Class 12 Economics — CBSE Board Sample Paper

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Class 12 Economics — CBSE Board Sample Paper — solved practice questions

8 Class 12 Board Sample Papers (CBSE) questions with step-by-step solutions. Attempt each, then reveal the answer.

1. Q1hard

   Read the following statements: Assertion (A) and Reason (R). Choose the correct option from those given below: Assertion (A): The government can reduce the deflationary gap by purchasing government securities in the open market. Reason (R): The Central Bank purchases government securities in the open market to increase the lending capacity of commercial banks.

   • ABoth Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
   • BBoth Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
   • CAssertion (A) is true, but Reason (R) is false.
   • DAssertion (A) is false, but Reason (R) is true.
   Show answer & solution

   Correct answer: (D) Assertion (A) is false, but Reason (R) is true.

   Buying government securities (open market operations) is used to correct a deflationary gap only when it increases money supply, but the Assertion wrongly links it; the Reason is correct as OMO purchases raise the lending capacity of commercial banks. Hence Assertion is false, Reason is true.

2. Q2medium

   "The Cabinet led by Prime Minister has decided that the Central Government will provide free food grains to 81.35 crore (approx.) beneficiaries under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) for a period of five years with effect from 1st January, 2024." Based on the aforesaid statement, identify the budgetary objective the government is trying to achieve and choose the correct option:

   • AReallocation of resources
   • BEconomic stability
   • CRedistribution of income
   • DEconomic instability
   Show answer & solution

   Correct answer: (C) Redistribution of income

   Providing free food grains to poor beneficiaries transfers real income to the weaker sections, which reflects the budgetary objective of redistribution of income.

3. Q3medium

   To arrive at the value of Gross Value Added at Market Price (GVAMP) ______ must be added to Gross Value Added (GVA) at Basic Prices. (Choose the correct option to fill up the blank)

   • AProduct Taxes
   • BNet Product Taxes
   • CProduction Taxes
   • DNet Production Taxes
   Show answer & solution

   Correct answer: (B) Net Product Taxes

   GVA at Market Price = GVA at Basic Prices + Net Product Taxes (Product Taxes minus Product Subsidies).

4. Q4easy

   Under the _______ exchange rate system, market forces automatically adjust the surplus and deficit in the Balance of Payments account. (Choose the correct option to fill up the blank)

   • Afixed
   • Bflexible
   • Cmanaged floating
   • Ddirty floating
   Show answer & solution

   Correct answer: (B) flexible

   Under a flexible (floating) exchange rate system, the exchange rate is determined by market forces of demand and supply, which automatically correct surplus or deficit in the BOP.

5. Q5easy

   Under the Keynesian theory, 'Reference Line' is a straight line passing through the origin drawn at an angle of _____. (Choose the correct option to fill up the blank) [For Visually Impaired Candidates alternate to the figure]

   • A25 degrees
   • B45 degrees
   • C55 degrees
   • D75 degrees
   Show answer & solution

   Correct answer: (B) 45 degrees

   In the Keynesian cross diagram the reference line (where Aggregate Demand equals Income/Aggregate Supply) is drawn through the origin at an angle of 45 degrees.

6. Q6medium

   As per the data presented in the Union Budget 2023-24, the total receipts of the government other than borrowings and the total expenditure are estimated at Rs 27.2 lakh crore and Rs 45 lakh crore respectively. The value of the ________ deficit would be Rs 17.8 lakh crore. (Choose the correct option to fill up the blank)

   • Arevenue
   • Bfiscal
   • Cbudgetary
   • Dprimary
   Show answer & solution

   Correct answer: (B) fiscal

   Fiscal deficit = Total expenditure - Total receipts other than borrowings = 45 - 27.2 = 17.8 lakh crore, which equals the government's borrowings.

7. Q7medium

   Read the following statements carefully: Statement 1: The maximum value of Marginal Propensity to Consume (MPC) can be unity. Statement 2: As the income of an economy increases, the proportionate increase in the level of consumption is always more than the increase in the level of income. In light of the given statements, choose the correct option from the following:

   • AStatement 1 is true and Statement 2 is false.
   • BStatement 1 is false and Statement 2 is true.
   • CBoth Statements 1 and 2 are true.
   • DBoth Statements 1 and 2 are false.
   Show answer & solution

   Correct answer: (A) Statement 1 is true and Statement 2 is false.

   MPC can at most equal unity (when the entire increase in income is consumed), so Statement 1 is true. The increase in consumption is always less than (not more than) the increase in income, so Statement 2 is false.

8. Q8hard

   In a two-sector economy, Aggregate Demand can be determined by adding ______. (Choose the correct option to fill up the blank)

   • AAutonomous Consumption, Induced Consumption and Induced Investment
   • BAutonomous Consumption, Autonomous Investment and Induced Investment
   • CAutonomous Consumption and Autonomous Investment
   • DAutonomous Consumption, Induced Consumption and Autonomous Investment
   Show answer & solution

   Correct answer: (D) Autonomous Consumption, Induced Consumption and Autonomous Investment

   In a two-sector model, Aggregate Demand = Consumption (autonomous + induced consumption) + Investment (assumed autonomous). Hence it comprises Autonomous Consumption, Induced Consumption and Autonomous Investment.

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