Friday, September 30, 2016

DESIGN OF QUESTION PAPER ECONOMICS Class - XII ( By CBSE)

DESIGN OF QUESTION PAPER

ECONOMICS

Class - XII


Marks - 100                                                                                                                Duration - 3 hrs.





1.        Weightage by types of questions

Type
Number of
Marks
Total
Estimated

questions



time a




candidate is




expected to take to




answer
Long answer questions
6
6
36
60 minutes
Short answer questions I
6
4
24
36
Minutes
Short answer questions II
10
3
30
50
Minutes
Very short answer questions
10
1
10
15
Minutes







2.     Weightage by content


Unit No
Unit/ Sub-Units


Marks












4


1.
Introduction






13


2.
Consumer Behaviour and Demand









3.
Producer Behaviour and Supply

23




10


4.
Forms of Market and Price determination




15


5.
National income and related aggregates




12


6.
Determination of income and employment





8


7.
Money and Banking






8


8.
Government Budget and the economy






7


9.
Balance of Payments






100











3.
Difficulty level of the question paper









Level
Marks
% age of the



total marks

Difficult
20
20


(can be attempted by top students)




Average
50
50


(can be attempted by students who have regularly




studied the study  material but may not have given




sufficient time to writing




Easy




(can be attempted satisfactorily by students who
30
30


have gone through the study material)










4.           Scheme of Options

There is no overall choice. However, there is an Internal choice in one question of 6 marks, one question of 4 marks and one question of 3 marks in each section. Thus there will be internal choice to 6 questions.


Sample Question Paper - I

Economics

Class - XII


Time - 3 Hours.                                                                                                 Maximum marks - 100


Notes :

1.        All questions in both the sections are compulsory.

2.        Marks for questions are indicated against each.

3.        Question Nos. 1-5 and 17 - 21 are very short- answer questions carrying 1 mark each. They are required to be answered in one sentence each

4.        Question Nos. 6-10 and 22-26 are short-answer questions carrying 3 marks each. Answer to them should not normally exceed 60 words each.

5.        Question Nos. 11-13 and 27-29 are also short- answer questions carrying 4 marks each. Answer to them should not normally exceed 70 words each.

6.        Question Nos. 14-16 and 30-32 are long-answer questions carrying 6 marks each. Answer to them should not normally exceed 100 words each..

7.        Answer should be brief and to the point and the above word limit be adhered to as far as possible.



Section A

1.
What gives rise to an economic problem?
(1)
2.
Define ‘production function’.
(1)

3.             What happens to equilibrium price of a commodity if there is ‘decrease’ in its demand and ‘increase’ in its supply?

4.
What induces new firms to enter an industry?
(1)
5.
Define cost.
(1)

6.             State three changes leading to the shift of demand curve of a consumer to the right.  (3)

7.
What will be the price elasticity of supply if the supply curve is a positively sloped
(3)

straight line?

8.
Explain why a production possibilities curve is concave.
(3)

OR

9.             Find the profit maximizing level of output from the following :


Quantity sold
Price
Average Total Cost

(Units)
(Rs. per unit)
(Rs.)

7
10
6

8
9
5

9
8
6

10
7
7
10.
Define marginal revenue. State the relation between marginal revenue and average   (3)

revenue when a firm :



(i)        is able to sell more quantity of output at the same price.

(ii)  is able to sell more quantity of output only by lowering the price.
(3)

11.          A consumer buys 100 units of a good at a price of Rs. 5 per unit. When price changes

he buys 140 units. What is the new price if price elasticity of demand is - 2 ?
(4)

12.          State any two features each of monopoly and monopolistic competition.


OR


State four features of a perfectly competitive market.

13.
Explain the effects of ‘increase’ in supply of a good on its equilibrium and
(4)

equilibrium quantity. Use diagram.


For blind candidates in lieu of Q. No. 13


Explain the effects of ‘increase’ in supply of a good on its equilibrium price and
(4)

equilibrium quantity with the help of a schedule.



14.          Draw average total cost, average variable cost, and marginal cost curves in a single diagram. Also explain the relationship between ATC and AVC.

For blind candidates in lieu of Q. NO. 14

Explain the relation between (i) ATC and AVC and (ii) MC and AVC.
(6)

15.          What is consumer’s equilbrium? Explain the conditions of consumer’s equilibrium assuming that the consumer consumes only two goods.

