher the engagement of people in economic activities and vice versa.

Read the following text carefully :

                    With the July 1991 budget, there was a clear switch in favour of a move towards an outward-oriented, market-based economy. The liberalisation steps initiated in the budget were very comprehensive although the pace remained gradual and there were occasional hiccups.
                   The 1991 reforms did away with import licensing on all but a handful of intermediate inputs and capital goods.

                   Consumer goods, accounting for approximately 30% of tariff lines, remained under licensing, Only a decade later, after a successful challenge by India’s trading partners at the World Trade Organisation (WTO), were these goods freed of licensing.

                   Today, except for a handful of goods that are disallowed on environmental/health/safety grounds, all goods may be imported without a license or other restrictions.

                    With the removal of licensing, the tariff rates became effective restrictions on imports. Therefore, a major task of the reforms has been to lower the tariff rates. Tariff reductions have been mainly confined to non-agricultural, industrial goods.

                     Therefore, the liberalization applies strictly to these goods. The reduction in tariffs has been achieved through a gradual compression of the tariff rates. A simultaneous rationalization of the tariff structure through a reduction in the number of tariff bands helped in this direction.

On the basis of the given text and common understanding, answer the following questions :

(i) “The trade liberalization reforms initiated in 1991 budget were very comprehensive.”
Justify the given statement explaining any two trade reforms introduced in 1991.
Answer :
The comprehensive trade liberalization reforms were initiated in 1991 budget to promote the efficiency of local industries and adoption of modern technologies.
Two trade reforms introduced in 1991 were:
• dismantling of quantitative restrictions on imports and exports.
• removal of licensing procedures for imports.

(ii) State any two areas in which tariff reductions were introduced.
Answer :
Two areas in which tariff reductions were introduced:
• non-agricultural goods
• industrial goods

Solution of CBSE Economics QP Compartment Exam 2024 58/S/2 Set 2

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Solution of CBSE Economics Compartment Exam 2024 QP code 58/s/2 set 2 series &RQPS/S

Solution of CBSE Economics QP code 58/s/2 Set 2

Official Question paper of Economics Compartment exam 2024

Solution of CBSE Economics QP Compartment Exam 2024 58/S/2 Set 2

Solution of CBSE Economics QP Compartment Exam 2024 58/S/2 Set 2

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