OR

Distinguish between an inferior good and a normal good. Explain the effect of

change in income on each giving suitable examples.
(6)

16.          Explain the reasons for : (i) increasing returns to a factor and (ii) increasing returns


to scale.
(6)

Section B

17.
Give meaning of involuntary unemployment.
(1)

18.          What is the relationship between marginal propensity to consume and


marginal propensity to save?
(1)
19.
State any two sources of non-tax revenue receipts.
(1)
20.
Why is entertainment tax an indirect tax?
(1)
21.
What is meant by Cash Reserve Ratio?
(1)

22.          From the following data relating to a firm, calculate its net value added at factor cost :



(Rs. in Crores)

(i)
Subsidy
40

(ii)
Sales
800

(iii)
Depreciation
30

(iv)
Exports
100

(v)
Closing stock
20

(vi)
Opening stock
50

(vii)
Intermediate purchases
500
(3)

23.          Can there be a fiscal deficit in a government budget without a revenue deficit? Explain

OR

Distinguish between direct tax and indirect tax. Give an example of each.
(3)

24.          Categorise the following government receipts into revenue and capital receipts Give reasons for your answer.

(a)      Receipts from sale of shares of a public sector undertaking.

(b)      Borrowings from public.



(c)    Profits of public sector undertaking                                                                                 (3)


25.       List three sources each of demand and supply of foreign exchange                                     (3)

26.          Name any three types of deposit accounts of commercial banks and also state one of


their distinguishing features.
(4)
27.
Distinguish between current account and capital account of balance of payment
(4)

account. Is import of machinery recorded in current account or capital account?

28.
State the role of central bank as a banker to the government.


OR


Describe the following functions of money :-


(a)  Medium of exchange


(b)  Standard of deferred payment
(4)

29.          An increase of Rs. 250 crores in investment in an economy resulted in total increase in income of Rs. 1000 crores, Calculate the following :

(a)      Marginal propensity to consume

(b)      Change in Savings

(c)      Change in consumption expenditure

(d)  Value of multiplier
(4)

30.          Why are exports included in the estimation of domestic product by the expenditure

method? Can gross domestic product be greater than gross national product ?

Explain
(6)

31.          Explain the meaning of equilibrium level of income and output with the help of saving and investment curves. If planned expenditure is less than planned output, what changes will take place in the economy?

For Blind Candidates in lieu of Q. No. 31

Explain the meaning of equilibrium level of employment by saving and investment approach. If planned expenditure is less than planned output, what changes will take place in the economy?


32.          From the following data calculate National Income by Income and Expenditure

methods :
(3, 3)


(Rs crores)
(i)
Government final consumption expenditure
100
(ii)
Subsidies
10
(iii)
Rent
200
(iv)
Wages and salaries
600
(v)
Indirect tax
60
(vi)
Private final consumption expenditure
800
(vii)
Gross domestic capital formation
120
(viii) Social security contributions by employers
55
(ix)
Royalty
25
(x)
Net factor income paid to abroad
30
(xi)
Interest
20
(xii)
Net domestic capital formation
110

(xiii) Profit
130
(xiv) Net exports
70

OR

Calculate Gross National Disposable Income and Personal Income from the following

data :
(3, 3)


(Rs. Crores)
(i)
Personal tax
120
(ii)
Net indirect tax
100
(iii)
Corporation tax
90
(iv)
National income
1000
(v)
Net factor income from abroad
5
(vi)
Consumption of fixed capital
50
(vii)
National debt interest
70
(viii) Retained earnings of private corporate sector
40
(ix)
Net current transfers to the rest of the world.
(-)20
(x)
Current transfers from government
30
(xi)
Share of government in national income
80


Marking Scheme

1.         Scarcity of resources                                                                                                               (1)

2.             Production function is a technological relationship between physical inputs and


physical output
(1)
3.
Equlibrium price will fall.
(1)
4.
Earning of above- normal profit by the existing firms.
(1)

5.             Cost of producing a good is the sum of actual expenditure on inputs and the

imputed expenditure on the inputs supplied by the owner.
(1)

6.

1.        Rise in the price of the substitute good.

2.        Fall in the price of complementary good.

3.        Rise in income (in case of a normal good)

4.        Fall in income (in case of an inferior good)

5.        Increase in taste for the good.

(Any three) (1x3)

7.             Es = 1 if the curve starts from the origin Es> 1 if the curve starts from the y-axis E<1 curve="" from="" if="" o:p="" starts="" the="" x-axix="">

8.             Downward sloping concave PP curve shows increasing Marginal Rate of Transformation (MRT) as more quantity of one good is produced by reducing quantity of the other good. This behaviour of the MRT is based on the assumption


that all resources are not equally efficient in production of all goods. As more of


one good is produced, less and less efficient resources have to be transferred to the


production of the other good which raises marginal cost i.e. MRT.

(3)




OR




The problem means that who will buy the goods produced ? Clearly those who


have income will buy. people earn income in the form of wages, rent, interest and


profit. This reduces the problem to the problem of distribution of income among


people.





(3)
9.
Qty. sold.
Price
ATC
TR
TC
Profit


(Units)
(Rs. per unit)
(Rs)
(Rs)
(Rs)
(TR-TC)


7
10
6
70
42
28


8
9
5
72
40
32


9
8
6
72
54
22


10
7
7
70
70
0
(2)
Profit maximizing output = 8 units




(1)


10.          Marginal revenue is the addition to total revenue from producing one more unit of

output
(1)
(i)
MR = AR at all the output levels
(1)
(ii)
MR will be less than AR at all the output levels
(1)
11.

(1)
- 2 =

5
x
40

(1½)

100
Ðp





– 200

P = 200


or   P = –1


(½)

New P = P+  P = 5+(–1) = Rs.4.
(1)

12.          Monopoly :

(1)  Only one producer

(2)  No freedom of entry to  new firms, etc.

Monopolistic Competition
(1x2)

(1)      Large number of sellers and buyers

(2)      Firms produce diiferentiated products.

(3)      Freedom of entry and exit to firms

(4)  Perfect knowledge about market
(any two) 1x2

OR


Perfect competition : (1) Large number of sellers and buyers


(2) Firms produce homegeneous product


(3)
Freedom of entry and exit to firm


(4)
Perfect knowledge about market and technology.
(1x4)

13.          Increase in supply means more quantity supplied at the given price. Supply curve shifts to the right from S1 to S2. This creates excess supply (=E, A) at price OP. Since the firms are not able to sell what they produce, Competition among firms
leading to fall in price. takes place. Fall in price leads to rise in demand and fall in
supply. These changes continue till price falls to OP2 OP2  is the new equilibrium

price and OQ2. equilibrum quantity.                                                                                      (3)








(1)





For Blind Candidates in lieu of Question No. 13

Schedule
(2)
Explanation
(2)










14.






Relation between ATC and AVC.
(3)
1.   ATC is greater than AVC by the amount of AFC.
(1½)

2.        The difference between ATC and AVC decreases as more output is produced

because AFC declines as level of output increases.
(1½)
For Blind Candidates in lieu of Q. No.14

(i)
Relation between ATC and AVC (Same as above)
(3)
(ii)
Relation between MC and AVC :


(a) When MC> AVC, AVC falls


(b) When MC= AVC, AVC is constant
(1x3)

(c)  When MC< AVC, AVC falls

15.          Consumer’s equiibrium means allocation of income by a consumer on goods and

services in a manner that gives him maximum satisfaction.
(2)

The two conditions of consumer’s equibrium are :

(i)        Ratio of marginal utility to price in case of each good is the same i.e.

MUx
=
MUy
(2)
Px

Py

(ii)  MU of a good decreases as more of it is consumed.
(2)

16.          (i) It means that TPP increases at an increasing rate and consequently MPP rises. It is due to (a) more efficient utilization of fixed input and (b) division of labour

and specialisation due to increase in the quantity of variable input.
(3)

(ii)       It means output increasing in greater proportion than the increase in all input simultaneously and in the same proportion. It is due to (a) more division of labour leading to specialisation that increases produtivilty and(b) use of specialized machines.


Section B

Q.No.                                                                                                                                              Marks

17.          Involuntary unemployment occurs when those who are able and willing to work at


the prevailing wage rate do not get work
(1)
18.
The sum of MPC and MPS is equal to 1.
(1)

19.          Income from investment made by the government, fees and fines received by the


government.
(½x2)
20.
It is an indirect tax because its burden can be shifted.
(1)

21.          It is the ratio of bank deposits that the commercial banks must keep with the central


bank.
(1)
22.
NVAfc = (ii)+(v)-(vi)-(vii)-(iii)+(i)
(1)

= 800+20-50-500-30+40
(1½)

= Rs. 280 lakhs
(½)

23.          Yes it is possible in the following situations

(i)        When revenue budget is balanced and capital budget shows a deficit.

(ii)       When there is a surplus in the revenue budget but the deficit in capital budget



is greater than this surplus
(1½)


OR



Direct tax is a tax in which incidence & impact is on the same person. Its burden


cannot be shifted. Indirect tax is a tax where burden can be shifted.
(2)


Exampls : Direct Tax : Income Tax etc.................
(½)


Indirect Tax : Excise duty etc...............
(½)
24.
(a)
It is a capital receipt as it results in reduction of  asset.


(b)
It is a capital receipt as it creates liability.


(c)
It is a revenue receipt as it neither creates a liability nor reduces any asset.
(1)

25.          Sources of demand for foreign exchange :

(i)        Importers

(ii)       Tourists going abroad

(iii)  Investors who want to make investments in other countries.                                      (½x3)

Sources of supply of foreign exchange.

(i)        Exporters

(ii)       Foreign tourists

(iii)  Remittances from abroad, etc.                                                                                     (½x3)


26.          (i)   Current account deposits



The bank does not pay any interest on deposit in this account.
(½)

(ii)
Saving account deposits
(½)


Interest is paid on deposits is this account.
(½)

(iii)
Fixed/ term deposits
(½)

Interest paid on such deposits is higher than the interest paid on deposits  under


saving account
(½)
27.
In current account, transactions relating to export and import of goods and services
(3)

and transfer payment are recorded. In capital account transaction relating to


international purchases and sales of assets are recorded.


Import of machinery is included under import of goods and so it is recorded under
(1)

current account.


28.          The central bank acts as a banker to the government. The government keeps its cash balance with the central bank. The central bank accepts receipts and makes payments for the government. It also provides short term credit facility to the government.

It also manages the public debt. It also advises the government on banking and


financial matters.
(4)






OR



(a)  Money is acceptable as means of exchange. A person can sell his goods or



services in exchange for money and can use this money for buying the goods and



services that he needs. Thus money acts as a medium of exchange,
(2)


(b)  Deferred payments mean payments to be made in future. Money serves as a



standard for deferred payments. Money can perform this function only if its value



remains more or less stable.
(2)

29.
(a)
Y
1




= K =




I
MPS


1000
=
1

250
MPS



MPS = 0.25


\MPC = 0.75

So MPC = 0.75
(1)

(b)      D S = D Y x MPS


= 1000 x 0.25



= Rs. 250 Crores
(1)

(c)  D C = D Y x MPC



= 1000x0.75



= Rs. 750 Crores
(1)

(d)  K =
Y
= 1000 = 4
(1)

I


250




30.          Expenditure method estimates expenditure on domestic product, i.e expenditure on final goods and services produced within the economic territory of the country. It includes expenditure by residents and non- residents both. Exports, though purchased

by non- residents, are produced within the economic territory, and therefore, a part

of domestic product.
(4)
Domestic product can be greater than national product if factor income paid to the

rest of the world is greater than the factor income received from the rest of the world

is i.e. when net-factor income received from abroad is negative.
(2)

31.          The equilibrium level of income and output is that level at which planned saving and

planned investment are equal.
(1)
















ss’ is the saving curve that shows planned saving at diffrent levels of income. I I’

shows fixed level of investment as it is assumed that investment is given and is

constant, OQ is the equilibrium level of income and output as at this level, planned

saving and investment are equal
(2)

If planned expenditure is less than planned output inventories will increase. So output will be reduced till planned expenditure and planned output are equal.

For Blind candidates
Same as above except diagram

32.
Income method


National Income = (iv+viii) + (iii + ix) + xi+xiii - x
(1)

= (600+55)+(200+25)+20+130-30
(1½)

=Rs. 1000 crores
(½)

Expenditure Method

National Income = vi+i+xii+xiv-v+ii-x
(1)
= 800+100+110+70-60+10-30
(1½)
= Rs. 1000 Crores
(½)

OR


GNDI = iv+ii+vi-ix
(1)
= 1000 +100 + 50 -(-20)
(1½)
= Rs. 1170
(½)
Personal Income = (iv-xi) + (vii-ix+x)-viii-iii
(1)
=
1000-80+70-(-20)+30- 40- 90
(1½)
=
Rs. 910 Crores.
(½)


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